Part IV. Applicable Federal Interest Rates
SECTION 1. PURPOSE AND
Internal Revenue Bulletin 2006-20 · 2026-10-03 edition · updated 2026-10-04 · United States
BACKGROUND
.01 Purpose. This revenue procedure sets forth the procedures by which taxpayers may obtain assistance from the U.S. competent authority under the provisions of tax coordination agreements entered into between the Internal Revenue Service (IRS) and the tax agencies of American Samoa, Guam, the Commonwealth of the Northern Mariana Islands (NMI), the United States Virgin Islands (USVI), and Puerto Rico (collectively, the possessions), as described in section 1.02 of this revenue procedure. The tax
The estimated total annual reporting or recordkeeping burden is 3 million hours.
The estimated annual burden per respondent/recordkeeper varies from 30 minutes to 3 hours, depending on individual circumstances, with an estimated average of 1.5 hours. The estimated number of respondents or recordkeepers is 2 million.
The estimated annual frequency of responses (used for reporting requirements only) is once.
The likely respondents are large timber producers and independent timber producers, including nonindustrial landowners.
This information is needed to prevent the improper shifting of basis between qualified timber properties for which depletion is available and qualified timber properties for which depletion is not available because an election under section 194 has been made.
- Act section 338 (section C.3.) The estimated total annual reporting or recordkeeping burden is 75 hours.
The estimated annual burden per respondent/recordkeeper varies from 30 minutes to 1 hour, depending on individual circumstances, with an estimated average of 45 minutes. The estimated number of respondents or recordkeepers is 100.
The estimated annual frequency of responses (used for reporting requirements only) is once.
The likely respondents are businesses. This information is needed to ensure that the deduction is properly determined and to ensure the specific identification of each property for which the basis is reduced.
- Act section 339 (section C.4.) The estimated total annual reporting or recordkeeping burden is 50 hours.
The estimated annual burden per respondent/recordkeeper varies from 30 minutes to 1.5 hours, depending on individual circumstances, with an estimated average of 1 hour. The estimated number of respondents or recordkeepers is 50.
The estimated annual frequency of responses (used for reporting requirements only) is once.
The likely respondents are cooperatives described in section 1381(a).
This information is needed to support the apportionment of the section 45H(g) credit among patrons of a cooperative.
- Act section 404 (section D.2.) The estimated total annual reporting or recordkeeping burden is 7,500 hours.
The estimated annual burden per respondent/recordkeeper varies from 15 minutes to 1 hour, depending on individual circumstances, with an estimated average of 30 minutes. The estimated number of respondents or recordkeepers is 15,000.
The estimated annual frequency of responses (used for reporting requirements only) is once.
The likely respondents are large multinational corporations that are financial services entities.
This information is needed to enable the IRS to verify the computation of the allowable foreign tax credit.
- Act section 408 (section D.3.) The estimated total annual reporting or recordkeeping burden is 25,000 hours.
The estimated annual burden per respondent/recordkeeper varies from 15 minutes to 1 hour, depending on individual circumstances, with an estimated average of 30 minutes. The estimated number of respondents or recordkeepers is 50,000.
The estimated annual frequency of responses (used for reporting requirements only) is once.
The likely respondents are large multinational corporations.
This information is needed to enable the IRS to verify the computation of the allowable foreign tax credit.
- Act section 909 (section F.1.) The estimated total annual reporting or recordkeeping burden is 1,000 hours.
The estimated annual burden per respondent/recordkeeper varies from 30 minutes to 2 hours, depending on individual circumstances, with an estimated average of 1 hour. The estimated number of respondents or recordkeepers is 1,000.
The estimated annual frequency of responses (used for reporting requirements only) is once.
The likely respondents are providers of electric transmission services.
This information is needed to ensure that the gain from the sale of certain electric transmission property is properly reported.
Books or records relating to a collection of information must be retained as long as their contents may become material in
2006–20 I.R.B. 900 May 15, 2006
ers may obtain assistance from the U.S. competent authority under the coordination agreements. Taxpayers are urged to examine the mutual agreement procedure provisions or other specific provisions of the coordination agreement 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 coordination agreement 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 an agreement between the governments 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. Taxpayers may consult the “Tax Information for International Businesses” page at www.irs.gov ( http://www.irs.gov/busi- nesses/international/index.html ) for links to a variety of agreements and other documents that may modify the procedures set forth in this revenue procedure.
