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NAM OUTLINES COMMENTS ON TRANSFER-PRICING REGS.

AUG. 13, 1992

NAM OUTLINES COMMENTS ON TRANSFER-PRICING REGS.

DATED AUG. 13, 1992
DOCUMENT ATTRIBUTES
  • Authors
    Lovell, Monica McGuire
  • Institutional Authors
    National Association of Manufacturers
  • Cross-Reference
    IL-372-88

    IL-401-88
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    related-party allocations
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 92-7842
  • Tax Analysts Electronic Citation
    92 TNT 170-66

 

=============== SUMMARY ===============

 

Monica McGuire Lovell of the National Association of Manufacturers (NAM), Washington, has submitted an outline of comments for the public hearing on the proposed section 482 regulations. NAM's comments, which will be presented by John G. Forsythe, will focus on recommendations regarding safe-harbor provisions.

 

=============== FULL TEXT ===============

 

August 13, 1992

 

 

Internal Revenue Service

 

P.O. Box 7604

 

Ben Franklin Station

 

Room 5228

 

Washington, DC 20044

 

Attn: CC:CORP:T:R (INTL 401-88, 372-88)

 

 

Dear Sir or Madam:

The National Association of Manufacturers (NAM) requests the opportunity to provide oral testimony at the August 31, 1992, hearing on the proposed section 482 transfer-pricing regulations. The NAM witness will be:

Mr. John G. Forsythe

 

Vice President -- Tax and Public Affairs

 

Ecolab Inc.

 

St. Paul, MN

 

 

Ecolab is a medium size company and a member of the NAM.

Enclosed is a outline, as requested by the Internal Revenue Service, of NAM's oral comments on the aforementioned regulations.

Should you have questions or would like to notify me regarding this request to testify, I may be reached at (201) 637-3076.

Thank you for your consideration of this request to testify.

Sincerely,

 

 

Monica McGuire Lovell

 

Director of Taxation

 

NAM

 

Washington, DC

 

 

cc: John Forsythe

 

 

Enclosure: testimony outline

 

 

OUTLINE OF NATIONAL ASSOCIATION OF MANUFACTURERS COMMENTS ON THE PROPOSED SECTION 482 REGULATIONS AUGUST 13, 1992

RECOMMENDATIONS WITH REGARD TO SAFE HARBOR PROVISIONS

A. The Proposed Regulations under section 482, relating to transfer pricing, should include safe harbor provisions. We recommend the following as reasonable safe harbors.

1. High-Tax Jurisdictions.

 

a. Proposed exception would apply when the tax rate in the

 

foreign jurisdiction exceeds 90% of the maximum U.S.

 

statutory rate.

 

 

2. Back-to-Back Transfers.

 

a. Transfer of intangibles acquired from unrelated parties to

 

related parties within a limited amount of time on the same

 

terms as originally acquired.

 

 

3. Transfers to Entities in Which an Unrelated Party Has

 

Substantial Interest.

 

a. Transfers to entities in which an unrelated party has a

 

substantial interest should be considered arm's length.

 

 

4. Method Accepted Under Prior Scrutiny by IRS.

 

a. Methodology accepted by the IRS in one audit cycle

 

should not be challenged in another, barring substantial

 

change of fact.

 

 

5. Minimum Distributions/Reasonable Profit Split.

 

a. Minimum amount deemed to be repatriated to U.S. or

 

specific level of allowable profit split.

 

 

6. De Minimis Foreign Activity or Location.

 

a. Relief for small business and taxpayers with numerous

 

small foreign related parties.

 

 

B. Inclusion of safe harbor provisions in the proposed section 482 regulations would provide a number of advantages.

1. Encourage voluntary compliance by taxpayers by providing an assured outcome of transfer pricing practices.

2. Reduce administrative costs both to IRS and taxpayers.

3. Encourage wider acceptance of proposed regulations by the international community and increase probability of correlative relief, thereby reducing the potential for double taxation.

DOCUMENT ATTRIBUTES
  • Authors
    Lovell, Monica McGuire
  • Institutional Authors
    National Association of Manufacturers
  • Cross-Reference
    IL-372-88

    IL-401-88
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    related-party allocations
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 92-7842
  • Tax Analysts Electronic Citation
    92 TNT 170-66
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