This paper examines the state corporate tax implications of abnormal transfer-pricing by U.S. companies involved in international trade. The state corporate tax cost of improperly priced imports and exports is estimated through analysis of every import and export transaction for the years 2005 through 2009 using the interquartile range methodology provided in regulations to Internal Revenue Code Section 482. Calculation of the interquartile range using the entire population of international transactions addresses interpretive issues related to abnormal prices that occur with the smaller samples normally used in such analyses. A policy recommendation is made for improving tax compliance through more rigorous state involvement in transfer pricing enforcement and greater formal collaboration with the Internal Revenue Service with respect to transfer pricing.
Christian, C. and Zdanowicz, J.S. (2016), "Assessing the potential impact of abnormal pricing violations on state corporate tax receipts", Journal of Public Budgeting, Accounting & Financial Management, Vol. 28 No. 3, pp. 361-390. https://doi.org/10.1108/JPBAFM-28-03-2016-B004
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