IRS Official Defends Periodic Adjustment Transfer Pricing Memo

An IRS official defended a memo that has been attacked by tax practitioners for giving the agency too much power to adjust transfer prices retrospectively and making too big a change without going through the regulatory process.

The general legal advice memo, which came out in January, strengthened the IRS’s ability to use the commensurate-with-income standard to assert periodic adjustments when actual profits from transferred intangibles, such as intellectual property, differ from the return that the taxpayer projected it would have when it transferred the property.

Practitioners have said the move amounted to a major shift from using after-the-fact results ...