Internal Revenue Bulletin 2015-35 (PDF rendition): IRS Revenue Procedures

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

# INTERNAL REVENUE BULLETIN

Bulletin No. 2015-35
August 31, 2015

## HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

## INCOME TAX

REG-132075-14, page 288.

The proposed regulations would remove the automatic exten-
sion of time to file certain information returns (Form W-2G,
1042-S, 1094-C, 1095-B, 1095-C, 1097 series, 1098 se-
ries, 1099 series, 3921, 3922, 5498 series, and 8027) and
remove the opportunity to seek a second 30 day extension of
time to file.

### Announcement 2015-22, page 288.

Announcement 2015-22 informs that the IRS will not assert
that an individual whose personal information may have been
compromised in a data breach must include in gross income
the value of the identity protection services provided by the
organization that experienced the data breach. Additionally, the
IRS will not assert that an employer providing identity protec-
tion services to employees whose personal information may
have been compromised in a data breach of the employer's (or
employer's agent or service provider's) recordkeeping system
must include the value of the identity protection services in the
employees' gross income and wages.

### Notice 2015-56, page 235.

Notice 2015-56 informs claimants about the federal income tax
treatment of credits under § 6426(c) and (d) that are paid in cash
under the one-time claim submission process of section 160(e) of
the Tax Increase Prevention Act of 2014 and implemented by
Notice 2015-3. Specifically, a claimant must reduce its income
tax deduction for (or cost of goods sold deduction attributable to)
§ 4081 excise taxes (or, if applicable, § 4041 excise taxes) for
each calendar quarter during 2014 by the amount of the
§ 6426(c) credit (or, if applicable, § 6426(d) credit) for fuel
mixtures sold or used during that calendar quarter.

### T.D. 9729, page 221.

This treasury decision (T.D.) provides rules for determining a
taxable beneficiary's basis in a term interest in a charitable

remainder trust upon a sale or other disposition of all interests
in the trust to the extent that basis consists of a share of
adjusted uniform basis. The T.D. provides that a taxable ben-
eficiary's assignable share of uniform basis upon the sale or
exchange of the taxable beneficiary's term interest does not
include the charitable remainder trust's undistributed net cap-
ital gains or net ordinary income.

### T.D. 9730, page 223.

These temporary regulations remove the automatic extension
of time to file information returns on forms in the W-2 series
(except Form W-2G) and remove the opportunity to seek a
second 30-day extension of time to file.

## EXCISE TAX

Notice 2015-52, page 227.

Section 4980I was added to the Code by the Affordable Care
Act and applies to taxable years beginning after December 31,
2017. Notice 2015-52 is the second notice concerning
§ 49801 and it is intended to supplement Notice 2015-16
concerning § 4980I, issued on February 23, 2015. Notice
2015-52 addresses additional issues under § 49801, including
the identification of the taxpayer who may be liable for the
excise tax, employer aggregation, exclusion from the cost of
applicable coverage amounts attributable to the excise tax, the
age and gender adjustment to the dollar limit, the allocation of
the tax among the applicable taxpayers, and the payment of
the applicable tax. In this notice, Treasury and the IRS invite
comments on the issues addressed in this notice and on any
other issues under § 4980I. After considering the comments
on both notices, Treasury and IRS intend to issue proposed
regulations under § 4980I.

(Continued on the next page)

Finding Lists begin on page ii.

## ADMINISTRATIVE

### Rev. Proc. 2015-40, page 236.

This document updates the procedures for requesting assis-
tance from the U.S. competent authority under the provisions
of an income, estate, or gift tax treaty to which the United
States is a party. Rev. Proc. 2006-54, 2006-2 C.B. 1035, is
modified and superseded. Rev. Proc. 2003-40, 2003-1 C.B.
1044, is modified. Rev. Rul. 92-75, 1999-2 C.B. 197, is
clarified. Rev. Proc. 2015-41, 2015-35 I.R.B., is amplified.

### Rev. Proc. 2015-41, page 263.

The revenue procedure provides guidance on the process of
requesting and obtaining an advance pricing agreement
("APA") and information on the administration of APAs. The
revenue procedure updates and supersedes Rev. Proc.
2006-9, as modified by Rev. Proc. 2008-31, which is also
superseded.

## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.

## Introduction

The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.

Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.

Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

### Part I .- 1986 Code.

This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.

### Part II .- Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.

Part III .- Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury's Office of the Assistant Sec-
retary (Enforcement).

### Part IV .- Items of General Interest.

This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

## Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

26 CFR 1.1014-5 Gain or loss.
26 CFR 1.1001-1 Computation of gain or loss.

T.D. 9729

DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1

Basis in Interests in
Tax-Exempt Trusts

AGENCY: Internal Revenue Service (IRS),
Treasury.

ACTION: Final regulations.

SUMMARY: This document contains fi-
nal regulations that provide rules for de-
termining a taxable beneficiary's basis in
a term interest in a charitable remainder
trust (CRT) upon a sale or other disposi-
tion of all interests in the trust to the
extent that basis consists of a share of
adjusted uniform basis. The final regula-
tions affect taxable beneficiaries of CRTs.

DATES: Effective date: These final regu-
lations are effective on August 12, 2015.

Applicability date: These final regula-
tions apply to sales and other dispositions
of interests in CRTs occurring on or after
January 16, 2014, except for sales or dis-
positions occurring pursuant to a binding
commitment entered into before January
16, 2014.

FOR FURTHER INFORMATION
CONTACT: Allison R. Carmody at (202)
317-5279 (not a toll-free number).

### Background

This document contains amendments
to 26 CFR part 1. On October 31, 2008,
the Treasury Department and the IRS pub-
lished Notice 2008-99 (2008-47 IRB
1194) to designate a transaction and sub-
stantially similar transactions as Transac-
tions of Interest under § 1.6011-4(b)(6)
of the Income Tax Regulations and to ask
for public comments on how the transac-
tions might be addressed in published
guidance. After studying the transaction
and comments received from the public in

response to Notice 2008-99, the Treasury
Department and the IRS filed a notice of
proposed rulemaking (REG-154890-03)
relating to basis in interests in tax-exempt
trusts in the Federal Register on January
16, 2014. No comments were received
from the public in response to the notice
of proposed rulemaking. No public hear-
ing was requested or held. The proposed
regulations are adopted without change by
this Treasury decision.

### Explanation of Provisions

These final regulations provide a spe-
cial rule for determining the basis in cer-
tain CRT term interests in transactions to
which section 1001(e)(3) applies. Such
transactions are those in which the sale or
other disposition of the CRT term interest
is part of a transaction in which all inter-
ests in the CRT are transferred. In these
cases, these final regulations provide that
the basis of a term interest of a taxable
beneficiary is the portion of the adjusted
uniform basis assignable to that interest
reduced by the portion of the sum of the
following amounts assignable to that in-
terest: (1) the amount of undistributed net
ordinary income described in section
664(b)(1); and (2) the amount of undis-
tributed net capital gain described in sec-
tion 664(b)(2). These final regulations do
not affect the CRT's basis in its assets but
rather are for the purpose of determining a
taxable beneficiary's gain arising from a
transaction described in section 1001(e)(3).
The rules in these final regulations are lim-
ited in application to charitable remainder
annuity trusts and charitable remainder uni-
trusts as defined in section 664.

### Effect on Other Documents

Notice 2008-99 provides that, when
the Treasury Department and the IRS
have gathered enough information to
make an informed decision as to whether
this transaction is a tax avoidance type of
transaction, the Treasury Department and
the IRS may take one or more actions,
including removing the transaction from
the transactions of interest category in
published guidance, designating the trans-

action as a listed transaction, or providing
a new category of reportable transaction.
Because the Treasury Department and the
IRS believe that these final regulations
address the proper tax treatment of the
transaction described in Notice 2008-99,
transactions that are the same as, or sub-
stantially similar to, transactions de-
scribed in Notice 2008-99 are no longer
considered "transactions of interest," ef-
fective for transactions entered into on or
after January 16, 2014. However, the
"transaction of interest" identification for
transactions that are the same as, or sub-
stantially similar to, the transaction de-
scribed in Notice 2008-99 continues to
apply for transactions entered into before
January 16, 2014, and to transactions en-
tered into on or after January 16, 2014,
pursuant to a binding commitment entered
into before January 16, 2014. For exam-
ple, disclosure and other obligations under
sections 6011, 6111, and 6112 continue to
apply for these transactions entered into
before January 16, 2014, and to transac-
tions entered into on or after January 16,
2014, pursuant to a binding commitment
entered into before January 16, 2014.

### Effective/Applicability Date

These final regulations apply to sales
and other dispositions of interests in CRTs
occurring on or after January 16, 2014,
except for sales or dispositions occurring
pursuant to a binding commitment entered
into before January 16, 2014. However,
the fact that a sale or disposition occurred,
or a binding commitment to complete a
sale or disposition was entered into, be-
fore January 16, 2014, does not preclude
the IRS from applying legal arguments
available to the IRS before issuance of
these final regulations in order to contest
the claimed tax treatment of such a trans-
action.

## Availability of IRS Documents

The IRS notice cited in this preamble is
published in the Internal Revenue Bulletin
and is available at the IRS website at
http://www.irs.gov or the Superintendent

of Documents, U.S. Government Printing
Office, Washington, D.C., 20402.

### Special Analyses

Certain IRS regulations, including this
one, are exempt from the requirements of
Executive Order 12866, as supplemented
and reaffirmed by Executive Order 13563.
Therefore, a regulatory impact assessment
is not required. It also has been deter-
mined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these final regula-
tions, and the Regulatory Flexibility Act
(5 U.S.C. chapter 6) does not apply to
these final regulations because the final
regulations do not impose a collection of
information on small entities. Therefore, a
Regulatory Flexibility Analysis is not re-
quired. Pursuant to section 7805(f) of the
Internal Revenue Code, the notice of pro-
posed rulemaking preceding this regula-
tion was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on its impact on
small business.

### Drafting Information

The principal author of these final reg-
ulations is Allison R. Carmody of the Of-
fice of Associate Chief Counsel (Pass-
throughs and Special Industries). Other
personnel from the Treasury Department
and the IRS participated in their develop-
ment.

* * * * *

### Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended
as follows:

#### PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.1001-1, paragraph
(f)(4), is amended by removing the lan-
guage "paragraph (c)" and adding "para-
graph (d)" in its place.

Par. 3. Section 1.1014-5 is amended by:

1\. In paragraph (a)(1), first sentence,
removing the language "paragraph (b)"
and adding "paragraph (b) or (c)" in its
place.

2\. Designating paragraph (c) as newly-
designated paragraph (d) and adding para-
graph (c).

3\. In newly-designated paragraph (d),
adding Example 7 and Example 8.

The additions read as follows:

##### § 1.1014-5 Gain or loss.

* * * * *

(c) Sale or other disposition of a term
interest in a tax-exempt trust-(1) In gen-
eral. In the case of any sale or other dis-
position by a taxable beneficiary of a term
interest (as defined in § 1.1001-1(f)(2)) in
a tax-exempt trust (as defined in para-
graph (c)(2) of this section) to which sec-
tion 1001(e)(3) applies, the taxable bene-
ficiary's share of adjusted uniform basis,
determined as of (and immediately be-
fore) the sale or disposition of that inter-
est, is-

(i) That part of the adjusted uniform
basis assignable to the term interest of the
taxable beneficiary under the rules of
paragraph (a) of this section reduced, but
not below zero, by

(ii) An amount determined by applying
the same actuarial share applied in para-
graph (c)(1)(i) of this section to the sum
of-

(A) The trust's undistributed net ordi-
nary income within the meaning of section
664(b)(1) and § 1.664-1(d)(1)(ii)(a)(1) for
the current and prior taxable years of the
trust, if any; and

(B) The trust's undistributed net capital
gains within the meaning of section
664(b)(2) and § 1.664-1(d)(1)(ii)(a)(2)
for the current and prior taxable years of
the trust, if any.

(2) Tax-exempt trust defined. For pur-
poses of this section, the term tax-exempt
trust means a charitable remainder annu-
ity trust or a charitable remainder unitrust
as defined in section 664.

(3) Taxable beneficiary defined. For
purposes of this section, the term taxable
beneficiary means any person other than
an organization described in section
170(c) or exempt from taxation under sec-
tion 501(a).

(4) Effective/applicability date. This
paragraph (c) and paragraph (d) Example
7 and Example 8 of this section apply to
sales and other dispositions of interests in
tax-exempt trusts occurring on or after

January 16, 2014, except for sales or dis-
positions occurring pursuant to a binding
commitment entered into before January
16, 2014.

(d)
* * *

Example 7. (a) Grantor creates a charitable re-
mainder unitrust (CRUT) on Date 1 in which
Grantor retains a unitrust interest and irrevocably
transfers the remainder interest to Charity. Grantor is
an individual taxpayer subject to income tax. CRUT
meets the requirements of section 664 and is exempt
from income tax.

(b) Grantor's basis in the shares of X stock used
to fund CRUT is $10x. On Date 2, CRUT sells the X
stock for $100x. The $90x of gain is exempt from
income tax under section 664(c)(1). On Date 3,
CRUT uses the $100x proceeds from its sale of the
X stock to purchase Y stock. On Date 4, CRUT sells
the Y stock for $110x. The $10x of gain on the sale
of the Y stock is exempt from income tax under
section 664(c)(1). On Date 5, CRUT uses the $110x
proceeds from its sale of Y stock to buy Z stock. On
Date 5, CRUT's basis in its assets is $110x and
CRUT's total undistributed net capital gains are
$100x.

(c) Later, when the fair market value of CRUT's
assets is $150x and CRUT has no undistributed net
ordinary income, Grantor and Charity sell all of
their interests in CRUT to a third person. Grantor
receives $100x for the retained unitrust interest,
and Charity receives $50x for its interest. Because
the entire interest in CRUT is transferred to the
third person, section 1001(e)(3) prevents section
1001(e)(1) from applying to the transaction.
Therefore, Grantor's gain on the sale of the re-
tained unitrust interest in CRUT is determined
under section 1001(a), which provides that Grant-
or's gain on the sale of that interest is the excess
of the amount realized, $100x, over Grantor's
adjusted basis in the interest.

(d) Grantor's adjusted basis in the unitrust in-
terest in CRUT is that portion of CRUT's adjusted
uniform basis that is assignable to Grantor's in-
terest under § 1.1014-5, which is Grantor's actu-
arial share of the adjusted uniform basis. In this
case, CRUT's adjusted uniform basis in its sole
asset, the Z stock, is $110x. However, paragraph
(c) of this section applies to the transaction.
Therefore, Grantor's actuarial share of CRUT's
adjusted uniform basis (determined by applying
the factors set forth in the tables contained in
§ 20.2031-7 of this chapter) is reduced by an
amount determined by applying the same factors
to the sum of CRUT's $0 of undistributed net
ordinary income and its $100x of undistributed net
capital gains.

(e) In determining Charity's share of the adjusted
uniform basis, Charity applies the factors set forth in
the tables contained in § 20.2031-7 of this chapter to
the full $110x of basis.

Example 8. (a) Grantor creates a charitable re-
mainder annuity trust (CRAT) on Date 1 in which
Grantor retains an annuity interest and irrevocably
transfers the remainder interest to Charity. Grantor is
an individual taxpayer subject to income tax. CRAT
meets the requirements of section 664 and is exempt
from income tax.

(b) Grantor funds CRAT with shares of X stock
having a basis of $50x. On Date 2, CRAT sells the
X stock for $150x. The $100x of gain is exempt
from income tax under section 664(c)(1). On Date
3, CRAT distributes $10x to Grantor, and uses the
remaining $140x of net proceeds from its sale of
the X stock to purchase Y stock. Grantor treats the
$10x distribution as capital gain, so that CRAT's
remaining undistributed net capital gains amount
described in section 664(b)(2) and § 1.664-1(d) is
$90x.

(c) On Date 4, when the fair market value of
CRAT's assets, which consist entirely of the Y
stock, is still $140x, Grantor and Charity sell all of
their interests in CRAT to a third person. Grantor
receives $126x for the retained annuity interest, and
Charity receives $14x for its remainder interest. Be-
cause the entire interest in CRAT is transferred to the
third person, section 1001(e)(3) prevents section
1001(e)(1) from applying to the transaction. There-
fore, Grantor's gain on the sale of the retained an-
nuity interest in CRAT is determined under section
1001(a), which provides that Grantor's gain on the
sale of that interest is the excess of the amount
realized, $126x, over Grantor's adjusted basis in that
interest.

(d) Grantor's adjusted basis in the annuity in-
terest in CRAT is that portion of CRAT's adjusted
uniform basis that is assignable to Grantor's in-
terest under § 1.1014-5, which is Grantor's actu-
arial share of the adjusted uniform basis. In this
case, CRAT's adjusted uniform basis in its sole
asset, the Y stock, is $140x. However, paragraph
(c) of this section applies to the transaction. There-
fore, Grantor's actuarial share of CRAT's adjusted
uniform basis (determined by applying the factors
set forth in the tables contained in § 20.2031-7 of
this chapter) is reduced by an amount determined
by applying the same factors to the sum of
CRAT's $0 of undistributed net ordinary income
and its $90x of undistributed net capital gains.

(e) In determining Charity's share of the adjusted
uniform basis, Charity applies the factors set forth in
the tables contained in § 20.2031-7 of this chapter to
determine its actuarial share of the full $140x of
basis.

John Dalrymple
Deputy Commissioner for
Services and Enforcement.

Approved: July 13, 2015.

Mark J. Mazur
Assistant Secretary of the
Treasury (Tax Policy).

(Filed by the Office of the Federal Register on August 11,
2015, 8:45 a.m., and published in the issue of the Federal
Register for August 12, 2015, 80 F.R. 48249)

26 CFR 1.6081-8T:

### T.D. 9730 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1

#### Extension of Time to File Certain Information Returns

AGENCY: Internal Revenue Service (IRS),
Treasury.

ACTION: Final and temporary regulations.

SUMMARY: This document contains fi-
nal and temporary regulations that remove
the automatic extension of time to file
information returns on forms in the W-2
series (except Form W-2G). The tempo-
rary regulations allow only a single 30-
day non-automatic extension of time to
file these information returns. These
changes are being implemented to accel-
erate the filing of forms in the W-2
series (except Form W-2G) so they are
available earlier in the filing season for
use in the IRS's identity theft and refund
fraud detection processes. In addition,
the temporary regulations update the list
of information returns subject to the
rules regarding extensions of time to
file. The temporary regulations affect
taxpayers who are required to file the
affected information returns and need an
extension of time to file. The substance
of the temporary regulations is included
in the proposed regulations set forth in
the notice of proposed rulemaking on
this subject in the Proposed Rules sec-
tion in this issue of the Internal Reve-
nue Bulletin.

DATES: Effective date: These regulations
are effective on July 1, 2016.

Applicability date: For dates of appli-
cability, see § 1.6081-8T(g) and (h).

FOR FURTHER INFORMATION

CONTACT: Jonathan R. Black, (202)
317-6845 (not a toll-free number).

SUPPLEMENTARY INFORMATION:
Background

This document contains amendments
to 26 CFR part 1 under section 6081 of the

Internal Revenue Code (Code) regarding
extensions of time to file certain informa-
tion returns. Effective for filing season
2017, this document removes § 1.6081-8
and adds new § 1.6081-8T. Section
1.6081-8 will remain in effect for filing
season 2016. Section 1.6081-8 currently
provides an automatic 30-day extension
of time to file information returns on
forms in the W-2 series (including Forms
W-2, W-2AS, W-2G, W-2GU, and
W-2VI), 1095 series, 1098 series, 1099
series, and 5498 series, and on Forms
1042-S and 8027, and allows an addi-
tional 30-day non-automatic extension of
time to file those information returns in
certain cases.

The temporary regulations § 1.6081-8T
are substantially identical to the regulations
§ 1.6081-8 that will be removed, except
that the temporary regulations: (1) add in-
formation returns on forms in the 1097 se-
ries and Forms 1094-C, 3921, and 3922 to
the list of information returns with proce-
dures prescribed by regulations for the ex-
tension of time to file; (2) remove informa-
tion returns on forms in the W-2 series
(except Form W-2G) from the list of infor-
mation returns eligible for the automatic 30-
day extension of time to file, and instead
provide a single 30-day non-automatic ex-
tension of time to file those information
returns; and (3) clarify that the procedures
for requesting an extension of time to file in
the case of forms in the 1095 series apply to
information returns on Forms 1095-B and
1095-C, but not 1095-A.

The due dates imposed by statute, regu-
lation, or form instruction for filing informa-
tion returns on forms in the W-2 series,
1097 series, 1098 series, and 1099 series,
and Forms 1094-C (when filed as a stand-
alone information return), 1095-B, 1095-C,
3921, 3922, and 8027 on paper are either
February 28 or the last day of February of
the calendar year following the calendar
year for which the information is being re-
ported. The due date for filing these infor-
mation returns electronically is March 31 of
the calendar year following the calendar
year for which the information is being re-
ported. The information returns on forms in
the 5498 series and the Form 1042-S,
whether filed on paper or electronically, are
due March 15 and May 31, respectively, of
the calendar year following the calendar
year for which the information is being

reported. All of these information returns
are filed with the IRS, except for informa-
tion returns on forms in the W-2 series
(other than Form W-2G), which are filed
with the Social Security Administration. Fil-
ers who fail to timely and accurately file
these information returns may be subject to
penalties under section 6652 (regarding fail-
ure to file certain information returns), sec-
tion 6693 (regarding failure to report on
certain tax-favored accounts or annuities),
or section 6721 (regarding failure to timely
and accurately file information returns de-
fined by section 6724(d)(1)).

Section 6081(a) generally provides that
the Secretary may grant a reasonable ex-
tension of time, not to exceed 6 months,
for filing any return, declaration, state-
ment, or other document required by Title
26 or by regulation. The regulations under
section 6081 generally provide rules for
extensions of time to file returns. The reg-
ulations under § 1.6081-8 provide spe-
cific rules for extensions of time to file
certain information returns.

Under § 1.6081-8(a), a person re-
quired to file certain information returns
(the filer), or the person transmitting the
return for the filer (the transmitter), can
currently receive an automatic 30-day ex-
tension of time to file those information
returns. A filer or transmitter obtains an
automatic 30-day extension of time to file
by submitting a Form 8809, "Application
for Extension of Time to File Information
Returns," to the IRS on or before the due
date of the information return.

Section 1.6081-8(d) also currently
provides that a filer or transmitter that
obtains an automatic 30-day extension of
time to file may request an additional 30-
day extension of time to file by submitting
a second Form 8809 on or before the date
that the automatic 30-day extension of
time to file expires. That additional 30-day
extension of time to file under § 1.6081-
8(d) is not automatically granted by the
IRS. Unlike requests to obtain an auto-
matic 30-day extension of time to file un-
der § 1.6081-8(a), a filer or transmitter
that requests an additional 30-day exten-
sion of time to file under § 1.6081-8(d) is
required to sign the Form 8809 under pen-
alties of perjury and include an explana-
tion of why an additional extension of
time to file is needed. No further exten-

sions of time to file are permitted under
§ 1.6081-8.

Employers eligible to file information
returns on forms in the W-2 series on an
expedited basis under § 31.6071(a)-
1(a)(3)(ii) are not eligible to obtain the
automatic 30-day extension of time to
file those information returns under
§ 1.6081-8 because they received an
automatic extension of time to file in-
formation returns on forms in the W-2
series under Rev. Proc. 96-57 (1996-2
CB 389), see § 601.601(d)(2)(ii)(b) of
this chapter.

A filer or transmitter seeking an exten-
sion of time to furnish statements to re-
cipients is required to separately request
an extension of time to furnish the state-
ments under rules applicable to those
statements.

### Explanation of Provisions

The IRS uses third-party information
returns to increase voluntary compliance,
verify accuracy of tax returns, improve
collection of taxes, and combat fraud, in-
cluding fraudulent refund claims filed by
unscrupulous preparers and individuals
using the stolen identities of legitimate
taxpayers. Identity theft and refund fraud
is a persistent and evolving threat to the
nation's tax system. It places an enormous
burden on the United States Government,
with the most painful and immediate im-
pact being on the victims whose personal
information is used to commit the crime
and the most pervasive impact being an
erosion of public confidence in the tax
system.

Identity thieves often electronically file
their fraudulent refund claims early in the
tax filing season, using fictitious wage and
other information of legitimate taxpayers.
Unscrupulous preparers also electroni-
cally file early in the tax filing season,
over-claiming deductions and credits and
underreporting income for unwitting, as
well as complicit, taxpayers. In many
cases, the IRS is unable to verify the wage
and other information reported on tax re-
turns filed before April 15th, in part be-
cause the IRS does not receive the infor-
mation returns reporting this information
until later in the filing season.

Although paper information returns are
generally due to be filed by February 28 or
the last day of February of the calendar

year following the calendar year for which
the information is reported, an extension
of time to file under § 1.6081-8 may
currently extend the due date until the end
of March or, if a non-automatic extension
is also granted, the end of April. Similarly,
although electronically-filed information
returns are generally due by March 31 of
the calendar year following the calendar year
for which the information is reported, an ex-
tension of time to file under § 1.6081-8 may
extend the due date until the end of April or, if
a non-automatic extension is also granted, the
end of May.

Receipt of information returns earlier
in the filing season will improve the IRS's
ability to identify fraudulent refund claims
and stop the refunds before they are paid.
The United States Government Account-
ability Office (GAO) has cited the IRS's
receipt of information returns late in the
filing season as a contributing factor in
payment of fraudulent refunds due to
identity theft and preparer misconduct.
See GAO Report GAO-14-633, Identity
Theft, Additional Actions Could Help IRS
Combat the Large, Evolving Threat of
Refund Fraud. Removing the automatic
30-day extension of time to file is an af-
firmative step to accelerate the filing of
information returns so they are available
earlier in the filing season for use in the
IRS's refund fraud detection processes.

Over the next several years, the IRS
intends to remove the 30-day automatic
extension of time to file certain informa-
tion returns. Under § 1.6081-8T, which
will not be effective until the 2017 filing
season, the first information returns sub-
ject to these new rules are information
returns on forms in the W-2 series (except
Form W-2G). These information returns
are particularly helpful to the IRS for
identifying fraudulent identity theft refund
claims and preventing their payout. This is
because a significant portion of most tax-
payers' income and withholding informa-
tion is reported on Forms W-2. Forms
W-2 are also a major source of the false
income and withholding that is reported
by identity thieves and unscrupulous pre-
parers. Having access to Forms W-2 ear-
lier in the filing season will improve the
IRS's ability to conduct pre-refund match-
ing and identify incidences of identity
theft and tax refund fraud.

Accordingly, § 1.6081-8T provides a
single 30-day non-automatic extension of
time to file information returns on forms
in the W-2 series (except Form W-2G)
due in 2017 that the IRS may, in its dis-
cretion, grant if the IRS determines that an
extension of time to file is warranted
based on the filer's or transmitter's expla-
nation attached to the Form 8809 signed
under the penalties of perjury. The IRS
anticipates that it will grant the non-
automatic extension of time to file only in
limited cases where the filer's or transmit-
ter's explanation demonstrates that an ex-
tension of time to file is needed as a result
of extraordinary circumstances or catas-
trophe, such as a natural disaster or fire
destroying the books and records a filer
needs for filing the information returns. If
the IRS does not grant the extension of
time to file, information returns filed after
their due dates are not timely filed, regard-
less of whether the application for exten-
sion of time to file was filed timely.

The IRS intends to eventually remove
the automatic 30-day extension of time to
file the other forms listed in § 1.6081-8T
and replace it with a single non-automatic
30-day extension of time to file. There-
fore, proposed regulations set forth in the
notice of proposed rulemaking on this
subject in the Proposed Rules section in
this issue of the Internal Revenue Bulle-
tin would remove the automatic 30-day
extension of time to file these other infor-
mation returns. As currently drafted, the
proposed regulations would affect infor-
mation returns due January 1 of the cal-
endar year beginning after the date of pub-
lication of final regulations in the Federal
Register, but the preamble to those pro-
posed regulations provides that final reg-
ulations will not be effective any earlier
than the 2018 filing season.

Treasury and the IRS request com-
ments on the appropriate timing of the
removal of the automatic extension of
time to file information returns covered by
§ 1.6081-8T, such as Form 1042-S, in-
cluding whether special transitional con-
siderations should be given for any cate-
gory or categories of forms or filers
relative to other forms or filers. Please
follow the instructions in the "Comments
and Requests for Public Hearing" sec-
tion in the notice of proposed rulemak-
ing accompanying these temporary reg-

ulations in this issue of the Internal
Revenue Bulletin.

Section 1.6081-8T also updates the list
of information returns that are currently
covered by § 1.6081-8. Forms 3921 and
3922 are being added to § 1.6081-8T
because these forms have been included
on Form 8809 since the June 2009 revi-
sion, which coincided with the revision of
the regulations requiring those forms un-
der section 6039. See TD 9470 (74 FR
59087) November 17, 2009. Forms in the
1097 series are being added because they
have similarly been included on Form
8809 since the September 2010 revision,
which coincided with the publication of
the notice requiring the filing of the only
active form in the 1097 series, Notice
2010-28 (2010-15 IRB 541).

In addition, the Form 1094-C is being
added to the list of forms in § 1.6081-8T.
In most cases the Form 1094-C is filed as
a mere transmittal with the Form 1095-C
and, therefore, the due date of the Form
1094-C is the same as the Form 1095-C,
including extensions. However, in certain
cases, the Form 1094-C is filed as a
stand-alone information return. See TD
9661, (79 FR 13231) March 10, 2014.
When Form 1094-C is filed as a stand-
alone information return, it is subject to
the same rules regarding extensions of
time to file as other information returns.
Accordingly, Form 1094-C has been
added to the list of forms subject to ex-
tension under § 1.6081-8T.

Section 1.6081-8T also replaces the
general reference to the forms in the 1095
series that was added to § 1.6081-8 on
March 10, 2014, by TD 9660 (79 FR
13220) with specific references to Forms
1095-B and 1095-C. Form 1095-A was
not intended to be included in § 1.6081-8,
because the timing rules for filing the
Form 1095-A are governed by § 1.36B-5.
See TD 9663 (79 FR 26113) May 7, 2014.

### Special Analyses

Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby
certified that this regulation will not have
a significant economic impact on a sub-
stantial number of small entities. As stated
in this preamble, these regulations remove
the automatic 30-day extension of time to
file information returns on Forms in the
W-2 series (except for Form W-2G).
Starting in filing season 2017, filers and
transmitters may request only one 30-day
extension of time to file Form W-2 by
timely submitting a Form 8809, including
an explanation of the reasons for request-
ing the extension and signed under pen-
alty of perjury. Although the regulation
may potentially affect a substantial num-
ber of small entities, the economic impact
on these entities is not expected to be
significant because filers who are unable
to timely file as a result of extraordinary
circumstances or catastrophe may con-
tinue to obtain a 30-day extension through
the Form 8809 process. The form takes
approximately 20 minutes to prepare and
submit to the IRS. Pursuant to section
7805(f) of the Code, these regulations
have been submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on their impact
on small business.

### Drafting Information

The principal author of these regula-
tions is Jonathan R. Black of the Office of
the Associate Chief Counsel (Procedure
and Administration).

