IRS Issues Updated Guidance on Requesting and Obtaining an APA

By Richard J. McAlonan, CPA, and David Canale, J.D., LL.M., Washington

Editor: Michael Dell, CPA

The IRS has issued updated guidance (Rev. Proc. 2015-41) on requesting and obtaining an advance pricing agreement (APA), modifying somewhat its proposed revenue procedure published in Notice 2013-79. The IRS released Rev. Proc. 2015-41 in conjunction with Rev. Proc. 2015-40, which provides guidance on the process for requesting assistance from the U.S. competent authority under the provisions of U.S. tax treaties.


Notice 2013-79 proposed updates to Rev. Proc. 2006-9 and Rev. Proc. 2008-31 and was issued in the wake of the creation of the IRS's Advance Pricing Mutual Agreement program (APMA) in February 2012. The APMA program merged what had been two separate groups responsible for the administration of APAs and mutual agreement procedures (also referred to as competent authority or double-taxation relief), implementing a team approach to developing the IRS's position on bilateral APA requests, negotiating with treaty partners, and finalizing APAs with taxpayers. The APMA handles both APAs and mutual agreement procedure (MAP) requests.

In issuing Notice 2013-79, the IRS requested comments on the proposed revenue procedure.

Changes Made in Final Guidance

Rev. Proc. 2015-41 responds in part to comments received on Notice 2013-79 and differs from the proposed revenue procedure in a number of ways:

  • Rev. Proc. 2015-41 clarifies that if the APMA requires a taxpayer to expand the proposed scope of its APA request to cover certain interrelated matters, the "APMA will do so with due regard to considerations of principled, effective, and efficient tax administration and only after considering the views of the taxpayer and the applicable foreign competent authority" and will relay to the taxpayer any concerns about the interrelated matters and possible scope expansion (see Rev. Proc. 2015-41, §2.02(4)).
  • The new procedure provides that rollback years may be formally covered within an APA and will be included, following coordination and collaboration between the APMA and other IRS offices, if either requested by the taxpayer or required by the APMA (see Rev. Proc. 2015-41, §§2.02(4)(c), 3.03(2), 3.08, and 5.02).
  • Guidance has been expanded regarding when an APA request will be considered complete (see Rev. Proc. 2015-41, §3.03(3)).
  • The appendix of the proposed revenue procedure, specifying what must be included in APA requests, has been refined, but the requirements have generally been retained.
  • Regarding the requirement that taxpayers execute consent agreements to extend the period of limitation for assessment for each year of a proposed APA term, Rev. Proc. 2015-41 states that APMA will coordinate and collaborate with other IRS offices and with the taxpayer regarding the type of consent that must be executed (see Rev. Proc. 2015-41, §2.03(3)).
  • User fees for APA requests have been increased from a base fee of $50,000 to $60,000, although total user fees may be reduced if a controlled group submits multiple APA requests within a 60-day period (see Rev. Proc. 2015-41, Appendix, §3.03(2)).
Effective Date

Rev. Proc. 2015-41 became effective when published in the Federal Register on Aug. 31, 2015. This revenue procedure applies to all APA requests filed under it. A taxpayer may instead file an APA request after Aug. 31, 2015, under Rev. Proc. 2006-9, but only if the taxpayer files a substantially complete APA request under Rev. Proc. 2006-9 no later than Dec. 29, 2015. APA requests filed on or before Dec. 29, 2015, should clearly state under which revenue procedure they are filed.


Taxpayers and practitioners have been eagerly anticipating updated guidance on how to pursue APAs since the formation of APMA in 2012. The IRS took the unusual step in 2013 of providing proposed updates to these revenue procedures. Because APAs have a role in sound tax administration and are initiated at the option of taxpayers, the Service thought it was critical to have user input into the process of revising this guidance. That process is reflected in the new procedures.

Although the new guidance does not respond to all taxpayer comments, it is a marginal improvement over Notice 2013-79.

This is the longest and most detailed revenue procedure for APAs. Rev. Proc. 2006-09 was a comparatively slim 38 pages, while the new guidance weighs in at a hefty 81 pages. Many of the additional pages provide detailed instructions on preparing and filing an APA request.

In general, these new details demonstrate the IRS's belief that it needs to have input into a taxpayer's decision on the proposed covered transactions. The Service seems to be saying that taxpayers may no longer narrowly scope proposed covered transactions (called "covered issues" in the procedure), so that the Service may realize sound tax administration and reflect its interests as well. This new procedure includes language that is more balanced than in Notice 2013-79.

The user fees have been increased, but not dramatically, and reflect the Service's view that taxpayers should pay the full cost of an APA. After publication of the revenue procedure, an IRS official stated that the $60,000 base fee covers only 54% of the total costs of an APA. The IRS has announced that it plans further user fee increases and that by 2020 the user fee will be nearly $100,000. Users of the APA program would like to have seen provisions that the user fee be allocated to APMA to cover its travel costs so it could more efficiently and effectively conduct the necessary due diligence and, in the case of bilateral APAs, conduct negotiations with their foreign counterparts, but the Service is unable to allocate user fees solely for APMA's use.

Further consideration needs to be given to the provisions allowing the IRS to terminate the APA process or an executed APA without taxpayers' being able to appeal this decision. These provisions allow for some inherently subjective determinations that could negatively affect taxpayers. Rev. Proc. 2015-41 makes clear that this decision is at the discretion of the Service and APMA and is not subject to appeal or review.

The IRS also has broad discretion in the rollback of an APA to prior open years. Historically, the decision to request a rollback has rested solely with the taxpayer. Under the new revenue procedure, in the interest of "efficient tax administration," the Service can require a taxpayer to accept a rollback as a condition of accepting its APA request.

Rev. Proc. 2015-41 increases the amount and type of information to be included in an APA request and standardizes the look and feel of an APA request. The hope is that these requirements will enable APMA to more efficiently perform its due-diligence function.

The APA program remains very popular and heavily used by taxpayers seeking to reduce uncertainty or resolve disputes with foreign revenue agencies. APAs are likely to continue to be a key strategy for taxpayers to manage and resolve tax and transfer-pricing risk as more countries adopt and pursue strategies emerging from the Organisation for Economic Co-operation and Development's base erosion and profit-shifting initiative.

A version of this item appeared in an EY Global Tax Alert.


Michael Dell is a partner at Ernst & Young LLP in Washington.

For additional information about these items, contact Mr. Dell at 202-327-8788 or

Unless otherwise noted, contributors are members of or associated with Ernst & Young LLP.

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