Transfer Pricing Compliance Alerts: What to Do Now

The Internal Revenue Service (IRS) is increasing its compliance efforts with regard to US subsidiaries of foreign companies that distribute goods in the US and report losses or low margins year after year. On October 20, 2023, the IRS announced its new initiative, the Large Foreign-Owned Corporations Transfer Pricing Initiative, whereby it sent “compliance alerts” to approximately 150 subsidiaries of large foreign corporations to reiterate those companies’ tax obligations and encourage self-correction (IR-2023-194 (Oct. 20, 2023)). On January 12, 2024, the IRS announced its progress with regard to this initiative, stating that over 180 compliance alerts had been sent ...