SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION

.01 Definitions. For purposes of this revenue procedure, the following terms have the meanings set forth in this section.

ACAP Accelerated competent authority procedure ( see section 4)

ACAP request A request to include ACAP years in a MAP case

ACAP years Taxable years covered by an ACAP request or eligible for ACAP

Ancillary issues Subsidiary issues eligible for coverage by a MAP resolution, including MAP repatriation ( see section 11), interest on refunds and deficiencies, penalties with respect to U.S.-initiated adjustments, and the determination of whether a payment is compulsory for foreign tax credit purposes as provided in Treas. Reg. §1.901–2(e)(5)

APA An advance pricing agreement within the meaning of Rev. Proc. 2014–YY

APA process The steps involved in the process of reaching an APA, as described in Rev. Proc. 2014–YY

APA request A request for an APA fled under Rev. Proc. 2014–YY

APMA The Advance Pricing and Mutual Agreement Program, a representative office of the U.S. competent authority and one of the divisions of TPO

Applicant A taxpayer making a request for discretionary LOB relief

Arbitration treaty A U.S. tax treaty in which the mutual agreement procedure article includes a provision for mandatory arbitration of certain MAP cases ( see section 12)

Bilateral APA A bilateral APA as defned in Rev. Proc. 2014–YY

Code The Internal Revenue Code of 1986 (26 U.S.C.), as amended

Controlled group The group of controlled taxpayers (as that term is defined in Treas. Reg. §1.482–1(i)) of which the taxpayer fling the MAP request is a member

Discretionary LOB A determination issued by the U.S. competent authority extending treaty benefits to a taxpayer relief that fails to meet any of the objective tests of an LOB article of a U.S. tax treaty

Examination resolution A resolution with IRS Examination on a U.S.-initiated adjustment that is memorialized in a Fast Track Settlement Session Report, a Form 870 waiver, a Form 870-AD offer, a closing agreement, or any other similar agreement

Fast Track Settlement The program set forth in Rev. Proc. 2003–40, 2003–1 C.B. 1044, or successor guidance

Foreign competent au- The competent authority of a treaty country thority

Foreign pension fund A pension fund that is a resident of a treaty country

Foreign-initiated adjust- A proposed or final adjustment to a filed tax return made by the tax authority of a treaty country ment

The competent authority of a treaty country

Foreign pension fund A pension fund that is a resident of a treaty country

Foreign-initiated adjust- A proposed or final adjustment to a filed tax return ment

Global trading arrangement

Global trading arrange- Any arrangement involving multiple associated enterprises or business unit(s) of an enterprise ment that operate in more than one country and that trade or deal in securities and/or other financial

products, either on their own behalf or on behalf of clients. Global trading arrangements may encompass functions ancillary to the foregoing activities

Intangible development Any arrangement for sharing the costs and risks of developing intangibles, including a cost arrangement ing arrangement as defined in Treas. Reg. §1.482–7, a qualified cost sharing arrangement as

Intangible development Any arrangement for sharing the costs and risks of developing intangibles, including a cost shararrangement ing arrangement as defined in Treas. Reg. §1.482–7, a qualified cost sharing arrangement as de fined in Treas. Reg. §1.482–7A (collectively, a “CSA”), and an arrangement (other than a CSA) for sharing the costs and risks of developing intangibles to which the consideration of the principles, methods, comparability, and reliability considerations set forth in Treas. Reg. §1.482–7 are relevant in determining the best method, under Treas. Reg. §1.482–4(g) or Treas. Reg. §1.482– 9(m)(3), as appropriately adjusted in light of the differences in facts and circumstances between such an arrangement and a CSA. See also Treas. Reg. §1.482–1(b)(2)(iii)

IRM Internal Revenue Manual

IRS Internal Revenue Service

IRS Examination The function(s) within the IRS responsible for examining federal tax and information returns and ascertaining the correctness of any return for purposes of determining the tax liability of taxpayers

LB&I Large Business & International Division of the IRS

LOB Limitation on benefits

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MAP Actions taken by the U.S. competent authority and consultations between the U.S. and foreign competent authorities under U.S. tax treaties, principally under the mutual agreement procedure article

MAP case A case initiated by a MAP request or by the U.S. competent authority involving one or more MAP issues in a given MAP year or set of years

MAP issue An issue that can be resolved by the U.S. competent authority, principally under the mutual agreement procedure article of a U.S. tax treaty

MAP process All steps in the process of reaching a MAP resolution, including steps to comply with applicable pre-fling requirements

MAP repatriation The treatment of repatriation payments pursuant to a MAP resolution ( see section 11)

MAP request A request for assistance of the U.S. competent authority fled under this revenue procedure

MAP resolution The resolution of MAP issues constituting a MAP case

MAP year A taxable year for which a tax return has been filed that is not an ACAP year and in which a MAP issue has arisen that is the subject of a MAP case

Multilateral APA A multilateral APA as defned in Rev. Proc. 2014–YY

Non-U.S.-initiated A foreign-initiated adjustment or a taxpayer-initiated position action

