How good is the IRS in dealing with such global complexities as transfer pricing and foreign tax credits?
In general, I think the IRS has excellent expertise in the Code’s current international provisions. But because we deal in prior years, we do not fully understand the issues that are a key part of the emerging industries and the information-age economy. We need to frankly advise our colleagues in Treasury and in the Chief Counsel’s Office [about] those global trends, because I think we may need to revise some of the tax rules to expedite and ensure proper tax compliance. What areas are ripe for possible new rulemaking? Intangibles, generally: R&D intangibles, marketing intangibles, and manufacturing intangibles. That’s because, in effect, those intangibles can be transmitted via satellites anywhere in the world, which represents transfer of value. The problem with the tax code is that it was primarily drafted in an era when most international transactions involved the shipment of goods. If you really analyze the services sector and the intangibles being transferred internationally, tho
