SECTION 2. SCOPE

.01 In General . The U.S. competent authority assists taxpayers with respect to matters covered in the mutual agreement procedure provisions of tax treaties in the manner specified in those provisions. A tax treaty generally permits taxpayers to request competent authority assistance when they consider that actions of the United States, the treaty country, or both, result or will result in taxation that is contrary to the provisions of a treaty. For example, tax treaties generally permit tax

payers to request assistance in order to relieve economic double taxation arising from an allocation under section 482 of the Internal Revenue Code (the “Code”) or an equivalent provision under the laws of a treaty country. Competent authority assistance may also be available with respect to issues specifically dealt with in other provisions of a treaty. For example, many tax treaties contain provisions permitting competent authorities to resolve issues of fiscal residence or allowing a competent authority to make a discretionary determination that a taxpayer is

2002–31 I.R.B. 243 August 5, 2002

entitled to the benefits of a treaty under specific limitation on benefits provisions. See sections 3.07 and 3.08 of this revenue procedure. Taxpayers are urged to examine the mutual agreement procedure provisions or other specific provisions of the treaty under which they seek relief, in order to determine whether relief may be available in their particular case. This revenue procedure is not intended to limit or expand any specific treaty provisions relating to competent authority matters.

.02 Requests for Assistance . In general, requests by taxpayers for competent authority assistance must be submitted in accordance with this revenue procedure. However, where a treaty or other published administrative guidance provides specific procedures for requests for competent authority assistance, those procedures shall apply, and the provisions of this revenue procedure shall not apply to the extent inconsistent with such procedures.

.03 Authority of the U.S. Competent Authority . The Director, International acts as the U.S. competent authority in administering the operating provisions of tax treaties (including reaching a mutual agreement in a specific case) and in interpreting and applying these treaties. In interpreting and applying tax treaties, the Director, International acts only with the concurrence of the Associate Chief Counsel (International). See Delegation Order No. 114 (Rev. 13).

.04 General Process . If a taxpayer’s request for competent authority assistance is accepted, the U.S. competent authority generally will consult with the appropriate foreign competent authority and attempt to reach a mutual agreement that is acceptable to all parties. The U.S. competent authority also may initiate competent authority negotiations in any situation deemed necessary to protect U.S. interests. Such a situation may arise, for example, when a taxpayer fails to request competent authority assistance after agreeing to a U.S. or foreign tax assessment that is contrary to the provisions of an applicable tax treaty or for which correlative relief may be available.

.05 Failure to Request Assistance . Failure to request competent authority assistance or to take appropriate steps as necessary to maintain availability of the remedy may cause a denial of part or all

of any foreign tax credits claimed. See § 1.901–2(e)(5)(i) of the Income Tax Regulations. See also section 9 of this revenue procedure concerning protective measures and section 11 of this revenue procedure concerning the determination of creditable foreign taxes.