SEC Roundup: Accenture in IRS Real-Time Audit Program

The Tax Management Transfer Pricing Report ™ provides news and analysis on U.S. and international governments’ tax policies regarding intercompany transfer pricing. 

By Alex M. Parker

Nov. 7 — Accenture Plc, the world’s largest consulting firm, has entered the IRS program for continuous, real-time auditing and expects a decrease in its reserves against possible transfer pricing issues, according to filings with the U.S. Securities and Exchange Commission.

Accenture was one of 10 companies to report significant transfer pricing and international corporate taxation issues during October. An alphabetized list follows; excerpts from the filings appear in the Text section.

Accenture Plc, a Dublin-based consulting firm, said it is “reasonably possible” its unrecognized tax benefits—reserves placed against possibly risky tax positions—could decrease by approximately $562 million, or increase by $169 million, in the next 12 months due to settlements, lapses of statutes of limitations and other adjustments. These figures mainly relate to transfer pricing in the U.S. and abroad, the company said.

The company also said it began participating in the IRS Compliance Assurance Process Program beginning with the 2016 fiscal year. CAP allows companies to be audited in real time in the hopes of resolving potential issues when the company files its tax return. The IRS announced it would bar new companies from entering the program beginning in 2017, as the agency considers a system-wide reorganization of its resources.

Bristol-Myers Squibb Co., the New York-based pharmaceutical giant, said its total unrecognized tax benefits as of Sept. 30 could decrease by between $265 million and $325 million primarily due to the settlement of tax audits, which include transfer pricing issues.

Celestica Inc., a Toronto-based electronics manufacturer, said that in the third quarter of 2016, the Canada Revenue Agency withdrew its position on “certain transfer pricing matters” involving a Canadian subsidiary and reversed its adjustments for 2001-04, allowing the company to record a tax recovery of C$37 million ($29 million).

Edwards Lifesciences Corp., an Irvine, Calif.-based health care devices maker, said its liability for income taxes associated with uncertain tax positions was $231.4 million at Sept. 30—which could decrease by $40.8 million due to potential transfer pricing adjustments.

Jabil Circuit Inc., a St. Petersburg, Fla.-based electronic equipment and services provider, said it is reasonably possible that its unrecognized tax benefits, as of Aug. 31, 2016, could decrease by $0.9 million from cash payments and by $12.7 million due to the settlements of audits and the expiration of statutes of limitations, both relating partially to transfer pricing.

Microsoft Corp., the Redmond, Wash.-based software giant, said its “tax contingencies and other income tax liabilities” increased from $12.1 billion as of June 30 to $12.7 billion as of Sept. 30, due in part to transfer pricing.

Quaker Chemical Corp., a Conshohocken, Pa.-based chemicals company, said in the first quarter of 2016 it settled an assessment from the Dutch tax authorities for 2011-15 with no additional taxes paid.

Rowan Companies Plc, a Houston-based oil drilling services company, said a previously announced IRS proposed adjustment for tax years 2009-12—including transfer pricing issues—totals $85 million in income.

The company’s gross unrecognized tax benefits as of Sept. 30 were $119 million, an increase from $65 million on Dec. 31, 2015, due in part to tax positions taken “of $7 million related to current year-to-date anticipated transfer pricing positions.”

Team Inc., a Sugarland, Texas-based equipment management company, said $1 million in uncertain tax position as of Dec. 31, 2015, was due mainly to transfer pricing.

Visteon Corp., a Detroit-based auto parts company, said it is currently pursuing a bilateral APA with the U.S. and Japanese tax authorities, and expects to submit a formal application in the fourth quarter of 2016.

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