IRS Reorganizes Transfer Pricing Programs

By Alistair M. Nevius, J.D.



 

From the IRS

The IRS has reorganized its advance pricing agreement (APA), mutual agreement, and competent authority programs into one new program (IR-2012-38). All three programs dealt with transfer pricing rules, which determine how international transactions within a multinational company must be priced to ensure each country receives its fair share of tax.

Before Feb. 26, 2012, the APA program, which handled transfer pricing agreements, was in a separate IRS division from the mutual agreement and competent authority programs. The mutual agreement program dealt with transfer pricing agreements between taxpayers and the United States and other governments. The APA program and the competent authority functions (including the mutual agreement procedures and determinations of permanent establishment status) that relate to transfer pricing and other similar issues are now combined into a new Advance Pricing and Mutual Agreement (APMA) program. Responsibility for competent authority requests that do not involve allocation issues is handled by the IRS’s Large Business & International Treaty Assistance and Interpretation team.

To implement this realignment, the IRS intends to revise its existing procedures for requesting APAs and competent authority assistance. Until then, the Service says, taxpayers can rely on Rev. Proc. 2006-9 (Allocation of Income and Deductions Among Taxpayers), as modified by Rev. Proc. 2008-31, and Rev. Proc. 2006-54 (Procedures for Requesting Competent Authority Assistance Under Tax Treaties), with the following changes:

  • References to APA refer to APMA;
  • The user fee in Rev. Proc. 2006-54 is $27,500 (instead of $15,000) for requests received after Feb. 4, 2012; and
  • Taxpayers should send requests to this address:

Deputy Commissioner (International)
Large Business and International Division
Internal Revenue Service
1111 Constitution Avenue, N.W.
Routing: MA2-209
Washington, DC 20224
Attention: Katina Cooper

Newsletter Articles

TAX REFORM

Traps for the unwary: Tax Cuts and Jobs Act changes

By now many of us are familiar with the various provisions of the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. Here is a list of changes together with (perhaps) unexpected nuances.

DEDUCTIONS

Qualified business income deduction regs. and other guidance issued

The package includes final regulations, guidance on how to calculate W-2 wages, a safe-harbor rule for rental real estate businesses, and new proposed rules on the treatment of previously suspended losses.