SECTION 7. COORDINATION WITH

OTHER ADMINISTRATIVE OR JUDICIAL PROCEEDINGS

.01 Suspension of Administrative Ac- tion with Respect to U.S. Adjustments. When a request for competent authority assistance is accepted with respect to a U.S. initiated adjustment, the IRS will postpone further administrative action with respect to the issues under competent authority consideration (such as assessment or collection procedures), except (a) in situations in which the IRS may be requested otherwise by the U.S. competent authority, or (b) in situations involving cases pending in court and in other instances in which action must be taken to avoid prejudicing the U.S. Government’s interest. The normal administrative procedures continue to apply, however, to all other issues not under U.S. competent authority consideration. For example, if there are other issues raised during the examination and the taxpayer is not in agreement with these issues, the usual procedures for completing the examination with respect to these issues apply. If the taxpayer is issued a 30-day letter with respect to these issues and prepares a protest of the unagreed issues, the taxpayer need not include any unagreed issue under consideration by the competent authority. Following the receipt of a taxpayer’s protest, normal IRS Appeals procedures shall be initiated with respect to those issues not subject to competent authority consideration.

.02 Coordination with IRS Appeals. Taxpayers that disagree with a proposed U.S. adjustment either may pursue their right of administrative review with IRS Appeals before requesting competent authority assistance or may request competent authority assistance immediately. However, the U.S. competent authority will not unilaterally withdraw an adjustment that should more properly be within the jurisdiction of Appeals. IRS Appeals’

May 15, 2006 905 2006–20 I.R.B.

celerated competent authority procedure is not subject to the AIR process limitations.