Vanguard Owes $35B In Tax Over Transfer Pricing: Report

Law360, New York (September 24, 2015, 2:35 PM EDT) -- A report submitted to federal authorities in support of a whistleblower claims Vanguard Group Inc. owes $34.6 billion in taxes because it undercharges its affiliated mutual funds for investment advisory services, resulting in a reduced federal tax liability.

The report, prepared by Reuven S. Avi-Yonah of the University of Michigan, says Vanguard's practices are not in compliance with transfer pricing regulations promulgated by the Internal Revenue Service and the U.S. Department of the Treasury, which dictate the prices that companies can charge to related companies. Under those rules, services must be priced at arm's length, or as if between unrelated companies,...

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