Audits Archives

The Multistate Tax Commission Is Primed to Revamp Its Multistate Transfer Pricing Collaboration and Enforcement Initiatives

May 7, 2021 By Ted Bots and Drew Hemmings 4 Mins Read

The Multistate Tax Commission (“MTC”) is set to revamp its transfer pricing collaboration and enforcement initiatives following the first public meeting of its State Intercompany Transactions Advisory Service (“SITAS”) Committee in over four years. At the end of last year, the SITAS Committee appointed its new Chair- Krystal Bolton, who is also an assistant director at the Louisiana Department of Revenue’s field audit income tax division. On March 23rd, Ms. Bolton hosted representatives from state revenue agencies, practitioners, taxpayers, and other members of the public in a virtual conference to overview the history of the SITAS Committee and to present the results of a multistate survey regarding intercompany transactions and transfer pricing.

Something Fishy in the False Claims Act World

October 14, 2020 By Lindsay LaCava and Mark Yopp 5 Mins Read

New York lawmakers recently introduced two bills to expand the application of the New York State False Claims Act (“FCA”). The first intends to require the FCA to apply to non-filers, the second to remove the scienter element (i.e., no longer imposing a “knowing” requirement). Although both bills are retroactive and concerning, removing the scienter element should put all businesses on high alert as enforcement of the tax laws could now be in the hands…

States Revisit Transfer Pricing Enforcement with New Initiatives

August 7, 2020 By Maria Eberle, Lindsay LaCava and Drew Hemmings 3 Mins Read

Two states recently unveiled transfer pricing enforcement tactics to, in their view, combat improper intercompany profit shifting.

A “Manufactured” Attack: Department Takes Aim at Contract Manufacturing and Redrafts the Tax Law in New Draft Regulations

June 1, 2020 By Maria Eberle, Lindsay LaCava, Mark Yopp and Nicole Ford 13 Mins Read

On the heels of its loss in Matter of TransCanada Facility USA, Inc. DTA NO. 827332, on May 14, the New York State Department of Taxation and Finance proposed draft regulations addressing the Article 9-A Franchise Tax treatment of Qualified New York Manufacturers (“QNYMs”).^[1] These draft regulations, which are not currently in effect but which do shed light on the Department’s current thinking, amplify a position that the Department has taken in prior informal guidance and on audit regarding contract manufacturing arrangements and the scope of activities that constitute “manufacturing” that is not in the statute. The position that a taxpayer that engages in contract manufacturing cannot qualify as a QNYM is contrary to prior New York authorities addressing “manufacturing” in the investment tax credit context and contrary to judicial authorities defining “manufacturing” under relevant federal tax law. In addition, the draft regulations set out a new position—again, one not found in the statute—that “digital manufacturing” is not manufacturing, and that only manufacturing that results in the production of “tangible” goods will qualify for QNYM treatment.