* * * * *

### Adoptions of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended
as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read as follows:

Authority: 26 U.S.C. 7805

Par. 2. Section 1.6081-8 is revised to
read as follows:

§ 1.6081-8 Automatic extension of time
to file certain information returns.

[Reserved]. For further guidance, see
§ 1.6081-8T(a) through (g).

Par. 3. Section 1.6081-8T is added to
read as follows:

§ 1.6081-8T Extension of time to file
certain information returns (temporary).

(a) Information returns on Form W-2G,
1042-S, 1094-C, 1095-B, 1095-C, 1097
series, 1098 series, 1099 series, 3921, 3922,
5498 series, or 8027-(1) Automatic exten-
sion of time to file. A person required to file
an information return (the filer) on Form
W-2G, 1042-S, 1094-C, 1095-B, 1095-C,
1097 series, 1098 series, 1099 series, 3921,
3922, 5498 series, or 8027 will be allowed
one automatic 30-day extension of time to
file the information return beyond the due
date for filing it if the filer or the person
transmitting the information return for the
filer (the transmitter) files an application in
accordance with paragraph (c)(1) of this
section.

(2) Non-automatic extension of time to
file. One additional 30-day extension of
time to file an information return on a
form listed in paragraph (a)(1) of this sec-
tion may be allowed if the filer or trans-
mitter submits a request for the additional
extension of time to file before the expi-
ration of the automatic 30-day extension
of time to file. No extension of time to file
will be granted under this paragraph (a)(2)
unless the filer or transmitter has first ob-
tained an automatic extension of time to
file under paragraph (a)(1) of this section.
To request the additional 30-day exten-
sion of time to file, the filer or transmitter
must satisfy the requirements of para-
graph (c)(2) of this section. No additional
extension of time to file will be allowed
for an information return on a form listed
in paragraph (a)(1) of this section pursu-
ant to § 1.6081-1 beyond the extensions
of time to file provided by paragraph
(a)(1) of this section and this paragraph
(a)(2).

(b) Information returns on forms in the
W-2 series (except Form W-2G). Except
as provided in paragraph (f) of this sec-
tion, the filer or transmitter of an informa-
tion return on forms in the W-2 series
(except Form W-2G) may only request
one non-automatic 30-day extension of
time to file the information return beyond
the due date for filing it. To make such a
request, the filer or transmitter must sub-
mit an application for an extension of time
to file in accordance with paragraph (c)(2)
of this section. No additional extension of
time to file will be allowed for informa-
tion returns on forms in the W-2 series
pursuant to § 1.6081-1 beyond the 30-day
extension of time to file provided by this
paragraph (b).

(i) Be submitted on Form 8809, “Re-
quest for Extension of Time to File Infor-
mation Returns," or in any other manner
as may be prescribed by the Commis-
sioner; and

(ii) Be filed with the Internal Revenue
Service office designated in the applica-
tion's instructions on or before the due
date for filing the information return.

(2) Non-automatic extension of time to
file. To satisfy this paragraph (c)(2), a filer
or transmitter must-

(i) Submit a complete application on
Form 8809, or in any other manner pre-
scribed by the Commissioner, including a
detailed explanation of why additional
time is needed;

(ii) File the application with the Inter-
nal Revenue Service in accordance with
forms, instructions, or other appropriate
guidance on or before the due date for
filing the information return (for purposes
of paragraph (a)(2) of this section, deter-
mined with regard to the extension of time

to file under paragraph (a)(1) of this sec-
tion); and

(iii) Sign the application under penal-
ties of perjury.

(d) Penalties. See sections 6652, 6693,
and 6721 through 6724 for failure to com-
ply with information reporting require-
ments on information returns described in
this section.

(e) No effect on time to furnish state-
ments. An extension of time to file an
information return under this section does
not extend the time for furnishing a state-
ment to the person with respect to whom
the information is required to be reported.

(f) Form W-2 filed on expedited basis.
This section does not apply to an informa-
tion return on a form in the W-2 series if
the procedures authorized in Rev. Proc.
96-57 (1996-2 CB 389) (or a successor
revenue procedure) allow an automatic
extension of time to file the information
return. See § 601.601(d)(2)(ii)(b) of this
chapter.

(g) Effective/applicability date. This
section applies to requests for extensions
of time to file information returns due
after December 31, 2016.

(h) Expiration date. The applicability
of this section expires on August 10,
2018.

John Dalrymple,
Deputy Commissioner for
Services and Enforcement.

Approved: July 31, 2015

Mark J. Mazur,
Assistant Secretary of the
Treasury (Tax Policy).

(Filed by the Office of the Federal Register on August 12,
2015, 8:45 a.m., and published in the issue of the Federal
Register for August 13, 2015, 80 F.R. 48433)

## Part III. Administrative, Procedural, and Miscellaneous

Section 49801-Excise Tax
on High Cost Employer-
Sponsored Health
Coverage

Notice 2015-52

Section I: PURPOSE AND OVERVIEW

Section II: BACKGROUND

Section III: PERSONS LIABLE FOR
THE § 4980I EXCISE TAX

Section IV: EMPLOYER
AGGREGATION

Section V: COST OF APPLICABLE
COVERAGE

Section VI: AGE AND GENDER
ADJUSTMENT TO THE DOLLAR
LIMIT

Section VII: NOTICE AND PAYMENT

Section VIII: REQUEST FOR
COMMENTS

Section IX: RELIANCE

Section X: DRAFTING
INFORMATION

## I. PURPOSE AND OVERVIEW

This notice is intended to continue the
process of developing regulatory guidance
regarding the excise tax on high cost
employer-sponsored health coverage under
§ 4980I of the Internal Revenue Code
(Code). Section 4980I, which was added to
the Code by the Affordable Care Act,1 ap-
plies to taxable years beginning after De-
cember 31, 2017. Under this provision, if
the aggregate cost of applicable employer-
sponsored coverage (applicable coverage)
provided to an employee exceeds a statutory
dollar limit (dollar limit), which is adjusted
annually, the excess benefit is subject to a 40
percent excise tax.

On February 23, 2015, the Department
of the Treasury (Treasury) and the Inter-
nal Revenue Service (IRS) issued Notice

2015-16, 2015-10 IRB 732, which de-
scribes potential approaches regarding a
number of issues under § 4980I that may
be incorporated into future regulations.
Notice 2015-16 addresses issues primar-
ily relating to (1) the definition of appli-
cable coverage, (2) the determination of
the cost of applicable coverage, and (3)
the application of the dollar limit to the
cost of applicable coverage to determine
any excess benefit subject to the excise
tax. Treasury and IRS invited comments
on the issues addressed in that notice and
on any other issues under § 4980I.

This notice is intended to supplement
Notice 2015-16 by addressing additional
issues under § 4980I, including the iden-
tification of the taxpayers who may be
liable for the excise tax, employer aggre-
gation, the allocation of the tax among the
applicable taxpayers, and the payment of
the applicable tax. This notice also ad-
dresses further issues regarding the cost of
applicable coverage that were not ad-
dressed in Notice 2015-16. Treasury and
IRS invite comments on these issues and
any other issues under § 4980I. After con-
sidering the comments on both notices,
Treasury and IRS intend to issue proposed
regulations under § 4980I. The proposed
regulations will provide further opportu-
nity for comment, including an opportu-
nity to comment on the issues addressed
in the preceding notices.

This notice includes the following sec-
tions:

## II. BACKGROUND

Section 4980I(a) imposes a 40 percent
excise tax on any "excess benefit" pro-
vided to an employee, and § 4980I(b)
provides that an excess benefit is the ex-
cess, if any, of the aggregate cost of ap-
plicable coverage of the employee for the
month over the applicable dollar limit for
the employee for the month.2

Section 4980I(c)(1) provides that each
coverage provider must pay the excise tax
on its applicable share of the excess ben-

efit with respect to an employee for any
taxable period.

Section 4980I(c)(2) defines the "cover-
age provider" as (A) the health insurance
issuer, in the case of applicable coverage
under a group health plan that provides
health insurance coverage, (B) the em-
ployer, in the case of applicable coverage
under an arrangement in which the em-
ployer makes contributions described in
§ 106(b) or (d) (health savings accounts
(HSAs) and Archer medical savings ac-
counts (Archer MSAs)), and (C) the per-
son that administers the plan benefits, in
the case of any other applicable coverage.
Section 4980I(f)(6) provides that the term
"person that administers the plan benefits"
includes the plan sponsor if the plan spon-
sor administers benefits under the plan.
Section 4980I(f)(7) provides that the term
"plan sponsor" has the meaning given
such term in § 3(16)(B) of the Employee
Retirement Income Security Act of 1974
(ERISA).

Section 4980I(c)(3) defines a coverage
provider's applicable share of an excess
benefit for any taxable period as the
amount which bears the same ratio to
the amount of such excess benefit as (A)
the cost of applicable coverage provided
by the provider to the employee during
that period, bears to (B) the aggregate cost
of all applicable coverage provided to the
employee by all coverage providers dur-
ing that period.

Section 4980I(c)(4)(A) provides that
each employer must calculate for each tax-
able period the amount of the excess benefit
subject to the excise tax and the applicable
share of such excess benefit for each cover-
age provider. Section 4980I(c)(4)(A) further
provides that each employer must notify, at
such time and in such manner as the Secre-
tary may prescribe, the Secretary and each
coverage provider of the amount so deter-
mined for the provider.

Section 4980I(c)(4)(B) provides a spe-
cial rule for multiemployer plans under
which the plan sponsor of the multiem-
ployer plan (as defined in § 414(f)) is

1The "Affordable Care Act" refers to the Patient Protection and Affordable Care Act (enacted March 23, 2010, Pub. L. No. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (enacted March 30, 2010, Pub. L. No. 111-152), and as further amended by the Department of Defense and Full-Year Continuing Appropriations Act, 2011
(enacted April 15, 2011, Pub. L. No. 112-10).

2See sections III and IV of Notice 2015-16 for background on the provisions of § 4980I related to the definition of applicable coverage and the calculation of the excess benefit (including
the calculation of the aggregate cost of the applicable coverage and determination of the applicable dollar limit).

responsible for making the calculations
and for providing the notice.

Section 4980I(f)(8) provides that the
term "taxable period" means the calendar
year or such shorter period as the Secre-
tary may prescribe. Section 4980I(f)(8)
further provides that the Secretary may
prescribe different taxable periods for em-
ployers of varying sizes.

Section 4980I(f)(9) provides that all
employers treated as a single employer
under subsection (b), (c), (m), or (o) of
§ 414 are treated as a single employer.

Section 4980I(f)(10) provides a cross-
reference to § 275(a)(6) for the denial of a
deduction for the tax imposed by § 4980I.
Section 275(a)(6) provides that no deduc-
tion is allowed for the taxes imposed by
chapters 41, 42, 43, 44, 45, 46 and 54 of
the Code. Section 4980I is located in
chapter 43 of the Code, and therefore no
deduction is allowed for the payment of
tax under § 4980I.

## III. PERSONS LIABLE FOR THE § 4980I EXCISE TAX

### A. Coverage Provider

Section 4980I(c)(1) provides that the
coverage provider is liable for any appli-
cable excise tax. The identity of the cov-
erage provider depends on the type of
coverage provided. Under the statute, in
the case of applicable coverage provided
under an insured group health plan, the
coverage provider is the health insurance
issuer. With respect to coverage under an
HSA or an Archer MSA, the coverage
provider is the employer. For all other
applicable coverage, the coverage pro-
vider is "the person that administers the
plan benefits."

### B. Person That Administers the Plan Benefits

Section 4980I does not define the term
"person that administers the plan bene-
fits." Section 4980I(f)(6) provides that the
term "person that administers the plan
benefits" includes the plan sponsor if the
plan sponsor administers benefits under
the plan, which indicates that the plan

sponsor of a self-insured arrangement
may be, but is not always, the person that
administers benefits under the plan. The
term, "person that administers the plan
benefits," is not used elsewhere in the
Code, nor is it used elsewhere in the Af-
fordable Care Act or in ERISA or the
Public Health Service Act, both of which
were amended by the Affordable Care
Act. Because the term "person that admin-
isters the plan benefits" is not used in
other statutory contexts, Treasury and IRS
are considering two alternative ap-
proaches to determining the identity of the
person that administers the plan benefits.3
Under either approach, it is anticipated
that the person that administers the plan
benefits will generally be an entity, rather
than an individual, but for purposes of the
discussion below, the relevant entity or
individual is referred to as a "person."

Under one approach, the person that
administers the plan benefits would be
the person responsible for performing the
day-to-day functions that constitute
the administration of plan benefits, such as
receiving and processing claims for bene-
fits, responding to inquiries, or providing
a technology platform for benefits infor-
mation. Treasury and IRS anticipate that
this person generally would be a third-
party administrator for benefits that are
self-insured, except in the rare circum-
stance in which the employer or plan
sponsor performs these functions, or owns
the person that performs these functions.
Comments are requested on the types of
administrative functions that should be
considered under this approach when de-
termining the person that administers the
plan benefits. Comments are also re-
quested on whether the person that admin-
isters the plan benefits could be easily
identified in most instances under this ap-
proach, or whether the identity of the per-
son that administers the plan benefits
would often be unclear because, for ex-
ample, multiple parties (such as a phar-
macy benefit administrator and a medical
claims benefit administrator) perform the
relevant functions with respect to a benefit
package for which a single cost of appli-

cable coverage will be determined as dis-
cussed in section IV.C of Notice 2015-16
(concerning potential approaches for de-
termining the cost of applicable cover-
age). In addition, Treasury and IRS re-
quest comments on any other concerns
this approach would raise.

Under the second approach that Trea-
sury and IRS are considering, the person
that administers the plan benefits would
be the person that has the ultimate author-
ity or responsibility under the plan or ar-
rangement with respect to the administra-
tion of the plan benefits (including final
decisions on administrative matters), re-
gardless of whether that person routinely
exercises that authority or responsibility.
For purposes of this second approach, the
relevant types of administrative matters
over which the person that administers
plan benefits would have ultimate author-
ity or responsibility could include eligibil-
ity determinations, claims administration,
and arrangements with service providers
(including the authority to terminate ser-
vice provider contracts). Treasury and IRS
anticipate that the person with such ulti-
mate administrative authority or responsi-
bility under the plan or arrangement
would be identifiable based on the terms
of the plan documents and often would
not be the person that performs the day-
to-day routine administrative functions
under the plan. Comments are requested
on whether the person that administers the
plan benefits would be easy to identify
under this second approach in most cir-
cumstances or whether multiple parties
have ultimate authority or responsibility
for the different relevant administrative
matters with respect to the same benefit
package, and whether in most instances
this approach would identify an appropri-
ate person as the person that administers
the plan benefits. Comments are requested
on any other issues this approach would
raise.

Comments are invited on the applica-
tion of these approaches to collectively
bargained multiemployer health plans.

3The Department of Health and Human Services (HHS) recently issued regulations defining a category of self-administered, self-insured plans for purposes of applicability of the fee, imposed
by § 1341 of the Affordable Care Act, which funds the Transitional Reinsurance Program. The definition in these HHS regulations focuses on the party directly responsible for claims
administration and plan enrollment. See Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2015; Final Rule, 79 Fed. Reg. 13744, 13772-75
(March 11, 2014). Section 4980I of the Code and § 1341 of the Affordable Care Act are provisions with no common statutory language. Accordingly, it is not anticipated that the definition
of the person that administers the plan benefits for § 4980I purposes will align with the definition for self-insured self-administered plans in the HHS regulations.

## IV. EMPLOYER AGGREGATION

Section 4980I(f)(9) provides generally
that, for purposes of § 4980I, all employ-
ers treated as a single employer under
subsections (b), (c), (m), or (o) of § 414
are treated as a single employer. Treasury
and IRS invite comments on the practical
challenges presented by the application of
those aggregation rules to § 4980I. In par-
ticular, Treasury and IRS request com-
ments on the application of these em-
ployer aggregation rules to the: (1)
identification of the applicable coverage
taken into account as made available by
an employer (§ 4980I(d)(1)(A)); (2) iden-
tification of the employees taken into ac-
count for the age and gender adjustment
(§ 4980I(b)(3)(C)(iii)), and the adjustment
for employees in high risk professions or
who repair and install electrical or telecom-
munications lines (§ 4980I(b)(3)(C)(iv)); (3)
identification of the taxpayer responsible for
calculating and reporting the excess benefit
(§ 4980I(c)(4)(A)); and (4) identification of
the employer liable for any penalty for fail-
ure to properly calculate the tax imposed
under § 4980I (§ 4980I(e)(1)(B)).

## V. COST OF APPLICABLE COVERAGE

### A. Taxable Period

Taxable period is defined under
§ 4980I(f)(8) to mean the calendar year or
such shorter period as the Secretary may
prescribe. The section provides that the
Secretary may have different taxable pe-
riods for employers of varying sizes. Trea-
sury and IRS anticipate that the taxable
period will be the calendar year for all
taxpayers.

### B. Determination Period

To calculate the amount of any excise
tax that a coverage provider may owe
under § 4980I for a taxable period, an
employer must determine the extent, if
any, to which the cost of applicable cov-
erage provided to an employee during any
month of the taxable period exceeds the
dollar limit. The employer then must no-
tify both IRS and the coverage provider of
the amount of the excess benefit, and the

tax must be paid by the coverage provider.
Accordingly, Treasury and IRS anticipate
that employers will be required to determine
the cost of applicable coverage provided
during a taxable year sufficiently soon after
the end of that taxable year to enable cov-
erage providers to pay any applicable tax in
a reasonably timely manner.

Section 4980I(d)(2)(A) provides that
the cost of applicable coverage is to be
determined using rules "similar to the
rules of section 4980B(f)(4)" regarding
the determination of the COBRA applica-
ble premium. Section IV.C of Notice
2015-16 invited comments on potential
approaches to determining the cost of ap-
plicable coverage. Treasury and IRS now
invite further comments on any issues
raised by the anticipated need to deter-
mine the cost of applicable coverage for a
taxable period reasonably soon after the
end of that taxable period.

Treasury and IRS anticipate that the
potential timing issues are likely to be
different for insured plans and self-insured
plans, and will also be different for HSAs,
Archer MSAs, health flexible spending ar-
rangements (FSAs),4 and health reimburse-
ment arrangements (HRAs). In the case of
self-insured plans, for example, if the cost of
applicable coverage is determined based on
a period ending at or before the beginning of
the applicable calendar year, then the nec-
essary information should be available to
the employer relatively soon after the appli-
cable calendar year ends to permit it to cal-
culate any excess benefit for each employee
and allocate any excess benefit among cov-
erage providers. In contrast, if the cost of
applicable coverage is determined based on
a period ending during or at the end of the
applicable calendar year, the cost may be
determinable only after the end of both the
applicable calendar year and a subsequent
run-out period during which employees may
submit claims for reimbursement. In that
case, an employer will need additional time
to compute the cost of applicable coverage
before it can calculate any excess benefit for
each employee and allocate any excess ben-
efit among coverage providers.

In addition, experience-rated arrange-
ments may provide for payments to be
made to or from an insurance company
after the end of a coverage period that

relate to the coverage provided during that
coverage period. In other instances, the
equivalent of those types of payments
may be made through a premium discount
for the next coverage period. Comments
are requested on how those payments or
discounts may be reflected in the cost of
applicable coverage, including comments
on any administrative issues that might
arise if, for purposes of determining the
cost of applicable coverage, the payments
or discounts are attributed back to the
original period of coverage (for which the
taxable year might have ended) rather
than accounted for during the period of
coverage in which the amounts are paid or
the discount applied. In addition, com-
ments are requested on how employers are
addressing these payments or discounts
currently for purposes of determining CO-
BRA applicable premiums. Taking into
account the potential approaches to the
determination of the cost of applicable
coverage outlined in Notice 2015-16, as
well as other issues with timing implica-
tions, Treasury and IRS request comments
on the processes expected to be involved
in calculating and allocating any excess
benefit and the time period necessary to
complete these processes.

### C. Exclusion from Cost of Applicable Coverage of Amounts Attributable to the Excise Tax

As discussed in section III of this no-
tice, the excise tax will be paid by the
health insurance issuer for insured cover-
age and by the "person that administers
the plan benefits" (which may, in some
instances, be the employer) in the case of
self-insured coverage. It is expected that,
if a person other than the employer is the
coverage provider liable for the excise tax,
that person may pass through all or part of
the amount of the excise tax to the em-
ployer in some instances. If the coverage
provider does pass through the excise tax
and receives reimbursement for the tax (the
excise tax reimbursement), the excise tax
reimbursement will be additional taxable in-
come to the coverage provider. Because
§ 4980I(f)(10) provides that the excise tax is
not deductible, the coverage provider will
experience an increase in taxable income

4All references in this notice to flexible spending arrangements refer only to health flexible spending arrangements.

(that is not offset by a deduction) by reason
of the receipt of the excise tax reimburse-
ment. As a result, it is anticipated that the
amount the coverage provider passes
through to the employer may include not
only the excise tax reimbursement, but also
an amount to account for the additional in-
come tax the coverage provider will incur
(the income tax reimbursement).

In determining the cost of applicable
coverage subject to the excise tax,
§ 4980I(d)(2)(A) provides that "any por-
tion of the cost of such coverage which is
attributable to the tax imposed under this
section shall not be taken into account."
This indicates that the excise tax reim-
bursement should be excluded from the
cost of applicable coverage, and it is an-
ticipated that future regulations will re-
flect this interpretation.

Treasury and IRS are also considering
whether some or all of the income tax
reimbursement could be excluded from
the cost of applicable coverage. However,
Treasury and IRS are concerned that a
methodology for excluding an income
tax reimbursement may not be adminis-
trable, given the potential variability of
tax rates and other factors among differ-
ent coverage providers and potential dif-
ficulties in determining and excluding
the reimbursement amount. Nonethe-
less, comments are requested on admin-
istrable methods for exclusion of the
income tax reimbursement.

Because it may not be feasible to ex-
clude amounts that are not separately
billed, Treasury and IRS anticipate that
coverage providers would be permitted to
exclude the amount of any excise tax re-
imbursement or income tax reimburse-
ment only if it is separately billed and
identified as attributable to the cost of the
excise tax. Separately billed amounts in
excess of the excise tax reimbursement or
the income tax reimbursement (as deter-
mined in the manner discussed in section
V.D below) could not be excluded from
the cost of applicable coverage (and,
therefore, would be treated as part of the
cost of applicable coverage). Comments
are requested on any practical issues or
legal barriers to passing through any or all
of these amounts or to separately identi-
fying these amounts, such as federal rating
rules or state insurance law.

Coverage providers generally will not
know the amount of any excise tax due
with respect to applicable coverage pro-
vided for a taxable period (discussed in
section V.A above) until after the end of
the taxable period. As a result, Treasury
and IRS expect that, as a practical matter,
the coverage provider generally will be
unable to bill for the excise tax reimburse-
ment or the income tax reimbursement
until the excise tax is paid by the coverage
provider. However, comments are re-
quested on whether there are alternative
approaches that might allow for earlier

billing of the amount but that would not
give rise to undue administrative com-
plexity or difficulty.

### D. Income Tax Reimbursement Formula

If Treasury and IRS conclude that an
income tax reimbursement can be ex-
cluded from the cost of coverage, it is
anticipated that the amount of the income
tax reimbursement would be determined
using a formula commonly used to calcu-
late "tax gross-ups." As mentioned previ-
ously, a coverage provider that passes the
excise tax through to another party will
have additional taxable income as a result
of receipt of the excise tax reimbursement.
If a coverage provider then also passes
through the amount of the income tax due
on the excise tax reimbursement, the re-
imbursement of that additional amount
will further increase the taxable income of
the coverage provider, and the coverage
provider will owe additional income tax
due to that reimbursement as well. The
formula would take these additional taxes
into account in determining the amount of
the income tax reimbursement. Under the
formula, the amount of the income tax
reimbursement that would be excludable
from the cost of applicable coverage
would be:

[amount of tax]

Income Tax Reimbursement =

\- [amount of tax]

(1 - [marginal tax rate])

In this formula, the "amount of tax" is
the excise tax rate multiplied by the initial
excess benefit calculated without regard to
any portion of the cost of applicable cov-
erage that the coverage provider identifies
as arising from an excise tax reimburse-
ment or an income tax reimbursement. For
example, if the cost of applicable cover-
age without regard to the tax is $2,500 in
excess of the dollar limit, a coverage pro-
vider would owe $1,000 as a § 4980I
excise tax ($2,500 times the 40 percent
rate). If the coverage provider's marginal

tax rate is 20 percent,5 the formula would
divide $1,000 (the amount of the excise
tax) by .8 (1-0.2), which equals $1,250;
and then subtract $1,000 (the amount of
the excise tax), which equals $250
($1,250 - $1,000). Accordingly, the in-
come tax reimbursement on an excise tax
of $1,000 paid by a coverage provider
with a marginal tax rate of 20 percent
would be $250.

If it is determined that an income tax
reimbursement can be excluded from the
cost of applicable coverage, Treasury and

IRS are considering two possible ap-
proaches for applying the formula de-
scribed above. The first approach would
use the coverage provider's actual mar-
ginal tax rate in the formula. This ap-
proach could provide greater flexibility to
taxpayers, but also could create adminis-
trative difficulties for IRS, coverage pro-
viders, and employers due to the extended
time needed to determine a taxpayer's
marginal tax rate for any year, changes in
a coverage provider's marginal tax rate
from year to year (including potential ret-

5If the coverage provider were not subject to income tax on the excise tax reimbursement (for example, because it is a tax-exempt organization described in § 501(c) that is not subject to
unrelated business income tax on the reimbursement under § 511), its marginal tax rate on the reimbursement would be zero, producing an income tax reimbursement amount of zero under
the formula.

roactive changes due to amended returns,
audits, or other circumstances), and the
fact that a coverage provider's marginal
tax rate is generally determined for its
fiscal year, which may not be the same as
the calendar year taxable period for which
the cost of applicable coverage is deter-
mined. This approach could also create an
additional administrative burden in cases
in which multiple coverage providers are
liable for tax for coverage offered by a
given employer. Comments are requested
on whether there are workable solutions to
these administrative challenges that would
permit Treasury and IRS to implement
such an approach.

The second approach would prescribe,
for purposes of applying the income tax
reimbursement formula in a manner that is
administrable, a standard marginal tax
rate6 based on typical marginal tax rates
applicable to different types of health in-
surance issuers. It is anticipated that the
prescribed rates would reflect an approx-
imately representative marginal rate that
would be less than the statutory maximum
rate. The prescribed rate for an insurer
would be used in the income tax reim-
bursement formula rather than the cover-
age provider's actual marginal tax rate.
While more administrable, this approach
may not permit some taxpayers to exclude
from the cost of applicable coverage the
total income tax reimbursement, but
would permit other taxpayers to exclude
from the cost of applicable coverage more
than the total income tax reimbursement.
Comments are requested on how these
standard marginal tax rates might be de-
termined, how many such rates might ap-
ply (for example, one for each of two or
three categories of insurers) and for what
types of insurers, and how this approach
would affect particular segments of tax-
payers.

### E. Allocation of Contributions to HSAs, Archer MSAs, FSAs, HRAs

Applicable coverage under § 4980I(d)
(1)(A) is "coverage under any group
health plan made available to the em-
ployee by an employer which is exclud-
able from the employee's gross income
under section 106, or would be so exclud-

able if it were employer-provided cover-
age (within the meaning of such section
106)." Applicable coverage includes cov-
erage under certain HSAs, Archer MSAs,
FSAs, or HRAs.

Section 4980I(a) imposes an excise tax
equal to 40 percent of the excess benefit if
an employee is covered under any appli-
cable coverage of an employer at any time
during a taxable period and there is any
excess benefit with respect to the cover-
age. Under § 4980I(b)(1), an excess ben-
efit means, with respect to any applicable
coverage made available by an employer
to an employee during any taxable period,
the sum of the excess amounts determined
for months during the taxable period. Un-
der § 4980I(b)(2), the excess amount de-
termined for any month is the excess (if
any) of (A) the aggregate cost of the ap-
plicable coverage of the employee for the
month over (B) an amount equal to 1/12
of the dollar limit for the calendar year in
which the month occurs.

Section 4980I(d)(2)(D) provides that if
the cost of applicable coverage is deter-
mined on other than a monthly basis, the
cost is allocated to months in a taxable
period on such basis as the Secretary may
prescribe.

Treasury and IRS are considering an
approach under which contributions to
account-based plans would be allocated
on a pro-rata basis over the period to
which the contribution relates (generally,
the plan year), regardless of the timing of
the contributions during the period. Trea-
sury and IRS anticipate that this allocation
rule would apply to HSAs, Archer MSAs,
FSAs, and HRAs that are applicable cov-
erage. For example, if an employer con-
tributes an amount to an HSA for an em-
ployee for a plan year, that contribution
would be allocated ratably to each calen-
dar month of the plan year, regardless of
when the employer actually contributes
the amount to the HSA. Similarly, if an
employee elects to contribute to an FSA
for a plan year, the employee's total con-
tributions would be allocated ratably to
each calendar month of the plan year,
even though the entire amount contributed
for the plan year would be available to
reimburse qualified medical expenses on

the first day of the plan year. Comments
are requested on this approach as well as
alternative approaches.

### F. Cost of Applicable Coverage under FSAs with Employer Flex Credits

Section 4980I(d)(2)(B) provides that in
the case of applicable coverage consisting
of coverage under an FSA, the cost of
applicable coverage is equal to the sum of
(i) the amount of any contributions made
under a salary reduction election, plus (ii)
the cost of applicable coverage under the
generally applicable rules for determining
the cost of applicable coverage with re-
spect to any reimbursement under the ar-
rangement in excess of the contributions
made under the salary reduction agree-
ment. Thus, the cost of applicable coverage
of an FSA for any plan year would be the
greater of the amount of an employee's sal-
ary reduction or the total reimbursements
under the FSA.

Under this general rule, in determining
the portion of the cost of applicable cov-
erage attributable to non-elective flex
credits contributed to an FSA by an em-
ployer (either in combination with em-
ployee salary reduction contributions or
without), the cost of the non-elective flex
credit would be the amount that is actually
reimbursed in excess of the employee's
salary reduction election for that plan
year. For example, if an employee elects
to make a salary reduction contribution to
an FSA in the amount of $1,000 for a plan
year and the employer makes a non-
elective flex credit in the amount of $500
available to the employee under the FSA
for that plan year, but the employee only
has $1,200 in medical expenses reim-
bursed under the FSA for that plan year,
the cost of applicable coverage for the
FSA for the plan year would be $1,200
(comprised of the $1,000 salary reduction
plus the additional $200 in reimburse-
ments attributable to the non-elective flex
credit provided by the employer) rather
than the full $1,500 elected or available
for the FSA for the plan year.

Under this rule, the cost of applicable
coverage of the FSA would not be known
until some point in time after the end of
the taxable year. With respect to amounts

"If an approach using a standard marginal tax rate were adopted, the standard marginal tax rate would not be available to coverage providers that are not subject to income tax on the excise
tax reimbursement.

carried over to a subsequent year, this rule
would take such amounts into account in a
later year if the reimbursements in the
subsequent year exceeded the amount of
employee salary reduction in the subse-
quent year.

