3M Case Offers Test of Chevron Ruling’s Sway on Transfer Pricing

A case involving 3M Co. and the IRS may be the first test of how a US Supreme Court ruling giving judges more power to overrule regulatory agencies plays out in the arena of transfer pricing.

The court’s June ruling scrapped the Chevron doctrine, which for decades required judges to defer to federal agencies when they interpreted ambiguous laws. Some tax practitioners say that move stands to leave transfer pricing especially vulnerable to challenges, because transfer pricing, which governs how to tax related-party transactions, relies heavily on just such interpretations by the IRS.

But many of the same practitioners also ...