February 9, 2023
IRS plans to update guidance on Advance Pricing Agreements and competent authority assistance
Kate Kerrigan, an attorney at the IRS's Office of the Associate Chief Counsel (International), said at a Practising Law Institute event on January 31, 2023, that the IRS is in the process of drafting updated guidance on Advance Pricing Agreements (APAs) and requests for competent authority assistance.1 Kerrigan said that the IRS is revising the guidance to reflect its recent case experience and is still deciding whether to seek public comments on the revised guidance.
In 2015, the IRS released Revenue Procedures for APAs (Revenue Procedure 2015-41), and Mutual Agreement Procedures (MAPs) (Revenue Procedure 2015-40). APAs are written agreements between multinational corporations and the IRS (unilateral APAs) or between a taxpayer and the IRS and a foreign treaty partner (bilateral APAs) on the transfer pricing to apply in future transactions between related parties. MAPs are dispute resolution procedures laid out in various US treaties through which the IRS and the affected foreign competent authority can resolve international tax disputes retroactively.
Consistent with other IRS officials' previous statements, Kerrigan confirmed that the IRS is also reviewing the selection process for cases included in the APA program (see Tax Alert 2022-1597 on the potentially increased selectivity of the APA program).
The IRS's prospective redrafting of the above-mentioned revenue procedures should provide taxpayers further clarity, and hopefully efficiency, going forward. Taxpayers should pay attention to these revisions while keeping in mind that every dispute concerning an APA or a MAP depends on the facts of the particular case.
Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor
1 Isabel Gottlieb, IRS Reviewing Advance Pricing Agreement Guidance, Update Planned, Daily Tax Report (January 31, 2023).