The Transfer Pricing Tempest: Implications of GlaxoSmithKline

Will the IRS smell blood in the water after reaching a $3.4 billion settlement -- the largest-ever in the U.S. -- with GlaxoSmithKline?

The pharmaceuticals giant conceded more than 60% of the amount at issue in its years-long, much-watched dispute with the IRS over transfer pricing. The company has also halted its efforts for a $1.8 billion federal and state income tax refund related to transfer pricing.

Other diversified companies must ponder this settlement with dread. The IRS says the outcome validates its campaign against transfer pricing intended to distort taxable income. Will the agency follow through with that promise and start pursuing other taxpayers more aggressively? Is your company prepared for that heat?

Our panel of experienced federal tax attorneys and transfer pricing experts puts the GlaxoSmithKline settlement in perspective for other corporations with a lot on the line.

Michel Collet, Resident Partner, CMS Bureau Francis Lefebvre, New York, plans and structures French or European transactions for U.S. multinational groups or banks, mergers and acquisitions, structured finance, real estate investments and transfer pricing.

Alan W. Granwell, Partner, Ivins Phillips & Barker, Washington, D.C., has practiced in the area of international taxation for over 35 years. Prior to joining the firm, Mr. Granwell was International Tax Counsel and Director, Office of International Tax Affairs at the U.S. Department of the Treasury, responsible for advising the Assistant Secretary for Tax Policy on legislation, regulations, and administrative matters involving international taxation and directing the U.S. tax treaty program.

John P. Warner, Co-Managing Shareholder, Buchanan Ingersoll & Rooney, Washington, D.C., is co-chair of the firm's Business Tax and International Tax Practice Groups. He focuses on international and corporate tax matters and the taxation of financial instruments and securitization transactions. He has more than 25 years of experience in domestic and international federal income tax and business planning.

Charles S. Triplett, Partner, Mayer Brown Rowe & Maw, specializes in cross-border tax issues affecting a wide variety of technology and other industries. He worked for 16 with the IRS at various positions ranging from trial attorney to Special Assistant to the Chief Counsel, working chiefly on international tax issues, particularly transfer pricing, which included litigation of Eli Lilly and G.D. Searle cases.

Nathan Boidman, Partner, Davies Ward Phillips & Vineberg, Montréal, is a senior member of the firm's tax group. He is a leading tax practitioner on cross-border and international transactions and tax planning. He also provides counsel on disputes with Canada Revenue Agency stemming from cross-border tax matters, including transfer pricing.

Brian E. Andreoli, Partner, DLA Piper, New York, focuses his practice on transfer pricing, international tax matters, and state tax matters. A tax professional for more than 25 years, he is also a CPA and has experience in public, corporate tax law, and litigation. He has tried cases and administrative hearings, concerning corporate income tax, sales and use tax, franchise tax and property tax in a number of states.

During the program, you’ll hear them:

• Review the facts of the GlaxoSmithKline transfer pricing structure – so that you’ll know how similar your company’s own pricing practices are.
• Identify where the IRS found the company vulnerable and where the taxpayer’s defense was solid.
• Assess the chances that this high-profile settlement will encourage the IRS to get still tougher on big companies’ transfer pricing – and which kinds of taxpayers will likeliest be in the gunsights first.
• Recommend ways your company can shore up your transfer pricing practices now to make them more defensible if an auditor comes calling.

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