SECTION 9. PROTECTIVE

MEASURES

.01 General . In negotiating treaties, the United States seeks to secure an agreement with the treaty country that any competent authority agreement reached with the treaty country will be implemented notwithstanding any time limits or other procedural limitations in the domestic law of either country. However, treaty provisions that provide a competent authority

2006–49 I.R.B. 1044 December 4, 2006

notifies the U.S. competent authority that competent authority consideration is no longer needed. In appropriate cases, the U.S. competent authority will send the taxpayer a formal notice of claim disallowance.

.04 Effect of a Protective Claim. Protective claims filed under section 9.02 or 9.03 of this revenue procedure will only allow a credit or refund to the extent of the grounds set forth in the protective claim and only to the extent agreed to by the U.S. and foreign competent authorities or to the extent unilaterally allowed by the U.S. competent authority. This revenue procedure does not grant a taxpayer the right to invoke section 482 of the Code in its favor or compel the IRS to allocate income or deductions or grant a tax credit or refund.

.05 Treaty Provisions Waiving Proce- dural Barriers .

In those cases where the mutual agreement article authorizes a competent authority to waive or remove procedural barriers to the credit or refund of tax, taxpayers may be allowed a credit or refund of tax even though the otherwise applicable period of limitations has expired, prior closing agreements have been entered into, or other actions have been taken or omitted that ordinarily would foreclose relief in the form of a credit or refund of tax. However, under these provisions there may still be situations in which taxpayers should take appropriate protective measures as described under this revenue procedure or under applicable foreign procedures. For example, procedural limitations cannot be waived if a request for competent authority assistance is declined or the competent authorities are unable to reach agreement. In addition, some countries may take the position that domestic statutes of limitation on refunds cannot be waived under the relevant treaty. Because there are circumstances that are not under the control of taxpayers or the U.S. competent authority it is advisable that taxpayers take protective measures to increase the possibility that appropriate relief is available to them in all circumstances.