In this blog, Mark O’Dell, CPA, dives into how the IRS is enhancing its Transfer Pricing enforcement.
In a news release, the IRS reminded individuals and entities who missed the April 15 deadline for filing a Report of Foreign Bank and Financial Accounts (FBAR) to submit their annual report on or before October 17, 2022.
Recently, Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a final rule requiring certain entities to file reports with FinCEN that identify two categories of individuals, which can increase the potential for FinCEN reporting and increased uncertainty whether a filing is required.
The U.S. Department of the Treasury recently announced that the United States notified Hungary of its termination of the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, in force since 1979.
In a Private Letter Ruling (PLR), the IRS granted a foreign eligible entity a 120-day extension to file Form 8832, where U.S. businesses which own foreign entities can effectively structure their foreign entities for U.S. tax purposes.
In response to logistical hardships imposed by the COVID-19 pandemic, the IRS released Notice 2022-36 in its Internal Revenue Bulletin providing relief of penalties relating to the failure to file certain international informational returns for the 2019 and 2020 tax years.
The Inflation Reduction Act will give the IRS billions to go into enforcement, operations, systems modernization, and customer service. The increased funding for IRS enforcement will significantly increase the IRS’s scrutiny of transfer pricing compliance.
Preparing international compliance forms which end up part of a U.S. federal tax return involves avoiding a multitude of potential errors. Knowing the most common tax-filing oversights is critical to prevent mistakes and the serious headache that results in IRS scrutiny that can lead to an assessment of interest and penalties.
In a surprising development, Senate Majority Leader Chuck Schumer, Senator Joe Manchin and President Joe Biden on 27 July announced a deal on a $740 billion reconciliation bill.
This blog discusses the revised time estimates for enacting a revamp of international tax rules.
The text of Public Law 117-169, otherwise known as the “Inflation Reduction Act” passed on January 3, 2022, includes the Section 10301 harmlessly entitled “Enhancement of Internal Revenue Service Resources.” However, as is now becoming well known, within this Section we have the paragraph 10301(1)(A)(ii), “Enforcement.” It is here we see the enormous resources allocated to “enforcement activities.”
Here $46,637,400,000 is dedicated “…For necessary expenses for tax enforcement activities of the Internal Revenue Service to determine and collect owed taxes, to provide legal and litigation support, to conduct criminal investigations (including investigative technology), to provide digital asset monitoring and compliance activities, to enforce criminal statutes related to violations of internal revenue laws and other financial crimes, to purchase and hire passenger motor vehicles (31 U.S.C. 1343(b)), and to provide other services as authorized by 5 U.S.C. 3109, at such rates as may be determined by the Commissioner…”. That’s $46 billion dedicated to enforcement and collection.
Further, the Congressional Budget Office’s Cost Estimate of PL 117-169 released on September 7, 2022, estimates that just over $2 billion additional tax collections will be realized just next year alone, in 2023, and nearly $35 billion of additional taxes by 2026. That’s a lot of assessments and collections in a short time.
These new resources provided to the IRS become available just after the IRS had updated its transfer pricing examination process guide on September 8, 2020. As the Treasury and Congress have stated that the focus of this enhanced enforcement effort will be large corporations with international operations, it becomes obvious that transfer pricing is squarely in their sights. Inadequate transfer pricing policies and documentation have never been more exposed to audit adjustment than now.
McGuire Sponsel’s Global Services Team has the depth of experience and tools required to ensure your clients’ compliance with the multi-layered IRS and Treasury cross-border transfer pricing principles. Let our team help you and your clients efficiently handle the oncoming transfer pricing enhanced enforcement.
Mark O’Dell, CPA, has a wealth of skill and knowledge in the areas of international corporate taxation and M&A. He brings more than thirty years of experience to the table as a corporate tax director for several publicly-traded multi-nationals, both U.S. and foreign-owned.
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