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ARTICLE · 03 APRIL 2023

Surviving Transfer Pricing Audits With Preparation, Perseverance

Mayer Brown
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Transfer pricing audits by the IRS can take years to resolve and consume tremendous resources. Mayer Brown's Jenny Austin, Jason Osborn, and May Chow explain how preparation, patience...

United StatesTax
Jenny A. Austin
Jenny A. Austin
Jason Osborn
Jason Osborn
May Y. Chow
May Y. Chow
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Transfer pricing audits by the IRS can take years to resolve and consume tremendous resources. Mayer Brown's Jenny Austin, Jason Osborn, and May Chow explain how preparation, patience, and perseverance can help a company survive the audit process and be well-positioned to seek a resolution.

It's inevitable that the IRS will audit significant intercompany transactions, particularly those at large multinational companies. These audits can take years to resolve and often consume significant resources to defend—but they're survivable. We suggest some considerations for anticipating or defending a transfer pricing audit.

Be Prepared

Strong, well-written Section 6662(e) documentation allows a taxpayer to control the narrative in an IRS audit. Documents should be viewed as having two purposes: penalty protection and the first line of audit defense. For penalty protection purposes, the documents must contain the relevant "principal documents" and must demonstrate that

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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