Research On The Issue Of The Burden Of Proof In Tax Cases Concerning Transfer Pricing

Transfer pricing for tax evasion is one of the common means for tax evasion.The IRS is difficult to obtain evidence about the cross-border related transactions outside the border,moreover,financial fraud for cross-border related transactions is very heavy to make the acquisition of evidence more difficult.There are many legal precedents of transfer pricing in America.,and these legal precedents make the transfer pricing taxation move forward.The transfer pricing taxation appears late in our country,and there is only one case concerning transfer pricing that went into the judicial proceeding so far.This article researches the burden of proof for tax cases concerning transfer pricing combined with the American judicial precedents to find that courts make the right presumption of the decisions of the deficiency notices issued by the IRS so that it can prevent tax evasion on the link of judicial proceedings in the end and defend the revenue benefits of America.Our country not only copies provisions of American administrative institution for transfer pricing taxation,but also learns the experience of burden of proof rules for tax cases concerning transfer pricing to have a complete system to anti-transfer pricing for tax evasion.This article is divided into three chapters except for the preface and conclusions.The chapter1is’The Basic Theory of Transfer Pricing’.It is to discuss the incentives and conditions of multinational corporations to tax evasion and the reason why the evidence collection power of the Internal Revenue Service(the IRS) is limited.These are the reasons to advocate that tax payers bear the burden of proof.The arm’s length principle that is the standard of the tax reallocation has a close link with the burden of proof.American transfer pricing taxation,especially the Internal Revenue Code authorizes the IRS the broad reallocation power,so burden of proof rules should keep pace with the spirit of the code.The chapter2is’Issues of the Burden of Proof In Tax Cases Concerning Transfer Pricing in U.S.’. In macroscopic view,burden of proof rules in tax cases concerning transfer pricing of the U.S. are generally that only if the IRS issues the decisions of the deficiency notices justly the decisions have the right presumption,and tax payers bear the burden of reversing it.Then combining with four judicial precedents in Amelica,it will help explain specific objects of proof in tax cases of transfer pricing.The chapter3is’Burden of Proof Rules in Tax Cases Concerning Transfer Pricing in our Country’.It will discuss the present situation of transfer pricing taxation in our country,a relative case and the judicial present situation.These are necessary conditions to build the burden of proof rules of tax cases concerning transfer pricing in our country.The courts should make the right presumption of the decision of the IRS to shift the burden of proof upon tax payers in tax cases concerning transfer pricing.and tax payers bear the burden of persuasion in most situations.For this purpose.we just need to interpret the ’burden of production’in the Administrative Procedural Law as its ordinary meaning,not using enlarging interpretation.The degree of proof in this type of the case is generally the preponderance of evidence,however,the degree of proof should reach the level of’capricious,random or unreasonable’to reverse the right presumption of decisions of the IRS.The judges should have the discretion to determine the arm’s length price or profit level.The institution of expert witness shoud also be introduced into the trial of tax cases concerning transfer pricing.