To avoid the double counting associ-
ated with taking salary deferral amounts
that are carried over from one year to
another year into account in determining
the cost of coverage in both the year of
contribution and the subsequent year,
which would be the result under the gen-
eral rule outlined above, Treasury and IRS
are considering providing a safe harbor.
Under this safe harbor, the cost of appli-
cable coverage for the plan year would be
the amount of an employee's salary reduc-
tion without regard to carry-over amounts.
Unused amounts that are carried forward
would be taken into account when initially
funded by salary reduction but would be
disregarded when used to reimburse ex-
penses in a later year. For example, if an
employee elected to reduce his salary by
$1,200 to contribute to an FSA in a given
year, the FSA's cost of applicable cover-
age in that year would be $1,200 even if
some or all of the $1,200 was not used to
reimburse expenses in that year. Accord-
ingly, if that same employee carried over
$500 of unused funds that were used to
reimburse expenses in the second year,
and elected no new salary reduction for
the second year, the FSA's cost of appli-
cable coverage in the second year would
be $0.

The possible safe harbor described
above would be limited to cases in which
non-elective flex credits are not available
for use in the FSA. To address situations
in which non-elective flex credits are
available under a cafeteria plan that in-
cludes an FSA, Treasury and IRS are con-
sidering a variation on the safe harbor that
would allow an FSA with non-elective
flex credits to be valued under the safe
harbor described in the preceding para-
graph in certain situations.

Under some cafeteria plan arrange-
ments, an employee may elect to defer
amounts to the cafeteria plan that exceed
the § 125(i) limit for FSAs (for 2015,
$2,550), and the employer may offer ad-
ditional non-elective flex credits. These
amounts may be allocated to pay for var-
ious benefits available under the cafeteria

plan, such as reimbursements under an
FSA, dependent care assistance, and
health insurance. The possible variation
on the safe harbor would provide that an
FSA could be treated as funded solely by
salary reduction if the amount elected by
the employee for the FSA were less than
or equal to the maximum amount permit-
ted by § 125(i). For example, if an em-
ployee with a $1,000 non-elective flex
credit available reduces salary by an ad-
ditional $5,000 under a cafeteria plan and
allocates $2,550 to the FSA, the FSA
would be treated as funded solely by sal-
ary reduction. As a result, the cost of
applicable coverage would be $2,550. Un-
der the safe harbor proposal, the salary
reduction taken into account would be
counted only in the year an amount was
elected for the FSA and, therefore, would
be disregarded in later years if amounts
were carried over. Comments are re-
quested on the allocation of FSA amounts
between non-elective flex credits and sal-
ary reduction when the total election for
the FSA exceeds the maximum salary re-
duction amount permitted by § 125(i).

Treasury and IRS request comments
concerning whether these potential ap-
proaches are administrable. In addition,
comments are requested generally on the
potential safe harbors described above and
on any other issues arising from the val-
uation of FSAs.

### G. Inclusion in Applicable Coverage of Self-Insured Coverage Includible in Income under § 105(h)

Section 4980I(d)(1)(A) defines appli-
cable coverage to include coverage under
any group health plan made available to
the employee by an employer that is ex-
cludable from the employee's gross in-
come under § 106 (or would be so exclud-
able if it were employer-sponsored
coverage).

Section 106 excludes employer-provided
coverage under an accident or health plan
from an employee's gross income. For an
employee who then receives reimburse-
ment for medical expenses of the em-
ployee or his family under an employer-
provided accident or health plan, § 105
further excludes those reimbursement
amounts from the employee's income. In
the case of reimbursements paid to a
highly-compensated individual under a

self-insured plan that discriminates in fa-
vor of highly compensated individuals,
however, § 105(h) provides that the ex-
clusion does not apply to the extent that
the amounts constitute an "excess reim-
bursement." The amount of the excess
reimbursement is included in the gross
income of the highly compensated indi-
viduals.

Section 6051(a)(14) requires employ-
ers to report on the Form W-2, Wage and
Tax Statement (Form W-2), the aggregate
cost of applicable coverage as defined in
§ 4980I(d)(1). Notice 2012-9, 2012-4
IRB 315, currently permits employers to
reduce the amount reported on the Form
W-2 by any excess reimbursement in-
cluded in gross income by application of
§ 105(h).

Although excess reimbursements cur-
rently can be excluded from the cost re-
ported on the Form W-2, Treasury and
IRS do not believe such amounts reduce
the cost of applicable coverage subject to
tax under § 4980I. It is the coverage (ex-
cludable from income under § 106), and
not the resulting benefit (excludable from
income under § 105), that is applicable
coverage under § 4980I, and it is the cost
of that coverage that is compared to the
dollar limit to determine the amount of
any excise tax under § 4980I. Inclusion of
excess reimbursements in an employee's
income does not reduce the cost of appli-
cable coverage subject to tax under
§ 4980I. Treasury and IRS anticipate that
Notice 2012-9 will be modified in the
future to make excess reimbursements
subject to reporting under § 6051(a)(14)
and that the forms and instructions will be
modified to reflect this change. Taxpayers
should continue to follow Notice 2012-9
until modification of that notice is issued.

## VI. AGE AND GENDER ADJUSTMENT TO THE DOLLAR LIMIT

Section 4980I(b)(3) provides two base-
line per-employee dollar limits for 2018
($10,200 for self-only coverage and
$27,500 for other than self-only coverage)
but also provides that various adjustments,
discussed in section V.C of Notice 2015-
16, will apply to increase these amounts.
As stated in Notice 2015-16, Treasury
and IRS intend to include rules regard-
ing these adjustments in proposed regu-

lations and have invited comments on
the application and adjustment of the
dollar limits.

One of these adjustments, set forth at
§ 4980I(b)(3)(C)(iii), provides for an in-
crease in the dollar limits based on the age
and gender characteristics of all employ-
ees of an employer. In accordance with
the statute, no downward adjustments can
occur (that is, the statute does not provide
for any decrease in the dollar limits based
on age and gender). Specifically, the ad-
justment increases the dollar limit by an
amount equal to the excess of the pre-
mium cost of the Blue Cross/Blue Shield
standard benefit option under the Federal
Employees Health Benefits Plan (FEHBP
standard option) if priced for the age and
gender characteristics of all employees of
an individual's employer (the employer's
premium cost), over the premium cost for
providing this coverage if priced for the
age and gender characteristics of the na-
tional workforce (the national premium
cost). Section 4980I(b)(3)(C)(iii)(II)(aa)
provides that the adjustment is based on
"the type of coverage provided such in-
dividual in such taxable period." In
other words, the age and gender adjust-
ment is determined separately for self-
only coverage and other than self-only
coverage.

While rating based on age and gender
in the individual and small group market
is subject to certain restrictions under the
Affordable Care Act, the actual cost of
applicable coverage generally differs
based on age and gender. On average,
older individuals have higher health costs
than younger individuals, and, on average,
younger women have higher health costs
than younger men. Consequently, some
employers may have higher health costs
than other employers under identical ben-
efit plans due to the age and gender char-
acteristics of their workforce. In determin-
ing the effect that the age and gender
characteristics of a workforce have on
premium rates, it is not sufficient to sim-
ply compare the average age and gender
of an employer's workforce to the average
age and gender of the national workforce.
Rather, the premium rate depends on the
distribution of men and women in differ-
ent age groups.

### A. Determination of Age and Gender Distribution

To compare the employer's premium
cost with the national premium cost, it
will be necessary to establish the age and
gender characteristics of the national
workforce. To determine the age and gen-
der distribution of the national workforce,
Treasury and IRS are considering using
the Current Population Survey as summa-
rized in Table A-8a, Employed Persons
and Employment-Population Ratios by
Age and Sex, Seasonally Adjusted (Table
A-8a), published annually by the Depart-
ment of Labor Bureau of Labor Statistics.
This publication provides the number of
individuals participating in the labor force
by five-year age-bands (up to age 75 and
over) and the ratio of male to female
workers in each age-band. Treasury and
IRS request comments on whether Table
A-8a and the Current Population Survey
more generally is an appropriate source
of data for the age and gender charac-
teristics of the national workforce for
purposes of § 4980I and whether other
sources of data for the age and gender
characteristics of the national workforce
should be considered.

To determine the age and gender char-
acteristics of a particular employer's pop-
ulation, Treasury and IRS are considering
a requirement that an employer use the
first day of the plan year as a snapshot
date for determining the composition of
its employee population. In other words,
an employer would be required to deter-
mine the age and gender of each employee
as of the first day of the plan year and that
distribution of age and gender character-
istics would apply for purposes of the age
and gender adjustment. Comments are re-
quested on the administrability of this ap-
proach, whether it is likely to result in a
representative age and gender distribu-
tion, and whether employers should be
permitted to choose a different date other
than the first day of the plan year to de-
termine the age and gender characteristics
of its employees. If employers were per-
mitted to choose a different date, it is
anticipated that the employer would not
be permitted to vary the date from one
taxable year to the next. To the extent that
commenters recommend that employers
be permitted to use a date other than the

first day of the plan year, Treasury and
IRS ask that the commenters address why
permitting the use of a different date will
result in a more accurate representation of
the age and gender characteristics of an
employer's workforce, whether flexibility
in determining the snapshot date is sus-
ceptible to abuse, and any administrability
issues associated with requiring a specific
date or permitting flexibility in the choice
of date.

### B. Development of Age and Gender Adjustment Tables

Treasury and IRS anticipate that IRS
will formulate and publish adjustment ta-
bles to facilitate and simplify the calcula-
tion of the age and gender adjustment. The
following approach is being considered
for the development of these tables and
the calculation of the age and gender ad-
justment. All adjustments and calculations
would be determined separately for self-
only coverage and for other than self-only
coverage.

1\. Determination of average cost for
FEHPB coverage. The average cost of
applicable coverage under the FEHBP
(FEHBP average cost) would be deter-
mined by aggregating all claims expenses
of the FEHBP standard option and divid-
ing the total by the number of coverage
units. Each employee policyholder would
be a coverage unit.

2\. Determination of average cost for
each age and gender group. Claims ex-
pense data would be sorted into groups,
separating the population into male and
female coverage units and further separat-
ing each gender population into multi-
year age-bands. For example, the dollar
amount of claims for all male individuals
between the ages of 30 and 34 would be
added together. The dollar amount of
claims for each group would then be di-
vided by the number of coverage units in
that age and gender group to yield the
average cost for that group (group average
cost). A group average cost would be cal-
culated in this way for each of the age and
gender groups.

3\. Determination of group ratios. Each
group average cost would be divided by
the FEHBP average cost to establish the
ratio (group ratio) of the group average
cost to the FEHBP average cost. The
group ratio would be expressed as a frac-

tion or percentage and would be deter-
mined periodically, but less frequently
than annually.

4\. Determination of group premium
cost. The group ratio would be multiplied
by the most recent annual premium cost of
the FEHBP standard option to determine
the annual premium cost for each age and
gender group (group premium cost). The
dollar amounts representing each group
premium cost would then be used to pop-
ulate the adjustment tables, to be pub-
lished annually.

5\. Determination of national premium
cost. To determine the national premium
cost, each group premium cost would be
multiplied by the fraction of employees in
the national workforce who are in that
group. The product of each of these cal-
culations would be added together to yield
the national premium cost, which would
be a single dollar amount that would be
published annually.

6\. Determination of the employer's
premium cost. Each employer would de-
termine the fraction of its employees who
are in each age and gender group. The
employer would then multiply the group
premium cost from the relevant adjust-
ment table by the fraction of its employees
in each group. The product of each of
these calculations would be added to-
gether to yield the employer's premium
cost, which would be a single dollar
amount.

7\. Determination of adjustment. The
employer's premium cost would then be
compared to the national premium cost. If
the employer's premium cost exceeds the
national premium cost, the excess dollar
amount would be added to the dollar limit
for that employer for purposes of deter-
mining the amount of any excess benefit.

With respect to step one, two different
approaches are under consideration. One
approach would rely on actual claims data
from the FEHBP standard option. An al-
ternative approach would rely on national
claims data reflecting plans with a design
similar to that of the FEHBP standard

option. It is anticipated that only one ap-
proach will be adopted and that it will be
applied in a uniform manner.

Treasury and IRS seek comments on this
approach to the age and gender adjustment,
including the alternative approaches to
step one and whether the approach to the
age and gender adjustment should take
into account the age rating scale adopted
in regulations for the individual and small
group market.

## VII. NOTICE AND PAYMENT

### A. Notice of Calculation of Applicable Share of Excess Benefit

Section 4980I(c)(4)(A) imposes a noti-
fication requirement on the employer.
Specifically, that section requires the em-
ployer to calculate for each taxable period
the amount of the excess benefit subject to
the tax imposed by § 4980I(a) and the
applicable share of that excess benefit for
each coverage provider, and to notify the
Secretary and each coverage provider of
the amount so determined for each cover-
age provider at the time and in the manner
as the Secretary may prescribe.

Treasury and IRS are considering both
the form in which that information must
be provided to the various coverage pro-
viders and IRS, and the time at which that
information must be provided. Comments
are requested on the administrative and
other issues raised by this notice require-
ment, taking into account that this process
may be affected by the rules governing the
period over which the cost of applicable
coverage is determined as discussed in
section V.B of this notice.

Treasury and IRS anticipate that calcu-
lation errors that affect the cost of appli-
cable coverage may, in some instances,
affect multiple coverage providers due to
the allocation of the tax. Comments are
invited on how instances of reallocation
might be mitigated or avoided.

### B. Payment of the § 4980I Excise Tax

Section 4980I(c)(1) provides that each
coverage provider is liable for the excise
tax on its applicable share of the excess
benefit with respect to an employee for
any taxable period, but does not specify
the time and manner in which the excise
tax is paid. Treasury and IRS are consid-
ering designating the filing of Form 720,
Quarterly Federal Excise Tax Return, as
the appropriate method for the payment of
the tax. Although Form 720 generally is
filed quarterly, under this approach a par-
ticular quarter of the calendar year would
be designated for the use of Form 720 to
pay the excise tax under § 4980I.7

## VIII. REQUEST FOR COMMENTS

Treasury and IRS invite comments on
the issues addressed in this notice and on
any other issues under § 4980I. This in-
cludes an invitation to submit further
comments on issues addressed in Notice
2015-16. For example, in response to No-
tice 2015-16, some commenters ex-
pressed concern about coordination be-
tween the excise tax under § 4980I and the
assessable payments under § 4980H.8
Comments are invited on the circum-
stances in which the interaction between
the provisions of § 4980H and § 4980I
may raise concerns and on whether and
how these provisions might be coordi-
nated consistent with the statutory re-
quirements of these provisions and in a
manner that is administrable for employ-
ers and the IRS.

Although many comments submitted
in response to Notice 2015-16 are not
reflected in this notice, those comments
are under consideration. Those comments
and comments responding to this notice
will be used to inform proposed regula-
tions that will be issued in the future for
further public notice and comment.

Public comments should be submitted
no later than October 1, 2015. Comments
should include a reference to Notice

7This procedure is used for payment of the fee imposed on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the
Patient-Centered Outcomes Research Institute. The fee is required to be reported only once a year on the second quarter Form 720 and paid by its due date, July 31. See Fees on Health
Insurance Policies and Self-Insured Plans for the Patient-Centered Outcomes Research Trust Fund, 77 Fed. Reg. 72721, 72726-27 (December 6, 2012) and the Form 720 and accompanying
instructions.

8Generally, under § 4980H, an applicable large employer that fails to offer to its full-time employees health coverage that is affordable and provides minimum value (as defined in
§ 36B(c)(2)(C)(ii)) may be subject to an assessable payment if a full-time employee enrolls in a qualified health plan for which the employee receives a premium tax credit. Commenters
have noted that health coverage providing no more than minimum value (or only slightly more than minimum value) may exceed the applicable dollar limit under § 4980I in certain
circumstances.

2015-52. Send submissions to CC:PA:LP-
D:PR (Notice 2015-52), Room 5203, Inter-
nal Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
Submissions may be hand delivered Mon-
day through Friday between the hours of 8
a.m. and 4 p.m. to CC:PA:LPD:PR (Notice
2015-52), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW,
Washington, DC 20044, or sent electroni-
cally, via the following e-mail address:
Notice.comments@irscounsel.treas.gov.
Please include "Notice 2015-52" in the
subject line of any electronic communica-
tion. All material submitted will be avail-
able for public inspection and copying.

## IX. RELIANCE

This notice does not provide guidance
under § 4980I upon which taxpayers may
rely. No inference should be drawn from
any provision of this notice concerning
any provision of § 4980I other than those
addressed in this notice or concerning any
other section of the Affordable Care Act.

## X. DRAFTING INFORMATION

The principal author of this notice is
Karen Levin of the Office of Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities). For further information re-
garding this notice contact Ms. Levin at
(202) 317-5500 (not a toll-free number).

## Income tax treatment of 2014 fuel credits allowable under section 6426(c) and section 6426(d)

### Notice 2015-56

PURPOSE

This notice informs claimants about
the federal income tax treatment of credits
under § 6426(c) and (d) of the Internal
Revenue Code that are paid in cash under
the one-time claim submission process of
section 160(e) of the Tax Increase Preven-
tion Act of 2014 (Act), Pub. L. No. 113-
295, 128 Stat. 4023, and implemented by
Notice 2015-3, 2015-6 I.R.B. 583. Spe-
cifically, a claimant must reduce its in-
come tax deduction for (or cost of goods
sold deduction attributable to) § 4081 ex-

cise taxes for each calendar quarter during
2014 by the amount of the § 6426(c)
credit for a biodiesel mixture sold or used
during that calendar quarter. Similarly, a
claimant must reduce its income tax de-
duction for (or cost of goods sold deduc-
tion attributable to) § 4041 excise taxes
for each calendar quarter during 2014 by
the amount of the § 6426(d) credit for
alternative fuel sold or used during that
calendar quarter.

## BACKGROUND

Section 6426(a) and (c) allows a
blender of a biodiesel (including renew-
able diesel) mixture to claim a credit
(biodiesel mixture credit) against its tax
liability under § 4081, relating to the tax
imposed on taxable fuel. Specifically,
§ 6426(c)(1) and (c)(2) provides that the
biodiesel mixture credit is the product of
$1.00 and the number of gallons of biodie-
sel used by the claimant in producing any
biodiesel mixture for sale or use in a trade
or business of the claimant.

Section 6426(a) and (d) allows a claim-
ant that sells or uses alternative fuel as a fuel
in a motor vehicle or motorboat, or in avi-
ation, to claim a credit (alternative fuel
credit) against the claimant's excise tax lia-
bility under § 4041, relating to the tax im-
posed on diesel fuel and alternative fuel.
Section 6426(d)(1) provides that the alter-
native fuel credit is the product of 50 cents
and the number of gallons of an alternative
fuel or gasoline gallon equivalents of a non-
liquid alternative fuel sold by the claimant
for use as a fuel in a motor vehicle or mo-
torboat, sold by the taxpayer for use in avi-
ation, or so used by the claimant.

Any excess credit under the biodiesel
mixture credit or alternative fuel credit
may be claimed as a payment under
§ 6427(e) or as a refundable income tax
credit under § 34. Generally, the excise
taxes imposed by §§ 4041 and 4081 are
reported on Form 720, Quarterly Federal
Excise Tax Return, and § 6426 credits are
claimed on Schedule C (Form 720),
Claims. A claimant must first apply the
biodiesel mixture credit against its § 4081
tax liability and the alternative fuel credit
against its § 4041 tax liability by making
the claim on Form 720 or Form 720X. To
the extent the claim exceeds a claimant's
§ 4081 or § 4041 tax liability, the claimant
may file a claim for payment of that ex-

cess amount pursuant to § 6427(e) using
Form 8849, Claim for Refund of Excise
Taxes, and attaching Schedule 3 (Form
8849), Certain Fuel Mixtures and the Al-
ternative Fuel Credit.

The Code provisions authorizing the
biodiesel mixture credit and the alternative
fuel credit expired for sales and uses after
December 31, 2013 (September 30, 2014, in
the case of any sale or use involving lique-
fied hydrogen). In the Act, which was
signed into law on December 19, 2014,
Congress retroactively reinstated the biodie-
sel mixture credit and the alternative fuel
credit for sales and uses during 2014. Spe-
cifically, section 160(a)(1) of the Act pro-
vides that § 6426(c)(6) is amended by strik-
ing "December 31, 2013," and inserting
"December 31, 2014." Similarly, section
160(b)(1) of the Act provides that
§ 6426(d)(5) is amended by striking “De-
cember 31, 2013," and inserting "December
31, 2014." Section 160(d)(1) of the Act pro-
vides that the amendments to § 6426(c) and
(d) apply to fuel sold or used after Decem-
ber 31, 2013.

Section 160(e) of the Act required issu-
ance of guidance providing for a one-time
submission of claims under § 6426(c) and (d)
(including any payment under § 6427(e))
covering periods during 2014. Pursuant to
this statutory mandate, the IRS issued No-
tice 2015-3, which provides procedures to
make a one-time claim for payment of the
credits and payments allowable under
§§ 6426(c), 6426(d), and 6427(e) for
biodiesel (including renewable diesel)
mixtures and alternative fuels sold or used
during calendar year 2014 (referred to in
Notice 2015-3 as the 2014 biodiesel and
alternative fuel incentives). These stream-
lined procedures require that claimants
submit all claims for 2014 biodiesel and
alternative fuel incentives on a single
Form 8849. For example, under Notice
2015-3, a biodiesel mixture claimant
whose § 4081 tax liability exceeds its
§ 6426(c) biodiesel mixture credit (and
would therefore not be eligible for a
§ 6427(e) payment) must still use Form
8849 to make a § 6426(c) claim. That the
claimant receives a payment of the
§ 6426(c) credit as opposed to a credit
against its excise tax liability does not
change the underlying character of the
claim from a § 6426(c) claim for credit to
a § 6427(e) claim for payment.

Claimants have requested clarification
regarding the proper accounting period(s)
for reducing the income tax deduction for
or the cost of goods sold deduction attrib-
utable to -

(i) the amount of the 2014 calendar
year biodiesel mixture credit claimed
against § 4081 excise taxes; and

(ii) the amount of the 2014 calendar
year alternative fuel credit claimed against
§ 4041 excise taxes.

INCOME TAX TREATMENT OF 2014
FUEL CREDITS UNDER § 6426(C)
AND (D)

The Act retroactively reinstated
through December 31, 2014, the biodiesel
mixture credit and the alternative fuel
credit. See § 160(c) and (d) of the Act and
§ 6426(c)(6) and (d)(5). As a result, these
credits are treated as if they never expired.
Claimants determine their 2014 calendar
year biodiesel mixture credit and alternative
fuel credit by reference to the sale or use of
a biodiesel mixture or alternative fuel during
2014. See § 6426(c)(1) and (d)(1).

Consequently, for federal income tax
purposes, a claimant must reduce its-

(i) § 4081 excise tax liability for each
calendar quarter during the 2014 calendar
year by its biodiesel mixture credit attrib-
utable to a biodiesel mixture sold or used
during that calendar quarter; and

(ii) § 4041 excise tax liability for each
calendar quarter during the 2014 calendar
year by its alternative fuel credit attribut-
able to alternative fuels sold or used dur-
ing the calendar quarter.

The reductions apply whether or not
the claimant's taxable year ended before
the Act was signed into law on December
19, 2014. This is because Congress re-
stored the credits retroactively; therefore,
a claimant must treat the credits as if they
never expired. The statute's procedural
mandate, under section 160(e) of the Act,
of a one-time submission of claims pro-
cess does not affect the substantive federal
income tax treatment of these credits.

The following examples illustrate the
application of the income tax treatment in
the context of the biodiesel mixture credit,
but the principles in the example apply
equally to the alternative fuel credit:

Example 1. B is a calendar year taxpayer. During
each calendar quarter of 2014, B's § 4081 excise tax
liability was $25, for a total of $100 for 2014. In

addition, during each calendar quarter of 2014 B
produced a biodiesel mixture using 20 gallons of
biodiesel. B produced the biodiesel mixture for sale
or use in its trade or business. B claims the biodiesel
mixture credit on Form 8849 pursuant to Notice
2015-3, and is allowed an $80 biodiesel mixture
credit for 2014 ($80 = 20 gallons of biodiesel used
to produce a mixture x $1.00/gallon credit x 4 quar-
ters). B must apply the $80 credit against B's $100
§ 4081 excise tax liability. Thus, for federal income
tax purposes, B's § 4081 excise tax liability for 2014
is $20. Therefore, B's federal income tax deduction
(or cost of goods sold, where applicable) attributable
to § 4081 excise taxes for 2014 is $20.

Example 2. C is a taxpayer with a tax year ending
March 31. During each calendar quarter of its tax year
ending March 31, 2014, C's § 4081 excise tax liability
was $25. In addition, during each calendar quarter of
that tax year, C produced a biodiesel mixture using 20
gallons of biodiesel. C produced the biodiesel mixture
for sale or use in its trade or business. C claims a $60
biodiesel mixture credit on Schedule C of the Forms
720 that C files for the last three calendar quarters of
2013 ($60 = 20 gallons of biodiesel used to produce a
mixture x $1.00/gallon credit x 3 quarters). C also
claims the biodiesel mixture credit on Form 8849 pur-
suant to Notice 2015-3. For the first calendar quarter of
2014 C produces a biodiesel mixture using 20 gallons
of biodiesel. Therefore, C is allowed a $20 biodiesel
mixture credit for the first calendar quarter of 2014
($20 = 20 gallons of biodiesel used to produce a
mixture x $1.00/gallon credit x 1 quarter). C's biodiesel
mixture credit for its taxable year ending March 31,
2014 equals $80 ($60 of credit in the last three calendar
quarters of 2013 and $20 in the first calendar quarter of
2014). C must apply the $80 credit against C's $100
§ 4081 excise tax liability. Thus, for federal income tax
purposes, C's § 4081 excise tax liability for its tax year
ending March 31, 2014 is $20. Therefore, C's federal
income tax deduction (or cost of goods sold, where
applicable) attributable to § 4081 excise taxes for its tax
year ending March 31, 2014 is $20.

## EFFECT ON OTHER DOCUMENTS

This notice amplifies Notice 2015-3 by
providing that, for federal income tax pur-
poses, a claimant reduces its § 4081 excise
tax liability by the amount of 2014 excise
tax credit allowable under § 6426(c) and its
§ 4041 excise tax liability by the amount of
2014 excise tax credit allowable under
§ 6426(d), in determining its deduction for
those excise taxes or its cost of goods sold
deduction attributable to those excise taxes.

## DRAFTING INFORMATION

The principal author of this notice is
Shareen S. Pflanz of the Office of Associate
Chief Counsel (Income Tax & Accounting).
For further information regarding this no-
tice, contact Shareen S. Pflanz on (202) 317-
4718 (not a toll-free number).

26 CFR 601.201: Rulings and determination letters.

## Rev. Proc. 2015-40

SECTION 1. PURPOSE,
BACKGROUND, RULES OF
CONSTRUCTION, AND
DEFINITIONS

SECTION 2. SCOPE AND GENERAL
APPLICATION

SECTION 3. PROCEDURES FOR
FILING COMPETENT AUTHORITY
REQUESTS

SECTION 4. ACAP AND
ANCILLARY ISSUES

SECTION 5. SMALL CASE
COMPETENT AUTHORITY
REQUESTS

SECTION 6. COORDINATION OF
THE COMPETENT AUTHORITY
PROCESS WITH U.S.
ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS

SECTION 7. ACKNOWLEDGMENT
OF RECEIPT AND DENIAL OF
ASSISTANCE

SECTION 8. CONSULTATIONS AND
RELATED ACTIONS BY THE U.S.
COMPETENT AUTHORITY

SECTION 9. RESULTS OF
COMPETENT AUTHORITY CASE

SECTION 10. ARBITRATION

SECTION 11. PROTECTIVE CLAIMS

SECTION 12. TREATY
NOTIFICATIONS

SECTION 13. REQUESTS FOR
RULINGS

SECTION 14. USER FEES

SECTION 15. EFFECT ON OTHER
DOCUMENTS

SECTION 16. EFFECTIVE DATE

SECTION 17. PAPERWORK
REDUCTION ACT

SECTION 18. DRAFTING
INFORMATION

APPENDIX

### SECTION 1. PURPOSE, BACKGROUND, RULES OF CONSTRUCTION, AND DEFINITIONS

.01 Purpose and Background. This
revenue procedure provides guidance on
the process of requesting and obtaining
assistance under U.S. tax treaties from the
U.S. competent authority, acting through
the Advance Pricing and Mutual Agree-
ment Program and the Treaty Assistance
and Interpretation Team of the Deputy
Commissioner (International), Large
Business & International Division of the
Internal Revenue Service. This revenue
procedure updates and supersedes Rev.
Proc. 2006-54, 2006-2 C.B. 1035, and is
being issued concurrently with Rev. Proc.
2015-41, 2015-35 I.R.B. 263, which pro-
vides guidance with respect to advance
pricing agreements.

A proposed version of this revenue
procedure was released for public com-
ment in Notice 2013-78, 2013-50 I.R.B.
633. This final revenue procedure is is-
sued following consideration of all public
comments received by the IRS and the
Treasury Department. This revenue pro-
cedure also reflects modifications based
on continuing internal monitoring of the
administrative procedures of the U.S.
competent authority to ensure that the ad-
ministration of U.S. tax treaties is consis-
tently principled, effective, and efficient.

The principal differences between this
final revenue procedure and the proposed
version in Notice 2013-78 may be sum-
marized as follows:

(1) This revenue procedure limits the
scope of requests to which mandatory pre-
filing procedures apply to requests involv-
ing taxpayer-initiated positions. See sec-
tion 3.02.

(2) To ensure that taxpayers have
broad access to the U.S. competent au-
thority to resolve disputes under U.S. tax
treaties, taxpayers will not be required
under this revenue procedure to expand

the scope of a competent authority request
to include interrelated issues as a condi-
tion of receiving competent authority as-
sistance. Taxpayers may still be required
to provide information that will allow the
U.S. competent authority to evaluate the
appropriateness of the relief sought under
the applicable U.S. tax treaty in light of
the taxpayer's positions on interrelated is-
sues. See section 2.04.

(3) This revenue procedure clarifies
that the U.S. competent authority may
consult with taxpayers with respect to cer-
tain additional issues that may arise in
connection with competent authority re-
quests, such as issues relevant to the de-
termination of foreign tax credits and re-
patriation payments. See sections 2.03 and
4.02(2).

(4) This revenue procedure provides
additional guidance on requesting dis-
cretionary determinations under the lim-
itation on benefits articles of U.S. tax
treaties, including time frames for tax-
payers to provide notification of mate-
rial changes in fact or law and the intro-
duction of a triennial statement
procedure to maintain a favorable grant
of discretionary benefits. See section
3.06(2).

(5) Consistent with the objective of
providing taxpayers with broad access to
the U.S. competent authority to resolve
disputes under U.S. tax treaties, the U.S.
competent authority will not condition as-
sistance on the taxpayer's notification of
the U.S. competent authority, or on ob-
taining its concurrence, with respect to
signing a standard Form 870 with IRS
Examination. Similarly, a taxpayer will
not be required to obtain the U.S. compe-
tent authority's agreement prior to enter-
ing into a closing agreement or similar
agreement with IRS Examination, but in
these cases the assistance provided by the
U.S. competent authority will be limited
to seeking correlative relief from the for-
eign competent authority, thus potentially

not eliminating double taxation. See sec-
tion 6.03.

