IRS Staff Reductions Threaten to Jam Up Tax Dispute Resolution

Deep staff cuts at the IRS will slow the agency’s tax dispute resolution programs for transfer pricing cases and expose companies to less tax certainty and more audit risks, practitioners warned.

The agency’s Advance Pricing and Mutual Agreement Program, which tackles transfer pricing disputes, hasn’t been spared from the termination of probationary employees. And more job losses could come. The administration plans to cut up to half of IRS employees across the agency by the end of the year.

In bilateral or multilateral advance pricing agreements and mutual agreement procedures, countries negotiate over which jurisdictions should collect taxes on which ...