SECTION 7. CONSULTATIONS AND

OTHER ACTIONS BY THE U.S. COMPETENT AUTHORITY

.01 Non-U.S.-initiated Actions . The U.S. competent authority will evaluate a MAP request involving a non-U.S.-initiated action on the basis of the justification for the action prepared by the foreign competent authority and on the analyses of such justification prepared by the taxpayer and by other IRS offices. After making its evaluation, the U.S. competent authority will proceed in any of several ways. In typical cases involving foreign-initiated adjustments, it will begin consultations with the foreign competent authority on the justification for correlative relief and the extent to which such correlative relief is warranted. In other cases involving foreign-initiated adjustments, the U.S. competent authority may grant correlative relief without consultations.

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.02 U.S.-initiated Adjustments . The U.S. competent authority will address a U.S.-initiated adjustment after evaluating the justification for the adjustment developed by IRS Examination, recommendations (if any) it has received through SAP review, the taxpayer’s views on the adjustment it sets forth in the MAP request or otherwise provides in the MAP process, and the views of other IRS offices on the adjustment. Once it has made its evaluation, the U.S. competent authority will proceed in any of several ways. In most cases, it will begin consultations with the foreign competent authority on the justification for correlative relief and the extent to which such correlative relief is warranted. In other cases, the U.S. competent authority may recommend or require that IRS Examination revise or withdraw the U.S.-initiated adjustment. If an adjustment remains after taking into account the U.S. competent authority’s recommendations or requirements, then the U.S. competent authority will continue to work with IRS Examination or the foreign competent authority as applicable.

.03 Requests for Discretionary LOB Relief. The LOB articles of some U.S. tax treaties require the U.S. or foreign competent authority to consult the other before denying a request for discretionary LOB relief. The U.S. competent authority will comply with such consultation requirements.

.04 Taxpayer Presentations. The U.S. competent authority will consider requests from, and may invite or require, the taxpayer to make presentations jointly to the U.S. and foreign competent authorities during the MAP process. The U.S. competent authority will consult with the foreign competent authority as to its interest in joint presentations and notify the taxpayer accordingly.