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The LCN Interview: Josh Finfrock


Intercompany Agreements

11 August 2022

Josh Finfrock is a transfer pricing specialist with more than 17 years’ experience of working with multinational businesses. He started his career with a Big Four firm, and has since led transfer pricing for a top-10 national public accounting firm and served as an IRS economist. He is currently Director, Transfer Pricing at Weaver.

How did you get into tax and transfer pricing?

I was very interested in wealth management when I was in university. My transfer to a liberal arts college shifted my major from finance to economics. As part of the economics program, I took part in an international business-focused cohort and curriculum that culminated with a trip to Europe to meet with businesses in London, Brussels, Amsterdam, Frankfurt, and Prague.

The trip exposed me to international companies and NGOs, including meetings at the Headquarters of the European Commission in Brussels. Meeting with different executives and leaders operating with a global context really piqued my interest in how global business has become. After my international business semester, I was able to get an internship with the International Trade Commission in Washington, DC, which furthered my shifting interest from investment management to international business.

Because of these international-focused experiences and my major in economics, I ended up getting an opportunity to interview with PwC in Chicago for a transfer pricing position. I had never heard of transfer pricing before those interviews, and I had not previously thought of accounting firms as a career path for me. The melding of disciplines across economics, legal, and accounting with the international business context really drew my interest, and I started my career with PwC in Chicago. I have been in transfer pricing ever since.

I was with PwC in Chicago for about four years, and next moved home to Tennessee (I'm from Memphis). I joined a large local CPA [Certified Public Accountant] firm in the corporate and international tax practice. It is quite a transition from a Big Four firm in a big city office to a small firm in a small city like Memphis, but I really enjoyed the entrepreneurial opportunity it gave me to take on more responsibility early in my career. Over the next few years, we built up the transfer pricing team, finding clients all over the country. I did a lot of work in Texas, California, Tennessee, and Colorado, in addition to clients across dozens of other states.


So people were open to the idea of working with a small firm from another state?

They were. At that time there were fewer small to midsize CPA firms focusing on transfer pricing. It really gave us a unique niche to grow a specialty area, and also do other tax work for larger companies. We also got a lot of referrals from other small CPA firms and law firms, because as long as you weren't in their major market, they usually were very happy to build out a trusted network of specialists to help their clients.

It's changed a lot in the last ten to twelve years. Many more midsize CPA firms have focused transfer pricing teams, making it a more competitive space as more firms seek to offer businesses a one-stop shop for tax services.

Anyway, after almost three years, my small Tennessee firm was bought by CBIZ, which was a national firm. As we integrated with CBIZ, I found the national footprint helpful in growing the transfer pricing further. In 2013, I became the national leader of transfer pricing for CBIZ, and in 2018 I moved to Irvine, California. I led the national practice for a little over seven years, before working a year with the IRS as an exam economist with the Transfer Pricing Practice. The experience with the IRS was very interesting, though I quickly missed the variety and pace of public accounting and client service.


Did the reality at the IRS differ from your expectations?

Well, on the side I saw, which was the large business side of things, I knew going in that there would be challenges with aspects of bureaucracy and the technology being a little dated, but I was really impressed with the calibre of people in the transfer pricing practice. Also, I really noticed that the IRS took seriously this idea of ‘We are here to encourage compliance with the tax laws, not chase the biggest adjustments or tally up “wins” over taxpayers’. More than once someone in leadership reminded me ‘It is your job to apply the law as objectively as possible, it’s not personal’. That was definitely a different attitude than I expected.

It’s a good thing, if you're a taxpayer, to feel ‘OK, they're just trying to do their jobs and be as objective as they can’.


Were they sufficiently well resourced?

That's the other thing. While there were a lot of great people there, there's just not enough focused specialists to cover all the issues that are out there. And that does skew a little bit towards larger taxpayers. There's no mandate towards only dealing with larger companies, but it tends that direction just because large taxpayers are often involved in a more transactions and with more nuanced types of issues.

But the IRS also will establish campaign areas, where they find a concept or a new transaction type that is viewed as an area of potential abuse. And in that context, they may get into much smaller companies because they're going to look at everybody that has this pattern and try to evaluate if that is an area that needs to be more specifically addressed.

So they have to be very sensitive on resource allocation, and spend their time in places that are at higher risk for non-compliance. They don't have enough specialists to audit everybody, and they know transfer pricing issues are going to take a long time to work through. So they take a very risk-based approach. They're trying to review as many potential issues with revenue agents as possible, and then risk-assessing where the best opportunities are to assign specialist resources.


Did your experience at the IRS change the way that you did things after you left?

I certainly saw some very interesting transactions there (because audit tends to be the most interesting ones by nature of the risk-management approach). So that has given me a new insight as to what some of those risk points might be, how the IRS is going to look at a set of facts and assess whether it's worth spending much time with. That has really helped me think differently when I'm dealing with clients: how to approach documenting things or even planning how to set something up. A little insight into the other side’s way of thinking – and their procedures, and the constraints they’re working within – helps a lot.


Do you see the taxpayer and tax authority relationship as a fundamentally antagonistic one?

I can’t speak for all people, and there are some people that view it as very antagonistic. But I really felt like generally the IRS was trying to be very reasonable about the tone of getting into an audit with a company. And with some of the bigger companies that were used to that, their attitude would be like, ‘Hey, we know you have a job to do. We know we have a job to do. Let's do our jobs’. In a well-functioning relationship, both sides understand what needs to happen, that co-operation generally makes exam a more efficient and pleasant experience, and why it's important: that the government has an obligation to enforce compliance with the laws, and that big companies are obligated to prove out that they're playing by the rules.

