The IRS is scrutinizing how UnitedHealth moved money through foreign subsidiaries—and whether it underpaid taxes

UnitedHealth Group is contesting an Internal Revenue Service proposal to increase its taxable income over how it priced transactions with one of its foreign subsidiaries, a dispute the company disclosed in a quarterly filing in May and repeated in its August filing. 

The notices cover transactions between UnitedHealth and a foreign subsidiary from the 2017 through 2020 tax years, according to the May filing. The IRS is seeking to “significantly increase taxable income” for each of those years, and could seek similar adjustments for later years.

UnitedHealth is not conceding. In its August filing, the company said it believes its tax positions are properly supported and plans to “vigorously contest” the IRS’s proposed adjustments.

This dispute comes amid a broader push from the IRS that began more than a decade ago to scrutinize how American multinational corporations allocate profits between their U.S. operations and foreign subsidiaries.

“This is quite common because the IRS has, since the Obama administration, increased its scrutiny of transfer pricing by U.S. based multinationals who are trying to shift profits out of the U.S. to their foreign subsidiaries,” Reuven S. Avi-Yonah, the Irwin I. Cohn Professor of Law at the University of Michigan Law School, told Fortune.

The agency has fought similar battles with some of corporate America’s biggest names, including Coca-Cola, Meta and Medtronic. Those cases have produced very different outcomes.

“The IRS has won some of these cases and lost others and the sums involved are usually in the billions,” Avi-Yonah said.

UnitedHealth emphasized........

© Fortune