A tax or transfer pricing dispute needs an economist once the question is whether an intercompany price, or the profit it left in each company, matches what unrelated parties would have agreed to. That question arises when an examination team proposes an adjustment supported by its own economist, when an appeal or a Tax Court petition is in view, when a state challenges related-party royalties or fees, and when a commercial, shareholder, or divorce claim turns on a price set between affiliates. Counsel considering an economist should start with the intercompany agreements and the documentation for the years at issue, because the analysis starts there.
Checklist
Identify the controlled transactions at issue: sales of goods, services, licenses of intangibles, or intercompany loans
Gather the intercompany agreements, their amendments, and the transfer pricing documentation for each year at issue
Establish the forum and its stage: examination, appeals, a Tax Court petition, a refund suit, a state tax appeal, or a civil case
Note any notice of proposed adjustment, examination report, or opposing analysis already in hand
Confirm whether an advance pricing agreement or a mutual agreement request covers any of the years
Questions to ask the economist
Does the dispute turn on the method, the comparables, or the facts of what each company did?
Can the group's own documentation be defended as written, or does the analysis need to be rebuilt?
Which records do you need first to give a preliminary view of the arm's length range?
How would the analysis differ if the case goes to the Tax Court rather than a refund suit or a commercial court?
Timeline
Two to three weeks from the first call to a preliminary view of the issues, once the agreements, the documentation, and the opposing position are in hand. A full analysis follows the retention and records phases described on the services pages.
Required documents
Intercompany agreements, amendments, and side letters for the years at issue
Transfer pricing documentation and the transfer pricing policy for each year
Legal-entity financial statements and general ledger detail of the intercompany accounts
Any notice of proposed adjustment, examination report, or opposing expert analysis
Common pitfalls
Treating the group's transfer pricing documentation as the answer to the question the dispute asks, rather than as one record to be tested
Waiting until the disclosure deadline, when there is no longer time to rebuild the delineation and the comparables
Overlooking the consequences of the same adjustment in a foreign jurisdiction or a state, which can change how the dispute is resolved
When does a transfer pricing issue justify a testifying economist?
When the dispute will be decided on an economic analysis rather than on a reading of the documents alone: an adjustment the examiners support with their own economist's report, an appeal or a petition in which the method or the comparables are contested, or a civil claim in which an intercompany price decides the amount at issue. A narrow dispute over whether a payment was made can often be resolved from the records without an expert.
Can the economist review the documentation before a dispute becomes formal?
Yes. A review during the examination can show whether the documentation supports the method it selected, where an examiner or an opposing expert is likely to press, and which records would answer the questions, and it can be done as consulting work before any decision about a testifying expert is made.
What does a preliminary transfer pricing review cost relative to a full report?
A preliminary review is a limited engagement built from the agreements, the documentation, and the financial statements, so it costs far less than a full analysis, which adds the functional analysis, the comparables search, the range, and the written report. The engagement letter states the fee basis for each phase, and counsel can stop after the review.
References
Internal Revenue Service. (2020). Transfer pricing examination process (Publication 5300, Rev. 9-2020). U.S. Department of the Treasury. irs.gov
Treas. Reg. sec. 1.482-1 (allocation of income and deductions among taxpayers). ecfr.gov
Internal Revenue Service. (n.d.). Transfer pricing documentation best practices frequently asked questions (FAQs). U.S. Department of the Treasury. Retrieved October 5, 2026. irs.gov