Chainbridge Software LLC “unlawfully violated the fundamental purpose” of tax code Section 482 in a transfer pricing study it conducted for the District of Columbia, BP Products North America Inc. charged in a motion for summary judgment filed recently in D.C. Superior Court (BP Products North America Inc. v. District of Columbia, D.C. Super. Ct., No. 2011 cvt 10619, motion for summary judgment filed 9/24/12).
BP Products is seeking to vacate a $722,585 assessment by the D.C. Office of Tax and Revenue (OTR) that was based on a Chainbridge study indicating the taxpayer had shifted revenue to affiliates outside the district during tax years 2006 to 2008, Bloomberg BNA Editor Dolores Gregory writes in this week’s issue of the Weekly State Tax Report.
The taxpayer also is asking the court to rule that the Chainbridge approach is invalid as a matter of law and to order OTR to refund the tax paid.
In a brief in support of its motion, BP Products charged that Chainbridge committed numerous errors, including the misapplication of federal transfer pricing guidelines by improperly aggregating transactions with both related and unrelated parties.
Approximately 79 percent of the company's sales of refined products were to third parties and were “by definition” at arm's length, the company said. Nevertheless, these sales were included in the Chainbridge analysis of whether BP Products North America (BPPNA) had properly priced its transactions with related parties.
“This inclusion of sales to third parties in the analysis is a fatal flaw in the methodology and invalidates the entire assessment as arbitrary,” the company said in its brief.
BPPNA counsel James McBride of Baker Donelson Bearman, Caldwell & Berkowitz PC told BNA Oct. 24 that the parties are seeking to delay a pretrial conference scheduled for Nov. 9.
“We just filed a joint motion to adjust the scheduling order to allow Judge [John] Campbell time to rule on the summary judgment motion before we have to go through the pre-trial procedures,” McBride said. “That motion also would give OTR until early in November to respond to the summary judgment motion.”
Gregory’s complete analysis of this development can be read in its entirety here .
In other developments…
California Study: Tax Millionaires, They’ll Just Grin and Bear It , b y Scott Drenkard of the Tax Foundation.
Morrison & Foerster LLP issues its November 2012 issue of New York Tax Insights which covers, among other things, a decision by a t rial court that upholds retroactive application of a 2010 statutory amendment.
The impact of tax policies on living organ donations in the United States , by t he Nelson A. Rockefeller Institute of Government.
COST files an amicus brief in the United States Supreme Court in the matter of Kimberly-Clark v. Alabama Department of Revenue.
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