(6) This revenue procedure provides
additional information about the process
followed by the U.S. competent authority
in conducting its review under the simul-
taneous appeals procedure. See section
6.04(2).

(7) This revenue procedure clarifies
and refines the bases on which the U.S.
competent authority may decline to accept
a competent authority request or may
cease providing assistance, consistent
with U.S. tax treaty policy that taxpayers
should have broad access to the U.S. com-
petent authority to resolve instances of
taxation not in accordance with the appli-
cable U.S. tax treaty. See section 7.02.

(8) This revenue procedure increases
the user fee for requests for discretionary
LOB relief from $27,500 to $37,000. This
increase is implemented in two phases.
First, the user fee will increase to $32,500
for requests filed on or after October 30,
2015 and prior to September 30, 2016.
The fee will further increase to $37,000
for requests filed on or after September
30, 2016. See section 14.02.

(9) This revenue procedure substan-
tially restructures the proposed guidance
in Notice 2013-78 to improve clarity,
readability, and organization.

.02 Section References. Unless indi-
cated by context or otherwise, section ref-
erences are to the sections of this revenue
procedure.

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

.04 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 4.01)

ACAP request

A request to include ACAP years in a competent authority case

ACAP years

Taxable years subsequent to competent authority years for which tax returns have been filed and that are covered by an ACAP request or are eligible for ACAP

Ancillary issue

A competent authority issue, such as repatriation payments (see section 4.02(2)), interest on refunds and deficiencies, and penalties, that arises out of a competent authority resolution of another, underlying competent authority issue

APA

An advance pricing agreement within the meaning of Rev. Proc. 2015-41

APA process

The steps involved in the process of reaching an APA, as described in Rev. Proc. 2015-41

APA request

A request for an APA filed under Rev. Proc. 2015-41

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 discretionary LOB request

Arbitration treaty

A U.S. tax treaty in which the mutual agreement procedure article includes a provision for mandatory arbitration of certain competent authority cases (see section 10)

Bilateral APA

A bilateral APA as defined in Rev. Proc. 2015-41

Code

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

Competent authority case

A case initiated by a competent authority request involving one or more competent authority issues

Competent authority issue

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

Competent authority process

All steps in the process of initiating and resolving a competent authority case, including steps in relation to pre-filing procedures

Competent authority request

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

Competent authority resolution

The resolution of competent authority issues constituting a competent authority case, reached either (i) between the U.S. competent authority and one or more foreign competent authority(ies) (as reflected in a signed mutual agreement and any additional agreements or understandings achieved through the competent au- thority process) or (ii) through arbitration

Competent authority year

A taxable year for which a tax return has been filed and in which a competent authority issue has arisen that is the subject of a competent authority case

Controlled group

The group of controlled taxpayers (as defined in Treas. Reg. § 1.482-1(i)) of which the taxpayer filing the competent authority request is a member

Discretionary LOB request

A request that the U.S. competent authority grant certain discretionary treaty benefits to an applicant that does not qualify for those benefits under the relevant LOB provisions of a U.S. tax treaty

Foreign competent authority

The competent authority of a treaty country

Foreign pension fund

A pension fund that is a resident of a treaty country

Foreign-initiated action

A foreign-initiated adjustment, or another action by or on behalf of the tax authority of a treaty country (such as withholding), that gives rise to a competent authority issue or makes it likely that a competent authority issue will arise

Foreign-initiated adjustment

A proposed or final adjustment made by the tax authority of a treaty country to the taxable income of a taxpayer

FTC issue

An issue relating to the determination of foreign tax credits, including the following: (1) whether a credit, deduction, or exclusion may be given under the law of a treaty country regarding income tax due in the treaty country on account of income tax paid in the United States; (2) whether a credit or deduction may be given regarding U.S. income tax due, on account of income tax paid in a treaty country; and (3) the extent to which remedies for reducing tax liability under foreign law (including, in appropriate cases, a request for competent authority assistance, litigation, or both) are "effective and practical" within the meaning of Treas. Reg. § 1.901-2(e)(5) and Rev. Rul. 92-75, 1992-2 C.B. 197 (see section 2.03)

Global trading arrangement

Any arrangement involving multiple associated enterprises or business unit(s) of an enterprise 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, including functions ancillary to the foregoing activities

Intangible development arrange- ment

Any arrangement for sharing the costs and risks of developing intangibles, including a cost sharing arrangement (or arrangement treated as such) as defined in Treas. Reg. § 1.482-7 or a qualified cost sharing arrangement (or arrangement treated as such) as defined in Treas. Reg. § 1.482-7A (collectively, a "CSA"); and an ar- rangement (other than a CSA) for which the principles, methods, comparability, and reliability considerations set forth in Treas. Reg. § 1.482-7 are relevant in deter- mining 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 circum- stances 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 informa- tion returns and ascertaining the correctness of any return for purposes of determining the tax liability of taxpayers

LB&amp;I

IRS Large Business &amp; International Division

LOB

Limitation on benefits

Multilateral APA

A multilateral APA as defined in Rev. Proc. 2015-41

Non-U.S .- initiated action

A foreign-initiated action or a taxpayer-initiated position

Pension plan request

A competent authority request in which the taxpayer requests a determination that a foreign pension plan "generally corresponds" to a pension plan recognized for tax purposes in the United States

Pre-filing conference

A conference held with the U.S. competent authority before a competent authority request is filed

Pre-filing memorandum

A memorandum or similar paper submitted to the U.S. competent authority before a competent authority request is filed

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 competent authority case

Protective claim

A contingent claim filed with the U.S. competent authority as described in section 11

Regulations

U.S. Treasury regulations promulgated under the Code

SAP review

The review of a competent authority issue by the U.S. competent authority with the assistance of IRS Appeals under the simultaneous appeals procedure. See section 6.04(2)

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), LB&amp;I

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 position

A competent authority issue that results from inconsistent positions taken by a taxpayer with respect to its tax liability in the United States and in a treaty country that were not adopted in response to a proposed or actual adjustment made by the IRS or a foreign tax authority, such as (i) inconsistent positions with regard to the same transaction taken on an original U.S. return and an equivalent filing with a foreign tax authority and (ii) a revised position taken on an amended U.S. return or equivalent filing with a foreign tax authority that creates inconsistent positions between the U.S. return and an equivalent filing with a foreign tax authority

Tentative competent authority resolution

A proposed competent authority resolution that is reached by the respective staffs of the U.S. competent authority and a foreign competent authority and that is subject to approval by the respective competent authorities before becoming a competent authority resolution

TPO

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

Treaty country

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

Treaty notification

The notification 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 (see section 12)

U.S. competent authority

The Deputy Commissioner (International), LB&amp;I, the Assistant Deputy Commissioner (International), LB&amp;I, and each other IRS official performing competent authority functions pursuant to applicable delegation orders

U.S .- initiated action

A U.S .- initiated adjustment, or another action by or on behalf of the IRS (such as withholding), that results in a competent authority issue

U.S .- initiated adjustment

A proposed or final adjustment made by the IRS to the taxable income of a taxpayer

U.S. return

A federal tax return filed with the IRS pursuant to the Code

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 protocols, exchanges of diplomatic notes, memoranda of understanding, and competent authority arrangements

## SECTION 2. SCOPE AND GENERAL APPLICATION

### .01 Administration of U.S. Tax Treaties.

(1) The U.S. Competent Authority. U.S.
tax treaties designate the Secretary of the
Treasury or his delegate as the competent
authority with respect to the United States.
The Secretary of the Treasury has delegated
that authority through the Commissioner of
the IRS to the Deputy Commissioner (Inter-
national), LB&I. The authority to act on
behalf of the Deputy Commissioner (Inter-
national), LB&I as the U.S. competent au-
thority has been delegated to the Assistant
Deputy Commissioner (International),
LB&I. See Treasury Order 150-10 and Del-
egation Order 4-12 (Rev. 2), IRM 1.2.43
(or successor delegation order). Authority to
act as the U.S. competent authority with
regard to certain competent authority issues
has been delegated to the directors of TPO
and APMA. The U.S. competent authority
has authority to apply the provisions of U.S.
tax treaties. The U.S. competent authority
endeavors to do so in a manner that is con-
sistent with U.S. tax treaty obligations and
that secures the appropriate tax bases of the
United States and its treaty partners, pre-
vents fiscal evasion, and provides taxpay-
ers broad access to competent authority
assistance in accordance with consider-
ations of principled, effective, and effi-
cient tax administration. The U.S. com-
petent authority also has authority to
interpret the provisions of U.S. tax trea-
ties, but only with the concurrence of

the Associate Chief Counsel (Interna-
tional).

(2) Mutual Agreement Procedure Arti-
cles. The mutual agreement procedure ar-
ticles of U.S. tax treaties grant taxpayers
the right to request the assistance of the
U.S. competent authority when the tax-
payer believes that the actions of the
United States or a treaty country result or
will result in the taxpayer being subject to
taxation not in accordance with the appli-
cable U.S. tax treaty. This situation typi-
cally arises as a result of U.S .- or foreign-
initiated adjustments resulting from an
examination, but can arise from other
U.S .- or foreign-initiated actions (such as
withholding of tax by a withholding
agent) or from a taxpayer-initiated posi-
tion. The U.S. competent authority will
endeavor to resolve competent authority
issues arising under the mutual agreement
procedure articles of U.S. tax treaties
through consultations with the applicable
foreign competent authority(ies) but in
some cases may resolve such issues uni-
laterally (see, e.g., section 8.02). There is
no authority for the U.S. competent au-
thority to provide relief with respect to
U.S. tax or to provide other assistance
related to taxation arising under the tax
laws of a foreign country or the United
States unless such authority is granted by
a treaty. The grant of such authority by the
mutual agreement procedure articles of
U.S. tax treaties is separate from and in
addition to the authority under such arti-
cles for the U.S. competent authority to

consult generally with foreign competent
authorities to resolve difficulties or doubts
regarding treaty interpretation or applica-
tion, irrespective of whether the consulta-
tion relates to a current matter involving a
specific taxpayer.

(3) Roles of APMA and TAIT. The U.S.
competent authority conducts the compe-
tent authority process through two offices,
APMA and TAIT. APMA has primary
responsibility for cases arising under the
business profits and associated enterprises
articles of U.S. tax treaties. An example of
a competent authority issue handled by
APMA is the double tax that could be
incurred as a result of an allocation made
by the IRS under section 482 of the Code
or by a foreign tax authority under an
equivalent provision in its domestic law.
TAIT has primary responsibility for cases
arising under all other articles of U.S. tax
treaties. TAIT also has primary responsi-
bility for cases arising under U.S. tax trea-
ties with respect to estate and gift taxes.
APMA and TAIT each can consider cases
arising under the permanent establishment
articles of U.S. tax treaties, and both of-
fices will coordinate and collaborate on
such cases and on any other cases as ap-
propriate.

.02 U.S. Territories. This revenue pro-
cedure pertains only to requests for assis-
tance arising under U.S. tax treaties. For
procedures for requesting assistance of the
U.S. competent authority in addressing in-
consistencies in tax treatment by the IRS

and a U.S. territory, see Rev. Proc. 2006-
23, 2006-1 C.B. 900.

.03 Informal Consultations with Tax-
payers. The U.S. competent authority is
available for informal consultations with
taxpayers (including consultations in
which the taxpayer chooses to be anony-
mous) regarding any competent authority
issue. Any informal advice provided by
the U.S. competent authority through such
consultations is advisory only and is not
binding on the IRS. The U.S. competent
authority also is available for informal
consultations on issues that arise in con-
nection with competent authority issues,
even where such issues are not themselves
competent authority issues. For example,
a taxpayer may consult the U.S. compe-
tent authority on FTC issues, which may
cover, when appropriate, considerations
surrounding administrative or other steps
that may be available to the taxpayer in
the foreign jurisdiction. See Treas. Reg.
§ 1.901-2(e)(5) and Rev. Rul. 92-75.

.04 Scope of Competent Authority
Cases.

(1) In General. In every case it accepts,
the U.S. competent authority will en-
deavor to reach a competent authority res-
olution on the competent authority issue
for which the taxpayer seeks assistance.
However, depending on the facts and cir-
cumstances of the particular case, the U.S.
competent authority may determine dur-
ing the competent authority process that it
cannot reach a competent authority reso-
lution consistent with principled, effec-
tive, and efficient tax administration un-
less it evaluates the relief sought by the
taxpayer under the U.S. tax treaty in light
of whether such relief, together with the
taxpayer's position(s) on interrelated is-
sues, would yield consistent and appropri-
ate results. Such circumstances may arise,
for example, when the competent author-
ity issues identified in the competent author-
ity request are more reliably evaluated to-
gether with other issues identified by the
U.S. competent authority. See, e.g., Treas.
Reg. §§ 1.482-1(f)(2)(i), 1.482-7(g)(2)(iv).
For specific examples of interrelated issues,
see section 2.04(2). The U.S. competent au-
thority will endeavor as early as possible in
the competent authority process to identify
any interrelated issues and require addi-

tional information on (see section 2.04(3)),
or request an expansion of the competent
authority request to include (see section
2.04(4)), such issue(s).

### (2) Examples of Interrelated Issues.

(a) Assume that a competent authority
request is made on a competent authority
issue concerning a company's ongoing li-
cense of intangible property to a second
company in the same controlled group,
and the intangible property covered by the
license had been sold in an earlier year by
the second company (the licensee) to the
first company (the licensor). In such a case,
the U.S. competent authority may consider
the assumptions underlying the valuation of
the intangible property when it was previ-
ously sold in evaluating the ongoing license.

(b) Assume that a competent authority
request is made on a competent authority
issue concerning the compensation for
services provided by one company to a
second company in the same controlled
group, and the services provided by the
first company require using intangible prop-
erty that the first company had transferred in
an earlier year to the second company as
part of a business restructuring. In such a
case, in evaluating the compensation for the
services, the U.S. competent authority may
consider the valuation done in connection
with the business restructuring and whether
any inconsistency in the valuations is ex-
plained by particular circumstances.

(c) If a competent authority issue pre-
sented by a taxpayer involves the valua-
tion of a platform contribution transaction
in a cost-sharing arrangement under
Treas. Reg. § 1.482-7, the U.S. competent
authority also may consider whether the
intangible development costs incurred
pursuant to the arrangement were properly
shared.

(d) Assume that the taxpayer presents a
competent authority issue concerning
sales of goods from a manufacturer in a
treaty country to a U.S. distributor in the
same controlled group, and the U.S. dis-
tributor resells most of the goods to an-
other distributor in a second country
(which may or may not be a treaty coun-
try) that is in the same controlled group. In
evaluating the price that the U.S. distrib-
utor should have paid to the manufacturer,
the U.S. competent authority may exam-

ine the price that the U.S. distributor re-
ceived for its resale.

(e) Further examples of interrelated is-
sues would include the same competent
authority issue in ACAP years, other in-
terrelated competent authority issues in
competent authority years and ACAP
years, and the competent authority issue
or interrelated issues in competent author-
ity or ACAP years concerning a treaty
country other than that named in the com-
petent authority request or concerning a
non-treaty country.

(3) Requirement to Provide Informa-
tion on Interrelated Issues. During the
competent authority process, the U.S.
competent authority may require the tax-
payer to provide information on the posi-
tion(s) it has taken on interrelated issues.
The U.S. competent authority will en-
deavor to identify any interrelated issues
as early as possible in the competent au-
thority process. Nevertheless, the taxpayer
should be prepared throughout the com-
petent authority process to provide infor-
mation on interrelated issues. See section
3.05(3).

(4) Request to Expand the Scope of a
Competent Authority Request to Include
Interrelated Competent Authority Is-
sues. The U.S. competent authority may
request, in writing, that the taxpayer
amend its competent authority request to
include interrelated competent authority
issues that the U.S. competent authority
identifies. The U.S. competent authority
also may recommend that the taxpayer
file a bilateral or multilateral APA re-
quest to cover the competent authority
issue(s) and the identified interrelated
competent authority issues (see section
2.05). If the taxpayer declines to amend
its competent authority request, the U.S.
competent authority will still endeavor
to reach a competent authority resolu-
tion, but it will take into account the
taxpayer's position(s) on interrelated is-
sues in determining the extent to which
it will provide relief for the competent
authority issue(s) in the competent au-
thority request.

(5) Closed Cases. The U.S. competent
authority will not request that the scope of
a competent authority case be expanded
so as to reopen a case closed after exam-
ination unless one or more of the circum-
stances described in Rev. Proc. 2005-32,

2005-1 C.B. 1206 (e.g., fraud, substantial
error, or certain other circumstances) are
present. The U.S. competent authority
may, however, take into account positions
that the taxpayer took on interrelated is-
sues in taxable years that are closed.

.05 Coordination between Competent
Authority and APA Processes. Competent
authority issues may be similar, or recur,
over successive audit cycles. Taxpayers,
the IRS, and foreign tax authorities may
want to use competent authority resolu-
tions as a framework for managing such
similar or recurring competent authority
issues. APMA will encourage (but will
not formally request or require) taxpayers
to extend competent authority resolutions
forward into APAs. Also, APMA may
request or encourage that taxpayers ex-
pand their APA requests to cover compe-
tent authority or ACAP years. For further
discussion of the relationships between
the competent authority and APA pro-
cesses, see Rev. Proc. 2015-41.

.06 Contact with U.S. Competent Au-
thority during Competent Authority Pro-
cess. The U.S. competent authority gener-
ally holds in-person meetings with most
foreign competent authorities. These
meetings are typically scheduled several
months in advance. In addition, the U.S.
competent authority frequently communi-
cates with foreign competent authorities
about competent authority cases outside
of scheduled in-person meetings. In order
to facilitate reaching a competent author-
ity resolution, the taxpayer should remain
in contact with its assigned U.S. compe-
tent authority representative throughout
the competent authority process, particu-
larly when a tentative competent authority
resolution has been reached (see sections
9.02 and 9.03).

.07 Taxpayer Role in the Competent
Authority Process.

(1) In General. The taxpayer can facil-
itate the competent authority process by
ensuring that both competent authorities
receive complete, accurate, and timely in-
formation on the factual and legal issues
underlying the competent authority re-
quest. The taxpayer also may assist the
competent authorities by offering con-
structive, principled proposals for the
terms of a competent authority resolution
at appropriate points in the competent au-

thority process. Nevertheless, the taxpayer
must recognize the fundamental principle
that the competent authority process is
conducted between two or more govern-
ments. Thus, the taxpayer must recognize
that it will not be directly involved in the
negotiations between the competent au-
thorities.

(2) Presentations to Competent Au-
thorities. Subject to the arbitration provi-
sions of U.S. tax treaties, the U.S. compe-
tent authority will allow a taxpayer a
reasonable opportunity to present and sup-
plement its views of the relevant facts and
arguments, both in writing and orally, be-
fore and after discussions with the foreign
competent authority have commenced.
The competent authorities may invite or
request the taxpayer to make a presenta-
tion to both competent authorities jointly,
particularly where the competent authori-
ties seek clarification of the issues or facts
in fact-intensive, unusual, or complex
cases. Taxpayers also may request the op-
portunity to make such a joint presenta-
tion during the competent authority pro-
cess. However, the U.S. competent
authority will consult with the foreign
competent authority on whether to accept
the request, and if so, on appropriate con-
tent for the presentation.

.08 Withdrawal of Request. A taxpayer
can withdraw its competent authority re-
quest at any time, either in full or with
respect to particular competent authority
issues. If the taxpayer withdraws its com-
petent authority request with respect to
particular competent authority issues, the
U.S. competent authority, in turn, will de-
cide whether to continue to provide com-
petent authority assistance with regard to
any competent authority issues that re-
main. For any issues no longer under con-
sideration by the U.S. competent author-
ity, the U.S. competent authority will
return jurisdiction to the relevant office(s)
within the IRS. See section 6.02.

## SECTION 3. PROCEDURES FOR FILING COMPETENT AUTHORITY REQUESTS

.01 In General. This section sets forth
the general procedures and requirements
for filing competent authority requests.
This section also addresses pre-filing pro-
cedures. Unless otherwise indicated, the
procedures and requirements of this sec-

tion apply to all types of competent au-
thority requests. Detailed instructions on
preparing competent authority requests
specific to APMA or TAIT are set forth in
the Appendix to this revenue procedure.
With regard to any competent authority
request, the U.S. competent authority will
provide assistance only after the request is
complete, either as initially filed or as
supplemented (see section 3.05(1)). For a
discretionary LOB request, the taxpayer
also must pay the correct user fee (see
sections 3.06(2)(f) and 14) after the U.S.
competent authority has accepted the re-
quest. Taxpayers should note that some
U.S. tax treaties contain specific timing
requirements for competent authority re-
quests (e.g., requiring taxpayers to submit
a treaty notification within a specified
time frame; see section 12). Any specific
requirement set forth in the applicable
U.S. tax treaty takes precedence over any
conflicting provision in this revenue pro-
cedure. Taxpayers also should be aware
that making certain agreements with the
IRS or a foreign tax authority may pre-
clude or limit access to the competent
authority process (see sections 6.03,
6.04, and 7.02(3)). Further, taxpayers
are advised to take such actions as are
necessary to preserve whatever rights
they may have available under domestic
law in either the United States or the
treaty country if the U.S. competent au-
thority ultimately denies competent au-
thority assistance (see section 7.02) or a
competent authority resolution is not
reached.

.02 Pre-filing Procedures.

(1) In General. For a competent au-
thority request that involves a taxpayer-
initiated position, the taxpayer must fol-
low the mandatory pre-filing procedures
described in section 3.02(2). For a com-
petent authority request that does not in-
volve a taxpayer-initiated position, there
is no mandatory pre-filing procedure, and
taxpayers are not required to contact the
U.S. competent authority before filing a
competent authority request. However,
even when the mandatory pre-filing pro-
cedures are not applicable, taxpayers may
benefit from attending a pre-filing confer-
ence under the optional pre-filing proce-
dure of section 3.02(3). The U.S. compe-
tent authority has found that a pre-filing

conference can facilitate the competent
authority process when the competent au-
thority issues presented by the taxpayer
are complex, large in amount, novel, or
likely to involve interrelated issues. Com-
mon types of cases for which the U.S.
competent authority generally recom-
mends that a pre-filing conference be held
are listed in section 3.02(4). Even in such
cases, however, the U.S. competent au-
thority may advise the taxpayer that a
pre-filing conference is unnecessary.

(2) Mandatory Pre-filing Procedures
for Taxpayer-initiated Positions. A tax-
payer must submit a pre-filing memoran-
dum prior to filing a competent authority
request if the proposed competent author-
ity issues will involve a taxpayer-initiated
position. The pre-filing memorandum
must identify the taxpayer, explain the
factual and legal basis of the taxpayer-
initiated position, and describe any admin-
istrative, legal, or other procedural steps
undertaken in the applicable treaty coun-
try (including whether the foreign tax au-
thority has accepted an income tax return
reflecting the taxpayer-initiated position
for which the taxpayer seeks competent
authority assistance) and any communica-
tions with the foreign competent authority
regarding the position. The degree of de-
tail and content of the pre-filing memo-
randum must be appropriate to the stage,
size, and complexity of the competent au-
thority issues underlying the proposed
competent authority request. The pre-
filing memorandum must propose at least
three possible dates for a pre-filing con-
ference, each at least two weeks after the
date that the pre-filing memorandum is
submitted. The U.S. competent authority
will decide whether to hold a pre-filing
conference with the taxpayer, taking into
account any views expressed by the tax-
payer in the pre-filing memorandum as to
the advisability of such a conference. The
pre-filing memorandum also must list the
name and contact information for the tax-
payer's point of contact and, if necessary,
provide a Form 2848, Power of Attorney
and Declaration of Representative, autho-
rizing the point of contact to represent the
taxpayer, or a Form 8821, Tax Informa-
tion Authorization, authorizing the point
of contact to inspect or receive confiden-
tial tax information about the taxpayer.
Two printed copies and one electronic

copy of the pre-filing memorandum must
be submitted to APMA or TAIT, as ap-
propriate. The taxpayer may supplement
the pre-filing memorandum with such ma-
terials as drawings, slides, and spread-
sheets.

(3) Optional Pre-filing Procedures. For
a competent authority request that does
not involve a taxpayer-initiated position,
the taxpayer may request a pre-filing con-
ference on either a named or anonymous
basis. The U.S. competent authority pre-
fers that pre-filing conferences be held on
a named basis to facilitate a more in-
formed understanding of the procedural
and substantive issues that could arise
during the competent authority process.
The U.S. competent authority may deter-
mine that a pre-filing conference is not
necessary. If the U.S. competent authority
agrees to a request for a pre-filing confer-
ence made on a named basis, the taxpayer
will be required to provide a point of
contact and, if necessary, a Form 2848
authorizing the point of contact to repre-
sent the taxpayer or a Form 8821 autho-
rizing the point of contact to inspect or
receive confidential tax information about
the taxpayer. The U.S. competent author-
ity may require the taxpayer to submit
pre-filing written materials as a prerequi-
site to holding a conference or to consid-
ering the taxpayer's request for a confer-
ence. Any such materials should describe
such issues in a degree of detail appropri-
ate to their size, stage of resolution, and
procedural and substantive complexity.

(4) Competent Authority Issues for
which Optional Pre-filing Conference Is
Recommended. The following are exam-
ples of circumstances for which a pre-
filing conference is generally recom-
mended to better facilitate the competent
authority process:

(a) a foreign-initiated adjustment that
exceeds $50 million for all competent au-
thority years combined;

(b) a competent authority issue that is
likely to involve interrelated issues (see
section 2.04(2));

(d) a business restructuring;

(e) a global trading arrangement;

(f) an unincorporated branch, pass-
through entity, hybrid entity, or entity dis-
regarded for U.S. tax purposes;

(g) a discretionary LOB request; or

(h) a competent authority issue that has
arisen outside the context of an examina-
tion, for example through the withholding
of tax by a withholding agent or a ruling
or promulgation issued by a foreign tax
authority.

(5) Statements during Pre-filing Con-
ference. Statements or representations,
whether oral or written, made by the U.S.
competent authority in connection with a
mandatory or optional pre-filing confer-
ence are informal only and are not binding
on the IRS (see section 2.03).

.03 Persons Eligible to File Competent
Authority Requests. Whether a taxpayer is
eligible to file a competent authority re-
quest is determined by reference to the
U.S. tax treaty under which competent
authority assistance is sought. Taxpayers
who are eligible to file a request for assis-
tance from the U.S. competent authority
may do so only in accordance with this
revenue procedure.

.04 Time for Filing a Competent
Authority Request.

(1) In General. Subject to the provi-
sions of section 3.04(3), taxpayers are en-
couraged to file a competent authority re-
quest promptly after a competent
authority issue arises or is likely to arise.
Certain U.S. tax treaties may require that a
competent authority request or a treaty
notification be filed within a certain time
limit (see generally sections 11 and 12).

(2) Effect of Expiration of Domestic
Time Limits. The prior expiration of time
limits prescribed by domestic law in the
United States or the treaty country will not
by itself prevent the consideration of a
competent authority request by the U.S.
competent authority, provided that (a) the
applicable treaty permits waiver of do-
mestic procedural barriers to implementa-
tion of a competent authority resolution
(see section 11.01) and (b) the procedural
requirements under the applicable treaty
(including time limits for notification) are
satisfied (see section 12.01).

(3) Timing of Competent Authority Re-
quest Concerning U.S .- Initiated Actions.
For a competent authority issue that arises
from an examination by the IRS, the U.S.
competent authority will not accept a
competent authority request before the
IRS has communicated the amount of the

proposed adjustment in writing to the tax-
payer, e.g., with a Form 5701, Notice of
Proposed Adjustment, or a Form 4549,
Income Tax Examination Changes. For a
competent authority issue that arises from
other actions undertaken by or on behalf
of the IRS (such as the withholding of tax
by a withholding agent), the U.S. compe-
tent authority will not accept a competent
authority request before such other action
occurs.

.05 Content and Form of Competent
Authority Request.

(1) In General. The U.S. competent
authority will provide assistance only af-
ter the taxpayer has filed a complete com-
petent authority request. The Appendix
sets forth the required contents of a com-
plete competent authority request, pre-
scribes the order in which the contents
must be presented, and provides informa-
tion and instructions on other administra-
tive matters relevant to filing the request.
With regard to requests for assistance
from APMA, see section 2 of the Appen-
dix. With regard to requests for assistance
from TAIT, see section 3 of the Appendix.

(2) Related Requests Submitted to For-
eign Competent Authority. A competent
authority request filed with the U.S. com-
petent authority must include a descrip-
tion or discussion of any related requests
for assistance submitted to the foreign
competent authority, together with a thor-
ough, informative explanation of any ma-
terial differences between the competent
authority request filed under this revenue
procedure and the request filed with the
foreign competent authority. The U.S.
competent authority may request that the
taxpayer provide a full or partial copy of
the corresponding request submitted to the
foreign competent authority. See gener-
ally the Appendix.

(3) Additional Requested and Submit-
ted Items. The required information, doc-
uments, and analyses identified in the Ap-
pendix may not be exhaustive of the items
the U.S. competent authority needs to
evaluate the competent authority request,
including possible interrelated issues (see
section 2.04(3)). Similarly, the foreign
competent authority may request addi-
tional information during the competent
authority process. In general, the taxpayer
should be prepared throughout the com-

petent authority process to provide each
competent authority with the same infor-
mation, documents, and analyses at ap-
proximately the same time, regardless of
whether such information, documents, or
analyses are provided in response to a
request from a competent authority or are
submitted voluntarily by the taxpayer in
support of its competent authority request.
The U.S. competent authority will work
with the taxpayer and the foreign compe-
tent authority to establish procedures for
efficient distribution of information, doc-
uments, and analyses submitted during the
competent authority process.

(4) Corrected and Updated Informa-
tion. After filing the competent authority
request, the taxpayer must promptly cor-
rect or remedy any material errors or
any material omissions in the competent
authority request or in supplemental
submissions. The taxpayer also must
submit any information or documents
discovered or created during the compe-
tent authority process that would be ma-
terial to the competent authority pro-
cess. The taxpayer must timely notify
the U.S. competent authority of all ma-
terial changes and updates to informa-
tion previously submitted in connection
with the competent authority request.

.06 Requirements and Procedures
Applicable to Specific Types of
Competent Authority Requests.

(1) Competent Authority Requests In-
volving Residency. U.S. competent au-
thority assistance may be available to dual
resident taxpayers (taxpayers resident in
both the United States and the treaty coun-
try) seeking to determine their sole resi-
dence under the treaty. The U.S. compe-
tent authority will accept a competent
authority request concerning a question of
residency under a U.S. tax treaty only if
both (a) the resolution of the residency
issue is necessary to avoid double taxation
or to determine the applicability of a ben-
efit under the treaty, and (b) the issue
requires consultation with the foreign
competent authority to ensure consistent
treatment under the applicable U.S. tax
treaty. The U.S. competent authority will
not unilaterally resolve a question of res-
idency.

(2) Discretionary LOB Requests.

