The IRS is still auditing 2017: UnitedHealth's transfer-pricing fight is a reserving problem

UnitedHealth Group is contesting an Internal Revenue Service proposal to increase its taxable income over how it priced transactions with one of its foreign subsidiaries, a dispute it disclosed in a May quarterly filing and repeated in August ^[1]. The notices cover the 2017 through 2020 tax years and the agency has signalled it could seek similar adjustments for later years ^[2][3], which is the part operators should sit with: a pricing policy set roughly nine years ago is still an open liability ^[18][20].

What the filings do not say is most of it. Neither names the subsidiary, says where it is based, describes the transactions at issue, nor attaches a dollar figure to what the IRS wants ^[6]. UnitedHealth says its tax positions are properly supported and that it will "vigorously contest" the proposed adjustments ^[4]; a spokesperson told Fortune the matters "remain subject to further review and discussions" ^[5]. So the exposure is unsizable from the outside, and four tax years are formally in play ^[18].

The mechanism is old and blunt. Section 482 lets the IRS adjust taxable income where it concludes transactions between related businesses were not fairly priced ^[8]. The rule states easily and applies badly, because there is often no unrelated third party doing the same deal to compare against, so two competent parties can read the same intercompany ledger differently and spend years arguing ^[9]. A Notice of Proposed Adjustment is issued during an examination and is a proposal, not a final determination, assessment or penalty; a company that disagrees can contest administratively, and unresolved disputes can reach court ^[7].

This is not an outlier event. Reuven Avi-Yonah of the University of Michigan Law School told Fortune the IRS has increased scrutiny of transfer pricing by U.S. multinationals shifting profits offshore since the Obama administration, and that the agency has won some of these cases and lost others, with sums usually in the billions ^[10][11]. The agency has run similar fights against Coca-Cola, Meta and Medtronic, with very different outcomes ^[12]. Avi-Yonah said many major disputes have centred on intellectual property transferred to foreign subsidiaries, while cautioning he does not know enough about UnitedHealth to say what is being examined here ^[16].

The reserving arithmetic is where this gets uncomfortable. Coca-Cola's dispute could ultimately involve roughly $20 billion in tax and interest: it has already paid $6 billion covering 2007 through 2009 while it appeals, and estimates roughly $14 billion more for 2010 through 2025 if the adjustments upheld by the Tax Court stand ^[13]. Its reserve stood at $529 million as of July 3, 2026 ^[14], about 2.6 percent of that potential total ^[17]. Meta, meanwhile, is contesting a notice asserting $15.89 billion in additional tax plus interest and penalties for 2017 through 2019, primarily transfer pricing with foreign subsidiaries, and petitioned the Tax Court in December 2025 ^[15]. Meta's contested years sit entirely inside UnitedHealth's window ^[19].

Watch three things: whether the IRS extends the notices past 2020 as it said it might ^[3]; whether UnitedHealth's dispute moves from examination to Appeals or a Tax Court petition ^[7]; and whether any quarterly filing ever puts a number, a jurisdiction or a transaction type on it ^[6].