In July 2026, Amgen agreed to pay USD 74 million, subject to court approval, to settle a class-action lawsuit filed by shareholders who accused the company of delaying the disclosure of a tax contingency of up to USD 10.7 billion. The origin of this liability is a Transfer Pricing dispute with the U.S. Internal Revenue Service (IRS) regarding the earnings/profit allocated to its manufacturing subsidiary domiciled in Puerto Rico.
Case shows something that is often left out of technical analysis: a Transfer Pricing position is not only defended before the tax authority. During the course of the dispute, it must also be clearly explained to investors, auditors, and regulators.
What is Amgen discussing with the IRS?
The dispute centers on the allocation of profits between Amgen’s U.S. entities and its Puerto Rico operation. In its SEC quarterly report (Form 10-Q) for the period ended June 30, 2026, Amgen states that in 2017 it received a Revenue Agent’s Report (RAR) and a modified RAR from the IRS for the 2010–2012 tax years, proposing adjustments that “primarily relate to the allocation of profits” between those entities.
The amounts became known in stages:
| Fiscal year | IRS Claim | Date on which Amgen reported |
| 2010–2012 | USD 3.6 billion in taxes, plus interest | August 3, 2021 |
| 2013–2015 | USD 5.1 billion in taxes, plus nearly US$2 billion in fines, plus interest | April 27, 2022 |
Amgen challenged both claims before the U.S. Tax Court, which consolidated the cases. According to the 10-Q as of June 30, 2026, the trial began on November 4, 2024, and concluded on January 17, 2025; the parties subsequently filed post-trial briefs. The company states that it does not expect a decision before late 2026 or early 2027.
What did the shareholders allege? How did the lawsuit end?
The investors did not dispute whether Amgen’s Transfer Pricing practices were at arm’s length. They disputed when and how the company reported the size of the claim. The lawsuit, Roofers Local No. 149 Pension Fund v. Amgen Inc. (23 Civ. 2138, U.S. District Court for the Southern District of New York), covered those who purchased shares between July 29, 2020, and April 27, 2022.
During that period, Amgen disclosed the existence of the dispute but described the adjustments using terms such as “significant” and “substantial,” without providing specific figures. When it disclosed the amounts, the stock fell 6.5% on August 4, 2021, and 4.3% on April 28, 2022.
On September 30, 2024, Judge John P. Cronan denied Amgen’s motion to dismiss the lawsuit. He held that, when discussing the dispute, the company had a duty to tell the full story, and that describing the amounts merely as “significant” or “substantial” rendered the disclosure neither “clear” nor “complete.” The court also compared the claim to the company’s own metrics: it amounted to nearly three times its equity and exceeded its annual net income.
In July 2026, the parties filed a USD 74 million settlement agreement, pending court approval. Amgen denied any improper conduct and maintained that the lawsuit lacked merit.
Why is a Transfer Pricing dispute also a financial disclosure risk?
Because accounting and tax authorities measure different things. The IRS’s claim represents the maximum amount the authority intends to collect. The accounting provision, on the other hand, reflects what the company estimates it will likely pay. Both figures can be legitimate and yet still be very far apart.
In the United States, that estimate is governed by the standard for uncertain tax positions (ASC 740). In Latin American countries that apply IFRS, the reference is IFRIC 23, Uncertainty over Income Tax Treatments, effective as of January 1, 2019. This standard requires assessing whether it is probable that the tax authority will accept the tax treatment and, if not, reflecting the uncertainty using the most probable amount or the expected value.
The Amgen case highlights where the risk lies: not in recording a provision smaller than the claim, but in failing to explain the difference between the two when it is material. As of June 30, 2026, Amgen reported a noncurrent liability for uncertain tax positions of USD 2,844 million, which corresponds to all of its uncertain positions and not just those in Puerto Rico. That figure, on its own, does not tell investors how much the IRS is claiming.
In this context, the Transfer Pricing analysis ceases to be merely a compliance document. It becomes the technical basis by which the company justifies to its auditors why its position is defensible and what range of outcomes is reasonable.
What does this mean for groups with operations in Latin America and the United States?
The lesson isn’t limited to publicly traded companies. Any group facing an ongoing Transfer Pricing audit has stakeholders who expect a clear figure: the board of directors, external auditors, the banks financing the group, or a potential buyer in a transaction. If the company cannot explain the range of its exposure, others will do so on its behalf.
Therefore, when a tax authority proposes an adjustment, the transfer pricing documentation must allow the company to answer two distinct questions. The first is technical: Why is the taxpayer’s position arm’s-length? The second is financial: What range of outcomes is reasonable if the dispute is resolved wholly or partially against the taxpayer? A study that answers only the first question leaves management without a basis for estimating and disclosing the second.
The case also illustrates the cost of ambiguity. Amgen has not lost its dispute with the IRS, which remains pending in the Tax Court. Even so, it has already agreed to pay USD 74 million for the way it reported the matter.
At TPC Group, in every transfer pricing dispute analysis, we evaluate both: the technical strength of the taxpayer’s position and the reasonable range of exposure to the proposed adjustment. The objective is to ensure that the defense presented to the tax authority and the information provided to auditors and investors are based on the same technical foundation.