(a) No Determination If Applicant
Meets Objective Test. Most U.S. tax trea-
ties contain an LOB article that enumer-
ates objective tests to determine whether a
resident of a treaty country is entitled to
benefits under the applicable U.S. tax
treaty. Most LOB articles provide that a
resident may be granted treaty benefits at
the discretion of the U.S. competent au-
thority if the resident does not qualify for
those benefits under the relevant objective
tests. The U.S. competent authority will
not issue a determination regarding
whether an applicant satisfies an objective
LOB test. In addition, the U.S. competent
authority will not accept a discretionary
LOB request if the applicant as a part of
its request does not represent that, and
explain why, it does not qualify for the
requested benefits under the relevant LOB
provisions. See the Appendix for the ad-
ditional information applicants are re-
quired to provide in discretionary LOB
requests. The U.S. competent authority
typically will not exercise its discretion in
circumstances described in section
3.06(2)(e).

(b) Sole Authority to Grant Discretion-
ary Benefits. The U.S. competent author-
ity in its sole discretion may grant benefits
under the discretionary provision of an
LOB article in an applicable U.S. tax
treaty. A decision by the U.S. competent
authority not to grant discretionary bene-
fits is final and not subject to administra-
tive review. An applicant that does not
qualify for the requested benefits under
the relevant LOB provisions of the appli-
cable U.S. tax treaty may not claim those
treaty benefits, either at source or through
a refund claim, unless it has received a
favorable determination from the U.S.
competent authority exercising its discre-
tion to grant benefits.

(c) Scope. The applicant must specifi-
cally identify the benefits of the treaty for
which it is requesting a discretionary deter-
mination. The requested benefits must be
specifically supported by the facts presented
in the applicant's request, and the request
must not present a hypothetical transaction.
The U.S. competent authority may grant all
the requested benefits or may grant only
certain benefits. For instance, it may grant
benefits only with respect to a particular

item of income. Further, the U.S. competent
authority may establish conditions on the
benefits, such as setting time limits on the
duration of any relief granted.

(d) Exercise of Discretion. In general,
if the applicant's case is accepted, all facts
and circumstances may be considered in
evaluating whether discretionary LOB re-
lief should be granted. To obtain a favor-
able determination, the applicant must
demonstrate to the satisfaction of the U.S.
competent authority that it does not qual-
ify for the requested benefits under the
relevant LOB provisions of the applicable
U.S. tax treaty, that the applicant has a
substantial nontax nexus to the treaty
country, and that, if benefits are granted,
neither the applicant nor its direct or indi-
rect owners will use the treaty in a manner
inconsistent with its purposes. By way of
example, but not limitation, the U.S. com-
petent authority may take into account the
countries of residence of the applicant's
owners, changes in the ownership struc-
ture of the applicant and its U.S. opera-
tions, and the history of the applicant's
trade or business activities in its country
of residence and in the United States, in-
cluding its customer base, capital assets,
employees, income, and sources of sup-
ply. A substantial nontax nexus to the
treaty country cannot be established by an
intent to take advantage of favorable do-
mestic laws of the treaty country, includ-
ing the existence of a network of tax trea-
ties.

(e) Areas in Which Discretion Will Not
Typically be Exercised. By way of exam-
ple, but not limitation, the U.S. competent
authority typically will not exercise its
discretion to grant benefits where:

(i) the applicant or any of its affiliates
is subject to a special tax regime in its
country of residence with respect to the
class of income for which benefits are
sought. An example of such a regime for
interest income is one that allows a no-
tional interest deduction with respect to
equity in the residence country;

(ii) no or minimal tax would be im-
posed on the item of income in both the
country of residence of the applicant and
the country of source, taking into account
both domestic law and the treaty provision
("double non-taxation"). For example,
double non-taxation would occur if a pay-
ment under a hybrid instrument was ex-

empt from withholding and generated a
deduction in the country of source, while
being treated as income exempt from tax
in the country of residence of the appli-
cant; or

(iii) the applicant bases its request
solely on the fact that it is a direct or
indirect subsidiary of a publicly traded
company resident in a third country and
the relevant withholding rate provided in
the tax treaty between the United States
and the country of residence of the appli-
cant is not lower than the corresponding
withholding rate in the tax treaty between
the United States and the country of resi-
dence of the parent company or any inter-
mediate owner.

(f) User Fee. Applicants filing a discre-
tionary LOB request for an initial deter-
mination, a renewal of a favorable deter-
mination issued prior to the effective date
of this revenue procedure, or a supple-
mental determination must remit the user
fee as provided in section 14 as well as
comply with the instructions set forth in
the Appendix.

(g) Material Change and Supplemental
Determination. An applicant that obtains a
favorable determination with respect to a
discretionary LOB request must notify
TAIT within 90 days after becoming
aware of any material change in fact or
law with respect to such request. Exam-
ples of material changes in fact may in-
clude changes in the ownership structure,
assets, or activities of the applicant or
relevant related entities. Examples of ma-
terial changes in law may include the en-
actment of a special tax regime that ma-
terially affects the applicant's tax liability.
Unless TAIT indicates otherwise, a grant
of discretionary LOB benefits terminates
upon the occurrence of a material change
in law or fact. After notification of a ma-
terial change, TAIT either will advise the
applicant that the original determination is
still in effect or will instruct the applicant
to seek a supplemental determination. If a
supplemental determination is required,
no benefits will be allowed until TAIT
has issued such supplemental determi-
nation. If a supplemental determination
is issued, benefits may, to the extent
consistent with the applicable U.S. tax
treaty, be granted retroactively to the
date of material change in law or fact as
determined in the sole discretion of the

U.S. competent authority. The fact that
an applicant previously received a fa-
vorable determination will not, by itself,
preclude the U.S. competent authority
from considering all relevant facts and
circumstances, including facts and cir-
cumstances that were not previously
considered, in determining whether to
grant the requested benefits.

(h) Triennial Statement. An applicant
that receives a favorable discretionary
LOB determination must file a triennial
statement to keep that determination in
force. The statement must declare that (i)
there has not been a material change with
respect to any relevant facts as set forth in
the discretionary LOB request (or in any
supplemental requests, submissions (in-
cluding past triennial statements), or oral
representations made with respect to that
request), (ii) there has not been a mate-
rial change in law relevant to the bene-
fits being sought, and (iii) the applicant
is not claiming any benefits different
from those granted. The triennial state-
ment must contain the following decla-
ration: "Under penalties of perjury, I
declare that I have examined this state-
ment and accompanying documents, if
any, and that, to the best of my knowl-
edge and belief, this statement contains
all relevant information relating to the
triennial reporting requirement, and that
the representations in this statement are
true, correct, and complete." The state-
ment also must include any other repre-
sentations or items that the U.S. compe-
tent authority may instruct the applicant
to include. The applicant must file the
first triennial statement with TAIT no
later than three years from the date of
the letter notifying the applicant of the
U.S. competent authority's determina-
tion to grant discretionary benefits, or by
such other date to which the U.S. com-
petent authority and the applicant may
agree. The applicant must file each ad-
ditional triennial statement with TAIT
no later than three years after the most
recent triennial statement, or by such
other date to which the U.S. competent
authority and the applicant may agree.
The U.S. competent authority will re-
view each triennial statement and notify
the applicant if any information must be
clarified or supplemented. Any request
the applicant receives to clarify or sup-

plement information in a triennial state-
ment does not constitute an examination
or the commencement of an examination
for purposes of section 7605(b) or any
other provision of the Code. Failure to
timely file a triennial statement will re-
sult in a termination of the grant of
discretionary benefits from the due date
of the triennial statement.

### (3) Pension Plan Requests

(a) In General. Several U.S. tax treaties
contain provisions relating to contribu-
tions to foreign pension funds. Under
these provisions, if certain requirements
are satisfied, individuals who perform ser-
vices in the United States as employees
(and in some cases as independent con-
tractors) are allowed to deduct or exclude
contributions to a foreign pension fund in
computing their U.S. taxable income.
Some of these U.S. tax treaties also allow
U.S. citizens who live and work in the
treaty country to claim deductions or ex-
clusions for U.S. tax purposes for contri-
butions to a foreign pension fund. Many
of these U.S. tax treaties allow U.S. em-
ployers a deduction on their U.S. returns
for contributions to a foreign pension fund
on behalf of employees who perform ser-
vices in the United States.

(b) Contents of Request. The U.S. tax
treaties described in section 3.06(3)(a)
provide that benefits are not available un-
less the U.S. competent authority has de-
termined that the foreign pension plan
"generally corresponds" to a pension plan
recognized for tax purposes in the United
States. In some cases, the treaty negotia-
tors or the competent authorities have
agreed that certain plans generally corre-
spond to a plan recognized for tax pur-
poses in the other country. In other cases,
however, it will be necessary for an em-
ployer, a plan trustee, or an individual
plan participant to request a competent
authority determination on whether a par-
ticular plan "generally corresponds." An
employer, plan trustee, or individual plan
participant seeking such a determination
must file a pension plan request according
to the instructions set forth in the Appen-
dix.

## SECTION 4. ACAP AND ANCILLARY ISSUES

### .01 Accelerated Competent Authority Procedure.

(1) In General. Under ACAP, a tax-
payer may request that the terms of a
competent authority resolution for a given
taxable period be extended to cover sub-
sequent taxable periods for which it has
filed tax returns. In appropriate cases, the
U.S. competent authority may request that
the taxpayer expand the scope of its com-
petent authority request to include ACAP
years, even if the taxpayer has not filed an
ACAP request (see generally section
2.04).

(2) Format and Timing of ACAP Re-
quests. A taxpayer may include an ACAP
request in its competent authority request
(see the Appendix) or in a separate written
submission provided to the U.S. compe-
tent authority after the taxpayer has filed
its competent authority request but before
a tentative competent authority resolution
is reached between the U.S. and foreign
competent authorities. See section 8.02. A
taxpayer that seeks to file an ACAP re-
quest after it has filed the competent au-
thority request may obtain instructions on
the format, content, and timing of the
ACAP request by contacting the taxpay-
er's assigned U.S. competent authority
representative. Among the items that will
be required in the ACAP request is the
taxpayer's waiver of its right to written
notification from the Secretary under sec-
tion 7605(b) of the Code of the need for
more than one inspection of its books of
account and records for taxable years cov-
ered by the ACAP request (see section
2.02, Tab 2, of the Appendix). The tax-
payer is responsible for timely filing an
ACAP request and should not rely on the
U.S. competent authority to notify the tax-
payer of the expected timing of a tentative
competent authority resolution.

### .02 Ancillary Issues.

(1) In General. The mutual agreement
procedure article in most U.S. tax treaties
provides that the U.S. competent authority
may consult with the foreign competent
authority to reach agreement on ancillary
issues, such as the application of the pro-
visions of domestic law regarding penal-

ties, fines, and interest. In cases where the
applicable U.S. tax treaty authorizes the
U.S. competent authority to do so, the
taxpayer may request, either in its compe-
tent authority request or in a supplemental
submission, that the competent authorities
discuss certain ancillary issues and that
any competent authority resolution in-
clude agreement on such ancillary issues.
If the U.S. competent authority either de-
clines to consult with the foreign compe-
tent authority about, or fails to reach an
agreement on, an ancillary issue, then the
controlling provisions of domestic law
will apply to that issue.

(2) Competent Authority Repatriation.
Competent authority repatriation may be
addressed as an ancillary issue in a com-
petent authority resolution. When a com-
petent authority resolution makes a pri-
mary adjustment to income, deductions,
credits, allowances, basis or any other
item or element affecting taxable income
between two members of a controlled
group, the competent authority resolution
might also include competent authority
repatriation as a means to conform their
accounts to reflect the primary adjustment.
Repatriation payments are described gen-
erally in Rev. Proc. 99-32, 1999-2 C.B.
296, as comprising certain types of pay-
ments and prepayment offsets made with
respect to the amount of a primary adjust-
ment. Competent authority repatriation al-
lows for specific treatment of repatriation
payments between the two members. Con-
sistent with the principles of section
4.02(1), only repatriation payments ad-
dressed in the competent authority resolu-
tion will be covered by competent author-
ity repatriation.

(a) Requirements for Competent Au-
thority Repatriation. The U.S. competent
authority will consider competent author-
ity repatriation in a competent authority
case only if:

(i) no person (whether or not a “United
States taxpayer" within the meaning of
Rev. Proc. 99-32) that will make or re-
ceive repatriation payments would be
barred from making or receiving repatria-
tion payments under the principles of sec-
tion 3.01 or 3.03 of Rev. Proc. 99-32;

(ii) the request for competent authority
repatriation is explicitly set forth in the
competent authority request or in a sup-
plemental written submission filed with

the U.S. competent authority prior to a
tentative competent authority resolution
being reached;

(iii) the primary adjustment giving rise
to the application for competent authority
repatriation is included in the competent
authority resolution; and

(iv) there has been no closing action
(within the meaning of section 5.01(1) of
Rev. Proc. 99-32) taken on the primary
adjustment.

(b) Decision on Competent Authority
Repatriation. The U.S. competent author-
ity has sole discretion to agree to or de-
cline a request for competent authority
repatriation or a request as to the specific
terms of such treatment. In no event will
the U.S. competent authority grant com-
petent authority repatriation if (i) the U.S.
competent authority terminates assistance
with respect to the competent authority
request pursuant to section 7.02, (ii) the
competent authority request involves is-
sues that previously were decided in liti-
gation (see section 6.05(2)) or covered by
a closing agreement or other similar
agreement (see section 6.03(2)), or (iii)
the taxpayer rejects the competent author-
ity resolution.

(c) Terms and Effect of Competent Au-
thority Repatriation. When a competent
authority resolution includes competent
authority repatriation for a particular tax-
able year, that treatment of repatriation
payment(s) replaces the treatment of the
repatriation payments that otherwise
would be available for that taxable year
under Rev. Proc. 99-32. To the extent the

taxpayer does not make repatriation pay-
ments of the primary adjustment for the
taxable year under the terms specified,
there will be consequences as provided
in the competent authority resolution or,
if not specified in the competent author-
ity resolution, as provided by the Code
and the relevant domestic law of the
treaty country. The terms of the compe-
tent authority repatriation reached in the
competent authority resolution may re-
flect a prevailing practice with a treaty
partner as well as circumstances specific
to a particular case, and may include,
among other things, a waiver of inter-
company interest on repatriation pay-
ments made within a certain time
period.

(d) Treatment of Repatriation Pay-
ments in Absence of Competent Authority
Repatriation. In the absence of competent
authority repatriation, the provisions of
the Code and the regulations will govern
the availability and tax consequences of
repatriation payments. In such cases, the
provisions of Rev. Proc. 99-32 or succes-
sor guidance governing the election avail-
able to qualifying taxpayers regarding the
treatment of repatriation payments are not
changed by this revenue procedure. See
also Rev. Proc. 2015-41, section 7.01(2).

## SECTION 5. SMALL CASE COMPETENT AUTHORITY REQUESTS

.01 In General. The U.S. competent
authority will endeavor to minimize ad-
ministrative burdens on taxpayers filing

small case competent authority requests
(as described in section 5.02). A taxpayer
that seeks an exemption from the usual
competent authority request content re-
quirements of section 3 with respect to a
small case competent authority request
should contact TAIT or APMA, as appro-
priate. Even if the U.S. competent author-
ity initially agrees to abbreviate the usual
competent authority request requirements,
the U.S. competent authority may subse-
quently require the taxpayer to supple-
ment its competent authority request with
any or all of the information required un-
der section 3, as well as any other infor-
mation or documents the U.S. competent
authority determines is needed to evaluate
the request.

.02 Eligibility.

(1) Excluded Requests. A competent
authority request does not qualify as a
small case competent authority request if
it (a) arises from a taxpayer-initiated po-
sition, (b) is a discretionary LOB request,
or (c) is a pension plan request filed by a
person other than an individual plan par-
ticipant.

(2) Dollar Thresholds. Except as pro-
vided in section 5.02(1), a competent au-
thority request will qualify as a small case
competent authority request if the sum of
the U.S .- and foreign-initiated adjust-
ments does not exceed the following dol-
lar thresholds for all of the competent
authority years combined:

Type of Taxpayer

Threshold of Proposed Adjustment(s)

Corporation/Partnership

$5,000,000

Other (including individual)

$1,000,000

SECTION 6. COORDINATION OF
THE COMPETENT AUTHORITY
PROCESS WITH U.S.
ADMINISTRATIVE AND JUDICIAL
PROCEEDINGS

.01 In General. This section discusses
coordination of the competent authority
process with administrative and judicial
proceedings associated with U.S .- initiated
actions. Specific guidance is also provided
on when the scope of assistance of the

U.S. competent authority may be limited
and the circumstances under which access
to the U.S. competent authority may be
denied with respect to U.S .- initiated ac-
tions.

.02 Exclusive Jurisdiction within the
IRS. The U.S. competent authority will
assume exclusive jurisdiction within the
IRS over all competent authority issues in
a competent authority request that it has
accepted. Any further administrative ac-

tion by the IRS (e.g., assessment and col-
lection procedures) with respect to the
competent authority issues in the compe-
tent authority case will be suspended un-
less the U.S. competent authority instructs
otherwise. Standard administrative proce-
dures will continue to apply to issues over
which the U.S. competent authority has
not assumed jurisdiction. If the U.S. com-
petent authority decides to cease provid-
ing assistance regarding a competent au-

thority issue (see section 7.02), the U.S.
competent authority will return jurisdic-
tion over the issue to the relevant office(s)
within the IRS. See also sections 2.08 and
9.03.

.03 Coordination with IRS
Examination.

(1) Form 870 Waivers. The U.S. com-
petent authority will not reject a taxpay-
er's competent authority request solely
because the taxpayer previously signed a
Form 870, Waiver of Restrictions on As-
sessment and Collection of Deficiency in
Tax and Acceptance of Overassessment,
with IRS Examination that covers compe-
tent authority issues for which the tax-
payer is requesting assistance. If the U.S.
competent authority accepts the compe-
tent authority request, it will endeavor to
reach a competent authority resolution
with the foreign competent authority. This
paragraph is intended to apply only to
standard Form 870 waivers. Taxpayers are
advised to contact the U.S. competent au-
thority to determine the effect of signing a
non-standard Form 870 waiver.

(2) Closing Agreements and Similar
Agreements. The U.S. competent author-
ity will not reject a taxpayer's competent
authority request solely because the tax-
payer previously executed a closing
agreement, a Form 870-AD, Offer to
Waive Restrictions on Assessment and
Collection of Tax Deficiency and to Ac-
cept Overassessment, or other similar
agreement with IRS Examination that
covers competent authority issues for
which the taxpayer is requesting assis-
tance. However, if the U.S. competent au-
thority accepts the competent authority re-
quest, the U.S. competent authority will
endeavor only to obtain a correlative ad-
justment from the applicable treaty coun-
try and will not undertake any actions that
would change the determination of tax-
able income set forth in the agreement.
Taxpayers therefore should be aware that
in these situations, as well as in situations
where a treaty country takes a similar po-
sition with respect to issues resolved un-
der its domestic laws, relief from double
taxation may be jeopardized.

(3) Alternative Dispute Resolution. The
U.S. competent authority will not reject a
taxpayer's competent authority request
solely because the taxpayer has previously

pursued resolution of its competent au-
thority issue through an alternative dis-
pute resolution program that is under the
jurisdiction of IRS Examination (e.g., the
Fast Track Settlement Program as set
forth in Rev. Proc. 2003-40, 2003-1 C.B.
1044). If a resolution is reached through
such a program, the taxpayer's access to
U.S. competent authority assistance will
be determined in accordance with sections
6.03(1) and 6.03(2). If, however, the tax-
payer has pursued resolution of its com-
petent authority issue through an alterna-
tive dispute resolution program that is
under the jurisdiction of IRS Appeals, the
U.S. competent authority will decline to
accept the taxpayer's competent authority
request. See section 6.04. Taxpayers that
are uncertain as to whether an issue would
be considered under the jurisdiction of
IRS Appeals in an alternative dispute res-
olution program are advised to contact the
U.S. competent authority to determine the
application of this paragraph before pur-
suing a resolution of the issue through the
program.

### .04 Coordination with IRS Appeals.

(1) In General. There are two offices
within the IRS to which a taxpayer may
present a U.S .- initiated action for admin-
istrative review of competent authority is-
sues: IRS Appeals and the U.S. competent
authority. Competent authority issues ac-
cepted for consideration by the U.S. com-
petent authority are not subject to the con-
current jurisdiction of IRS Appeals (see
section 6.02). However, a taxpayer may
request SAP review as described in sec-
tion 6.04(2), which is a review of a com-
petent authority issue under the jurisdic-
tion of the U.S. competent authority with
the assistance of IRS Appeals. For a com-
petent authority issue that is initially un-
der the jurisdiction of IRS Appeals, the
U.S. competent authority will decline to
provide assistance unless the taxpayer, in
accordance with the requirements of sec-
tion 6.04(3), effectively severs the issue
from its protest and then timely files a
U.S. competent authority request with re-
spect to the issue. This revenue procedure
does not limit the ability of a taxpayer to
obtain IRS Appeals review of a competent
authority issue that remains after the com-
petent authority process has concluded.
See section 6.04(4).

(2) SAP Review.

(a) In General. The simultaneous ap-
peals procedure is an optional aspect of
the competent authority process whereby
IRS Appeals works jointly with the U.S.
competent authority and the taxpayer to-
ward the development of the U.S. compe-
tent authority's position on an underlying
U.S .- initiated adjustment prior to the U.S.
competent authority's consultations with
the foreign competent authority. The pro-
cedure is intended to facilitate the U.S.
competent authority's unilateral consider-
ation of a resolution of the competent au-
thority issue before it presents a position
on the issue to the foreign competent au-
thority. SAP review will be initiated only
upon a request by a taxpayer in accor-
dance with section 6.04(2)(b).

(b) Requesting SAP Review. A tax-
payer may request SAP review as part of
its competent authority request or in a
separate written submission filed no later
than 60 days after the taxpayer receives
notification that the U.S. competent au-
thority has accepted its competent author-
ity request (see section 2, Part 3.1 of the
Appendix; see also section 1.03 for the
rule applicable to deadlines). Before fil-
ing its competent authority request, a
taxpayer may request a pre-filing con-
ference with the U.S. competent author-
ity to discuss SAP review by following
the procedures set forth in section 3.02.
SAP review may be requested for one or
more competent authority issues in the
competent authority request. Any com-
petent authority issues for which the
taxpayer has not sought SAP review will
be handled by the U.S. competent au-
thority under the standard competent au-
thority process.

(c) Actions with Respect to SAP Review
Request. The U.S. competent authority in
its sole discretion will decide whether to
accept the taxpayer's request for SAP
review after consulting with IRS Ap-
peals and after considering whether SAP
review would unduly burden tax admin-
istration, including the competent au-
thority process. The U.S. competent au-
thority may choose to accept SAP
review with respect to only certain com-
petent authority issues.

(d) Conduct of SAP Review.

(i) In General. If the U.S. competent
authority accepts a request for SAP re-
view, it will notify the taxpayer and coor-
dinate with both the taxpayer and IRS
Appeals on process and time frame. The
manner in which SAP review is conducted
will be determined by the U.S. competent
authority on a case-by-case basis after
consulting with IRS Appeals. In general,
IRS Appeals will begin SAP review by
reviewing the positions previously taken
on the competent authority issues by IRS
Examination and the taxpayer and con-
sulting with the taxpayer and the U.S.
competent authority. IRS Appeals will
conduct its review and consultations in
accordance with standard IRS Appeals
practices except that the U.S. competent
authority will participate in meetings held
between IRS Appeals and the taxpayer.
IRS Appeals and the U.S. competent au-
thority will consult on whether other ex-
ceptions to standard IRS Appeals prac-
tices may be appropriate in a given case.

(ii) Positions in SAP Review not Bind-
ing. The U.S. competent authority will
consider the points raised in SAP review
before deciding upon the position it will
present to the foreign competent authority.
Any discussions with respect to positions
taken in SAP review, whether written or
oral, are not binding on the taxpayer, the
U.S. competent authority, or IRS Appeals.
The IRS will not ask a taxpayer to enter
into a written agreement based on a posi-
tion developed through SAP review as a
prerequisite to pursuing any competent
authority resolution.

(iii) Termination of SAP Review by
IRS. At any point during SAP review, the
U.S. competent authority in its sole dis-
cretion may terminate SAP review with
regard to one or more competent authority
issues after consulting with IRS Appeals.
The standard competent authority process
will then apply to any issues removed
from SAP review. The U.S. competent
authority will inform the taxpayer of next
steps in the competent authority process
(and in SAP review for any issues that
remain in SAP review). Upon termination
of SAP review, a taxpayer may withdraw
its competent authority request for any of
the competent authority issues for which it

initially sought assistance (see section
2.08).

(iv) Withdrawal from SAP Review by
Taxpayer. At any point during SAP re-
view, the taxpayer may withdraw its re-
quest for SAP review with regard to one
or more competent authority issues. The
U.S. competent authority, in turn, will de-
cide whether to continue SAP review for
any competent authority issues the tax-
payer chooses to retain in SAP review.
The standard competent authority process
will then apply to any competent authority
issues removed from SAP review.

(3) Severing Issues from Protest Filed
with IRS Appeals.

(a) In General. A taxpayer that initially
presents a competent authority issue to
IRS Appeals may still request U.S. com-
petent authority assistance if, and only if,
it satisfies the following conditions: (a)
the taxpayer files its competent authority
request no later than 60 days after its
opening conference with IRS Appeals
(see section 1.03 for the rule applicable to
deadlines); (b) the competent authority re-
quest shows that the taxpayer has properly
severed the competent authority issue
from the issues in its protest that will
remain under the jurisdiction of IRS Ap-
peals; (c) the taxpayer has not invoked an
alternative dispute resolution program un-
der the jurisdiction of IRS Appeals with
respect to the competent authority issue;
and (d) the taxpayer has not executed with
IRS Appeals a Form 870-AD, a closing
agreement, or any other similar agreement
concerning such competent authority is-
sue. If the U.S. competent authority ac-
cepts the request, it will assume exclusive
jurisdiction over the competent authority
issues that it has accepted. Standard IRS
Appeals procedures will continue to apply
to any other issues over which IRS Ap-
peals retains jurisdiction. The U.S. com-
petent authority will not accept a compe-
tent authority request concerning a
competent authority issue that the tax-
payer has not properly severed from the
issues within the jurisdiction of IRS Ap-
peals in accordance with this section (see
section 7.02(3)(d)). In deciding whether to
sever issues pursuant to this section, tax-
payers should bear in mind that forgoing
U.S. competent authority assistance may
adversely affect the availability of the for-

eign tax credit. See Treas. Reg. § 1.901-
2(e)(5) and Rev. Rul. 92-75, 1992-2 C.B.
197.

(b) Deadline for Competent Authority
Issues Identified During IRS Appeals Con-
sideration. If, during the course of review-
ing the taxpayer's issues and after the
60-day period provided in section
6.04(3)(a) has commenced, the IRS Ap-
peals representative determines that a po-
tential competent authority issue exists
that had not been identified by IRS Exam-
ination, the deadline for filing the compe-
tent authority request under the provisions
of section 6.04(3)(a) will be 60 days after
the date the taxpayer is first notified that a
potential competent authority issue exists.

(c) Consideration of Competent Au-
thority Request. The U.S. competent au-
thority will consider, in accordance with
this revenue procedure, a competent au-
thority request that includes one or more
issues severed from an Appeals protest.
The U.S. competent authority may accept
the competent authority request as to
some or all of the severed issues. If the
U.S. competent authority accepts the com-
petent authority request with respect to
only particular severed issues, the U.S.
competent authority will assume jurisdic-
tion over only those severed issues, and
IRS Appeals procedures will continue to
apply to the other severed issues. The
taxpayer may request SAP review pursu-
ant to section 6.04(2)(b) with respect to
competent authority issues severed from
the IRS Appeals protest, and the U.S.
competent authority will consider whether
to accept the request for SAP review con-
sistent with the general principles set forth
in section 6.04(2)(c).

(4) Subsequent Review by IRS Appeals.
Nothing in this revenue procedure limits
the ability of a taxpayer to obtain IRS
Appeals review of a competent authority
issue set forth in its competent authority
request if, with respect to that competent
authority issue, (a) the U.S. competent
authority rejects the request or terminates
the competent authority process, (b) the
taxpayer withdraws its request for compe-
tent authority assistance, (c) the compe-
tent authorities do not reach a competent
authority resolution, or (d) the taxpayer
does not accept the terms of the competent
authority resolution.

(5) Transition Rule for Cases Under
the Jurisdiction of IRS Appeals. If, prior to
the effective date of this revenue proce-
dure, either (a) the IRS has issued a 30-
day letter notifying a taxpayer of the right
to request IRS Appeals consideration of a
competent authority issue or (b) the com-
petent authority issue is before IRS Ap-
peals, the procedures and time frames set
forth in section 7.02 of Rev. Proc.
2006-54 will apply to such competent au-
thority issue.

### .05 Coordination with Litigation.

(1) In General. The U.S. competent
authority will not accept or continue to
consider a taxpayer's competent authority
request regarding (a) any competent au-
thority issue and taxable period desig-
nated for litigation with respect to the
same taxpayer, or (b) any competent au-
thority issue and taxable period that are
pending in a U.S. federal court and that
were under IRS Appeals jurisdiction with
respect to the same taxpayer before the
commencement of the litigation (see gen-
erally sections 6.04 and 7.02(3)(d)). In
other cases where a taxpayer has made a
competent authority request with respect
to a taxable period involved in pending
litigation concerning the federal tax liabil-
ity of the taxpayer, the U.S. competent
authority may accept, or continue to con-
sider, the competent authority request af-
ter consulting with the Associate Chief
Counsel (International). During the com-
petent authority process, a taxpayer may
be asked to join the IRS in a motion to
sever any competent authority issues, de-
lay trial, or stay proceedings pending the
outcome of the taxpayer's competent au-
thority case. The Associate Chief Counsel
(International) will coordinate the filing
of any such motion on behalf of the IRS
with, as appropriate, Division Counsel,
the Department of Justice, and the tax-
payer. Final decision on severing issues,
delaying trial, or staying proceedings
rests with the court. If the court denies a
motion to sever competent authority is-
sues, delay trial, or stay proceedings, the
U.S. competent authority will terminate
any ongoing consideration of the com-
petent authority request (see generally
section 7.02(3)(d)).

(2) Effect of Judicial Determinations
and Litigation Settlements. A taxpayer
may file a competent authority request
with respect to a U.S. federal court's final
determination of its tax liability, but only
for the purpose of seeking correlative re-
lief from a foreign competent authority.
Such final determinations include litigation
settlements with the Office of Chief Counsel
or the Department of Justice. If it accepts
such a request, the U.S. competent authority
will seek correlative relief from the foreign
competent authority only for the amount of
such final determination and will not autho-
rize competent authority repatriation.

## SECTION 7. ACKNOWLEDGMENT OF RECEIPT AND DENIAL OF ASSISTANCE

.01 In General. The U.S. competent
authority will acknowledge to the tax-
payer in writing that it has received the
taxpayer's competent authority request.
The acknowledgment will indicate
whether the competent authority request is
complete and whether the U.S. competent
authority accepts the competent authority
request. The acknowledgment also will
provide the name and contact information
of the assigned U.S. competent authority
representative(s) and any supplemental in-
structions (e.g., payment of the user fee in
the case of a discretionary LOB request
that has been accepted (see section
14.02)). The U.S. competent authority
will notify the foreign competent author-
ity when a competent authority request
has been accepted.

