November 11, 2022
IRS 2022–2023 Priority Guidance Plan includes transfer pricing projects similar to last year
In its 2022–2023 Priority Guidance Plan, the IRS and Treasury listed the projects to which the IRS and Treasury will allocate resources for plan year July 1, 2022, through June 30, 2023. This year's plan includes transfer pricing-related projects similar to those listed in the 2021–2022 guidance plan (see Tax Alert 2021-1768).
The IRS and Treasury again included the transfer pricing project, which would clarify the effects of group membership on arm's-length pricing (specifically for financial transactions) under the IRC Section 482 regulations. Additionally, this year's guidance plan again includes updating (1) Revenue Procedure 2015-40, which provides procedures for requesting and obtaining assistance from the US competent authority under US tax treaties; and (2) Revenue Procedure 2015-41, which provides procedures for requesting and obtaining Advance Pricing Agreements.
Like the 2021–2022 plan, the guidance plan listed regulations under IRC Sections 367 and 482 under the transfer pricing section. The project, which appears to combine two projects from the 2021–2022 Priority Guidance Plan, includes (1) regulations addressing the changes to IRC Sections 367(d) and 482 "on aggregation, realistic alternatives, and the definition of intangible property"; and (2) regulations under IRC 482 clarifying certain aspects of the arm's-length standard, including periodic adjustments.
Unlike the 2021–2022 plan, this year's guidance plan does not include parts of the project on IRC Section 482 regulations concerning "coordination of the best method rule with guidance on specified methods for different categories of transactions" or "discretion to determine the allocation of risk based on facts and circumstances of transactions and arrangements."
The guidance plan also includes, as it did last year, the inbound transfer of intangible property subject to IRC Section 367(d). If a US person transfers any intangible property to a foreign corporation in an exchange under IRC Sections 351 or 361, the outbound transfer is generally governed by IRC Section 367(d).
Implications The inclusion of several transfer pricing items on the priority guidance plan, along with increased IRS funding, suggests forward movement of potential enforcement efforts in transfer pricing. In addition, any modifications to Revenue Procedures 2015-40 and 2015-41 will give taxpayers more guidance on the criteria governing acceptance into the Advance Pricing and Mutual Agreement Program and how to structure requests for advance pricing agreements and US competent authority assistance.
Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor