The IRS revised the Internal Revenue Manual in Memorandum LB&I-04-0219-001
, issued Feb. 19, to require IRS examination teams to consult with the Advance Pricing and Mutual Agreement (APMA) program when the examination could generate transfer pricing adjustments involving a country with which the United States has a tax treaty.
This consultation requirement applies regardless of whether the taxpayer currently has a mutual agreement procedure (MAP) or Advance Pricing Agreement (APA) case with APMA.
At the beginning of the exam team’s review of the taxpayer’s transactions involving a treaty partner, the exam team manager will request APMA consultation on procedural and substantive matters. APMA can help the exam team understand relevant treaty background and experience with the treaty partner or transfer pricing issues. The early consultation requirement is intended to improve the efficiency and effectiveness of the resolution of transfer pricing issues. Further, such consultations give APMA the opportunity to learn from the experiences of the exam teams and use that information in APMA’s MAP case negotiations.
Partner, Washington National Tax Office
+1 202 861 4104
Managing Director, Washington National Tax Office
+1 202 521 1542
Senior Associate, Washington National Tax Office
+1 202 521 1509
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.