UnitedHealth Group is challenging an Internal Revenue Service (IRS) proposal to raise its taxable income related to transactions with a foreign subsidiary. This dispute covers tax years from 2017 to 2020, as noted in company filings and reported by Fortune. The IRS has suggested it may make similar changes for later years.
Key Details
The case focuses on transfer pricing, which decides how profits are shared between different locations. Under Section 482 of the U.S. tax code, the IRS can change taxable income if it finds that transactions between related companies were not priced correctly. UnitedHealth has not revealed the name of the foreign subsidiary or the specific transactions being examined. It also has not provided an estimate of the extra tax the IRS is seeking.
In its August filing, UnitedHealth said it disagrees with the IRS's proposed changes and plans to "vigorously contest" them. A company spokesperson stressed that its tax positions are well-supported. They also noted that the matters are still under review and discussion. The IRS's proposed changes are not final tax assessments or penalties. If the dispute is not resolved, UnitedHealth can seek administrative appeals or take the matter to court.
Background
This case is part of a larger trend where the IRS is paying more attention to how American multinationals share profits between their U.S. operations and foreign subsidiaries. Experts point out that similar disputes have involved major companies like Coca-Cola and Meta, leading to different results.
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The ongoing dispute could affect UnitedHealth's financial outlook if the IRS's changes result in a large increase in taxable income. Investors will be watching for the outcome of this case, as it may impact the company's tax liabilities and overall profitability in future quarters.