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Saturday, August 11, 2012

Deterring Transfer Pricing Abuse Through Tax Court Reform

David A. Osborne (J.D. 2011, Washington U.), Note, Deterring Transfer Pricing Abuse: Changing Incentives As a Practical Alternative to a Global Tax Regime, 10 Wash. U. Global Stud. L. Rev. 813 (2011):

This Note proposes a change to the jurisdiction of the U.S. Tax Court and discusses why such a change would deter businesses from engaging in overly aggressive tax-avoidance behavior. First, in Part II it provides an initial example of the problem of transfer pricing by explaining how a multinational enterprise, IKEA, uses a carefully planned corporate structure to greatly reduce its tax burden. It then provides an introduction to how one nation, the United States, addresses corporations that shift income between countries. Next, it addresses in Part III how the global tax system might be reformed and whether such reform would effectively prevent tax evasion by allocating income to countries with a lower tax. In Part IV, using the U.S. tax regime as an example, the Note suggests modifications to national tax regimes that will deter transfer pricing abuses, including the requirement that Article III courts, where there is the prospect of a jury as the fact-finder, have exclusive jurisdiction over transfer pricing disputes. The Note concludes in Part V.

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