Specialty Tax Spotlight — Notice 2025-4 and U.S. Adoption of Amount B

Specialty Tax Spotlight

IRS Notice 2025-4 is a pivotal development related to U.S. alignment with Organisation for Economic Co-operation and Development’s (OECD) Amount B. In this episode of Specialty Tax Spotlight, Sean Muller and Josh Finfrock explore this trending topic. As countries work toward simplifying how profits from distribution activities are taxed, Weaver offers a grounded look at how U.S. companies — especially in the middle market — can prepare for this shift.

Key Points:

• Amount B provides a simplified method for pricing baseline distribution functions under OECD Pillar 1.
• IRS Notice 2025-4 foreshadows integration of Amount B into U.S. transfer pricing rules under Section 482.
• Qualification requires significant documentation, modeling and a rigorous eligibility review.

 
Amount B, a component of the OECD’s broader base erosion and profit shifting (BEPS) 2.0 initiative, offers both large and mid-market multinationals a new tool for managing transfer pricing for cross-border distribution activities. As Josh explains, the intent is to simplify and standardize profit attribution to baseline distribution activities — cutting through some of the ambiguity that surrounds traditional transfer pricing methods.

Josh emphasizes that although Amount B introduces clarity in execution, its real value lies in the degree of audit defensibility it provides. “Once you qualify,” Josh notes, “you get a very definitive answer.” But this outcome requires extensive modeling, risk analysis and alignment with OECD guidelines to determine eligibility and benefit.

With the IRS poised to recognize Amount B as an available method under Section 482 regulations, companies should evaluate its appeal against legacy pricing methods. This discussion reveals that OECD global tax initiatives are no longer the exclusive domain of the largest global tech firms. Amount B could become a game-changer for middle-market companies across industries whose cross-border activities qualify as baseline marketing and distribution activities.

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