Court Cases Spur IRS Economic Substance Test Use, Official Says

Hello and welcome to this week’s Transfer Pricing Report. I was in New York this week, where NYU and KPMG held their 20th annual symposium. Transfer pricing practitioners there sparred with IRS Associate Chief Counsel for International Peter Blessing over the latest agency guidance impacting audits.

In particular, practitioners complained about the IRS’s increased use of the economic substance doctrine, which the agency has said it will be applying to transfer pricing cases.

Mayer Brown partner Jenny Austin said she’s seen a significant uptick in IRS agents applying the doctrine since the agency loosened restrictions in 2022.

“The first question ...