US: New guidance under APA program

US: New guidance under APA program

The IRS today released two revenue procedures that provide guidance regarding the advance pricing agreement (APA) program, and that offer guidance on the process for taxpayers to request and obtain the assistance of the U.S. Competent Authority under the U.S. network of income tax treaties.

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Rev. Proc. 2015-41 [PDF 241 KB] is the IRS guidance with respect to advance pricing agreements (APAs).

 

The IRS also released Rev. Proc. 2015-40 [PDF 245 KB] as guidance on the process of requesting and obtaining assistance under U.S. tax treaties from the U.S. Competent Authority, acting through the Advance Pricing and Mutual Agreement Program and the Treaty Assistance and Interpretation Team of the Deputy Commissioner (International) Large Business and International Division of the Internal Revenue Service. 

The following provides an initial overview of the 80+ page Rev. Proc. 2015-41.

Rev. Proc. 2015-41

Rev. Proc. 2015-41 addresses the process of requesting and obtaining APAs from the Advance Pricing and Mutual Agreement program (APMA), and provides guidance on administration of executed APAs. 

Rev. Proc. 2015-41 updates and supersedes Rev. Proc. 2006-9, as modified by Rev. Proc. 2008-31 (which is also superseded). 

A proposed version of this revenue procedure was released for public comment in Notice 2013-79, and Rev. Proc. 2015-41 was issued following IRS and Treasury Department consideration of the public comments, and also reflects the continuing internal monitoring and modifications of APMA’s administrative procedures concerning effective administration of APAs.

As summarized by the IRS, the principal differences between today’s final revenue procedure and the proposed version in Notice 2013-79 are as follows:

  • Rev. Proc. 2015-41 clarifies that if APMA requires, as a condition of continuing with the APA process, that the taxpayer expand the proposed scope of its APA request to cover interrelated matters (interrelated issues in the same years, covered issues or interrelated issues in other years, and covered issues or interrelated issues in the same or other years as applied to other countries), APMA will do so with due regard to considerations of principled, effective, and efficient tax administration and only after considering the views of the taxpayer and the applicable foreign competent authority.
  • Rollback years may be formally covered within an APA. A rollback will be included in an APA when a rollback is either requested by the taxpayer and approved after coordination and collaboration between APMA and other offices within the IRS—or, in some cases, is required by APMA, after  coordination and collaboration with other offices within the IRS, as a condition of beginning or continuing the APA process.
  • Rev. Proc. 2015-41 provides expanded guidance as to when an APA request will be considered complete.
  • The required contents of APA requests that were specified in the Appendix of the proposed revenue procedure have been refined, but generally retained.
  • Taxpayers are required to execute consent agreements to extend the period of limitations for assessment of tax for each year of the proposed APA term, and the required consent could be either general or restricted. Rev. Proc. 2015-41 expressly provides that APMA will coordinate and collaborate with other offices within the IRS and with the taxpayer on the type of consent the taxpayer will be instructed to execute, which, if restricted, will follow standardized language provided by APMA. Rev. Proc. 2015-41 also provides that in certain instances, only general consents will be used.
  • Rev. Proc. 2015-41 increases the user fees for APA requests and provides that total user fees may be reduced for multiple APA requests filed by the same controlled group within a 60-day period.
  • Rev. Proc. 2015-41 substantially restructures the proposed guidance in Notice 2013-79 to improve clarity, readability, and organization.

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