USA Law and Practice Contributed by: Kim Marie Boylan, Nicholas Wilkins, Christina Culver and Kiara Williams, 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, mul - tinational 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 pric - ing agreements (APAs), and multilateral agree - ments such as the OECD’s base erosion and profit shifting (BEPS) framework. 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 sin - gle taxpayer and the IRS), bilateral (the taxpayer, the taxpayer’s affiliate, the IRS, and a foreign tax authority), or multilateral (the taxpayer, the tax - payer’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 tax - payer’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 Pro - gram (APMA) group. The APMA is overseen by the Director of Treaty and Transfer Pricing Oper - ations, who reports to the Deputy Commissioner of the Large Business and International (LB&I) Division.
IRS asserts an adjustment to a transaction, the courts may determine an arm’s length allocation even if that would result in a taxpayer-favourable adjustment. 5.2 Secondary Transfer Pricing Adjustments The US transfer pricing regulations provide rules for both correlative adjustments (adjusting the results for other parties to the transaction adjust - ed by the IRS to match that adjustment) and conforming adjustments (adjusting accounts to address the portion of a payment that was not at arm’s length). There are several methods available to the USA to further co-operation in the sharing of taxpayer information across jurisdictions. The USA has signed bilateral tax treaties with numerous coun - tries, creating a vast treaty network. These trea - ties allow for the exchange of taxpayer informa - tion (eg, information related to income, assets, and financial transactions) between the USA and agreeing countries. Further, tax information exchange agreements (TIEAs) allow the USA to request information from and send information to other countries on individuals or entities suspected of evading taxes. 6. Cross-Border Information Sharing 6.1 Sharing Taxpayer Information Additionally, the USA can also operate through multilateral treaties such as the Convention on Mutual Administrative Assistance in Tax Matters and the Hague Evidence Convention.
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