ARTICLE 28. MUTUAL AGREEMENT PROCEDURES

This Article provides that the competent authorities of the States may prescribe regulations for implementing the present Convention within their respective States and may communicate with each other directly for the purpose of ca frying out and giving effect to the provisions of this Convention.

This Article also provides that the competent authorities of the two States will endeavor to settle by mutual agreement cases of taxation not in accordance with the Convention as well as any other difficulties or doubts arising as to the appli­ cation of the Conventioa Some particular areas on which the competent authori­ ties may consult and reach agreement are (1) the amount of industrial and com­ mercial profits to be attributed to a permanent establishment, (2) the allocation of income, deductions, credits, or allowances between a resident and any related person, and (3) the determination of the source of particular items of income In accordance with the rules set forth in Article 5 (Source of Income).

In implementing the provisions of this Article, the competent authoritiLs will communicate with each other directly and meet together for an exchange of oral opinions where advisable.

In cases in which the competent authorities reach agreement with respect to a particular matter, taxes will be adjusted and refunds or credits allowed in accordance with such agreement. This provision permits the issuance of a re­ fund or credit notwithstanding procedural barriers otherwise existing under a

State's law, such as the Statute of Limitations.

This provision will apply only where agreement or partial agreement bas been reached between the competent authorities and will apply In the case of any such agreement after the Convention goes Into effect even though the agreement may concern taxable years prior thereto.

Revenue Procedure 70-18 sets forth the procedures followed by the United States in implementing its obligations under this type of article.