Pre-fling conference A conference held with the U.S. competent authority before a MAP request is fled

Pre-fling memorandum A memorandum or similar paper submitted to the U.S. competent authority before a MAP request is fled

Pre-fling requirements The requirements regarding pre-fling memoranda and pre-fling conferences

Primary adjustment An adjustment falling under the associated enterprises article of a U.S. tax treaty or an analogous adjustment made pursuant to a taxpayer-initiated position that is the subject of a MAP case

Protective claim A notifcation to the U.S. competent authority described by section 13.02(1)

Regulations U.S. Treasury regulations promulgated under the Code

Repatriation payment A payment (within the meaning of section 4.01 of Rev. Proc. 99–32, 1999–2 C.B. 296) or a prepayment offset (within the meaning of section 4.02 of Rev. Proc. 99–32) made with respect to and not exceeding the amount of a primary adjustment

SAP review The review of a MAP issue undertaken by IRS Appeals for the purpose of making a recommendation to the U.S. competent authority under the Simultaneous Appeals Procedure ( see section 8)

Session report The Fast Track Settlement Session Report within the meaning of the term set forth in Rev. Proc. 2003–40, 2003–1 C.B. 1044, or successor guidance

Small case MAP request A MAP request involving a U.S.- or foreign-initiated adjustment that falls below the dollar thresholds set forth in section 5

TAIT The Treaty Assistance and Interpretation Team, a representative office of the U.S. competent authority, which reports directly to the Assistant Deputy Commissioner (International)

Taxpayer A U.S. person, as defined in section 7701(a)(30) of the Code, or a non-U.S. person eligible to seek competent authority assistance when permitted by the applicable U.S. tax treaty

Taxpayer-initiated A position taken by a taxpayer (not in response to a proposed or actual adjustment by the IRS or a similar position action by a foreign tax authority) with respect to a tax liability in the United States or in a treaty country

that directly or indirectly results in double taxation

TPO Transfer Pricing Operations, which reports to the Deputy Commissioner (International), LB&I

Treaty country A country other than the United States that has a U.S. tax treaty in force

Treaty notification The notification by a taxpayer to a competent authority, required under certain U.S. tax treaties, that a request for competent authority assistance has been made to the other competent authority, in particular such a notification submitted to the U.S. competent authority in the manner and circumstances set forth in section 14

U.S. competent authority The Deputy Commissioner (International), LB&I, the Assistant Deputy Commissioner (International), and each other IRS offcial performing competent authority functions pursuant to applicable delegation orders

U.S. tax treaty A convention governing income, estate, or gift taxes to which the United States is a party and that has entered into force, together with its implementing protocols, exchanges of diplomatic notes, memoranda of understanding, and competent authority arrangements

U.S.-initiated adjustment A proposed or final adjustment made by the IRS to a tax return filed by a taxpayer

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.02 Section References . Unless indicated by context or otherwise, section references are to the sections of this revenue procedure (including the appendix).

.03 Deadline References . If a deadline under this revenue procedure falls on a Saturday, Sunday, or a legal holiday in the District of Columbia, the deadline is extended to the next succeeding day that is not a Saturday, Sunday, or a legal holiday in the District of Columbia.

SECTION 2. PURPOSE, BACKGROUND, SCOPE, AND GENERAL APPLICATION

.01 Purpose . This revenue procedure provides guidance on filing MAP requests and guidance on determinations the U.S. competent authority may make on MAP issues. This revenue procedure updates and supersedes Rev. Proc. 2006–54, 2006–2 C.B. 1035. .02 Background and Scope . U.S. tax treaties, principally through the mutual agreement procedure article, permit taxpayers to request the assistance of the U.S. competent authority in alleviating double taxation or taxation otherwise not in accordance with such treaties. For example, U.S. tax treaties generally permit taxpayers to request assistance in order to relieve economic double taxation arising from an allocation under section 482 of the Code or an equivalent provision under the laws of a treaty country. U.S. tax treaties also authorize the U.S. and foreign competent authorities to consult each other to resolve other MAP issues. MAP issues typically arise as a result of U.S.- or foreigninitiated adjustments. MAP issues can also arise as a consequence of taxpayerinitiated positions. For procedures for requesting assistance of the U.S. competent authority when a taxpayer is or may be subject to inconsistent tax treatment by the IRS and a U.S. possession tax agency, see Rev. Proc. 2006–23, 2006–1 C.B. 900 (or successor guidance).

.03 The U.S. Competent Authority . The Deputy Commissioner (International), LB&I, is the U.S. competent authority. As such, the Deputy Commissioner (International) has the authority to apply U.S. tax treaties. The Deputy Commissioner (International) also has the authority to interpret the provisions of U.S. tax treaties, but only with the concurrence of the Associ

ate Chief Counsel (International). The same authority has been delegated to the Assistant Deputy Commissioner (International), LB&I. See Delegation Order 4–12 (Rev. 2), IRM 1.2.43. Aspects of this authority have been delegated to the directors of the TPO and APMA.

