Transfer Pricing in Transition: Mitigating State Tax Risk While Preserving Value

This article was originally published in the September/October 2025 edition of Tax Executive Magazine.

Although states experienced significant tax revenue growth during the COVID-19 pandemic, many experienced revenue declines in fiscal year 2024, some for the second consecutive year. In response to economic downturns, state governments often intensify audit activity to raise revenue. One major area of focus for state tax audits has been, and will continue to be, transfer pricing, with states examining whether transactions between affiliated entities are conducted at arm’s length, an evaluation that may also involve examining the transaction’s economic substance and business purpose.

BDO’s Shirley Wei, Jeremy Dukes, and John Damin provide full details in this article for Tax Executive Magazine.