Case: Inadvertent Taxpayer Errors Not Grounds for IRS to Cancel Transfer Pricing Agreements, Impose Accuracy-Related Penalties; Double Taxation Relief Due (6th Cir.) (IRC §6662)

A global company’s inadvertent miscalculations on transfer prices, which it corrected, weren’t material so as to justify the IRS’s cancellation of two advance pricing agreements and levying of 40% penalties under I.R.C. §6662 for “gross valuation misstatements,” the Sixth Circuit Court of Appeals held, affirming the Tax Court’s opinion on that matter and reversing on double taxation relief, consistently siding with Taxpayer. Taxpayer and the IRS entered into the APAs for a 10-year period during which Taxpayer self-corrected its miscalculations, which the IRS thought were serious enough to warrant unilateral cancellation of the APAs for two of the years, ...