New BNA Transfer Pricing Portfolio Outlines Litigation Strategy and Tactics for Corporations in Transfer Pricing Disputes

ARLINGTON, Va., Feb. 8, 2011 /PRNewswire-USNewswire/ -- At a time when transfer pricing disputes are on the rise, and penalties ever more significant, a new BNA Tax & Accounting Portfolio, Transfer Pricing: Litigation Strategy and Tactics, written by leading transfer pricing experts Sanford Stark and Hartman Blanchard, both of Bingham McCutchen LLP, discusses the unique strategic and procedural options to be considered in contesting a dispute either during the administrative process or in the examination phase of litigation.

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"Transfer pricing has become a key area for IRS scrutiny, and any U.S. business with international operations may one day find itself defending its transfer pricing at IRS Appeals or in court," notes Harold W. Pskowski, Managing Editor for U.S. International publications at BNA Tax & Accounting.

Section I of the Portfolio discusses a taxpayer's procedural alternatives following the identification of a dispute during examination, and Section II identifies considerations for the taxpayer in deciding whether to pursue pre-litigation alternatives or instead proceed directly to court. It is at this early stage that the taxpayer must evaluate the impact that its procedural alternatives may have on costs incurred, publicity, timing to resolution, potential settlement, and the disclosure of the taxpayer's case prior to litigation.

Section III discusses the key related issue of a taxpayer's preferred choice of forum, which will determine whether and when payment of the disputed tax liability must be made, the pool of potential judges, the timing of commencement and the course of any litigation, government counsel, discovery, and the availability of alternative dispute resolution.

Section IV of the Portfolio outlines burden of proof considerations, which are particularly important in a transfer pricing case, given the distinct but related burdens of demonstrating that the IRS adjustment was arbitrary and capricious and that the taxpayer's intercompany pricing met the arm's-length standard.

Discovery and objections, as discussed in Section V, are particularly important in the transfer pricing context due to the broad factual scope of the inquiry. The burden to demonstrate that the government's adjustment is arbitrary and capricious, and the potential availability of affirmative refund claims, make discovery of the government case potentially more relevant than in other tax disputes. Moreover, the international nature of transfer pricing cases and the increased efforts at global cooperation in the discovery process raise concerns over the availability of documents and witnesses located overseas.

Transfer Pricing: Litigation Strategy and Tactics closes by addressing pretrial procedures, the trial of a transfer pricing case, and post-trial procedures, appellate review, and the potential for the application of the doctrine of res judicata to transfer pricing decisions and judgments.

About the Authors

Sanford W. Stark, B.A., cum laude, Yale University (1988); J.D., with High Honors, Duke University School of Law (1991); Member, Alaska Law Review and Moot Court Board; Law Clerk to the Honorable Peter Hill Beer, U.S. District Court for the Eastern District of Louisiana (1991–92); Trial Attorney, U.S. Department of Justice Tax Division, Civil Trial Section (1995–99); Adjunct Professor, LL.M. (Taxation) program, Georgetown University ("Introduction to Transfer Pricing") (2009–); Member, American Bar Association, Section of Taxation, Transfer Pricing Committee, Foreign Activities of U.S. Taxpayers Committee; Member, bars of the District of Columbia and Illinois.

Hartman E. Blanchard, Jr., B.A., magna cum laude, Harvard University (1991); J.D., with honors, The George Washington University (1994); Member, The George Washington Journal of International Law and Economics; LL.M. (Taxation), with distinction, Georgetown University; Law Clerk to the Honorable James C. Turk, U.S. District Court for the Western District of Virginia (1994–95); Member, American Bar Association, Section of Taxation; Member, bars of the District of Columbia and Maryland.

About BNA Tax & Accounting

BNA Tax & Accounting is the foremost source of news, analysis, and practice tools for tax attorneys, estate planners, accountants, and corporate tax and financial accounting professionals. For more than 50 years, BNA Tax & Accounting has offered practitioners expert insights and guidance on every significant issue in tax planning and financial accounting. Written by practitioners for practitioners, BNA's award-winning Portfolios offer topic-driven, in-depth guidance on transactions designed to help tax professionals achieve new levels of excellence and client service. For more information on BNA's International Tax series of which this Portfolio is a part, call 800.372.1033.

SOURCE BNA Tax & Accounting

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