Transfer Pricing Issues for Tax Exempt Organizations
Tax-exempt organizations are increasingly engaging in dealings with their related for-profit entities, which can include the provision of services, financing arrangements, licensing of intangible property or even the sale of tangible goods. These transactions are subject to IRS transfer pricing regulations, which require documentation proving the activities are conducted as if the parties are unrelated.
Improper and undocumented transactions between a tax-exempt entity and its related taxable affiliates can incur steep costs such as tax adjustments, penalties, interest and loss of tax-exempt status and negative publicity.
While the U.S. transfer pricing regulations provide the framework for determining the fair market value of transactions between a tax-exempt entity and its related taxable affiliates, they also can be used to determine a tax-exempt entity’s unrelated business income (UBI) liability.
BKD’s transfer pricing team coordinates with our tax-exempt advisors to assist your organization with its related-party pricing and UBI needs. Our services range from planning and documentation to dispute resolution and valuation. We have years of experience assisting with related-party documentation and UBI calculations for a variety of tax-exempt organizations, including:
- Higher education institutions
- Health care organizations
- Religious organizations
- Trade & membership associations
- Political action groups
- Faith-based insurance companies
Don’t risk your tax-exempt status. BKD has the experience and expertise to help your organization navigate these complex business relationships and comply with IRS requirements.