TEI's fall advocacy collection hits runways: TEI comments on OECD's intangibles transfer pricing rules, expanded 1099 business reporting in the U.S., and myriad state tax issues.

• Position: Tax Executives Institute, Organisation for Economic Co-operation and Development

Tax Executives Institute's advocacy activities have never gone out of fashion, and this fall has been no exception with tastefully appointed position papers and representations filed on both sides of the Atlantic. As with clothing, the season began in Paris, where the Institute's European Direct Tax Committee participated in transfer pricing consultations with the Organisation for Economic Co-operation and Development. In Washington, the Federal Tax Committee suggested ways for the Internal Revenue Service and U.S. Department of the Treasury to ease the burden of expanded Form 1099 reporting requirements for businesses.

In addition, the State and Local Tax Committee sought clearer guidance on recently published emergency regulations in Washington, and urged the California Supreme Court to hear a tax case addressing the proper remedy in situations where a state tax statute has been found unconstitutional. Finally, this issue of The Tax Executive contains minutes from the Institute's liaison meetings earlier this year with the Commissioner of Internal Revenue, the Treasury Department's Assistant Secretary of Tax Policy, and representatives of the Internal Revenue Service's Large and Mid-Size Business Division.

OECD Transfer Pricing for Intangibles Consultation

On September 14, TEI submitted a letter to the OECD in response to its request for comments on the scope of a new project on the transfer pricing aspects of intangibles. Although the OECD released guidance on this issue in 1996 and again in 1997, disputes between taxpayers and tax administrators about transfer pricing for intangibles have increased in frequency, amount and scope. Through the process of "scoping" this project, the OECD is seeking to identify the most significant issues encountered in practice, any shortfalls in the OECD's current guidance, and other areas ripe for further work.

"TEI commends the OECD for seeking public input on the scope of its project," said Paul O'Connor, President of Tax Executives Institute. "For most multinational enterprises, intangibles are a significant component of the value of the business's products or services making this issue incredibly relevant for our members."

The Institute's letter reaffirmed certain fundamental principles of the current guidelines including the use of the arm's-length principle as the basis for valuing and reporting transactions between affiliated enterprises. TEI's letter cautioned against moving away from the...