.03 General Process. If a taxpayer’s request for competent authority assistance is accepted, the U.S. competent authority generally will consult with the competent authority of the appropriate possession tax agency and attempt to reach a mutual agreement that is acceptable to all parties. If the taxpayer raises such a request with the possession tax agency, that agency generally will consult with the U.S. competent authority in accordance with the applicable coordination agreement. However, this revenue procedure does not provide procedures to be used by any possession tax agency. The U.S. competent authority also may initiate competent authority negotiations, as provided in each of the coordination agreements, in any situation deemed necessary to protect U.S. interests.
.04 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 credits claimed under the Code (for example, under section 901, 902, or 932). See, e.g., Treas. Reg. § 1.901–2(e)(5)(i). See also
coordination agreements described in section 1.02 of this revenue procedure each contain provisions allowing the competent authorities of the United States and the possession to resolve by mutual agreement inconsistent tax treatment by the two jurisdictions. This revenue procedure updates Rev. Proc. 89–8, 1989–1 C.B. 778, to conform more closely with the current competent authority procedures. See, e.g., Rev. Proc. 2002–52, 2002–2 C.B. 242, for tax treaty competent authority procedures. In addition, this revenue procedure reflects the tax coordination agreement entered into between the United States and the NMI, effective January 30, 2003. Finally, conforming changes to terminology are made to reflect administrative and organizational changes in the IRS.
.02 Background. The IRS has entered into agreements, as described in paragraphs (1) through (5) of this section 1.02 (coordination agreements) for coordinating tax administration between the IRS and the tax agencies in American Samoa, Guam, the NMI, Puerto Rico, and the USVI (possession tax agencies). The coordination agreements authorize the exchange of information and mutual assistance with regard to taxes. In accordance with the coordination agreements, the IRS has established cooperative programs (or so-called “mutual agreement procedures”) to resolve tax disputes arising from inconsistent positions taken by the IRS and a possession tax agency. The mutual agreement procedures generally permit taxpayers to request competent authority assistance when they consider that actions of the United States, possessions, or both, result or will result in taxation that is contrary to the provisions of a coordination agreement. The Director, International (LMSB) acts as the U.S. competent authority under the coordination agreements with the responsibility for coordination and liaison of tax administration issues involving the possessions of the United States, including reaching mutual agreements in specific cases. See Delegation Order 4–36 (formerly D.O. 269) (effective 11/22/02). (1) American Samoa. The “Tax Implementation Agreement Between the United States of America and American Samoa” was signed by the Government of American Samoa on December 10, 1987, and by the Government of the United States
on January 7, 1988; it generally became effective on January 1, 1988 (American Samoa implementation agreement). Article 6 of the American Samoa implementation agreement deals with the mutual agreement procedure on potential double taxation.
(2) Guam. The 1977 “Agreement on Coordination of Tax Administration” entered into between the United States and Guam was amended to add section 10. The amendment was signed by the Government of Guam on January 10, 1985, and by the Government of the United States on July 12, 1985, and became effective on that date (Guam coordination agreement). Section 10 of the Guam coordination agreement deals with the mutual agreement procedure on potential double taxation.
(3) Commonwealth of the Northern Mariana Islands. The “Tax Coordination Agreement Between the United States of America and the Commonwealth of the Northern Mariana Islands” was signed by the Government of the NMI on December 5, 2002, and by the Government of the United States on January 30, 2003, and became effective on that date (NMI coordination agreement). Section 10 of the NMI coordination agreement deals with the mutual agreement procedure on potential double taxation.
(4) Puerto Rico. The “Tax Coordination Agreement Between the United States of America and the Commonwealth of Puerto Rico” was signed by the Government of Puerto Rico on December 31, 1988, and the Government of the United States on May 26, 1989; and became effective on that date (Puerto Rico coordination agreement). Article 6 of the Puerto Rico coordination agreement deals with the mutual agreement procedure on potential double taxation.
(5) United States Virgin Islands. The “Tax Implementation Agreement Between the United States of America and the Virgin Islands” was signed on February 24, 1987, and took effect on that date (USVI implementation agreement). Article 6 of the USVI implementation agreement deals with the mutual agreement procedure on potential double taxation.
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