3M, IRS Clash on How High Court Rulings Affect Transfer Pricing

3M Co. and the IRS offered dueling arguments on Thursday over how a trio of recent US Supreme Court rulings affecting federal agencies’ rulemaking power should impact their ongoing $4.85 million transfer pricing dispute.

3M challenged the IRS’s decision to allocate additional income to the US-based parent company after the agency determined that its wholly-owned Brazil subsidiary undercompensated 3M in royalties paid to use its intellectual property. The IRS’s $23.6 million allocation resulted in a $4.85 million tax liability for 3M, which the conglomerate contests.

The high court’s decision in Moore v. United States supports the IRS’s income allocation for ...