.02 Denial and Termination of Assis-
tance. The U.S. competent authority may
decline to accept a competent authority
request or may cease providing assistance
at any point after the competent authority
process has commenced. The U.S. com-
petent authority will notify and, as appro-
priate, consult with the relevant foreign
competent authority before taking such
action. Circumstances in which the U.S.
competent authority may decline to accept
a competent authority request or may
cease providing assistance include, but are
not limited to, the following:

(1) The taxpayer has failed to comply
with the procedural requirements set forth
in this revenue procedure, such as those
listed in section 2.04, section 3, and the
Appendix, after having been provided rea-

sonable opportunity to correct (if possi-
ble) or remedy any deficiencies in its com-
petent authority request or in its other
submissions during the competent author-
ity process.

(2) The taxpayer is not eligible for the
treaty benefit or for the assistance re-
quested according to a plain reading of the
U.S. tax treaty (such as by failing to be a
resident of either contracting state).

(3) The taxpayer's conduct before or
after filing its competent authority request
has undermined or has been prejudicial to
the competent authority process, includ-
ing but not limited to conduct that has
significantly impeded the ability of (a)
IRS Examination, the U.S. competent au-
thority, or any other part of the IRS, or the
foreign tax authority, to adequately exam-
ine the competent authority issues for
which assistance has been requested or (b)
the U.S. or foreign competent authority to
undertake substantive consideration of
and resolve the competent authority case.
Examples of such conduct include:

(a) The taxpayer agreed to or acqui-
esced in a foreign-initiated adjustment, or
entered into a unilateral APA with a for-
eign tax authority, involving significant
legal or factual issues in a manner that
impeded the U.S. competent authority
from engaging in full and fair consulta-
tions with the foreign competent authority
on the competent authority issues.

(b) The taxpayer entered into a unilateral
APA with the IRS when the competent au-
thority issue could reasonably and practi-
cally have been covered if the taxpayer had
instead pursued a bilateral APA (see Rev.
Proc. 2015-41, section 2.02(4)(d)).

(c) The taxpayer rejected a request to
extend the period of limitations for assess-
ment of tax for taxable periods (including
ACAP years) covered by the competent
authority request.

(d) The taxpayer has failed to comply
with the provisions of sections 6.03, 6.04,
and 6.05 governing coordination between
the competent authority process and ad-
ministrative and judicial proceedings or
has pursued its rights within such pro-
ceedings and within the competent author-
ity process in a way that has undermined
or is prejudicial to the competent authority
process.

(e) The taxpayer has presented new
material information or evidence during

the competent authority process that rea-
sonably could have been presented to IRS
Examination during the examination of
the taxable years covered by the compe-
tent authority request.

(f) In competent authority requests or
competent authority cases involving
taxpayer-initiated positions, the taxpayer
failed to request the assistance of the for-
eign competent authority and the U.S.
competent authority in a timely manner in
relation to the taxable year for which re-
lief is sought, or the taxpayer otherwise
has pursued competent authority assis-
tance in a way that has undermined or
prejudiced the competent authority pro-
cess or has impeded the U.S. or foreign
competent authority from engaging in full
and fair consultations on the competent
authority issue(s).

.03 No Review of Denial of Competent
Authority Request for Assistance. The
U.S. competent authority's decision as to
whether a competent authority request is
complete, or to deny, suspend, or termi-
nate assistance, is final and not subject to
administrative review. See also section
3.06(2)(b) regarding denial of discretion-
ary LOB relief.

## SECTION 8. CONSULTATIONS AND RELATED ACTIONS BY THE U.S. COMPETENT AUTHORITY

.01 Non-U.S .- Initiated Actions. In gen-
eral, the U.S. competent authority will
evaluate a competent authority request in-
volving a non-U.S .- initiated action on the
basis of the justifications for the action
prepared by the foreign tax authority or
foreign competent authority (or, in the
case of a taxpayer-initiated position, on
the basis of the justifications for the posi-
tion given by the taxpayer) and the anal-
yses of such justifications prepared by the
taxpayer or other IRS offices. The U.S.
competent authority typically will engage
in consultations with the foreign compe-
tent authority on the justification for, and
appropriate extent of, correlative relief
that it may provide. In cases involving
foreign-initiated actions, the U.S. compe-
tent authority may grant correlative relief
without such consultations if it is satisfied
on the basis of its own review and assess-
ment that the foreign-initiated action is
justified under the U.S. tax treaty (e.g., the
action represents a reasonable application

of the arm's length standard in a transfer
pricing case).

.02 U.S .- Initiated Actions. In general,
the U.S. competent authority will evaluate
a competent authority request involving a
U.S .- initiated action in light of justifica-
tions for the action developed by IRS Ex-
amination, views received through SAP
review, if any, and any analyses of the
action prepared by the taxpayer or other
IRS offices. If the action appears to be
justified and the U.S. competent authority
determines that it is not itself able to ar-
rive at a satisfactory resolution of the
competent authority issues (e.g., by with-
drawing an adjustment in part or in full),
then the U.S. competent authority will be-
gin consultations with the foreign compe-
tent authority.

### SECTION 9. RESULTS OF COMPETENT AUTHORITY CASE

.01 In General. This section discusses
possible outcomes of the competent au-
thority process and the steps to close a
competent authority case. The outcome of
most competent authority cases will be a
competent authority resolution that pro-
vides the taxpayer with complete or par-
tial relief from taxation not in accordance
with the U.S. tax treaty. If the U.S. and
foreign competent authorities are unable
to reach a competent authority resolution,
the competent authority case may be eli-
gible for resolution through arbitration un-
der the terms of the applicable U.S. tax
treaty (see generally section 10).

.02 Presentation of Tentative Compe-
tent Authority Resolution to Taxpayer. If
the U.S. and foreign competent authorities
reach a tentative competent authority res-
olution, it will be presented to the tax-
payer for consideration. Whether the ten-
tative competent authority resolution is
conveyed to the taxpayer in writing or by
other means will depend upon the stage,
size, and complexity of the competent au-
thority case. The taxpayer will be given
adequate opportunity to respond affirma-
tively as to whether the taxpayer accepts
or rejects the terms. However, the compe-
tent authorities may deem the taxpayer to
have rejected the tentative competent au-
thority resolution if the taxpayer does not
timely accept it. Subject to any applicable
disclosure constraints, the competent au-
thorities may respond to questions that the

taxpayer asks about the positions and
views of the competent authorities under-
lying the tentative competent authority
resolution, including specific questions
about computations and similar aspects of
implementing its terms. Resolution of
such questions may require further con-
sultations between the competent author-
ities. The purpose of such consultations is
to address the implementation of the ten-
tative competent authority resolution, not
to renegotiate the underlying agreement.

.03 Rejection of Tentative Competent
Authority Resolution. If the taxpayer re-
jects the tentative competent authority res-
olution (either by notifying the U.S. or
foreign competent authority or by failing
to timely accept it) and either the U.S. or
foreign competent authority is unwilling
to consult further, then the U.S. competent
authority will formally close the case. The
taxpayer may then pursue all domestic
remedies otherwise available to it with
respect to the competent authority issue(s)
in the United States or the treaty country.
If there are multiple competent authority
issues covered by the tentative competent
authority resolution, the taxpayer, subject
to the consent of the competent authori-
ties, may accept the agreement reached on
one or more competent authority issues
while rejecting an agreement on other is-
sues covered by the tentative competent
authority resolution. Generally, if the tax-
payer accepts a tentative resolution of a
competent authority issue, it must accept
the resolution of that issue for all of the
covered years (including ACAP years if
applicable). Where appropriate, the com-
petent authorities may permit the taxpayer
to accept the resolution only for particular
years (e.g., for competent authority years
but not ACAP years). To the extent that
the taxpayer rejects the competent author-
ity resolution, the U.S. competent author-
ity will return jurisdiction over the com-
petent authority issue(s) to the relevant
offices within the IRS.

.04 Implementation of Competent Au-
thority Resolution. If the taxpayer accepts
the terms of the tentative competent au-
thority resolution, the U.S. competent au-
thority will proceed to formally close the
case. The U.S. competent authority will
not recognize a competent authority reso-
lution as being final and binding on the
IRS until the tentative competent author-

ity resolution has been reviewed and ap-
proved within the office of the U.S. com-
petent authority and the competent
authority case has been formally closed by
both competent authorities. Once the com-
petent authority resolution has been final-
ized, the U.S. competent authority will
direct the relevant offices within the IRS
to begin implementing its terms. To the
extent authorized under the applicable
U.S. tax treaty, the competent authority
resolution will be implemented notwith-
standing any time limits or other proce-
dural limitations under the Code and reg-
ulations. When appropriate, the IRS may
request that the taxpayer execute a closing
agreement reflecting the terms of the com-
petent authority resolution. See Rev. Proc.
68-16, 1968-1 C.B. 770 (as modified by
Rev Proc. 94-67, 1994-2 C.B. 800).

## SECTION 10. ARBITRATION

.01 In General. In arbitration treaties,
the mutual agreement procedure article
requires that the competent authorities re-
fer certain competent authority cases to
mandatory arbitration in the event direct
consultation does not lead to a competent
authority resolution within a prescribed
time period. The mutual agreement proce-
dure article in arbitration treaties sets forth
detailed rules regarding the resolution of
cases that are eligible for arbitration as
prescribed by the relevant treaty. This sec-
tion addresses general procedural issues
associated with mandatory arbitration that
is undertaken as part of the competent
authority process. Taxpayers should con-
sult the mutual agreement procedure arti-
cle under the applicable U.S. tax treaty to
determine whether it is an arbitration
treaty and the extent to which mandatory
arbitration applies under such treaty.

.02 Commencement Date and the Be-
ginning of Arbitration Proceedings. De-
termining the "commencement date" un-
der an arbitration treaty is important
because arbitration proceedings begin af-
ter a specified time period, typically two
years, following the commencement date
unless both competent authorities agree to
a different date. In general, the com-
mencement date for a case is the earliest
date on which the information necessary
to undertake substantive consideration for
a competent authority resolution has been
received by both competent authorities.

The U.S. competent authority generally
takes the position that it has received all
information necessary to undertake sub-
stantive consideration for a competent
authority resolution only when it has
received a complete competent authority
request as described in this revenue pro-
cedure. The U.S. competent authority
will notify the taxpayer as to the com-
mencement date once it has been estab-
lished by the U.S. and foreign compe-
tent authorities.

.03 Non-disclosure Agreement. The ar-
bitration proceedings will not begin be-
fore the date by which both competent
authorities have received properly exe-
cuted non-disclosure agreements from all
concerned persons (as defined in the ap-
plicable arbitration treaty), their autho-
rized representatives, and their agents.
The U.S. competent authority will provide
the taxpayer and all concerned persons
with a form for the non-disclosure agree-
ment.

.04 Notification of Unsuitability for Ar-
bitration. Arbitration treaties allow both
competent authorities to agree, at any time
prior to the start of an arbitration proceed-
ing, that a particular case is not suitable
for arbitration. The U.S. competent au-
thority will notify the taxpayer of any
such determination.

.05 Taxpayer Participation. The tax-
payer may submit its analysis and view of
the case to the arbitration panel through
the U.S. competent authority to the extent
permitted under the applicable arbitration
treaty.

.06 Notification of Arbitration Panel's
Determination. The U.S. competent au-
thority will notify the taxpayer of the ar-
bitration panel's determination. If the tax-
payer accepts the arbitration panel's
determination, its terms will constitute a
competent authority resolution.

.07 Other Taxpayer Rights. If a tax-
payer rejects the determination of an arbi-
tration panel, does not accept the determi-
nation within the deadline mandated
under the applicable arbitration treaty, or
has been notified that a case has been
determined not to be suitable for arbitra-
tion, then upon closure of the competent
authority case, the taxpayer may pursue
any rights that remain available under do-
mestic law in either the United States or
the treaty country.

## SECTION 11. PROTECTIVE CLAIMS

.01 In General. Most U.S. tax treaties
provide that competent authority resolu-
tions are to be implemented by the United
States and the treaty country notwith-
standing any time limits or other proce-
dural limitations under the domestic law
of either country. A minority of U.S. tax
treaties may not allow the U.S. competent
authority to waive such limitations. Fur-
ther, in any particular case, domestic bar-
riers may be waived only if a competent
authority request is accepted and a com-
petent authority resolution is reached. For
these reasons, and because circumstances
not under the control of the taxpayer or
the U.S. or foreign competent authority
may impede the implementation of a com-
petent authority resolution, it is advisable
as a general matter for the taxpayer or a
member of the taxpayer's controlled
group to take protective measures under
applicable domestic law to increase the
likelihood that a competent authority res-
olution in its competent authority case can
be implemented in both treaty countries
and to protect any rights of access to al-
ternative remedies outside of the compe-
tent authority process from being barred
by administrative, legal, or procedural
barriers. This section sets forth procedures
and guidelines for taking such protective
measures.

### .02 Protective Claims Procedures Generally.

(1) In General. A taxpayer may make a
protective claim to protect its right to a
potential credit or refund in the event that
a competent authority resolution is
reached and to retain its rights of access to
any alternative remedies available outside
of the competent authority process under
the Code or regulations. A protective
claim is distinct from a treaty notification
(see section 12) and does not affect the
notification deadline under a given treaty,
even though a protective claim and
treaty notification may initially be made
in the same submission and may be up-
dated annually in the same notification
(see section 12.05).

(2) Timing of Protective Claims. Gen-
erally, a taxpayer should consider making
a protective claim when it has reason to
believe that an action of a tax authority

has resulted or is likely to result in a
competent authority issue. However, it
may be advisable to make a protective
claim at earlier times, for example, when
the claim concerns a recurring competent
authority issue or when the taxpayer is
otherwise aware that an adjustment is
likely for a given taxable year. The U.S.
competent authority is not responsible for
ensuring that the taxpayer has filed a valid
protective claim timely.

(3) IRC § 6402 Requirements. To be a
valid protective claim for credit or refund
for purposes of this revenue procedure,
the claim must be in writing and meet the
requirements of section 6402 of the Code
and the regulations thereunder, other than
the requirement in Treas. Reg.
§ 301.6402-3 to file the claim on the
appropriate form. Accordingly, a protec-
tive claim must, at a minimum, (a) fully
advise the IRS of the grounds on which
the credit or refund is claimed, (b) contain
sufficient facts to apprise the IRS of the
exact basis of the claim, (c) describe and
identify the contingencies affecting the
claim, (d) state the year for which the
claim is being made, (e) be verified by
written declaration made under penalties
of perjury, and (f) be filed before the ex-
piration of the applicable period of limi-
tation to which the claim relates.

.03 Making Protective Claim in
Competent Authority Request or
Separate Letter.

(1) In General. A protective claim for
credit or refund filed under this revenue
procedure may be made in either of the
following ways: (a) including the claim in
a competent authority request; or (b) filing
a letter specifically stating that a protec-
tive claim is being made pursuant to this
revenue procedure in relation to an issue
on which the taxpayer may eventually re-
quest competent authority assistance. In
conjunction with either of these methods,
the taxpayer may, but is not required to,
use the form specified in Treas. Reg.
§ 301.6402-3. To make a protective claim
within a competent authority request, see
section 2.02, Tab 3 of the Appendix.
There may be situations in which a tax-
payer will be unable to submit a compe-
tent authority request before the applica-
ble period of limitations expires. In such
situations, a separate protective claim in

the form of a letter should be filed. For
example, a letter would be appropriate
when (a) a foreign tax authority is consid-
ering, but has not yet proposed, an adjust-
ment, (b) a foreign tax authority has pro-
posed an adjustment but administrative or
judicial remedies are expected to be pur-
sued in the treaty country before a com-
petent authority request is filed, or (c) or
the terms of the applicable treaty require
that notification of a claim be made within
a certain time, independent of any action
by a tax authority.

(2) Manner of Filing Separate Letter.
If the protective claim is made in a sepa-
rate letter, the subject of the letter should
state, "Protective Claim Pursuant to Sec-
tion 11 of Rev. Proc. 2015-40." In the
letter, the taxpayer must declare that it is
making a protective claim prior to filing a
potential competent authority request re-
garding the anticipated competent author-
ity issue(s) set forth in the letter. The letter
also must contain the information de-
scribed in section 11.02(3). A subsequent
competent authority request that relates to
a protective claim made in the form of a
letter must refer to such letter (see section
11.04). The taxpayer may combine multi-
ple years and issues into a single protec-
tive claim (or annual notification) as long
as all of the required claim information is
provided with respect to each year and
issue (see section 11.05). One printed
copy and one electronic copy of the pro-
tective claim letter must be submitted to
APMA or TAIT, as appropriate. The tax-
payer may include a second printed copy
of the letter, together with a self-addressed
stamped envelope. Upon receipt of the
protective claim letter, the U.S. competent
authority will date stamp the second
printed copy and return it to the taxpayer
for its records. The electronic copy of the
protective claim letter must follow the
rules for media and format of electronic
submissions described in section 2.03(3)
of the Appendix. If a taxpayer filing a
protective claim letter is under examina-
tion by the IRS, or if an examination be-
gins after the letter is filed, the taxpayer
must send a copy of the letter to the IRS
office conducting the examination. A tem-
plate of a letter suitable for making a
protective claim may be obtained by con-
tacting APMA or TAIT, as appropriate.

.04 Effect of Protective Claim. A pro-
tective claim made in the form of a letter
or a competent authority request that com-
plies with the provisions of this revenue
procedure will meet the filing require-
ments for a valid claim for credit or refund
under section 6402 of the Code and the
regulations thereunder with respect to the
competent authority issues set forth in the
claim, so long as the letter or request is
filed before the expiration of the applica-
ble statutory period of limitations for fil-
ing claims for credit or refund under the
Code.

.05 Annual Notification Requirement
and Additional Protective Claims.

(1) Annual Notification. After initially
filing a protective claim letter with respect
to a given taxable year and before filing its
competent authority request, the taxpayer
must annually notify the U.S. competent
authority as to whether it may still file a
competent authority request with regard to
the taxable year for which the protective
claim was filed. The annual notification
must be filed following the close of each
taxable year ending after the taxable year
in which the taxpayer filed the protective
claim but no later than the date on which
the taxpayer timely files a tax return for
such taxable year (see section 1.03 for the
rule applicable to deadlines). The annual
notification, which must be filed in the
form of a letter, must (a) be titled "Annual
Notification of Protective Claim," (b) ref-
erence the initial protective claim and re-
state the taxable year for which that claim
was made, (c) contain a declaration that
the taxpayer is providing its annual notice
of protective claim pursuant to this section
and that it is requesting that its protective
claim for that taxable year remain active,
and (d) where appropriate, update or oth-
erwise correct the information set forth in
the protective claim or any subsequent an-
nual notifications. The annual notification
must be filed in the same place and manner
as an initial protective claim letter. The tax-
payer may include a second printed copy of
the annual notification letter, together with a
self-addressed stamped envelope, which the
U.S. competent authority will date stamp
and return to the taxpayer for its records.
The U.S. competent authority may deny as-
sistance to a taxpayer that fails to provide
the annual notification with regard to the

taxable year for which the annual notifica-
tion was required.

(2) Additional Protective Claims. A
taxpayer that is filing an annual notifica-
tion for a given taxable year pursuant to
section 11.05(1) may include in its letter
an additional protective claim(s) for a sub-
sequent taxable year(s) and an additional
annual notification(s) for a subsequent
taxable year(s). In addition to including
the information required by section
11.05(1) for the annual notification for a
prior claim, the taxpayer's letter must in-
clude all of the information required by
section 11.03(2) for any new protective
claim in order to constitute a valid protec-
tive claim. In whatever manner such ini-
tial protective claims or annual notifica-
tions are consolidated pursuant to this
section, the submission must clearly state
in its title the purposes for which it is to
serve. In accordance with section
11.03(2), the taxpayer may include a sec-
ond printed copy of the letter, which the
U.S. competent authority will date stamp
and return to the taxpayer for its records.

## SECTION 12. TREATY NOTIFICATIONS

.01 In General. A number of U.S. tax
treaties provide that a mutual agreement
under the mutual agreement procedure ar-
ticle of the treaty shall be implemented
notwithstanding any time or other proce-
dural limitations in the domestic law of
the parties to the treaties, provided that
certain notification requirements are satis-
fied. For example, if a formal request for
competent authority assistance has been
submitted to the competent authority of
one country, but not the other, then notice
generally must be provided to the compe-
tent authority of the other country within
the number of years specified in the treaty.
See, e.g., United States-Canada Income
Tax Convention (1980), Article XXVI(2).
A taxpayer seeking assistance of the for-
eign competent authority under such a
treaty with regard to a foreign-initiated
adjustment must ensure that a treaty noti-
fication is received by the U.S. competent
authority within the time set forth in the
treaty.

.02 Manner of Notification to U.S.
Competent Authority. For purposes of this
revenue procedure, a treaty notification to
the U.S. competent authority may be

made either as a part of a taxpayer's com-
petent authority request (see section 2.02,
Tab 3 of the Appendix) or by letter to the
U.S. competent authority. If a letter is
used, one printed copy and one electronic
copy of the letter must be submitted to
APMA or TAIT, as appropriate. The tax-
payer may include a second printed copy
of the letter, together with a self-addressed
stamped envelope. Upon receipt of the
treaty notification letter, the U.S. compe-
tent authority will date stamp the second
printed copy and return it to the taxpayer
for its records. The electronic copy of the
treaty notification letter must follow the
rules for media and format of electronic
submissions described in section 2.03 of
the Appendix. A template of a letter suit-
able for making a treaty notification may
be obtained by contacting the U.S. com-
petent authority.

.03 Notification of Foreign Competent
Authority. With regard to a U.S .- initiated
adjustment under a U.S. tax treaty with a
notification requirement, the taxpayer
must ensure that a notification is received
by the foreign competent authority within
the time set forth in the treaty. The noti-
fication should be made in accordance
with any applicable procedures prescribed
by the treaty country. The U.S. competent
authority is not responsible for notifying a
foreign competent authority that it has re-
ceived a competent authority request.

.04 Annual Notification Requirement.
After initially filing a treaty notification in
the form of a letter and before filing its
competent authority request, the taxpayer
must annually notify the U.S. competent
authority until a complete competent au-
thority request has been filed. The annual
notification must be submitted to APMA
or TAIT as appropriate following the
close of each taxable year ending after the
taxable year in which the taxpayer submit-
ted the treaty notification but no later than
the date on which the taxpayer timely files
a tax return for such taxable year (see
section 1.03 for the rule applicable to
deadlines). The annual update must be
titled "Treaty Notification Annual Update
under Section 12 of Rev. Proc. 2015-40."
The annual update must refer to prior
treaty notifications.

.05 Consolidation of Protective Claim
and Treaty Notification. The taxpayer
may consolidate an initial protective claim

and an initial treaty notification into a
single letter or in a competent authority
request. A template of a letter suitable for
consolidating an initial protective claim
and treaty notification may be obtained by
contacting APMA or TAIT, as appropri-
ate. The taxpayer also may consolidate an
annual protective claim notification and
annual treaty notification in a single letter.
In whatever manner such initial or annual
notifications are consolidated, the title of
the submission must clearly indicate the
dual function of the submission as a pro-
tective claim and treaty notification (see
section 11.05).

## SECTION 13. REQUESTS FOR RULINGS

.01 In General. Requests for advance
rulings regarding the interpretation of a
U.S. tax treaty, as distinguished from
competent authority requests under this
revenue procedure, must be submitted to
the Associate Chief Counsel (Interna-
tional) according to the provisions of the
applicable revenue procedure governing
such submissions. See Rev. Proc. 2015-1,
2015-1 I.R.B. 1, and Rev. Proc. 2015-7,
2015-1 I.R.B. 231.

.02 Foreign Tax Rulings. Neither the
U.S. competent authority nor any other
office within the IRS will issue an ad-
vance ruling on the effect of the provi-
sions of a U.S. tax treaty on the applica-
tion of the domestic tax laws of a treaty
country.

## SECTION 14. USER FEES

.01 In General. Except as otherwise
provided in this section, no user fee is
required for a competent authority re-
quest.

.02 Requests for Discretionary LOB
Relief. A $32,500 user fee is required for
all requests for discretionary LOB relief
as described in section 3.06(2) filed on or
after October 30, 2015 and prior to Sep-
tember 30, 2016. A $37,000 user fee is
required for all requests for discretionary
LOB relief as described in section 3.06(2)
filed on or after September 30, 2016. See
Rev. Proc. 2015-1 (and successor guid-
ance). The fee must be paid as specified in
section 14.03, as supplemented by instruc-
tions set forth in the acknowledgment pro-
vided to the applicant as described in sec-

tion 7.01. The fee will apply regardless of
whether the request is for an initial deter-
mination, a renewal of a favorable deter-
mination issued prior to the effective date
of this revenue procedure, or a supple-
mental determination. If a competent au-
thority request requires discretionary LOB
relief for two or more entities, a separate
user fee will be charged for each entity.

.03 Timing of User Fee Charge. Within
30 days of receipt of a complete submis-
sion for a request for discretionary LOB
relief, the U.S. competent authority will
notify the applicant whether it accepts or
rejects the request for assistance. No user
fee will be charged unless and until the
U.S. competent authority notifies the ap-
plicant that it formally accepts the request.
If the U.S. competent authority accepts
the request, the taxpayer must pay the
applicable user fee or fees electronically
using the Pay.gov website within 60 days
of the notification of the acceptance (see
section 1.03 for the rule applicable to
deadlines). Upon receipt of the user fee,
the U.S. competent authority will com-
mence analysis of the case.

.04 Refund of User Fee. In general, a
user fee will not be refunded once the U.S.
competent authority accepts a request for
consideration and the user fee is paid. For
example, the IRS will not refund the user
fee if the request for a discretionary de-
termination is withdrawn by the applicant
or if the applicant fails to submit addi-
tional information as requested by the
U.S. competent authority. A user fee may
be refunded, however, if (a) a higher user
fee is paid than is required, or (b) taking
into account all the facts and circum-
stances, including the IRS's resources de-
voted to the request, the U.S. competent
authority declines to rule and, in its sole
discretion, decides a refund is appropriate.

SECTION 15. EFFECT ON OTHER
DOCUMENTS

Rev. Proc. 2006-54, 2006-2 C.B.
1035, is modified and superseded by this
revenue procedure. Rev. Proc. 2003-40,
2003-1 C.B. 1044, is modified. Rev. Rul.
92-75, 1999-2 C.B. 197, is clarified. Rev.
Proc. 2015-41, 2015-35 I.R.B. 263, is
amplified. References in this revenue pro-
cedure to Rev. Proc. 99-32 will be treated
as references to the corresponding provi-
sions of Rev. Proc. 65-17, 1965-1 C.B.

833, as modified, amplified, and clarified
from time to time, for taxable years be-
ginning before August 24, 1999.

## SECTION 16. EFFECTIVE DATE

Except as otherwise provided in this
section, this revenue procedure is effec-
tive for competent authority requests filed
on or after October 30, 2015. The triennial
statement requirement set forth in section
3.06(2)(h) is effective for discretionary
LOB determinations issued on or after
August 31, 2015.

## SECTION 17. PAPERWORK REDUCTION ACT

The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. § 3507) under control number
1545-2044.

An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless the collec-
tion of information displays a valid control
number.

The collection of information in this
revenue procedure is in sections 3.02(2),
3.05, 3.06(2), 4.01, 4.02(2), 5.01, 6.04(2),
9.03, 11.03, 11.05, 12.04, and 12.05 and
in the Appendix. This information is re-
quired, and will be used, to evaluate and
process the request for competent author-
ity assistance. The likely respondents are
individuals or business or other for-profit
institutions.

The estimated total annual reporting
and/or recordkeeping burden is 9,000
hours.

The estimated annual burden per re-
spondent/recordkeeper is 30 hours. The
estimated number of respondents and/or
recordkeepers is 300.

The estimated annual frequency of re-
sponses is on occasion.

Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by section 6103 of the Code.

## SECTION 18. DRAFTING INFORMATION

The principal author of this revenue
procedure is John Hughes of the Office of
the Deputy Commissioner (International),
LB&I. However, other personnel from the
Treasury Department and the IRS (includ-
ing the Office of the Associate Chief
Counsel (International)) participated in its
development. For further information re-
garding this revenue procedure, contact
either Mr. Hughes at (202) 515-4307 or
Alan S. Williams at (202) 317-6941 (not
toll-free calls). For further information on
competent authority issues or on filing
competent authority requests or other as-
pects of the competent authority process,
contact APMA or TAIT; see the contact
information provided in sections 2.04 and
3.05(2) of the Appendix.

## APPENDIX

This Appendix sets forth instructions
on preparing and filing a competent au-
thority request. Unless the U.S. competent
authority has explicitly instructed the tax-
payer otherwise, the competent authority
request must be prepared and filed accord-
ing to the instructions provided in this
Appendix. The U.S. competent authority
may reject a competent authority request
that does not comply with these instruc-
tions. See section 7.02(1) of the revenue
procedure.

Competent authority requests must be
filed with the office (APMA or TAIT) that
has primary responsibility for the subject
of the request (see section 2.01(3) of the
revenue procedure). In cases of doubt, the
taxpayer should consult APMA or TAIT.
Section 1 of this Appendix provides in-
structions and requirements applicable to
all competent authority requests, while the
other sections of this Appendix provide
instructions for filing specific types of
competent authority requests.

SECTION 1. INSTRUCTIONS AND
REQUIREMENTS APPLICABLE TO
ALL COMPETENT AUTHORITY
REQUESTS

.01 In General. A competent authority
request consists of a request letter and
attachments. The contents of the request
letter vary by the type of competent au-

thority request, but generally consist of
information about the taxpayer and about
the competent authority issues involved in
the request. The contents of the attach-
ments vary by type of competent authority
request, but generally consist of required
authorizations, disclosures, consents, and
notifications.

.02 Complete Request Requirement.
The taxpayer must provide a complete
competent authority request. In order to be
complete, the competent authority request
must follow the instructions set forth in
this Appendix. If the taxpayer believes a
required item is not applicable to its com-
petent authority request, this must be
shown as "N/A" or "Not Applicable" (as
opposed to being left blank). If the tax-
payer maintains that it is unable to provide

the required item or seeks an exception to
the filing requirement, it must provide a
statement of its reasons for not providing
the item or its basis for the exception it
seeks (as opposed to leaving the entry
blank). The U.S. competent authority may
permit exceptions to the filing require-
ments in this Appendix on a case-by-case
basis. See also the rules in section 5.01
governing small case competent authority
requests.

SECTION 2. INSTRUCTIONS AND
REQUIREMENTS APPLICABLE TO
COMPETENT AUTHORITY
REQUESTS FILED WITH APMA

.01 Request Letter.

(1) Process. The request letter for
APMA must be addressed to the Deputy

Commissioner (International), LB&I at
the address provided in section 2.04 of
this Appendix. An original of the request
letter, signed and dated by a person having
authority to sign the taxpayer's U.S. re-
turns, must be included in one of the three
required printed copies of the competent
authority request (see section 2.04 of this
Appendix).

(2) Content. The request letter must
contain an introductory statement that the
taxpayer seeks assistance of the U.S. com-
petent authority. The letter then must fol-
low the structure shown below and must
contain or respond to each of the required
statements, descriptions, explanations,
and other information listed.