.04 Roles of APMA and TAIT. In general, the U.S. competent authority endeavors to resolve MAP issues in a manner that secures the appropriate tax bases of the United States and its treaty partners, prevents fiscal evasion, and is otherwise consistent with sound tax administration. The U.S. competent authority comprises APMA and TAIT. APMA has primary responsibility for cases arising under the business profits and associated enterprises articles of U.S. income tax treaties. TAIT has primary responsibility for cases arising under all other articles of U.S. income tax treaties, including, but not limited to, articles concerning residence, dividends, interest, royalties, income from employment, social security, annuities, pensions and pension funds, other income, and limitation on benefits. TAIT also handles cases arising under U.S. estate and gift tax treaties. APMA and TAIT each can consider cases arising under the permanent establishment articles of U.S. income tax treaties. Regardless of the specific treaty article or MAP issue that may be presented, APMA and TAIT will coordinate and collaborate as appropriate on any given case.

.05 Informal Advice Generally. As appropriate, APMA and TAIT will provide oral, informal advice to taxpayers, whether or not in the course of the MAP process, on general matters concerning MAP issues, including whether a MAP issue may exist. Any such informal advice is advisory and is not binding on the IRS.

.06 Informal Consultation on Noncom- pulsory Payments for Foreign Tax Credit Purposes . In the course of the MAP process or outside the MAP process, the issue of whether the taxpayer has exhausted all effective and practical remedies to reduce its liability under foreign law for tax (including, in appropriate cases, a request for competent authority assistance) within the meaning of Treas. Reg. §1.901–2(e)(5) and Rev. Rul. 92–75, 1992–2 C.B. 197, may be the subject of informal consultation with the U.S. competent authority. Taxpayers and their advisors must ultimately exercise their independent judgment in developing a posi

tion on the extent to which effective and practical remedies have been exhausted in light of their particular facts and circumstances. To assist in consideration of this issue, the U.S. competent authority, through the offices of APMA and TAIT, is available to consult on these matters and, when appropriate, may provide oral, informal advice regarding necessary next steps. Any such informal advice is advisory and is not binding on the IRS. Further, when appropriate, APMA and TAIT will communicate with IRS Examination regarding these matters to ensure consistent and coordinated treatment. It is intended that, through such consultation processes, taxpayers and the U.S. competent authority can achieve greater insight into matters pertaining to the application and enforcement of foreign tax laws. Such consultation processes may also inform the U.S. competent authority in addressing these matters as ancillary issues in a MAP resolution.

.07 General Requirements for MAP Re- quests . The U.S. competent authority will consider the factors set forth in section 6 in determining whether to provide the assistance sought by the taxpayer in its MAP request. In no event will the U.S. competent authority provide assistance to the taxpayer unless and until: (1) the taxpayer has met the pre-filing requirements set forth in section 3.02, as applicable; (2) the MAP request as initially filed is complete, as described in section 3.05; and (3) the taxpayer has paid the correct user fee, if required. Where they exist, specific requirements regarding MAP requests set forth in U.S. tax treaties take precedence over the provisions of this revenue procedure.

.08 Scope of MAP Cases . Except as otherwise provided by this revenue procedure, law or treaty, the U.S. competent authority will provide assistance with respect to MAP issues and treaty countries identified in a taxpayer’s MAP request. However, because the U.S. competent authority has a strong interest in resolving all potential MAP issues in a timely manner, APMA or TAIT may seek to initiate a MAP case in the absence of a MAP request or may require that the scope of a MAP case be expanded. Examples of such an expansion include adding treaty countries or MAP issues to the scope of the MAP case and extending the MAP case to include ACAP years ( see section 4). Recognizing that foreign competent authori

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ties may have an interest in expediting bilateral or multilateral resolution of MAP issues, the U.S. competent authority under applicable exchange-of-information provisions of U.S. tax treaties may also notify foreign competent authorities of MAP cases that could arise out of anticipated U.S.-initiated adjustments. In such cases, the U.S. competent authority will also notify the affected taxpayers.

.09 Closed Cases . A case previously closed after examination will not be reopened in order to make an adjustment unfavorable to the taxpayer except in the presence of one of the circumstances described in Rev. Proc. 2005–32, 2005–1 C.B. 1206 (providing procedures for reopening cases if fraud, substantial error, or certain other circumstances are present).

.10 Coordination of MAP and APA Processes . APAs and MAP resolutions are two interconnected means by which taxpayers can manage and address transfer pricing and other cross-border tax issues. In recognition of these connections, the U.S. competent authority seeks MAP resolutions and APAs that achieve substantive and procedural consistency and coordination in their coverage and application. In particular, the U.S. competent authority may seek to roll forward a MAP resolution to ACAP years where it is feasible, practicable, and in the interest of sound tax administration to do so. Further, in appropriate cases, the U.S. competent authority will encourage taxpayers to extend MAP resolutions to future years that could be covered by an APA. For further discussion of the relationship and intersections between the MAP process, the APA process, and ACAP, see Rev. Proc. 2014–YY.