The IRS announced Sept. 25 that it would reorganize the Advance Pricing and Mutual Agreement (APMA) program into three groups with a goal to improve internal processes, resolve disputes and increase taxpayer service.
The APMA program handles taxpayer requests for advance pricing agreements (APAs) and provides assistance with respect to transfer pricing and related disputes under the mutual agreement procedures (MAP).
Each of the three new groups under APMA, known as Groups A, B and C, will be comprised of two teams. Each of the six teams will be comprised of team leaders and economists, which, the IRS believes, will foster collaboration and optimize economist involvement. Under the new structure, country inventories will be aligned at the group level and managerial responsibility for a given APA or MAP will rest with a team leader.
Taxpayers should assume that an ongoing case will continue to be handled by its current APMA team. Existing cases will be transferred only as necessary or only to the extent that doing so will not significantly disrupt the MAP or APA process.
The IRS’s reorganization of the APMA program comes on the heels of the Large Business and International (LB&I) division’s issuance of Publication 5300, “Transfer Pricing Examination Process,” (TPEP) which, in conjunction with Publication 5125, “Large Business & International (LB&I) Examination Process” is the guide for planning, executing and resolving transfer pricing examinations.
The TPEP is designed to provide a framework and guide for such transfer pricing examinations, considering the uniqueness of those issues and taking into account the judgment of exam teams. Ultimately the TPEP, as well as the changes to the APMA program, Publication 5125, and LB&I’s ongoing compliance campaigns, come as a result of diminished resources and strained budgets. More changes to LB&I exam processes are likely, including in the compliance assurance process (CAP) program.
Taxpayers under the jurisdiction of LB&I, and those that have transfer pricing issues, should carefully consider the landscape of IRS controversies.
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