Tax Administration

Road Map to a Transfer Pricing Controversy
Preparing for success in audits and litigation in a strict enforcement environment

In recent decades, the Internal Revenue Service has pursued numerous long-running and complex transfer pricing audits. Although many have been resolved administratively, or prior to trial, the IRS has a decidedly uneven record in its litigation of high-profile transfer pricing disputes, not infrequently finding itself in the loss column in… Read more »

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The Research & Experimentation Credit: New Issues on the Horizon
Are you current on the latest administrative, legislative, and legal developments?

The Internal Revenue Service’s Large Business and International Division (LB&I) has recently turned its focus back to the research tax credit by announcing new campaigns and directives. LB&I’s efforts aim to centralize review and assessment of issues, promote increased compliance, and provide consistency across the nation with respect to examinations.… Read more »

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A More Collaborative Tax Controversy Approach?
Strategies for Exam and Appeals

Tax executives are familiar with the scenario: Internal Revenue Service examiners are in the building and are beginning to issue information document requests (IDRs) on routine and sensitive issues. One typical taxpayer response is to go on the defensive. This approach includes not voluntarily identifying issues and transactions; responding to… Read more »

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A Tax Executive’s Guide to Spin-offs: 10 Things You Won’t See in Section 355
Advise board and officers to be careful about certain negotiations or public statements during pendency of the spin

Behind the closed doors of a corporate boardroom somewhere in America, the directors of a publicly traded company are discussing the future of their business. For many years, the company has operated two major divisions that have gradually diverged over time. These divisions (having the remarkably original names Business A… Read more »

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Data Privacy at a Crossroads
As privacy laws proliferate globally, the IRS expands its ability to seek and obtain taxpayer data

In recent years, two important legal developments have accelerated and are currently on a collision course. The first is the rapid proliferation of data-privacy laws across the globe. As explained below, these laws—such as the European Union’s recently enacted General Data Protection Regulation (GDPR)—broadly prohibit unauthorized collection and transmission of… Read more »

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Dealing With Significant Multiemployer Pension Plan Issues in Corporate Transactions
Withdrawal liability could be jointly and severally owed by more than one entity in a corporate chain

If your company has targeted or is targeting another entity with a unionized workforce, you should pay particular attention to associated pension obligations. In recent years, a combination of industry and economic factors has led to the massive underfunding of many multiemployer pension plans. Such underfunding can result in substantial… Read more »

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Tax Internal Controls in an Era of Transparency and Disclosure
SOX404, ASC 740, and PCAOB may seem easily managed but pose significant risks if not closely monitored

To meet the demands of the Public Company Accounting Oversight Board, audit firms continue to increase activity related to internal controls. So, what’s the big deal? Let’s look at some numbers: tax accounting was the second leading cause of 2016 financial restatements; in 2016, ninety-eight percent of financial restatements were… Read more »

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Pros and Cons of Voluntarily Disclosing Past Wrongs
To disclose or not to disclose, that is the question

Hamlet’s thoughts weighed heavily upon him. Should he suffer the slings and arrows of outrageous fortune, or take arms against a sea of troubles? For the young Prince of Denmark seeking to avenge his father’s death, the choice was action or inaction, and ultimately life or death. Fortunately, most tax… Read more »

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Proposed Related-Party Debt vs. Equity Regulations: Section 385 — Reactions and Practical Responses
The proposed rules ignore commercial realities, create a bias toward third-party borrowing and equity investments, and mandate significant reporting obligations — but what can taxpayers do?

The proposed regulations ignore the commercial realities of doing business in a global economy. They create a bias toward third-party borrowing and equity investments in lieu of intercompany debt. If finalized in their current form, the proposed regulations will force companies to choose inefficient mechanisms for financing their operations and… Read more »

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Trends and Developments in Canadian Tax Controversy and Jurisprudence
Transfer pricing issues, increases in voluntary disclosures, and procedural disputes are among major developments, but what will happen in 2016 — and beyond?

The Canada Revenue Agency (CRA) continues to employ a risk-based approach when auditing large corporate taxpayers, focusing on high-risk areas such as aggressive tax avoidance and international tax planning. Information-gathering involves the use of written requests and requirement letters to routinely attempt to compel delivery of taxpayer information. However, the… Read more »

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