SECTION 17. DRAFTING

INFORMATION

The principal authors of this revenue procedure are Mae J. Lew and Javier G. Salinas of the Office of Associate Chief Counsel (International). For further information regarding this revenue procedure, contact Mr. Salinas at (202) 435–5262 (not a toll-free call).

reflect the terms of the mutual agreement and of the competent authority assistance provided in a closing agreement, in accordance with sections 6.07 and 6.17 of Rev. Proc. 68–16, 1968–1 C.B. 770 (modified by Rev. Proc. 94–67, 1994–2 C.B. 800).

.07 Disposition of Funds. When competent authority assistance is requested with regard to determination of an issue, or issues, that results in the disposition of funds, then when appropriate, and as part of the competent authority agreement, the taxpayer may be asked to waive any procedural rights that he may have with regard to the funds at issue if it is determined that either the United States or the possession is ultimately entitled to such funds by statute. In that case, the taxpayer may be asked to assign his right to the funds directly to the proper jurisdiction.

.08 Unilateral Withdrawal or Reduction of U.S. Initiated Adjustments. With respect to U.S. initiated adjustments under section 482 of the Code, the primary goal of the mutual agreement procedure is to obtain a correlative adjustment from the possession involved. For other types of U.S. initiated adjustments, the primary goal of the U.S. competent authority is the avoidance of taxation in contravention of the relevant coordination agreement. Unilateral withdrawal or reduction of U.S. initiated adjustments, therefore, generally will not be considered. For example, the U.S. competent authority will not withdraw or reduce an adjustment to income, deductions, cred

its or other items solely because the period of limitations has expired in the possession and the possession competent authority has declined to grant any relief. If the period provided by the possession statute of limitations has expired, the U.S. competent authority may take into account other relevant facts to determine whether such withdrawal or reduction is appropriate and may, in extraordinary circumstances and as a matter of discretion, provide such relief with respect to the adjustment to avoid actual or economic double taxation. In no event, however, will relief be granted where there is fraud or negligence with respect to the relevant transactions.