UnitedHealth Group is challenging an Internal Revenue Service proposal that could significantly increase its taxable income over transactions involving a foreign subsidiary, putting the healthcare giant in the latest high-profile transfer pricing dispute between a US multinational and the tax agency.
The dispute covers UnitedHealth’s tax years from 2017 through 2020, according to company filings cited by Fortune. The IRS has proposed adjustments that would raise the company’s taxable income for each year and could pursue similar changes for subsequent tax years.
Why is the IRS examining UnitedHealth’s foreign transactions?
The case centres on transfer pricing, the way multinational companies set prices for transactions between related businesses operating in different countries.
Those prices can determine how profits are allocated between jurisdictions and, consequently, where taxes are paid. Under Section 482 of the US tax code, the IRS can adjust taxable income if it concludes that transactions between related entities were not priced appropriately.
UnitedHealth has not identified the foreign subsidiary involved, disclosed the transactions under review or put a figure on the additional tax the IRS is seeking.
The company said it disagrees with the proposed adjustments and intends to fight them.
"The company has previously disclosed the IRS examination and related tax matters in its public filings and believes its tax positions are properly supported," a UnitedHealth Group spokesperson said. The matters "remain subject to further review and discussions."
UnitedHealth says it will contest IRS proposal
In its August filing, UnitedHealth said it believes its tax positions are adequately supported and plans to “vigorously contest” the IRS's proposed adjustments.
The IRS notices are proposed adjustments, not final tax assessments or penalties. If the dispute cannot be settled during the examination process, UnitedHealth can pursue administrative appeals and potentially take the matter to court.
The size of the potential liability remains unclear. UnitedHealth reported $5.6 billion in gross unrecognised tax benefits at the end of 2025, up from $4.1 billion a year earlier, but said that figure covers all of its uncertain tax positions.
A company spokesperson said the $5.6 billion figure "should not be interpreted as the amount associated with the NOPAs."
IRS transfer pricing scrutiny targets US multinationals
The UnitedHealth dispute comes amid years of increased IRS scrutiny of how US-based multinationals allocate profits between domestic operations and overseas subsidiaries.
The IRS has pursued similar cases involving companies including Coca-Cola, Meta and Medtronic. Some disputes have involved billions of dollars and lasted for years.
Coca-Cola's transfer pricing case, for example, could ultimately involve about $20 billion in tax and interest. Meta is contesting an IRS claim seeking $15.89 billion in additional tax, interest and penalties for 2017 through 2019.
UnitedHealth's case remains unresolved, and neither the company nor the IRS has disclosed how much money could ultimately be at stake.
