Transfer Pricing Studies - How frequently does your company perform them?

Typically, companies will update a transfer pricing study every year (for benchmarking results) and prepare a full study (with functional interviews) every 3rd year. This boils down to a company's appetite for cost savings vs. the risk of an IRS adjustment. If there is no contemporaneous study for each year, then the IRS is within its rights to assess penalties on top of any adjustment they make, and they have become tougher about doing this. In fact, they are mandated to begin an audit by asking for the transfer pricing documentation.

If you have old documentation from a prior year and you feel confident that your transfer pricing will withstand audit scrutiny then it's your choice to take the risk. Just be sure your boss signs off, so as not to blame you later if things blow up in your face because a study doesn't guarantee that the IRS will see things in the same way.