The AICPA provided comments to the IRS on forthcoming proposed regulations that will include the Organisation for Economic Co-operation and Development’s (OECD’s) simplified and streamlined approach (SSA) as a new transfer-pricing method under the Sec. 482 regulations.
The letter, in response to Notice 2025-04, Application of the Simplified and Streamlined Approach Under Section 482, requests guidance on certain aspects of applying the SSA as described in the OECD’s report on Pillar One Amount B, an AICPA news release said.
The AICPA noted that under Option 1 for applying the SSA in Notice 2025-04, only taxpayers can elect it, while under Option 2 “the IRS could, unintentionally and unnecessarily, compel taxpayers to apply the SSA even when it is neither reliable nor cost optimal.”
The AICPA endorsed Option 1 and recommended that the IRS should withdraw the prioritization of the internal comparable uncontrolled price method (“internal CUP method”) as a condition of electing the SSA.
The AICPA’s other recommendations include:
- The availability of the SSA for U.S. taxpayers should not depend on whether the SSA has been implemented by the counterparty jurisdiction.
- The SSA election should apply to all in-scope transactions without further limitation, unless such limitation serves the interests of simplicity or sound tax administration.
- 30%, as selected by the IRS, should be the upper bound of the operating-expense-to-sale ratio.
“These recommendations, individually and collectively, would encourage taxpayers to elect the SSA, thereby maximizing the benefits of simplified compliance and tax certainty [for] both taxpayers and the IRS,” the AICPA said in the letter, sent to the IRS on Thursday.
The IRS intends for the proposed regulations to fully implement the substance of the OECD’s report, the AICPA said in its news release, published Monday.
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.
