Internal revenue code section 482 and Transfer Pricing Free Essay Example, 2500 words

These provisions clearly state that the prices and fees charged by such entities for the goods, services or loans as well as property, that they will transfer between different associates of the company, should be same as they would have done if the transaction was with a business house outside the company group. However, what could be these prices etc. for the transfer transaction remains a big question. Certain anomalies are found between the legislations laid out under section 482 and the implementation of the same. The reasons for this can be summarized as below: Section 482 legislation and the regulations for implementation of the same are working diversely as these regulations are ambiguous, thus vulnerable to many interpretations by the revenue officials. While dealing with the issues of intra-company pricing, the need is to have experts in the economic and financial fields to decide and implement the section 482 according to its true legislative meaning. However, the dearth of such expertise with IRS results in varied implementation of the legislation and thus the resolution of any pricing issue becomes a subject of multiple interpretations. The other reason could be that the US congress, which has passed such legislative laws like section 482 of IRC code, have provided that these laws mandate the availability of expertise and sources to IRS for interpreting and implementing the rules in the proper manner. We will write a custom essay sample on Internal revenue code section 482 and Transfer Pricing or any topic specifically for you Only $17.96 $11.86/page The legislations could be the result of certain political motivation also, while keeping in view the interests of some individual members. .... .... .... .... .... .... .(Transfer pricing, book by King page 5-7 ) Disparity between section 482 legislation and administrative practice There can be several reasons for such disparity. One reason is the glaring gap between the actual tax collections and the figures that were mandated for such tax hauls. If it is the fault on part of the administrative and treasury deptt. ,. for improper implementation, then either the tax laws or the administrative practices need to be reformed to bring the two closer. However, if the US congress is collectively satisfied with the actual tax collections that show huge deficit of collection from the large companies, then the legislation can be only a â€Å"window dressing† exercise, which means a costly revenue loss.