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8.1 Summary of Key Facts 117in a secure and timely fashion, and (c) ensuring that all legal and client-specificdisclosure requirements are fully satisfied.After the initial launch, the Account Management Group handles all technical,financial, marketing, customer service and other aspects of ongoing relationshipswith clients. Payment or fee issues may arise, for example, if clients and USPhave different assessments of the increase in sales volume attributable to the directmarketing program (although both assessments will be based on the same negotiatedmetric). USP’s Account Management Group is also in regular contact withits clients’ marketing staffs to assess the effectiveness of its direct marketing campaigns,determine how to modify the program or its presentation so as to optimizeresponse rates, etc.8.1.3 USP: Marketing GroupUSP’s Marketing Group is divided into two subgroups. The first of these subgroupsis responsible for testing and maximizing response rates to the data solicitationspage. It does so by varying the format of the page and the range of informationrequested, and developing and evaluating specific rewards. The other subgroup consistsof copy writers, graphic artists and production teams. These individuals areresponsible for designing and producing USP’s data solicitations pages and customizeddirect marketing messages.8.1.4 USP: Information Technology GroupUSP’s IT Group has developed all of its core software internally, which has thefollowing functionality:1. IT tools that support the Marketing Group’s online data solicitation and testingprocedures, parse response rates by page design, content and reward, and estimatethe volume of purchases attributable to USP’s direct marketing programs;2. Software that resides on USP’s server; and,3. Software that facilitates online communications with clients’ customers.USP’s IT Group is constantly in the process of maintaining, testing and upgradingits systems and building in new functionality. The Company’s IT infrastructural andmaintenance costs include Oracle license fees, hardware, hosting and telecom costs,voice/data systems costs, network engineering, etc.8.1.5 USP: Customer ServiceUSP has a large Customer Service Group, which responds to clients’ and customers’inquiries regarding safeguards in place to maintain the confidentiality of personaldata, the use of such data, rewards, measures of program effectiveness, etc.
118 8 Replication of Internet-Based Business Model8.1.6 USP: LegalUSP’s Legal Group handles a wide range of issues, among them (a) drafting contractswith clients, (b) handling contentious employment matters, (c) reviewing andapproving data solicitations pages, marketing materials and copy, (d) managingcompliance issues, and (e) handling litigation.8.1.7 USP: Finance, <strong>Tax</strong>, Internal Audit and Back-OfficeUSP performs financial planning and analysis, prepares financial statements, budgetsand forecasts, assesses the adequacy of financial controls, and reviews technicalaccounting issues as needed.8.1.8 FSFS was established in late 2007. The Managing Director of FS, who was hired atabout the same time, spent several months at the facilities of USP to familiarizehimself with its business model and organizational structure. FS has effectivelyreplicated USP’s business model in one European country, although certain supportfunctions that are not customer-facing have remained centralized in USP. Moreparticularly, FS has Business Development, Account Management and MarketingGroups. USP performs customer service, legal, finance, tax, internal audit and backofficeservices on behalf of FS.The Managing Director of FS has weekly conference calls with his U.S. counterpartand monthly calls with the Senior Vice Presidents of USP. These discussions arelargely for purposes of providing status updates and to obtain advice on operationalissues that have arisen.8.2 Transfer Pricing IssuesUSP and FS engage in intercompany transactions in intangible assets and services.More particularly, USP has transferred the following intellectual property to FS:1. An established business model. Elements of USP’s business model are patented,and FS has replicated this model.2. Proprietary software. To a large extent, USP’s internally developed software isdirectly transferable to the European market, although its IT Group has made certainminor modifications, and anticipates having to further customize elementsof its software for the European market as FS’ operations grow.3. Trademark and name. FS will have rights to use USP’s trademark and name inthe European market.
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Transfer Pricing and Corporate Taxa
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Elizabeth KingBeecher Consulting, L
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AcknowledgementsI have worked with
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xContents3.5.3 SummaryandPracticalI
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xiiContents8.3 Analysis Under Exist
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Part IEconomic and Accounting Rates
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8 2 Economic vs. Accounting Profit
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12 3 Overview and Critique of Exist
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Chapter 4Some Alternative Approache
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4.1 Modified Comparable Uncontrolle
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4.6 Franchise Model 63relationship
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Chapter 13Concluding ObservationsTh
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13 Concluding Observations 185The r
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Chapter 1IntroductionNational tax a
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2 1 Introductionof specific transfe
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4 1 Introductionvenues. The propose
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188 IndexBusiness Judgment Rule, 28
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190 IndexFamily-owned, 81FASB, see
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192 IndexNumerical standards, 51-52
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194 IndexSwing lines, 149, 154, 158
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