SECTION 15. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 2006–26, 2006–21 I.R.B. 936, and Rev. Proc. 2002–52, 2002–2 C.B. 242, are modified and superseded by this revenue procedure. Rev. Proc. 2006–9, 2006–9 I.R.B. 278 is amplified. Rev. Rul. 92–75, 1992–2 C.B. 197, is clarified. References in this revenue procedure to Rev. Proc. 99–32 will be treated as references to Rev. Proc. 65–17, 1965–1 C.B. 833, as modified, amplified and clarified from time to time, for taxable years beginning before August 24, 1999.

ther administrative or judicial review. If the competent authorities fail to agree, or if the agreement reached is not acceptable to the taxpayer, the taxpayer may withdraw the request for competent authority assistance and may then pursue all rights otherwise available under the laws of the United States and the treaty country. Where the competent authorities fail to agree, no further competent authority remedies generally are available, except with respect to treaties that provide for arbitration of the dispute. See, e.g., Article 25(5) of the U.S.-German income tax treaty. A request for arbitration must be made in accordance with the procedures prescribed under the applicable treaty and related documents, including procedures that the IRS may promulgate from time to time.

.06 Closing Agreement . When appropriate, the taxpayer may be requested to enter into a closing agreement that reflects the terms of the mutual agreement and of the competent authority assistance provided and that is executed in conformity with sections 6.07 and 6.17 of Rev. Proc. 68–16, 1968–1 C.B. 770 (as modified by Rev. Proc. 94–67, 1994–2 C.B. 800).

.07 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 treaty country. For other types of U.S. initiated adjustments, the primary goal of the U.S. competent authority is the avoidance of taxation not in accordance with an applicable treaty. 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, credits or other items solely because the period of limitations has expired in the foreign country and the foreign competent authority has declined to grant any relief. If the period provided by the foreign 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, how

ever, will relief be granted where there is fraud or negligence with respect to the relevant transactions. In keeping with the U.S. Government’s view that tax treaties should be applied in a balanced and reciprocal manner, the United States normally will not withdraw or reduce an adjustment where the treaty country does not grant similar relief in equivalent cases.