Barnes Dennig Transfer Pricing After Tax Reform and COVID-19 120920 - BD | Page 11
WHAT IF THE IRS DISAGREES WITH TRANSFER PRICING ?
Assume a total transfer pricing tax adjustment of $ 10m
Additional income tax owed : $ 10m x 35 %* = $ 3.5m Plus non-deductible penalties of 20 % $ 700,000
$ 4.2M + interest + US state taxes + potential double tax
20 % penalties start at $ 5m , penalties increase to 40 % at $ 20m NO automatic refund of double tax
* Open tax years at pre-tax reform 35 % rate