Transfer pricing documentation requirements in the United States

The United States has no mandatory local file. The documentation below is what taxpayers must have in existence when the return is filed, and provide within 30 days of an IRS request, to obtain protection from transfer pricing penalties (Treas. Reg. §1.6662-6(d)).

Principal documents

The principal documents should accurately and completely describe the basic transfer pricing analysis conducted by the taxpayer. The documentation must include the following:

• An overview of the taxpayer's business, including an analysis of the economic and legal factors that affect the pricing of its property or services
• A description of the taxpayer's organizational structure (including an organization chart) covering all related parties engaged in transactions potentially relevant under section 482, including foreign affiliates whose transactions directly or indirectly affect the pricing of property or services in the United States
• Any documentation explicitly required by the regulations under section 482
• A description of the method selected and an explanation of why that method was selected, including an evaluation of whether the regulatory conditions and requirements for application of that method, if any, were met
• A description of the alternative methods that were considered and an explanation of why they were not selected
• A description of the controlled transactions (including the terms of sale) and any internal data used to analyze those transactions. For example, if a profit split method is applied, the documentation must include a schedule providing the total income, costs, and assets (with adjustments for different accounting practices and currencies) for each controlled taxpayer participating in the relevant business activity and detailing the allocations of such items to that activity. Similarly, if a cost-based method (such as the cost plus method, the services cost method for certain services, or a comparable profits method with a cost-based profit level indicator) is applied, the documentation must include a description of the manner in which relevant costs are determined and are allocated and apportioned to the relevant controlled transaction
• A description of the comparables that were used, how comparability was evaluated, and what (if any) adjustments were made
• An explanation of the economic analysis and projections relied upon in developing the method. For example, if a profit split method is applied, the taxpayer must provide an explanation of the analysis undertaken to determine how the profits would be split
• A description or summary of any relevant data that the taxpayer obtains after the end of the tax year and before filing a tax return, which would help determine if a taxpayer selected and applied a specified method in a reasonable manner
• A general index of the principal and background documents and a description of the record-keeping system used for cataloging and accessing those documents

Background documents

The assumptions, conclusions, and positions contained in principal documents ordinarily will be based on, and supported by, additional background documents. Documents that support the principal documentation may include the following documents that are not otherwise described in the section of principal documents:

• Original entry books and transaction records
• Profit and loss statements
• Pricing documents
• Foreign country and third party filings
• Ownership and capital structure records
• Records of loans, services, and other non-sales transactions
• Records relating to conduit financing arrangements

• Form 5472: filed with the income tax return by 25% foreign-owned US corporations and foreign corporations engaged in a US trade or business, reporting transactions with related parties; record maintenance rules under Treas. Reg. §1.6038A-3 apply.

• Penalty-protection documentation: must exist when the income tax return is filed and be provided within 30 days of an IRS request.
• Form 5472: with the income tax return, including extensions.
• CbCR (Form 8975): with the ultimate parent entity's income tax return for the tax year, by its due date including extensions (15 October 2026 for calendar-year 2025 corporations on extension).
• Penalties for non-compliance:
  • Substantial valuation misstatement: 20% of the resulting underpayment (IRC §6662(e)).
  • Gross valuation misstatement: 40% of the resulting underpayment (IRC §6662(h)).
  • These penalties can be reduced or avoided with documentation meeting Treas. Reg. §1.6662-6(d).
  • Form 5472: USD 25,000 for each failure to file or maintain records.
  • Form 8975: penalties under IRC §6038(b) may apply.

Benchmarking is not mandatory, but documentation must support the method chosen. The best method rule applies (no hierarchy), covering CUP, resale price, cost plus, comparable profits method (TNMM), profit split and other methods, including income, market capitalisation and acquisition price methods for intangibles. Comparability analysis is consistent with the OECD Guidelines; there is no preference for domestic comparables and secret comparables are not used. Ranges, including the interquartile range, may be used to improve reliability, and comparability adjustments must be made where they improve the reliability of results.

A safe-haven interest rate of 100% to 130% of the Applicable Federal Rate applies to certain loans. Under Notice 2025-4, taxpayers may elect the simplified and streamlined approach (Amount B) for baseline marketing and distribution activities for tax years beginning on or after 1 January 2025.

• Internal Revenue Code §§482, 6038, 6038A and 6662(e) and (h)
• Treas. Reg. §1.6662-6 (transactions between persons described in section 482 and net section 482 transfer price adjustments)
• Treas. Reg. §1.6038A-3 (record maintenance); Treas. Reg. §1.6038-4 (country-by-country reporting)
• IRS Notice 2025-4 (simplified and streamlined approach)
• Legislation (original language): https://cdn.aibidia.com/localization/United_States.pdf
• OECD Transfer Pricing Country Profile – United States (updated October 2025): https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/transfer-pricing/transfer-pricing-country-profile-united-states.pdf
• Additional sources: https://www.irs.gov/