August 22, 2014

Connecticut Hires Chainbridge Software LLC for Transfer Pricing Training

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On July 15, 2014, the Connecticut Department of Revenue Services awarded Chainbridge Software LLC a contract worth $50,000 for on-site and remotely supported training for transfer pricing audits. Chainbridge is infamous for being the contract auditor hired by the District of Columbia Office of Tax and Revenue to manufacture transfer pricing-based assessments. In 2012, the District of Columbia Office of Administrative Hearings denounced Chainbridge’s methodology in Microsoft Corp. v. Office of Tax and Revenue. Numerous other cases are in litigation following D.C.’s refusal to abide by that decision.

We have reviewed the Connecticut request for proposal drafted by the Department of Revenue Services. While we do not yet have access to the final contract, it will likely be similar to the request for proposal. The solicitation requests two to three days of training per week over the course of three months. According to the RFP, Chainbridge will teach the Department’s employees about transfer pricing principles and methodologies, taxpayer planning, economic analysis of transactions between related parties, pre- and post-audit planning, and other related topics.

In light of the Connecticut Department of Revenue Services’ expected contract with Chainbridge, we anticipate that the Department will become more active in evaluating transfer pricing. What is not certain is whether the analysis will follow the debunked method still being used in D.C.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.