March 21, 2012
IRS Putting Together "SWAT" Team To Go After Transfer Pricing Cheats
Transfer pricing is a booming field of global tax law strategies. It involves multinational corporations that are constantly moving goods, services and assets from one subsidiary to another in different countries, and how they account for these "transfers." By carefully manipulating the pricing of such moves, companies can effectively shift profits to low-tax countries from high-tax ones, lowering their overall tax costs.
Small US Entrepreneurs with operations abroad and foreign corporations also take advantage of this procedure as well as the giant corporations. The IRS is forming a task force in order to be certain reasonable profits are taxed in the US rather than transferred to low tax or no tax countries and thus escape US taxation. A good example is Apple which has accumulated Sixty Billion Dollars in Cash abroad (in low tax or no tax countries) and will not remit it to the US which would subject it to US taxes, though they would get a credit for any taxes it did pay (if any) on those funds in other countries.