Contents of Request Letter for APMA

Part 1: Identifying Information and Summary of Issues and Proceedings

1.1

Identifying information: Provide the following information for the taxpayer filing the competent authority request: a. Name; b. Address and phone number;

c. Countries of residence for purposes of the treaty;

d. U.S. taxpayer identification number or foreign taxpayer identification number; and

e. Names and countries of incorporation or residence of all members of the controlled group whose taxable incomes would be affected by a competent authority resolution being reached in the competent authority case

1.2

Authorizations and contacts: Provide names and contact information for the following: a. All individuals authorized by a Form 2848, Power of Attorney and Declaration of Representative, to represent the taxpayer in connection with the competent authority request;

b. All individuals authorized by a Form 8821, Tax Information Authorization, to inspect or receive confidential tax information about the taxpayer in connection with the competent authority request; and

c. The individual(s) who will serve as the taxpayer's point(s) of contact for the U.S competent authority

1.3

IRS office: Provide the following information:

a. For competent authority issues arising from U.S .- initiated adjustments, identify the IRS office that made the ad- justment and provide the name of and contact information for the taxpayer's IRS Examination team manager; and b. For competent authority issues not arising from U.S .- initiated adjustments, identify the IRS office having exami- nation jurisdiction over the taxpayer or U.S. members of the controlled group and provide the name of and con- tact information for the taxpayer's IRS Examination team manager if the taxpayer is under examination when the competent authority request is filed

1.4

Treaty(ies): Identify the U.S. tax treaty(ies) and articles under which the request is being filed

1.5

Summary of competent authority issues: Provide a summary of the competent authority issues for which assistance is being requested

1.6

Years and amounts: Provide the taxable years and amounts at issue, presented in both U.S. dollars and foreign cur- rency, together with the exchange rate(s) that was used for currency conversion during the applicable taxable years

Contents of Request Letter for APMA

1.7

Taxpayer proceedings: Provide: a. a summary of relevant U.S. and foreign judicial and administrative proceedings involving the taxpayer or other members of the controlled group, that are relevant to the competent authority issues for which assistance is being requested (including all information related to notifications provided to the treaty country(ies)); and b. a summary of all other U.S. judicial proceedings that concern the taxpayer's federal tax liability for any taxable period involved in the competent authority request

1.8

Other proceedings: To the extent known, provide a summary of any relevant foreign judicial and public administra- tive proceedings not involving the taxpayer or members of the controlled group but concerning an issue similar to the competent authority issue for which the competent authority request is being filed

1.9

Statutes of limitations: Provide the expiration dates of applicable statutes of limitations in both the United States and the treaty country(ies) for the taxable years covered by the competent authority request

Part 2. Competent Authority Issues

2.1

Competent authority issues: Provide a thorough, informative explanation of the competent authority issues for which assistance is requested, including but not limited to descriptions or discussions of: a. The relevant transactions, activities, or other circumstances surrounding the competent authority issues for which assistance is requested;

b. The taxpayer's understanding of the legal basis for each U.S .- initiated action, foreign-initiated action, or taxpayer- initiated position giving rise to the competent authority issues;

c. The taxpayer's view on the justification for assistance under the applicable U.S. tax treaty(ies); and d. The content of any related requests for assistance submitted to the foreign competent authority, together with an explanation of any material differences between the competent authority request filed under the revenue procedure and the request filed with the foreign competent authority

2.2

Prior or current U.S. competent authority assistance: State whether or not each competent authority issue set forth in the competent authority request is the same or similar to an issue considered in a prior or current competent au- thority or APA request covering the same or other taxable years, and, if so, summarize the terms of any resolution of the issue by the U.S. competent authority

2.3

Pre-filing information: Provide the following information: a. Whether a pre-filing memorandum was filed; and

b. Whether a pre-filing conference was held and, if so, the date of and attendees at the conference

Part 3. Assistance Requested and Required Statements

3.1

Coordination with other proceedings: Provide the following information: a. Whether the taxpayer entered into a previous agreement with IRS Examination as described in section 6.03 of the revenue procedure; b. For any competent authority issue for which assistance is being requested that has been under the jurisdiction of IRS Appeals pursuant to a protest, the date of any opening conference with IRS Appeals and evidence showing that the taxpayer has properly severed the competent authority issue from the issues in its protest that will remain under the jurisdiction of IRS Appeals (see section 6.04(3)(a) of the revenue procedure); and c. Whether the taxpayer seeks SAP review, and if so, for which issues

3.2

ACAP years: Provide the following information: a. Whether the taxpayer requests ACAP and, if so, the ACAP years proposed to be covered; b. Whether the taxpayer does not seek to apply the competent authority resolution to one or more ACAP years and its reasons for not requesting ACAP (such as the transactions at issue not having occurred in subsequent taxable years); and c. Whether the taxpayer has filed a bilateral or multilateral APA request pursuant to Rev. Proc. 2015-41 that proposes to cover one or more issues covered by the competent authority request and, if so, whether it included a rollback request for ACAP years in its APA request

3.3

Ancillary issues: List the ancillary issues (if any) the taxpayer requests be addressed in the competent authority resolution, e.g., competent authority repatriation

### Contents of Request Letter for APMA

3.4
Attachments not included: List any required competent authority request attachments that the taxpayer has not in-
cluded in its competent authority request, together with explanations as to why such items are not included (e.g.,
"N/A")

.02 Attachments. A competent authority request filed with APMA also must include the following attachments after the request
letter, separated and ordered as indicated in this section.

Attachments to Competent Authority Requests for APMA

Tab 1

Authorization form: Include a properly executed Form 2848, Power of Attorney and Declaration of Representa- tive, or Form 8821, Tax Information Authorization

Tab 2

ACAP requests: If the taxpayer is requesting ACAP, provide a statement that the taxpayer agrees to the following: a. The inspection of books of account or records under ACAP will not preclude or impede (under section 7605(b) of the Code or any administrative provision adopted by the IRS) a later examination of a return or inspection of books of account or records for any taxable period covered in the ACAP request; and b. The IRS need not comply with any applicable procedural restrictions (e.g., providing notice under section 7605(b) of the Code) before beginning such later examination or inspection

Tab 3

Protective claim and treaty notification: If applicable, provide the following information: a. A statement that the competent authority request is to serve as a protective claim pursuant to section 11 of the revenue procedure, together with the information described in section 11.02(3); and b. A statement that the competent authority request is to provide treaty notification pursuant to section 12 of the rev- enue procedure

Tab 4

Consent to disclosure: Include a declaration, dated and signed by a person having authority to sign the taxpayer's federal tax returns, that the taxpayer consents to the disclosure of the contents of the competent authority request - other than trade secrets, if the taxpayer so requests - to the applicable foreign competent authority(ies) within the limits contained in the U.S. tax treaty(ies) governing the competent authority request

Tab 5

"Penalties of perjury" declaration: Include the following "penalties of perjury" declaration: Under penalties of perjury, I declare that I have examined this request, including accompa- nying documents, and, to the best of my knowledge and belief, the facts presented in sup- port of the competent authority request are true, correct, and complete. The declaration must be dated and signed by the person(s) on whose behalf the request is being made and not by the taxpayer's representative. The person signing for a corporate taxpayer must be an authorized officer of the taxpayer having personal knowledge of the facts. The person signing for a trust, an estate, or a partnership must be a trustee, an executor, or a partner, respectively, who has personal knowledge of the facts

Tab 6

Written notice of adjustment: Provide the following information: a. For U.S .- initiated adjustments, a copy of the written notice of the adjustment, (e.g., the Form 5701 or Form 4549, and any related attachments received from IRS Examination); or b. For foreign-initiated adjustments: (1) an English translation of any official notice(s) of the adjustment to taxable income reported in the treaty country(ies) upon which the competent authority request is based; and (2) a copy of the official notice(s) of such adjustment(s) in the original language

Tab 7

Information or documents in a foreign language: List any information or documents in a foreign language that are submitted to a foreign tax authority or foreign competent authority in connection with, or that are otherwise relevant to, the competent authority request and for which a full translation in English is not provided

Tab 8

Transfer pricing documentation and related information: Provide the following information: a. A copy of documentation prepared pursuant to section 6662 of the Code or other documentation analyzing the competent authority issues for the taxable years covered by the competent authority request; b. Financial data prepared for official statutory, regulatory, or other reporting purposes for the taxpayer's controlled group (whether a corporate parent is a U.S. person or not) for all taxable years covered by the compe- tent authority request;

Attachments to Competent Authority Requests for APMA

c. Income statements and balance sheets, segmented as necessary to demonstrate the effect of the competent authority issue(s) on taxable income for the taxpayer and the members of the controlled group whose taxable incomes would be affected by a competent authority resolution being reached in the taxpayer's competent authority case, for all taxable years covered by the competent authority request and, as applicable, for the three taxable years ending before and the three taxable years ending after the years covered by the competent authority request; and d. Covered issue diagrams, as described in Exhibit 11 listed in the Appendix to Rev. Proc. 2015-41

Tab 9

Pre-filing submissions: Include any pre-filing memoranda or other materials submitted prior to the competent authority request

Tab 10

Optional e-mail memorandum of understanding: At the taxpayer's option, an executed memorandum of understand- ing in the form prescribed by APMA (as may be posted on the APMA website or otherwise available by contacting APMA) permitting APMA to communicate with the taxpayer's authorized representatives through encrypted e-mail

.03 Manner of Filing Competent
Authority Request with APMA.

(1) In General. The taxpayer must pro-
vide five (5) copies of its competent au-
thority request for APMA as follows: one
(1) original, bound printed submission
containing signed originals of the request
letter and attachments; two (2) bound pho-
tocopies of the contents of the original
printed submission; and two (2) electronic
copies of the contents of the original
printed submission on CD or flash drive or
similar acceptable electronic storage me-
dium. All five (5) copies of the competent
authority request must be filed with
APMA at the address set forth in section
2.04.

(2) Format of Printed Copies. Each
printed copy may be filed in one or more
bound volumes. The attachments must be
tabbed and identified and ordered as pre-
sented in section 2.02 of this Appendix. If
an attachment is not applicable to the
competent authority request, a statement
to this effect must be included in the rel-
evant tabbed attachment.

(3) Content and Format of Electronic
Copies.

(a) Content. The electronic copies of
the competent authority request must con-
tain (1) the request letter, with all required
statements, declarations, explanations,
documents, information, data, and all
other requested materials, and (2) all re-
quired attachments. The attachments
should consist of separate electronic files
named in a manner that corresponds to the
tab numbers and descriptions presented in
section 2.02 of this Appendix. If an at-
tachment is not applicable to the compe-
tent authority request, a statement to this
effect must be included in the electronic
file.

(b) Format. Suitable formats for the
documents in the electronic copy include
Microsoft Word, Excel, PowerPoint, and
Adobe Portable Document Format. Any
document that is readily available in Mi-
crosoft Word, Excel, or PowerPoint for-
mat should be provided in that format
rather than, or in addition to, Adobe Por-
table Document Format. Documents pre-
sented in Excel format to APMA must be
provided with formulas and internal cell

linkages intact. For some competent au-
thority requests, including those that are
complex, the taxpayer may choose addi-
tionally to provide, or APMA may require
the taxpayer to provide, a bookmarked
Adobe Portable Document Format file
that includes the entire contents of the
APA request.

.04 Address and Other Contact Infor-
mation for APMA. Competent authority
requests filed with APMA must be sent to
the following address.

Deputy Commissioner (International)
Large Business and International
Division
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
SE:LB:IN:ADCI:TPO:APMA:
M3-370
(Attention: APMA)

All mail should be sent to this mailing
address, including regular mail, express
mail, overnight mail, and mail sent by
USPS, FedEx, UPS, or any other carrier.
Additional contact information for APMA
is as follows.

Telephone

Telephone numbers are available through the "contact us" link on the APMA website

Website

www.irs.gov/Businesses/Corporations/APMA

Office Location

801 Ninth Street, N.W.

Washington, D. C. 20001

(Mail not accepted at office location)

#### SECTION 3. INSTRUCTIONS AND REQUIREMENTS APPLICABLE TO COMPETENT AUTHORITY REQUESTS FILED WITH TAIT

.01 In General. Competent authority
requests filed with TAIT should follow
the instructions and requirements on con-
tent and structure of competent authority
requests filed with APMA, except as mod-
ified by this section. Requests filed with
TAIT do not need to include the material
listed under Tab 8 found in section 2.02 of
this Appendix. Applicants seeking discre-
tionary LOB relief and pension plan de-
terminations should provide the additional
information described in sections 3.03 and
3.04 of this Appendix. Applicants seeking

to file a request concerning Article XIII(8)
of the U.S .- Canada Treaty should also
consult Rev. Proc. 98-21, 1998-1 C.B.
585. With regard to this and other aspects
of filing a competent authority request
with TAIT, the taxpayer may contact
TAIT for further information prior to fil-
ing its competent authority request. If a
competent authority request does not arise
through the mutual agreement article of a
U.S. tax treaty and is neither a discretion-
ary LOB request nor a pension plan re-
quest, the taxpayer should consult with
TAIT. See section 3.05(2) of this Appen-
dix for information on how to contact
TAIT.

.02 Case presented by foreign compe-
tent authority. If a case is presented by a

foreign competent authority and no corre-
sponding competent authority request has
been filed with TAIT in accordance with
the revenue procedure, TAIT may require
that the relevant U.S. taxpayer, if any (or,
if none, the foreign person) file a compe-
tent authority request in accordance with
the revenue procedure.

.03 Requirements for Discretionary
LOB Requests. In addition to following
the requirements in section 2.02 of this
Appendix as modified by section 3.01, an
applicant filing a discretionary LOB re-
quest also must include an additional sec-
tion in its request letter addressing the
following:

Part 4: Additional Information for Discretionary LOB Requests

4.1

Information necessary for identification and discretionary LOB request review:

a. Statement about the type(s) of benefits requested (e.g., dividends, interest, royalties, or branch profits) and the relevant treaty provision(s) and amount of income at issue;

b. Date on which the applicant requests that the determination become effective; and

c. Statement as to whether the applicant made a previous request and the ultimate disposition of that request

4.2

Applicant's organization information: a. Narrative description of the business activities of the applicant's U.S., foreign, and group holdings that de- scribes the ownership structure and any recent restructurings in ownership and the purposes therefor relevant to the applicant and its ultimate owner(s), including the tax reasons for the use of any hybrid entities in the structure;

b. In the case of a country that applies a territorial or exemption system for relieving double taxation on in- come or gain attributable to an office or branch in a third country, whether the applicant conducts business in the United States through such an office or branch, and if so, the name of the country in which the office or branch is located, the type of income or gain derived by the office or branch, and the applicable rate of tax applied to that income in that third jurisdiction; c. Name, address, contact telephone number, and U.S. taxpayer identification number of U.S. entities related to the applicant from whom income covered by the request was or will be received;

d. A chart stating i) the name and country of tax residence or organization of the applicant and every entity or individual in its chain of ownership up to, and including, its ultimate beneficial owners; ii) the classification of each such entity under the tax law of the country in which it is organized and the United States (e.g., corporation, pension or other tax-exempt entity, or partnership); iii) whether each entity is fiscally transpar- ent or opaque (i.e., non-transparent) under U.S. and foreign tax law; and iv) a description of the amount and type of ownership interests (e.g., preferred stock, common stock, or membership interests) held in each en- tity;

e. Description of the control and business relationships between the applicant and relevant persons for the years in issue, including any changes in such relationships prior to the date of the request; and f. Description of the relevant transactions, activities, or other circumstances involved in the matter covered by the request

Part 4: Additional Information for Discretionary LOB Requests

4.3

Additional applicant information: a. Analysis of why the applicant does not qualify for the requested benefits under the relevant LOB provisions (e.g., (i) if the company fails the base erosion test because it pays more than half of its gross income in the form of deductible expenses to persons not authorized by the treaty, including an explanation as to the rea- sons for making payments to such persons, (ii) if a company is engaged in the active conduct of a trade or business in its country of residence, an explanation of what specifically prevents the company from meeting the active trade or business test in the treaty, (iii) if the applicant's parent was recently delisted from a rec- ognized stock exchange and why, (iv) if the applicant's parent is publicly traded on a stock exchange not recognized under the treaty);

b. Explanation of the non-tax business reasons why the applicant was formed or maintained in the particular treaty country (e.g., that the country is the source of raw materials, the customer base is located in the country, substantial functions of the company's business are located in the country, a substantial amount of services are performed in the country, or rents or royalties are derived from such country), and an explana- tion for any recent changes in these reasons;

c. Detailed description of the facts and circumstances that demonstrate that the applicant has a sufficient rela- tionship or nexus to the treaty country;

d. Analysis of any relevant factor for determining whether to grant a request for discretionary LOB relief, as indicated, for example, by the applicable U.S. tax treaty and Treasury Department Technical Explanation to the U.S. tax treaty;

e. Statement from the applicant as to whether any entity in the ownership chain between the applicant and the publicly held entity (including the publicly held entity) is a nominee, agent, or otherwise a conduit, and if so, why it is arranged in that manner;

f. A statement whether the applicant received any tax rulings or tax concessions issued to the applicant by the country in which it is organized, and a statement of whether the applicant otherwise benefits from a special tax regime in that country, and a description of the benefits;

g. Statement from the applicant whether an examination by any tax authority has been or is currently in pro- cess that is related to the benefit covered by the request;

h. Whether a request for an APA has been or is anticipated to be made with respect to the income that is cov- ered by the request;

i. Statement listing each entity between the applicant and the ultimate owners and indicating whether each such entity meets the base erosion component of the ownership base erosion test of the treaty;

j. If the requested treaty benefits relate to dividends, a description of the capital structure of the applicant and of the U.S. entity paying the dividends, including details about each class of shares and associated rights (e.g., voting, conversion, and dividend rate), the period during which the structure was in effect, and any reorganizations in the United States or of the applicant abroad, including change of residence;

k. If the requested treaty benefits relate to interest, a general description of the terms of indebtedness, the method used to calculate interest, and the existence of embedded options or other derivative structures; whether the debt is registered or in bearer form; whether it is publicly traded and, if so, on which exchange; whether it is held by a hedge fund or other type of investment vehicle; and whether the ultimate owners are known to the applicant;

l. If the requested treaty benefits relate to royalties, a description of the intangible property generating the royalty payments, when the applicant gained the rights to this property, and the terms of the royalty agreement;

m. In the case of an applicant that is a hybrid entity, or that owns an interest in a hybrid entity through which it derives income, profit, or gain with respect to which it seeks treaty benefits, a detailed explanation of why the applicant derives the income in accordance with the relevant treaty provisions; n. Statement of the applicant's effective global tax rate;

o. Statement of the extent to which deductible payments are made outside the ordinary course of the appli- cant's business;

p. Detailed description of the tax treatment in the other contracting state if discretion is granted, including source and character; and

q. Statement of understanding that if the request for discretionary LOB relief is accepted by the U.S. compe- tent authority the applicant is required to remit the user fee as provided by section 14 of the revenue proce- dure

In addition, a discretionary LOB request must contain the four additional attachments listed in the following table, separately tabbed:

Additional Attachments for Discretionary LOB Requests

Tab 11

Financial statements, if available, for the years in issue of the applicant and any U.S. branch or related entity that paid or will pay income to the applicant during the period covered by the request

Tab 12

Annual reports of any publicly traded shareholder that directly or indirectly owns stock in the applicant for the years in issue, and an English translation, if available, of any similar filings with securities regulators reflecting the structure or transaction that is the subject of the request for the years in issue, if applicable

Tab 13

English translations of all tax rulings or tax concessions issued to the applicant by the country in which it is organized

Tab 14

If the applicant has requested a certification from its country of residence regarding entitlement to the benefits of the treaty, where applicable, a copy of all correspondence from the treaty country

.04 Instructions and Requirements Ap-
plicable to Pension Plan Requests. For a
pension plan request, in addition to fol-
lowing the instructions and requirements
in section 2.02 of this Appendix, as mod-

ified by section 3.01, the taxpayer also
must include an additional section (Part 4)
in its request letter explaining why the
foreign pension plan should be deemed to
"generally correspond" to a pension plan

recognized for tax purposes in the United
States. In addition, a pension plan request
must contain the three additional attach-
ments listed in the following table, sepa-
rately tabbed:

Additional Attachments for Pension Plan Requests

Tab 11

Copies of the Plan Documents (translated into English). For this purpose, the Plan Documents includes the plan itself, the trust agreement, the summary plan description or similar document provided to plan participants, and any other document that will assist the U.S. competent authority in making its determination

Tab 12

If the plan at issue relates to another plan of the employer, copies of the Plan Documents (as described above) for that other plan (translated into English)

Tab 13

Copies of all applicable statutory provisions that govern the foreign pension plan (translated into English)

.05 Manner of Filing Competent Authority Request with TAIT.

(1) Format. The taxpayer must provide two copies of its competent authority request in the same manner and format as filing
requests to APMA as described in section 2.03 of this Appendix, except as otherwise permitted by TAIT for small case
competent authority requests (see section 5 of the revenue procedure). One copy must be an original printed submission
containing signed originals of the request letter and attachments. One copy must be an electronic copy of the contents of the
original printed submission on CD or flash drive or similar acceptable electronic storage medium.

(2) Address and Other Contact Information for TAIT. Competent Authority requests filed with TAIT must be sent to the following
address.

Deputy Commissioner (International)
Large Business and International Division

Internal Revenue Service

1111 Constitution Avenue, N.W.
Washington, D.C. 20224

SE:LB:IN:ADCI:TAIT:M4-365

(Attention: TAIT)

All mail should be sent to this mailing address, including regular mail, express mail, overnight mail, and mail sent by USPS,
FedEx, UPS, or any other carrier. Additional contact information is as follows.

Telephone

202-515-4476

Website

http://lmsb.irs.gov/international/dir_treaty/index.asp

Office Location

801 Ninth Street, N.W.

Washington, D. C. 20001

(Mail not accepted at office location)

Internal Revenue Code § 482: Allocation of income
and deductions among taxpayers

##### Rev. Proc. 2015-41

SECTION 1. PURPOSE,
BACKGROUND, RULES OF
CONSTRUCTION, AND
DEFINITIONS

SECTION 2. SCOPE AND GENERAL
APPLICATION

SECTION 3. PROCEDURES FOR
FILING APA REQUESTS

SECTION 4. ACTIONS ON APA
REQUESTS

SECTION 5. COORDINATION WITH
REV. PROC. 2015-40 AND
ROLLBACKS

SECTION 6. LEGAL EFFECT OF AN
APA

SECTION 7. ADMINISTERING AN
APA

SECTION 8. RENEWING AN APA

SECTION 9. DISCLOSURE

SECTION 10. EFFECT ON OTHER
DOCUMENTS

SECTION 11. EFFECTIVE DATE

SECTION 12. PAPERWORK
REDUCTION ACT

SECTION 13. DRAFTING
INFORMATION

APPENDIX. APA REQUEST
REQUIREMENTS

SECTION 1. PURPOSE,
BACKGROUND, RULES OF
CONSTRUCTION, AND
DEFINITIONS

.01 Purpose and Background. This
revenue procedure provides guidance on
the process of requesting and obtaining
advance pricing agreements from the Ad-
vance Pricing and Mutual Agreement pro-
gram ("APMA"), a constituent office of
the U.S. competent authority, within the
office of the Deputy Commissioner Inter-
national, Large Business & International
Division. This revenue procedure also
provides guidance on administration of
executed APAs. This revenue procedure
updates and supersedes Rev. Proc.

2006-9, 2006-1 C.B. 278, as modified by
Rev. Proc. 2008-31, 2008-1 C.B. 1133,
which is also superseded. This revenue pro-
cedure is being released in conjunction with
Rev. Proc. 2015-40, 2015-35 I.R.B. 236,
which provides procedures and guidance on
the process of requesting assistance from the
U.S. competent authority under the provi-
sions of U.S. tax treaties.

A proposed version of this revenue
procedure was released for public com-
ment in Notice 2013-79, 2013-2 C.B.
653. This revenue procedure is issued fol-
lowing consideration of all public com-
ments received by the IRS and the Trea-
sury Department and also reflects the
continuing internal monitoring and modi-
fications of APMA's administrative pro-
cedures to ensure that the administration
of APAs is consistently principled, effec-
tive, and efficient.

The principal differences between this
final revenue procedure and the proposed
version in Notice 2013-79 may be sum-
marized as follows:

(1) This revenue procedure clarifies
that if APMA requires, as a condition of
continuing with the APA process, that the
taxpayer expand the proposed scope of its
APA request to cover interrelated matters
(interrelated issues in the same years, cov-
ered issues or interrelated issues in other
years, and covered issues or interrelated
issues in the same or other years as ap-
plied to other countries), APMA will do
so with due regard to considerations of
principled, effective, and efficient tax ad-
ministration and only after considering the
views of the taxpayer and the applicable
foreign competent authority. Further,
APMA will communicate to the taxpayer
any concerns about interrelated matters
and possible scope expansion as early as
possible. Examples are provided of inter-
related matters. See section 2.02(4).

(2) In the interest of efficient tax ad-
ministration, rollback years may be for-
mally covered within an APA. A rollback
will be included in an APA when a roll-
back is either requested by the taxpayer
and approved after coordination and col-
laboration between APMA and other of-
fices within the IRS or, in some cases, is
required by APMA, after coordination and
collaboration with other offices within the
IRS, as a condition of beginning or con-

tinuing the APA process. See sections
2.02(4)(c), 3.03(2), 3.08, and 5.02.

(3) This revenue procedure provides
expanded guidance as to when an APA
request will be considered complete. See
section 3.03(3).

(4) The required contents of APA re-
quests that were specified in the Appendix
of the proposed revenue procedure have
been refined but generally retained, which
APMA continues to view as necessary to
conduct informed and efficient evalua-
tions of APA requests.

(5) As stated in Notice 2013-79, tax-
payers are required to execute consent
agreements to extend the period of limi-
tations for assessment of tax for each year
of the proposed APA term, and the re-
quired consent could be either general or
restricted. This revenue procedure ex-
pressly provides that APMA will coordi-
nate and collaborate with other offices
within the IRS and with the taxpayer on
the type of consent the taxpayer will be
instructed to execute, which, if restricted,
will follow standardized language pro-
vided by APMA. This revenue procedure
also provides that in certain cases, only
general consents will be used. See section
2.03(3).

(6) This revenue procedure increases
the user fees for APA requests and pro-
vides that total user fees may be reduced
for multiple APA requests filed by the
same controlled group within a sixty-day
period. See section 3.03(2) of the Appen-
dix.

(7) This revenue procedure substan-
tially restructures the proposed guidance
in Notice 2013-79 to improve clarity,
readability, and organization.

.02 Section References and Defined
Terms. Unless indicated by context or oth-
erwise, section references are to the sec-
tions of this revenue procedure.

.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 ex-
tended to the next succeeding day that is
not a Saturday, Sunday, or legal holiday in
the District of Columbia.

.04 Definitions. As used in this revenue
procedure, certain acronyms and other
terms have the meanings set forth in this
section.

Abbreviated APA request

An APA request in which information, documents, or content required for a complete APA request has been truncated or omitted, per explicit authorization from APMA (see section 3.04(2))

ACAP

Accelerated competent authority procedure (see section 4.01 of Rev. Proc. 2015-40)

ACAP request

A request filed under section 4.01 of Rev. Proc. 2015-40 to include ACAP years in a competent authority case

ACAP years

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

Ancillary issue

An issue eligible for coverage by an APA, such as the repatriation of funds (see section 7.01), interest on refunds and deficiencies, and penalties with respect to U.S .- initiated adjustments, that arises out of the resolution of another, underlying covered issue

APA

An advance pricing agreement

APA annual report

The report prepared by the taxpayer for each APA year demonstrating the taxpayer's compliance with the covered method(s) and APA terms and conditions

APA primary adjustment

An adjustment made by a taxpayer to its results, as shown in its books and records for an APA year and/or reflected in its U.S. return for an APA year, in order to make its reported taxable income consistent with the application of the covered method(s) (see section 7.01)

APA process

The series of formal or informal steps described in this revenue procedure or estab- lished by the APA team during the course of its evaluation of an APA request that are involved in reaching an APA, including steps relating to pre-filing conferences and memoranda

APA request

A request for a unilateral, bilateral, or multilateral APA submitted under this revenue procedure

APA team

The IRS team assembled to process an APA request

APA team leader

The taxpayer's primary point of contact within the IRS during the APA process

APA term

The time period consisting of all APA years

APA terms and conditions

The terms and conditions of the APA, including (but not limited to) the APA years, operational and compliance provisions, critical assumptions, and record-keeping and annual reporting responsibilities

APA year

A taxable year covered by an APA

APMA

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

Arbitration treaty

A U.S. tax treaty in which the mutual agreement procedure article includes a provision for mandatory arbitration of certain cases, as described in section 10 of Rev. Proc. 2015-40

Back year

In relation to an APA, any taxable year ending before the first prospective year; and in relation to a proposed APA, any taxable year ending before the first prospective year as proposed by the taxpayer in its APA request or as determined by APMA, as applicable

Bilateral APA

An APA in which the covered issue(s), covered method(s), and APA terms and condi- tions are premised on an underlying competent authority resolution reached between the U.S. competent authority and a foreign competent authority

Bilateral APA request

A request for a bilateral APA submitted under this revenue procedure

Closed filed year

A filed year for which the period of limitations for assessment of tax has expired in the United States

Code

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

Competent authority case

A competent authority case, as defined in Rev. Proc. 2015-40, modified for purposes of this revenue procedure to include the consideration of a bilateral or multilateral APA request

Competent authority issue

A competent authority issue, as defined in Rev. Proc. 2015-40, in one or more compe- tent authority years, which includes issues raised by a bilateral or multilateral APA re- quest

Competent authority process

The competent authority process, as defined in Rev. Proc. 2015-40, modified for pur- poses of this revenue procedure to include the APA process with regard to a bilateral or multilateral APA request

Competent authority re- quest

A competent authority request, as defined in Rev. Proc. 2015-40, modified for purposes of this revenue procedure to include a bilateral or multilateral APA request

Competent authority reso- lution

A competent authority resolution, as defined in Rev. Proc. 2015-40, modified for pur- poses of this revenue procedure to include a resolution by the U.S. competent authority and foreign competent authority(ies) (or through arbitration) of covered issue(s) in a case initiated by a bilateral or multilateral APA request under this revenue procedure, as appropriate

Competent authority year

A competent authority year, as defined in Rev. Proc. 2015-40, modified for purposes of this revenue procedure to include proposed APA years of a bilateral or multilateral APA request

Controlled group

The group of controlled taxpayers, within the meaning of the term set forth in Treas. Reg. § 1.482-1(i), of which the taxpayer filing the APA request is a member

Coverable issues

The issues eligible to be covered by an APA, including (1) issues arising under section 482 of the Code, (2) other issues for whose resolution transfer pricing principles are relevant, which in a particular case could include (a) issues arising under section 367(d) of the Code, (b) competent authority issues arising under the business profits and asso- ciated enterprises articles of U.S. tax treaties, and (c) the determination of the income effectively connected with the conduct of a trade or business within the United States, and (3) ancillary issues

Covered group

The U.S .- and non-U.S. taxpayers within a controlled group, including the taxpayer fil- ing the APA request, whose intercompany transactions or other business activities are within the scope of the covered issue(s)

Covered issue diagrams

Diagrams, charts, tables, or similar representations, as described more fully in the Ap- pendix, that depict the structure and value chain of the proposed covered group as they relate to the proposed covered issue(s) and (if applicable) interrelated issues

Covered issue(s)

The coverable issue(s) that is (are) covered by the APA

Covered method(s)

The transfer pricing method(s) or other method(s) set forth in the APA for resolving the covered issues

Critical assumption

A fact whose continued existence is identified in an APA as being material to the reli- ability of the APA's covered methods; such fact may be related to the taxpayer, a third party, an industry, or business and economic conditions

Dollar file request

An APA request filed in accordance with the provisions of section 3.03(3)(b)

Effective date of an APA

The first date on which the APA has been executed by both the IRS and the taxpayer

Filed year

A taxable year for which the taxpayer has filed its U.S. return, determined by reference to the stage in the APA process at which the characterization as filed or not filed is relevant

Foreign competent author- ity

The competent authority of a treaty country

Global trading arrange- ment

Any arrangement involving multiple associated enterprises or the business unit(s) of an enterprise 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, in- cluding functions ancillary to the foregoing activities

Intangible development arrangement

Any arrangement for sharing the costs and risks of developing intangibles, including a cost sharing arrangement (or an arrangement treated as such) as defined in Treas. Reg. § 1.482-7 or a qualified cost sharing arrangement (or an arrangement treated as such) as defined in Treas. Reg. § 1.482-7A (collectively, a "CSA"); and an arrangement (other than a CSA) for which 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 appropri- ately adjusted in light of the differences in the facts and circumstances between such arrangement and a CSA. See also Treas. Reg. § 1.482-1(b)(2)(iii)

IRS

Internal Revenue Service

IRS Examination

The function(s) within the IRS responsible for examining federal tax and information returns for purposes of determining tax liability

LB&amp;I

IRS Large Business &amp; International Division

Multilateral APA

An APA in which the covered issue(s), covered method(s), and APA terms and condi- tions are premised on one or more underlying competent authority resolutions reached between the U.S. competent authority and more than one foreign competent authority

Multilateral APA request

A request for a multilateral APA submitted under this revenue procedure

OECD Guidelines

The transfer pricing guidelines promulgated by the Organisation for Economic Coopera- tion and Development

Open filed year

A filed year for which the period of limitations for assessment of tax has not expired in the United States

Opening conference

Typically, the first meeting between the taxpayer and an APA team after an APA re- quest has been submitted

Pre-filing conference

A conference held with APMA before an APA request is filed (see section 3.02)

Pre-filing memorandum

A memorandum or similar paper submitted to APMA before an APA request is filed (see section 3.02)

Pre-filing requirements

The requirements regarding pre-filing memoranda and pre-filing conferences set forth in section 3.02

Protective claim

A contingent claim filed with the U.S. competent authority as described in section 11 of Rev. Proc. 2015-40 and section 3.06

Prospective year

An APA year that is described as a prospective year in section 3.03(2)

Rev. Proc. 2006-9

Rev. Proc. 2006-9, 2006-1 C.B. 278

Rev. Proc. 2015-40

Rev. Proc. 2015-40, 2015-35 I.R.B. 236

Rollback

The application (with appropriate modifications, if necessary) of the covered method(s) to specific back years (see sections 2.02(4)(c) and 5.02)

Rollback request

A request for a rollback submitted under this revenue procedure

Rollback year

An APA year that is described as a rollback year in section 3.03(2)

SAP review

The review of a competent authority issue by the U.S. competent authority with the assistance of IRS Appeals under the simultaneous appeals procedure described in sec- tion 6.04 of Rev. Proc. 2015-40

Small case APA user fee

the Appendix The user fee required for APA requests that meet the criteria set forth in section 3.04 of

Taxpayer

Unless the context indicates otherwise, the member of the covered group that is either a U.S. person, as defined in section 7701(a)(30) of the Code, or a non-U.S. person that is expected to file one or more U.S. returns during the proposed APA years that will re- flect the treatment of covered issues. However, if such a member of the covered group is a member of a consolidated group other than the common parent (as defined in Treas. Reg. § 1.1502-1), then the common parent, rather than that member of the con- solidated group, is considered to be the "taxpayer." Further, if there is more than one entity that satisfies the preceding definition of "taxpayer," then the term "taxpayer" re- fers collectively to all such entities.

