Weekly Round-Up: ‘State-Level Transfer Pricing—Will a Revived Interest in Enforcement Lead to Change?’


The Organization for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Project has captivated the international tax community during the past three years. The project, which culminates this month, aims to identify tax policy reforms at the national level that eliminate, or at least mitigate, perceived abuses by taxpayers who are thought to utilize clever (and often legal) tax planning to reduce their global tax burdens.

In response to these potentially nefarious taxpayer practices, the U.S. Multistate Tax Commission (MTC) is well on its way to establishing the Arm's-Length Adjustment Service (ALAS), a program that enables states to more efficiently regulate interstate transfer pricing and enforce interstate transfer pricing rules. With the BEPS project nearing its end, how and whether ALAS will be able to enforce appropriate pricing of transactions is rising to the forefront of the discussion among state tax authorities and taxpayers as effective enforcement undoubtedly will have a distinct and notable impact on both cohorts.

In a new perspective piece, Benjamin Miller, Peter Stathopoulos and Michael Kee of Bennett Thrasher discuss how and whether the Arms-Length Adjustment Service will be able to enforce appropriate pricing of transactions.

The article can be read in its entirety here.

Some notable developments from the State Tax Developments Tracker–Bloomberg BNA’s new tool for monitoring important developments in all the states:

Maryland Governor’s Office announces cuts in unemployment insurance taxes

Indiana Department of Revenue issues bulletin concerning changes to the corporate income tax rate

New York Office of the State Comptroller announces sentencing of former town clerk convicted of falsifying own tax payments

For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library. 

In other developments…

Oregon Supreme Court adopts transactional approach for costs of performance sourcing, by Sutherland Asbill & Brennan LLP

Clarifying the positions of the Republican presidential candidates, by the Tax Foundation

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