Episode 121: Transfer pricing controversy: Planning for the long term

Kristina Novak, a Principal in PwC’s Washington National Tax Services Transfer Pricing Practice, and TP Talks co-host John Cianfrone, a Director in PwC’s Washington National Tax Services Transfer Pricing Practice, discuss the evolving transfer pricing audit and controversy landscape with guest speakers Mark Thomas and David Ernick, both Principals in PwC’s Washington National Tax Services Transfer Pricing Practice. The group explores how transfer pricing audits have changed over time, emphasizing more expansive IRS fact-finding, longer audit timelines, and the growing volume and detail of information document requests (IDRs). Mark highlights the resurgence of functional interviews and explains how IDRs increasingly resemble litigation tools. David underscores that high-quality documentation begins with rigorous functional and factual development and should be viewed as the foundation for dispute defense, with consistency across reports and audit submissions critical to credibility. The group also addresses dispute resolution considerations, including MAP and APAs, and closes with a 2026 risk outlook focused on realistic alternatives, economic substance, commensurate with income, and increased foreign-initiated adjustments.

See also: More pain? A review of the transfer pricing controversy environment