USA Law and Practice Contributed by: Kevin Spencer, Kim Marie Boylan, Nicholas Wilkins and Christina Culver, White & Case LLP
6.2 Joint Audits In certain circumstances, the USA will co-operate with other tax authorities to conduct a joint audit. Although there is no widespread framework for joint audits in the USA, the IRS will participate in joint audits that involve transfer pricing, multinational enterprises (MNEs) and other cross-border tax issues under the established rules for those issues. The USA co-operates in joint tax audits, particularly through frameworks such as competent authority procedures, advance pricing agreements (APAs), and multilateral agreements such as the OECD’s base erosion and profit shifting (BEPS) framework. 6.3 Simultaneous Controls The IRS has a Simultaneous Examination Program under which it will participate in simultaneous audits with other tax authorities. These are independent and separate audits, during which the IRS and the other tax authority will exchange information pursuant to the applicable treaty. There is no standard arrange - ment for these simultaneous examinations, which are instead conducted pursuant to working arrangements agreed between the particular Competent Authorities. 6.4 International Compliance Assessment Programme (ICAP) The USA participates in the OECD International Com - pliance Assessment Programme (ICAP). 7. Advance Pricing Agreements (APAs) 7.1 Programmes Allowing for Rulings Regarding Transfer Pricing The USA created the APA programme. The pro - gramme is well established for unilateral (a single taxpayer and the IRS), bilateral (the taxpayer, the tax - payer’s affiliate, the IRS and a foreign tax authority) or multilateral (the taxpayer, the taxpayer’s affiliate(s), the IRS and multiple foreign tax authorities) agreements. An APA identifies the entities and transactions that are covered and can be limited to select portions of a taxpayer’s operations. The APA process is set out in Revenue Procedure 2015-41.
7.2 Administration of Programmes The APA programme is administered by the Advance Pricing and Mutual Agreement Program (APMA) group. The APMA is overseen by the Director of Treaty and Transfer Pricing Operations, who reports to the Deputy Commissioner of the Large Business and International (LB&I) Division. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures The APA programme and mutual agreement proce - dures (MAPs) are both administered by the APMA and the same IRS personnel staff both programmes to resolve transfer pricing matters. The APMA is com - prised of team leaders, economists, managers and assistant directors. 7.4 Limits on Taxpayers/Transactions Eligible for an APA APAs are available to US taxpayers for “coverable issues”. Coverable issues include issues arising under Section 482 of the Code and other issues impacted by transfer pricing principles. Examples of other issues include: • issues related to Section 637 (d) of the Code (rules for certain repatriations of intangible property); • competent authority issues arising under the busi - ness profits and associated enterprises articles of US tax treaties; • the determination of the income effectively con - nected with the conduct of a trade or business within the USA; and • ancillary issues such as interest and penalties to the extent the APMA has authority under the Code or a US tax treaty. The APMA’s acceptance of a taxpayer’s request for an APA is discretionary. In April 2023, the IRS issued additional internal guidance instructing APMA per - sonnel on how to evaluate whether to accept an APA or renewal request. The guidance provides for a new optional pre-submission review process designed to identify roadblocks to successfully concluding an APA, and encourages taxpayers to obtain prelimi - nary advice from the IRS as to whether an APA is an appropriate resolution to a taxpayer’s transfer pricing issues.
294 CHAMBERS.COM
Powered by FlippingBook