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In this update on recent transfer pricing trends in North America, NERA Senior Vice President Dr. Harlow Higinbotham and Vice President Dr. Stuart Harshbarger examine the front end of the new US service fee regulations, which provide updated guidance relating to controlled services transactions and to the allocation of income attributable to intangible property. The authors argue that, to comply with the new regulations, taxpayers must now consider a wider, less immediately apparent range of internal service-providing activities. Those rendered activities that provide significant and measurable benefits to recipients require the payment of arm’s length service fees. Thus, a taxpayer’s ability to affirm or deny the presence of significant and measurable benefits for compliance and tax planning purposes is directly related to the quality of its accounting and financial record-keeping systems.