USA Law and Practice Contributed by: Kim Marie Boylan, Nicholas Wilkins, Christina Culver and Kiara Williams, White & Case LLP
14. Judicial Precedent 14.1 Judicial Precedent on Transfer Pricing There is significant judicial precedent on trans - fer pricing in the USA, with ongoing develop - ment of case law. Challenges to transfer pricing regulations will likely increase given a recent US Supreme Court decision weakening judicial def - erence to regulations generally. 14.2 Significant Court Rulings Some recent court rulings with a significant impact on US transfer pricing rules include: • 3M Co v Commissioner, in which the US Tax Court upheld transfer pricing adjustments based on “blocked income” subject to foreign payment restrictions (an appeal is pending); • Altera Corp v Commissioner, in which the Ninth Circuit upheld regulations requiring stock-based compensation in CSAs; • Eaton Corp v Commissioner, in which the Sixth Circuit limited the IRS’s ability to cancel APAs; • Medtronic, Inc v Commissioner, in which the US Tax Court used an unspecified method somewhat similar to a CUT (an appeal is pending); and • Coca-Cola Co v Commissioner, in which the US Tax Court applied the CPM and rejected taxpayer arguments based on reliance on long-standing and previously approved meth - ods (an appeal is pending).
15. Foreign Payment Restrictions 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions The USA does not restrict outbound payments relating to uncontrolled transactions. 15.2 Restrictions on Outbound Payments Relating to Controlled Transactions The USA does not restrict outbound payments relating to controlled transactions. 15.3 Effects of Other Countries’ Legal Restrictions There are detailed regulations addressing when other countries’ legal restrictions will be respect - ed in determining transfer pricing allocations. The validity of these regulations are currently being challenged in court. 16. Transparency and Confidentiality 16.1 Publication of Information on APAs or Transfer Pricing Audit Outcomes Statistical information on APAs is published annually. The information includes the number of executed and pending APAs, as well as num - ber of APAs by jurisdiction, industry, controlled party relationship, type of transaction, method used, and similar metrics. 16.2 Use of “Secret Comparables” Secret comparables are not used.
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