In the USA, transfer pricing starts with section 482 of the Internal Revenue Code (IRC) available in its entirety at

Section 1.482 of the Code of Federal Regulations (CFR) contains hundreds of pages of technical rules for the application of section 482 IRC.

Section 6662 IRC and section 1.6662 CFR are relevant for transfer pricing penalties. The IRS also occasionally publishes documents that are relevant to transfer pricing.

Section 1.482 CFR

Section 1.482 CFR is available in its entirety at and The table of contents differs from the OECD Transfer Pricing Guideline layout; it includes:

1.482-1 – Allocation of income and deductions among taxpayers
1.482-2 – Determination of taxable income in specific situations
1.482-3 – Methods to determine taxable income in connection with a transfer of tangible property
1.482-4 – Methods to determine taxable income in connection with a transfer of intangible property
1.482-5 – Comparable profits method
1.482-6 – Profit split method
1.482-7 – Methods to determine taxable income in connection with a cost sharing arrangement
1.482-8 – Examples of the best method rule
1.482-9 – Methods to determine taxable income in connection with a controlled services transaction

Section 6662 IRC and 1.6662 CFR

Section 6662 IRC ( and section 1.6662 CFR ( contain penalties that may be applicable to transfer pricing transactions. Section 6662 IRC prescribes the imposition of an accuracy-related penalty on underpayments that may apply to any transfer pricing adjustment as per section 482 IRC and section 1.482 CFR.

Section 1.6662-6 CFR applies to transactions between persons described in section 482 and net section 482 transfer price adjustments. Section 6662 IRC prescribes penalties for « any underpayment which is attributable to 1 or more of the following:

(1) Negligence or disregard of rules or regulations.
(2) Any substantial understatement of income tax.
(3) Any substantial valuation misstatement under chapter 1 [of the IRC].
(4) Any substantial overstatement of pension liabilities.
(5) Any substantial estate or gift tax valuation understatement. »


The IRS Internal Revenue Manual (IRM) is available here.

The IRS has also published a « Transfer Pricing Audit Roadmap » available here. To see the Canada Revenue Agency Audit Manual click here. The IRS explains :

« The Transfer Pricing Audit Roadmap (Roadmap) is a practical, user-friendly toolkit organized around a notional 24 month audit time-line.

The Roadmap provides recommended audit procedures and links to useful reference material. It is not intended as a template. Every transfer pricing case is unique and requires ongoing exercise of judgment and discretion. With the release of the Roadmap, TPO is providing the public with insight into what to expect during a transfer pricing examination. This transparency is intended to help improve communications and efficiency, for the benefit of both the IRS and taxpayers. »

The « Transfer Pricing Audit Roadmap » states :

« Transfer pricing cases are usually won and lost on the facts. The key in transfer pricing cases is to put together a compelling story of what drives the taxpayer’s financial success, based on a thorough analysis of functions, assets, and risks, and an accurate understanding of the relevant financial information. Fact development is the “bread and butter” of our exam teams – it’s what they are trained for and good at. An effective story explains the taxpayer’s value chain, competitive position in its industry, and financial results, in a clear and compelling fashion. If indications are that the tax result claimed by the taxpayer is at odds with common sense and economic reality – “too good to be true” – chances are it is a good candidate for further scrutiny. Early identification and aggressive pursuit of cases that have this potential is important. Conversely, if indications are that the taxpayer’s financial results are reasonable, and the taxpayer’s method fits its fact profile, it may not be worth pursuing the issue. »


« Effective presentation can make or break a case. Even a strong position may not be sustained on review if it is not presented clearly and persuasively. A Notice of Proposed Adjustment (NOPA) should have logical structure, and should weave the facts and applicable legal and economic principles together in a story-line that resonates with the reader. All of the relevant facts – good and bad – should be addressed. The conclusion should come across as “inevitable.” This sort of presentation lends credibility to the proposed adjustment, and increases the odds of early resolution or sustention on review. »

The rest of the Transfer Pricing Audit Roadmap gives tools to the IRS auditor.

See also the IRS’ International Practice Units below.


IRC: Section 482 – Allocation of income and deductions among taxpayers

IRC: Section 6662 – Imposition of accuracy-related penalty on underpayments

CFR: Section 1.482 – Allocation of income and deductions among taxpayers

CFR: Section 1.6662-6 – Transactions between persons described in section 482 and net section 482 transfer price adjustments

IRS: United States Income Tax Treaties

IRS: Mandatory Tax Treaty Arbitration

IRS: Taxpayer Agreements for MAP Arbitration

Department of Treasury Technical Explanation: Convention between the United States of America and Canada

IRS: Tax Information For International Businesses

IRS: Filing / Reporting

Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations

Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

IRS: Transfer Pricing Audit Roadmap

IRS: Notice 2013–79 Proposed Revision of Procedures for Advance Pricing Agreements

IRS: Allocation and Sourcing of Income and Deductions Among Taxpayers Engaged in a Global Dealing Operation (1998)

IRS: APA and Transfer Pricing Published Guidance

IRS: Rev. Proc. 2015-41 Procedures for Advance Pricing Agreements

IRS: Advance Pricing and Mutual Agreement Program

IRS: Rev. Proc. 2015-40 Procedures for Requesting Competent Authority Assistance under Tax Treaties

IRS: Notice 2014-52, Rules Regarding Inversions and Related Transactions

IRS: Notice 2015-79 Additional Rules Regarding Inversions and Related Transactions

IRS: FATCA – General FAQ

IRS: Internal Revenue Bulletins

IRS: International Practice Units

U.S. Customs and Border Protection: Rulings and Legal Decisions


IRS: Annual APA Statutory Reports