UnitedHealth Group Contests IRS Demand to Increase Taxable Income Over Foreign Subsidiary Pricing

UnitedHealth Group Inc. is contesting Internal Revenue Service proposals that seek to significantly increase the company’s taxable income following an examination of pricing on transactions with an undisclosed foreign subsidiary.

The notices cover transactions between UnitedHealth and a foreign subsidiary from the 2017 through 2020 tax years, according to the May filing. The IRS is seeking to “significantly increase taxable income” for each of those years, and could seek similar adjustments for later years.

UnitedHealth is not conceding. In its August filing, the company said it believes its tax positions are properly supported and plans to “vigorously contest” the IRS’s proposed adjustments.

The healthcare conglomerate detailed the administrative notices in its Form 10-Q quarterly reports filed with the U.S. Securities and Exchange Commission (SEC). While UnitedHealth disclosed that the adjustments stem from intercompany transfer pricing under Section 482 of the Internal Revenue Code, the filings omit the name of the foreign subsidiary, its geographic location, the exact nature of the intercompany transactions, and the specific dollar amounts demanded by tax examiners.

Under Section 482, the IRS maintains statutory authority to reallocate gross income, deductions, credits, or allowances between related entities to ensure transactions reflect arm’s-length pricing. A Notice of Proposed Adjustment represents an initial finding by IRS field auditors during an ongoing examination rather than a final tax assessment or legally binding demand for payment.

UnitedHealth emphasized that the dispute remains unresolved through the audit stage. “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 told Fortune, adding that the matters “remain subject to further review and discussions.”

The dispute reflects a sustained enforcement push targeting corporate intercompany transactions. “This is quite common because the IRS has, since the Obama administration, increased its scrutiny of transfer pricing by U.S. based multinationals who are trying to shift profits out of the U.S. to their foreign subsidiaries,” Reuven S. Avi-Yonah, the Irwin I. Cohn Professor of Law at the University of Michigan Law School, told Fortune. Avi-Yonah noted that transfer pricing disputes typically involve substantial financial stakes, stating, “The IRS has won some of these cases and lost others and the sums involved are usually in the billions.”

In its regulatory disclosures, UnitedHealth reported that its gross unrecognized tax benefits reached $5.6 billion at the end of 2025, up from $4.1 billion a year earlier. However, the company cautioned against interpreting that total as the exposure for the current audit. A UnitedHealth spokesperson stated that the $5.6 billion reserve encompasses all uncertain tax positions across the company’s global business units and “should not be interpreted as the amount associated with the NOPAs.”

If field examiners and UnitedHealth fail to resolve the proposed adjustments during the examination phase, the company can petition the IRS Independent Office of Appeals for administrative review. If no administrative settlement is reached, the IRS would issue a formal Notice of Deficiency, allowing UnitedHealth 90 days to litigate the dispute before the U.S. Tax Court prior to paying any assessed liability.