Elizabeth Stevens Weighs in on IRS Statute on Cross-Border Intercompany Transactions

Tax practitioners have been waiting for years to see how the IRS would implement new powers to scrutinize cross-border intercompany transactions.

After languishing on the agency’s agenda since 2018, an IRS official signaled earlier this month that guidance on such transactions, under Section 482, is among the list of things to tackle during the Biden administration. The rules could bolster the IRS’s position in big transfer pricing cases—disagreements with companies on how they value their related-party transactions—and provide more clarity on how the agency would approach evaluating such transactions.

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The statute gives the IRS authority to apply the concepts to regulations, said Elizabeth Stevens, a Member at Caplin & Drysdale. She added, “it’s harder for taxpayers to apply them and for courts to apply them if we get to a controversy situation, if you have nothing beyond what’s in the statute itself.”

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