Audits go much better for people that view it that way. Because they're more transparent earlier, they're less combative, less difficult, and the whole thing goes more smoothly. I think when you get people that are a bit scared, they may be a little more difficult in the beginning and maybe even in some ways it becomes a self-fulfilling prophesy: they create that challenging relationship themselves.

I didn't feel like the tone needed to be combative.


What initially attracted you to Weaver?

I met the guys leading the tax and international tax practices. I liked their approach and their vision for servicing their clients. They really fit what I was looking for: a midsize firm where I could bring value as a specialist and continue to help clients of any size to be practical in how they approach navigating transfer pricing complexities around the world. Of course, a midsize firm doesn’t have some of the resources a Big Four firm may have, but I have found that most companies are happiest when they are getting practical advice and responsive attention.

Weaver is a top 32 CPA firm, a full-service firm, with its largest presence in Texas, and with offices in Southern California, where I am based, and New York. They have an international tax practice here that's already well established, and I’m trying to come on board to build a transfer pricing practice that can continue to expand the breadth of offering to clients.

One of the partners I worked for early in my career, in Tennessee, really impressed upon me the value of going beyond just the technical side of what we do, and realising that clients are often just as interested in the customer service you provide. Clients expect correct advice, but I have found that clients are more commonly unhappy with their current advisor when they're not able to get responsive advice when they need it.

For Weaver, it’s a natural evolution of the international tax practice to offer transfer pricing internally instead of having to outsource it to someone else.


Are there big differences in the marketplace, such as above and below the threshold for country-by-country reporting?

Well, a $500 million company is still quite a large company, and can have a very international footprint. Smaller companies are having more and more complicated international operations because they have greater access to the market these days. Things might feel a little tense right now, and maybe trade seems different than it did two or three years ago, but the reality still is that the world is getting flatter, if you like.

Supply chains are still very global, so smaller and smaller companies are having to deal with those complex issues. They may not be sitting around thinking about the BEPS initiatives every day, but they are still feeling the trickledown effect of tax authorities applying more focus and resource to transfer pricing as a high-risk area for their government’s tax base.

Transfer pricing is a significantly higher-level issue for almost every tax authority in the world now than it was, say, five to seven years ago. We're going to have a lot more companies of all sizes that have a practical need to think about their exposure, to have a plan – a methodology and a policy – that makes sense, and to adequately document support for what they've done. It is important that when someone (tax authority, prospective acquirer, financial statement auditor, etc.) does want to look at it, they're ready to explain what they did and why they did it.


Looking back on your career to date, what achievement are you most proud of?

No question: it's the people that I've developed that I see having great careers. That's a very satisfying experience to see guys that worked with you, helped you, and made you successful over the years… when they are able to take what you exposed them to and some of the things you taught them, and run without you. Go work at other places and get their own experiences and keep growing their own careers. That's a very satisfying thing.


What would be your ideal job if you didn't work in transfer pricing?

I would enjoy the recruiting side of our business. I see people that are in specialist recruiting niche businesses, and I think that would be a really fun thing to do.


What do you do to relax? What are your hobbies?

I don't relax anymore! I have little kids. I've got three little boys and that's a lot of fun. And so whatever we're doing with them, that's what's going on. Given where we live, we enjoy to go to the beach with them. We're starting to get them into camping too. Very short trips at this stage!

We particularly enjoyed the Joshua Tree National Park, which is a great place to visit. It really is a unique landscape unlike anywhere else that I have ever been. Joshua trees are biggest and most noticeable plants in the area, and fairly unique to the area that is now a National Park.

You wouldn't want to get stuck there with no water for very long. But it's a beautiful place.


What is your biggest extravagance?

Living in Southern California! You're spending a lot of money to live here, but the weather and the significant amount of unique outdoor activities you can enjoy within close proximity are really hard to beat. California has done a really great job of protecting a lot of areas and developing an extensive State Parks network including many great beaches. We like to get an annual parks pass to make sure we try to see some new beaches and parks every year.


How would you describe yourself in three words?

Pragmatic. Curious. And I really enjoy variety. Is there a single word for that? Maybe ‘versatile’ or ‘adaptable’.


Who would be your ideal guests at a dinner party?

Warren Buffett would be there. Winston Churchill would be there. I would also have my grandfather there. He was one of my greatest role models, and he would enjoy meeting the others as well, for probably the same reasons that I would.

Warren Buffett seems to be the kind of guy I would like: practical. He’s been very successful, obviously, but he’s a fairly to-the-point and sensible kind of guy.

And Winston Churchill, the ups and downs of his life, and his leadership in a period like World War II are just fascinating. I like World War II history, and he's one of the most interesting figures to me from that period.


What advice would you give your younger self?

Probably to try more new and different things earlier. Because as I get older, the idea of changing things – different work experiences, different hobbies, different travel, things like that – just gets harder and harder to make the time. I would have certainly enjoyed taking a secondment to a foreign office during my time with PwC.

I don't regret anything about my path, but I think I might have taken myself a little too seriously in my twenties, when the potential consequences of taking risks that might not work out would have been much more easily recovered from.

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Article by
Paul O’Regan

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