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New IRS template for requesting advance pricing agreement (APA)

New IRS template for requesting APA

The IRS Advance Pricing and Mutual Agreement (APMA) program today announced a new template for taxpayers to use in requesting an advance pricing agreement (APA), pursuant to Rev. Proc. 2015-41.

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According to an item posted on the APMA webpage (updated 11 May 2018), the new APA template will facilitate the submission and review of APAs. Taxpayers with pending APA requests are instructed to contact their assigned APMA team leader(s) about whether to use this template in their cases.

The new APA template and related instructions reflect changes that were made in response to comments received about draft versions issued by the IRS in September 2017. The new APA template allows some editing by taxpayers “in appropriate cases.” 

Today’s release also states that “…to avoid confusion, the revised template repeats in section 4 of Appendix A the explanation of the sense in which ‘Tested Party’ is used.” Also, the revised APA template reflects that when an APA covers the pricing of transactions between related entities, the covered issue is to be described as the pricing for the transaction—rather than simply as the transaction—and the description of the two covered issues in the example (section 3 of Appendix A) is modified to reflect this standard.

The APMA has requested comments concerning the following:

APMA removed proposed section 7 of Appendix A, Effect of Certain Adjustments by Tax Authorities and Resulting Competent Authority Proceedings. This section addressed whether a covered method should be re-applied to take into account certain adjustments between an APA-covered entity and a non-APA-covered entity, and any resulting competent authority resolution, that would affect the testing of financial results under the covered method. APMA believes that this question needs further study. Comments are invited on the frequency with which this question might arise, the need for provisions to address this question, and what provisions or choice of provisions (including those in the removed section of the proposed template) might be appropriate.

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