All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Altera charged $27 million by US IRS for employee cost transfer pricing

The IRS is demanding $27 million from tech company Altera because it says the company wrongly booked employee stock-based compensation in the US where it is tax deductible.


Wrapped-up in the dispute is the company’s use of its Cayman Islands unit, where the IRS argues the company should have split its employee costs between 2004 and 2007, rather than booking them all in the US and claiming the full tax deduction.

Altera is challenging the IRS rules penned in 2003 that say stock-based compensation should be shared between a US parent company and a subsidiary because the rulings are impossible for companies to follow. The company is seeking for the court to rule the 2003 rules invalid.

more across site & bottom lb ros

More from across our site

The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.
Tax consultants say companies must not ignore financial transactions in their TP policies as authorities, particularly in the UK, become more demanding.