TPO

Transfer Pricing Operations, the director of which reports to the Deputy Commissioner (International), LB&amp;I

Treaty country

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

U.S. competent authority

The Deputy Commissioner (International), LB&amp;I, the Assistant Deputy Commissioner (International), and each other IRS official performing competent authority functions pursuant to applicable delegation orders (see section 2.01 of Rev. Proc. 2015-40)

U.S. return

A federal income tax return filed with the IRS pursuant to the Code

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, ex- changes of diplomatic notes, memoranda of understanding, and competent authority arrangements

U.S .- initiated adjustment

A proposed or final adjustment made by the IRS to the taxable income of a taxpayer

Unilateral APA

An APA in which the covered issue(s), covered method(s), and APA terms and condi- tions are not premised upon an underlying competent authority resolution

Unilateral APA request

A request to enter into a unilateral APA under this revenue procedure

#### SECTION 2. SCOPE AND GENERAL APPLICATION

.01 Contact Information. APMA may
be contacted with general or specific ques-
tions about this revenue procedure by one
of the means identified in the Appendix.
Unless otherwise instructed by APMA,
any item (e.g., an APA request or a pre-
filing memorandum) that the taxpayer ei-
ther is required or chooses to file with
APMA must be sent to APMA at the
address listed in the Appendix.

##### .02 Principles of Administering APAs.

(1) In February 2012, the IRS estab-
lished APMA to oversee its APA program
and to act as the representative office of
the U.S. competent authority responsible
for handling competent authority cases
arising under the business profits and as-
sociated enterprises articles of U.S. tax
treaties. APMA also has shared responsi-
bility for cases arising under the perma-
nent establishment articles of U.S. tax
treaties. See section 2.01(3) of Rev. Proc.
2015-40. In accordance with its mission,
APMA endeavors to administer the pro-
grams within its jurisdiction in a manner
that is consistent with U.S. tax treaty ob-
ligations and that secures the appropriate
tax bases of the United States and its
treaty partners, prevents fiscal evasion,
promotes consistency and reasonableness
in outcomes, and provides taxpayers ac-
cess to competent authority assistance and
to the APA process in accordance with
considerations of principled, effective,
and efficient tax administration.

(2) APMA's APA program provides a
voluntary process whereby the IRS and
taxpayers may resolve transfer pricing is-
sues and issues for which transfer pricing
principles may be relevant in a principled
and cooperative manner on a prospective
basis. Ancillary issues such as interest and
penalties may also be resolved, but only to
the extent to which APMA has authority
under the Code or under a U.S. tax treaty

to resolve the issues. The APA process
increases the efficiency of tax administra-
tion by encouraging taxpayers to come
forward and present all the facts necessary
for a proper evaluation of their proposed
covered issues and to work towards a res-
olution of such issues in a spirit of open-
ness and cooperation. The voluntary and
prospective nature of the APA process
lessens the burden of compliance by giv-
ing taxpayers greater certainty regarding
covered issues and promotes the princi-
pled resolution of these issues by allowing
for their discussion and resolution in ad-
vance, before the consequences of such
resolution are fully known to either tax-
payers or the IRS. As such, the APA pro-
cess is intended to address issues that are
ongoing in nature or have already arisen
(or, based on firm commitments, are ex-
pected to arise). Conversely, the APA pro-
cess is not available for addressing hypo-
thetical or merely contemplated issues. In
particular, the taxpayer will not be permit-
ted to use the APA process to obtain an
advance view of the IRS's likely treat-
ment of particular transactions (for exam-
ple, business restructurings or intangible
development arrangements) the taxpayer
may be considering.

(3) The APMA Director, directly or by
delegation, may take any action - not con-
trary to statute, regulation, or treaty - nec-
essary to carry out the intent of this revenue
procedure. Such actions include, but are not
limited to, declining to initiate or suspend-
ing or terminating the APA process (see
section 4.02(1)) and modifying the applica-
tion of provisions contained in this revenue
procedure in particular cases (for example,
regarding time limits). Such actions are not
subject to administrative review.

##### (4) Scope of APAs

(a) In General. A taxpayer's APA re-
quest will include one or more covered
issues, as applied to certain proposed tax-
able years, and (in the case of bilateral and
multilateral APA requests) involving one
or more foreign competent authorities. In

evaluating the taxpayer's request, in some
cases APMA may also need to consider
additional, interrelated issues, additional
taxable years (including potential rollback
years, see sections 2.02(4)(c) and 5.02), or
additional treaty countries (collectively,
"interrelated matters") in order to reach a
resolution that is in the interest of princi-
pled, effective, and efficient tax adminis-
tration. APMA will endeavor to commu-
nicate to the taxpayer any concern about
interrelated matters, and any possible need
to expand the scope of the APA (as dis-
cussed below), as early as possible in the
APA process. APMA may do so, for ex-
ample, when the taxpayer's proposed cov-
ered issues are most reliably evaluated
together with other issues. See Treas. Reg.
§§ 1.482-1(f)(2)(i), 1.482-7(g)(2)(iv).
For specific examples of interrelated mat-
ters, see section 2.02(4)(b). In cases re-
quiring consideration of interrelated mat-
ters, APMA will endeavor to reach a
resolution of the taxpayer's proposed cov-
ered issues, but only to the extent that
such resolution is consistent with the
treatment of the identified interrelated
matters. Further, after considering the views
of the taxpayer and (if applicable) the for-
eign competent authority(ies) in such cases,
APMA may decide that it is not in the
interest of principled, effective, and efficient
tax administration to reach a resolution on
the taxpayer's proposed covered issues
without also reaching a resolution on such
identified interrelated matters. In these cir-
cumstances APMA may condition its ac-
ceptance, continued consideration, or reso-
lution of an APA request upon the
agreement of the taxpayer (and, if applica-
ble, of the foreign competent authority(ies))
to expand the scope of the APA.

(b) Examples of Interrelated Matters.
APMA will always consider the taxpay-
er's particular facts and circumstances and
the scope of the covered issue(s) as pro-
posed in the APA request before deciding
that interrelated matters also need to be
considered. However, it is possible to

identify some common fact patterns in
which APMA will be more likely to so
decide.

(i) Assume that the taxpayer proposes
to cover a company's license of intangible
property in certain years to a second com-
pany in the same controlled group, when
that intangible property had been sold in
an earlier year by the second company
(the licensee) to the first company (the
licensor). In such a case, APMA might
consider that the ongoing license should
be evaluated in a manner consistent with
the evaluation performed for the previous
sale (for example, using the same under-
lying assumptions unless there were spe-
cific reasons why certain assumptions
would have changed in the interim).

(ii) The taxpayer might propose to
cover the compensation for services pro-
vided by one company to a second com-
pany in the same controlled group, when
providing the services requires using in-
tangible property that had been transferred
in an earlier year from the first company
to the second company as part of a busi-
ness restructuring. In such a case, APMA
might seek to ensure that the services are
valued in a manner consistent with the
valuation done in connection with the re-
structuring, in the absence of some factual
reason why the valuations should not be
consistent.

(iii) In evaluating a platform contribu-
tion transaction ("PCT") in a cost sharing
arrangement under Treas. Reg. § 1.482-7,
APMA might also consider whether the
intangible development costs in that ar-
rangement are being properly shared.

(iv) Assume that the taxpayer makes a
bilateral APA request to cover sales of
goods from a manufacturer in a treaty
country to a U.S. distributor that is in the
same controlled group, when the U.S. dis-
tributor, in turn, resells most of these
goods to a distributor in another country
(which may or may not be a treaty coun-
try) that is in the same controlled group.
Before agreeing to a price that the U.S.
distributor should pay to the manufac-
turer, APMA might consider the price that
this distributor receives for its resale.

(v) Other examples of types of APA
requests that could involve interrelated
matters are listed among those for which a
pre-filing memorandum is required in sec-
tion 3.02(4), such as cases involving

transactions within a global trading ar-
rangement or involving hybrid entities or
entities disregarded for U.S. tax purposes.

(c) Rollbacks; Coordination between
APAs and Competent Authority Cases. An
APA is primarily a means to resolve cov-
erable issues for prospective years (as de-
fined in section 3.03(2)). However, an
APA can also be "rolled back" to cover
one or more earlier taxable years. When
rollback years are included, the APA term
will then comprise both rollback years and
prospective years (see sections 3.03(2)
and 3.08). Rollback years are defined in
section 3.03(2), and rollbacks are further
discussed in section 5.02. Rollback years
need not be, but typically are, the subject
of an ongoing or anticipated competent
authority case under Rev. Proc. 2015-40.
In recognition of these connections,
APMA views APAs and competent au-
thority resolutions under Rev. Proc.
2015-40 as being two interconnected
means by which taxpayers can manage
and address transfer pricing and other
cross-border tax issues for which transfer
pricing principles may be relevant. Ac-
cordingly, APMA will endeavor to ad-
dress APA requests and competent au-
thority requests under Rev. Proc. 2015-40
in a way that will achieve substantive and
procedural consistency between the APA
process and the competent authority pro-
cess under Rev. Proc. 2015-40, and that
will provide resolution and certainty
across taxable years for taxpayers and the
IRS. For example, when warranted by
similarity of facts and circumstances
across taxable years, APMA will encour-
age and in some cases require (see section
2.02(4)(a)) a taxpayer to expand the scope
of its APA request to include a rollback
when a comprehensive resolution of cov-
erable issues would further the interests of
principled, effective, and efficient tax ad-
ministration. Conversely, when a taxpayer
that has sought APMA's assistance for a
competent authority case under Rev. Proc.
2015-40, APMA may request (but will
not require) that the taxpayer also pursue
ACAP to extend the competent authority
resolution from that case to cover one or
more of its ACAP years (see section 2.04
of Rev. Proc. 2015-40). In such cases,
APMA may also encourage (but will not
formally request or require) the taxpayer
to further extend the competent authority

resolution into an APA as a means of
obtaining certainty in future taxable years
(see section 2.05 of Rev. Proc. 2015-40).
The relationship between APAs, compe-
tent authority cases under Rev. Proc.
2015-40, and ACAP is addressed in
more detail in section 5 and in Rev.
Proc. 2015-40.

(d) Preference for Bilateral and Multi-
lateral APAs. APMA's interest in coordi-
nating APAs and competent authority
cases under Rev. Proc. 2015-40 is also
reflected in its preference for bilateral and
multilateral APAs over unilateral APAs.
To minimize taxpayer and governmental
uncertainty and administrative cost, bilat-
eral and multilateral APAs are generally
preferable to unilateral APAs. If a tax-
payer requests a unilateral APA to cover
any issue that could be covered under a
bilateral or multilateral APA under the
applicable tax treaty(ies), the taxpayer
must explain in a pre-filing memorandum
(see section 3.02(4)) why it believes that a
unilateral APA is appropriate to cover that
issue. The taxpayer might state, for exam-
ple, that it believes that there is no APA
process with the treaty country, or that the
taxpayer's proposed covered issues in-
volve so many treaty countries that the
taxpayer believes that bilateral APAs or a
multilateral APA would be impractical.
After taking into account the taxpayer's
views expressed in the memorandum (and
in a pre-filing conference if one is held,
see section 3.02), APMA will inform the
taxpayer whether it will accept a unilateral
APA request. APMA may reject a taxpay-
er's unilateral APA request for various
reasons, particularly when accepting it
would contravene procedures and prac-
tices established with particular treaty
partners. Further, even if APMA and a
taxpayer sign a unilateral APA, APMA
might subsequently decline to consider a
competent authority request for an issue
that could reasonably and practically have
been covered if the taxpayer had instead
pursued a bilateral or multilateral APA.
See section 7.02 of Rev. Proc. 2015-40.
This would particularly be the case when
APMA has already expended resources
and fully considered the taxpayer's argu-
ments in reaching a unilateral APA and
when a reasonably foreseeable outcome of
the competent authority case would be a
reduction in U.S. taxable income beyond

the level to which APMA and the tax-
payer had agreed in the unilateral APA. In
the same vein, under the example de-
scribed in section 2.02(4)(b)(iv), if the
taxpayer is unwilling to expand the scope
of the APA request to include the compe-
tent authority of a second treaty country,
and APMA nevertheless is willing to
reach an APA, APMA might subsequently
decline to consider a MAP request con-
cerning the resale of the goods to the
distributor in that second treaty country.
In deciding whether to pursue a bilateral
or multilateral APA rather than a unilat-
eral APA, or to expand the scope of the
APA request to include the competent au-
thority of a second treaty country, taxpay-
ers should bear in mind that a failure to
timely request competent authority assis-
tance may adversely affect the availability
of the foreign tax credit. See Treas. Reg.
§ 1.901-2(e)(5) and Rev. Rul. 92-75,
1992-2 C.B. 197.

(5) APMA is available for informal
consultations with taxpayers within or
outside of the APA process. Such consul-
tations may address potential covered is-
sues, and the APA process in general.
Statements or representations, whether
oral or written, made by APMA in con-
nection with such consultations are infor-
mal only and are not binding on the IRS.
Such consultations may be by telephone,
written, and/or in person. Such consulta-
tions may relate to taxpayers whose iden-
tities remain anonymous to APMA, and in
such cases may include participation of a
taxpayer's officers or employees on an
anonymous basis.

.03 General Requirements for
Initiating and Continuing the APA
Process.

(1) To initiate the APA process, the
taxpayer must (i) meet the pre-filing re-
quirements set forth in section 3.02, as
applicable, (ii) submit a complete APA
request, as explained in section 3.04(1),
and (iii) pay the correct user fee, as de-
scribed in section 3.05 and as instructed in
the Appendix.

(2) Throughout the APA process, the
taxpayer must supplement its APA re-
quest and provide updated information in
accordance with sections 3.09 and 3.10.

(3) Throughout the APA process, the
taxpayer and the IRS will execute consent

agreements as necessary to extend the pe-
riod of limitations for assessment of tax
for each proposed APA year (including
both proposed prospective years and pro-
posed rollback years). Each required con-
sent agreement will be either general or
restricted, as specified in this section. A
restricted consent will not be appropriate
for a proposed APA year for which an
issue other than the proposed covered is-
sues is under ongoing or potential exam-
ination by the IRS.

(a) Requirement for APA Request. As
of the date the APA request is filed, the
remaining period of limitations for assess-
ment of tax for each proposed APA year
must be at least two years. If the remain-
ing period of limitations for a proposed
APA year is less than two years from such
date, then the request must contain an
executed general consent to extend the
period of limitations for assessment of tax
for the proposed APA year(s) to at least
two years.

(b) Ongoing Requirement. For each
proposed APA year, as the APA process
progresses, the taxpayer must submit ex-
ecuted consents to the IRS to extend the
period of limitations for assessment of tax
as specified in this section 2.03(3)(b). An
executed consent must be submitted no
later than twelve months before the end of
the remaining period of limitations. Un-
less the taxpayer is otherwise instructed
by APMA, each such consent must extend
such period by at least one year. In most
cases, the taxpayer should submit a gen-
eral consent for this purpose. However, if
there are no issues other than the proposed
covered issues under examination by the
IRS for a proposed APA year, then the
taxpayer may request a restricted consent
under this ongoing requirement. Requests
for restricted consents must be made in
writing no later than fifteen months before
the end of the remaining period of limita-
tions, and include the taxpayer's views on
why a restricted consent is appropriate in
light of its circumstances. APMA will
then coordinate and collaborate with other
offices within the IRS and inform the tax-
payer of the type of consent to be exe-
cuted (general or restricted). Any re-
stricted consent will be on a form
provided by APMA.

(4) An APA request, and an APA, must
be signed by each entity that comes within

the definition of "taxpayer" in section
1.04. Any requirement in this revenue
procedure applicable to the "taxpayer" is
applicable to each such entity, except as
agreed between APMA and the taxpayer.

## SECTION 3. PROCEDURES FOR FILING APA REQUESTS

.01 General. This section sets forth
procedures, rules, and guidelines relevant
to filing an APA request. This section also
addresses the taxpayer's obligations be-
fore and after filing the request. Instruc-
tions on preparing and filing an APA re-
quest are also set forth in the Appendix.

.02 Pre-filing Requirements and
Requests for Pre-filing Guidance.

(1) General. In the interest of making
the APA process effective and efficient,
APMA invites, and in some cases re-
quires, the taxpayer to meet with APMA
in a pre-filing conference prior to filing
the APA request. For the same reason,
APMA invites, and sometimes requires,
the taxpayer to submit a pre-filing mem-
orandum prior to filing the APA request.
Pre-filing requirements are set forth in
sections 3.02(3) through 3.02(7).

(2) APA Requests Eligible for Small
Case APA User Fee. The pre-filing re-
quirements set forth in sections 3.02(3)
through 3.02(7) do not apply to APA re-
quests that are eligible for the small case
APA user fee. A taxpayer that seeks to file
such an APA request may submit the
small case APA user fee together with a
complete APA request, or may first con-
tact APMA to discuss filing an abbrevi-
ated APA request or to discuss any other
procedural or substantive issue.

(3) Requesting Pre-filing Conferences.
A taxpayer that wishes to hold a pre-filing
conference with APMA must submit its
request as part of a mandatory pre-filing
memorandum filed pursuant to section
3.02(4) or an optional pre-filing memoran-
dum filed pursuant to section 3.02(5).

(4) Mandatory Pre-filing Memoranda.
A pre-filing memorandum that identifies
the taxpayer must be filed if:

(a) the taxpayer wishes to file a unilat-
eral APA request to cover an issue that
could be covered under a bilateral or mul-
tilateral APA under the pertinent tax trea-
ty(ies) (see section 2.02(4)(d));

(b) the taxpayer seeks permission to
file an abbreviated APA request pursuant
to section 3.04(2); or

(c) the covered issue(s) proposed by
the taxpayer will, or could reasonably be
expected to, involve any of the following:
(i) the license or other transfer of intangi-
bles in connection with, or the develop-
ment of intangibles under, an intangible
development arrangement, (ii) a global
trading arrangement, (iii) a business re-
structuring, or the use of intangibles
whose ownership changed as a result of a
business restructuring, or (iv) unincorpo-
rated branches, pass-through entities, hy-
brid entities, or entities disregarded for
U.S. tax purposes.

This section is not intended to limit
anonymous informal consultations with
APMA as described in section 2.02(5).
For example, a taxpayer might engage in
informal consultations as described in sec-
tion 2.02(5), including submitting an
anonymous memorandum, and subse-
quently file a pre-filing memorandum that
identifies the taxpayer and otherwise sat-
isfies the requirements for a mandatory
pre-filing memorandum.

(5) Optional Pre-filing Memoranda. A
taxpayer may voluntarily submit a pre-
filing memorandum in cases other than
those set forth in section 3.02(4). Al-
though not required, APMA generally rec-
ommends that a pre-filing memorandum
be submitted for APA requests that may
present novel or complex substantive or
procedural issues, and APA requests for
which APMA could reasonably have con-
cerns regarding interrelated matters (see
section 2.02(4)). Optional pre-filing mem-
oranda may be submitted on an anony-
mous basis. APMA generally recom-
mends, however, that optional pre-filing
memoranda be provided on a named basis
so as to facilitate a more informed under-
standing of the procedural and substantive
issues that may arise during the APA pro-
cess.

(6) Contents of Pre-filing Memoran-
dum. A mandatory pre-filing memoran-
dum must have a length and content ap-
propriate to the size and complexity of the
covered issue(s) proposed by the taxpayer,
and must be primarily in memorandum
form but may be accompanied by dia-
grams, slides, spreadsheets, and similar
supporting materials. An optional pre-

filing memorandum must have a length
and content appropriate to the substantive
or procedural issues the taxpayer wishes
to raise with APMA, and may be in a
format chosen by the taxpayer. Whether
mandatory or optional, a pre-filing mem-
orandum must also do the following:

(a) State whether the taxpayer seeks a
pre-filing conference and, if so, the issues
the taxpayer wishes to discuss;

(b) Propose at least three possible dates
for a pre-filing conference that normally
would be at least two weeks after the date
that the pre-filing memorandum is submit-
ted, if either the pre-filing memorandum is
mandatory (whether or not the taxpayer
seeks a pre-filing conference, which might
be required by APMA) or the pre-filing
memorandum is optional and the taxpayer
seeks a pre-filing conference;

(d) If mandatory and if submitted pur-
suant to sections 3.02(4)(b) and 3.04(2)(a)
to seek permission to file an abbreviated
APA request, must (i) specify any infor-
mation, documents, or other materials the
taxpayer proposes to omit from its APA
request, (ii) present the taxpayer's argu-
ments that the information, documents, or
other materials the taxpayer proposes to
omit from its APA request are not neces-
sary for APMA's evaluation of the APA
request, including if applicable the tax-
payer's arguments that the applicable law,
facts and circumstances, economic condi-
tions, proposed covered issue(s) and
method(s), and other factors relevant to
the proposed APA years are substantially
the same as those relevant to the current
APA or the competent authority resolu-
tion as the case may be (see sections 5.01
and 8), and (iii) in the case of a proposed
renewal APA, summarize in a table the
results and adjustments under the current
APA, in absolute and (as applicable) per-
centage terms (e.g., operating margin),
with comparison to any arm's length
points or ranges specified in the APA, and
also summarize any proposed changes in
terms from the current APA;

(e) List the name and contact informa-
tion for the taxpayer's point of contact
and, unless the pre-filing memorandum is
submitted on an anonymous basis, pro-
vide, as necessary, a Form 2848 authoriz-
ing the point of contact to represent the

taxpayer in connection with the APA re-
quest or a Form 8821 authorizing the
point of contact to inspect or receive con-
fidential tax information about the tax-
payer in connection with the APA request;
and

(f) Identify all open back years of the
taxpayer and which of such years, if any,
are under examination by the IRS.

(7) Place for Submission of Pre-filing
Memorandum. Two printed copies and
one electronic copy of the pre-filing mem-
orandum must be submitted to APMA at
the address provided in section 4 of the
Appendix. The electronic copy of the pre-
filing memorandum must follow the rules
for media and format of electronic sub-
missions described in section 2 of the Ap-
pendix.

(8) Actions Taken with Respect to Pre-
filing Conferences and Memoranda.

(a) APMA will notify the taxpayer
whether it will accept or decline the tax-
payer's request to hold a pre-filing confer-
ence. APMA may also require a pre-filing
conference to follow a mandatory pre-
filing memorandum even if the taxpayer
did not request a conference. If APMA
decides to hold a pre-filing conference, the
conference will address procedural and
substantive issues pertinent to the APA
request. During the conference, the tax-
payer should be prepared to discuss the
relevant facts and circumstances sur-
rounding the issue(s), method(s), and
terms and conditions it proposes to cover
in the APA, and (if applicable) the tax-
payer's justification for its request to file
an abbreviated APA request. If APMA
decides against holding a pre-filing con-
ference, it will direct the taxpayer to pro-
ceed with its APA request (see section
3.04(2) regarding the situation in which
the taxpayer has sought permission to file
an abbreviated APA request).

(b) Unless the taxpayer has submitted a
mandatory pre-filing memorandum pursu-
ant to section 3.02(4), which requires
identification of the taxpayer, or has oth-
erwise identified the taxpayer, a pre-filing
conference may be held on an anonymous
basis. APMA generally recommends,
however, that pre-filing conferences be
held on a named basis to facilitate a more
informed discussion of procedural and
substantive issues that may arise during
the APA process.

(9) Informal Advice in Pre-filing Con-
ference. Statements or representations
made by APMA in a pre-filing conference
are informal and are, therefore, not bind-
ing on the IRS (see section 2.02(5)).

.03 Time for Filing.

(1) In General. APAs are intended to
apply primarily to prospective years, as
defined in section 3.03(2). APMA nor-
mally expects an APA request to be filed
early enough such that the proposed APA
term would cover at least five prospective
years (see section 3.08). This section 3.03
gives rules applicable to filing deadlines
and determinations. These rules reference
section 3.04, which provides guidance on
the content and form of complete APA
requests.

(2) Prospective Years, Rollback Years,
and Filing Deadline of Complete APA Re-
quest. An APA term will comprise pro-
spective years and rollback years (if any).
Except as provided in section 3.03(2)(b), a
prospective year is a taxable year in an
APA term (or a requested APA term) for
which the taxpayer has filed a complete
APA request, or an APA request that is
considered complete (see section 3.03(3)),
as of a date that is no later than the appli-
cable return date (as defined in section
3.03(2)(a)) for that taxable year. Any
APA year, or proposed APA year, ending
before the first prospective year will be a
rollback year (see generally section 5.02).
Depending on the taxable years that the
taxpayer proposes be covered by the APA
term and depending upon the date that
APMA considers the taxpayer's APA re-
quest to be complete, the first prospective
year of the APA may or may not be the
same as what is proposed by the taxpayer.
For example, the taxpayer may file its
APA request intending that a certain tax-
able year be the first prospective year of
the APA. If, however, APMA determines
the APA request is not complete as of the
applicable return date for that taxable
year, then the taxable year the taxpayer
intended to be the first prospective year
will be considered to be a proposed roll-
back year. APMA will determine which
proposed APA year will be the first pro-
spective year according to the provisions
of this section.

(a) Applicable Return Date. If the tax-
payer timely files its U.S. return for a

taxable year, the applicable return date for
that year is the later of (i) the actual filing
date, and (ii) the U.S. return's due date
prescribed by statute without regard to
extensions. If the taxpayer does not timely
file its U.S. return for a taxable year, the
applicable return date for that year is the
U.S. return's due date prescribed by stat-
ute without regard to extensions.

(b) Special Filing Deadline Rule for
Bilateral and Multilateral APA Re-
quests. An additional filing deadline ap-
plies in the case of bilateral and multi-
lateral APA requests. In order to better
coordinate the timing of discussions on
bilateral and multilateral APAs with for-
eign competent authorities, the taxpayer
should file a complete bilateral or mul-
tilateral APA request (or be considered
to have filed such a complete request
under section 3.03(3)) no later than 60
days after a corresponding bilateral or
multilateral request proposing to cover
substantially the same coverable is-
sue(s) and APA years has been filed
with a foreign competent authority. For
this purpose, the filing of a correspond-
ing request with a foreign competent
authority shall be understood to mean
the filing of a substantive request with
that foreign competent authority rather
than the mere filing of a notice of intent
to file a substantive request. If the tax-
payer does not meet the deadline for
filing stated in this section 3.03(2)(b),
then the first APA year that otherwise
would be a prospective year under the
rules of this section 3.03(2) will be con-
sidered to be a rollback year. If the
taxpayer misses that deadline by more
than one year, then the first two or more
APA years (as determined by APMA in
its discretion) that otherwise would be
prospective years under the rules of this
section 3.03(2) will be considered to be
rollback years.

(3) Date as of Which APA Request
Considered Complete.

(a) In General. In certain cases, a com-
plete APA request will be considered to
be filed on a date earlier than the date on
which it is actually filed. Specifically, the
curing of certain deficiencies in an APA
request could relate back to the original
filing date (see section 3.04(1)). The cur-
ing of an incorrect user fee could in ex-
ceptional cases relate back to the original

date of payment (see section 3.05). The
filing of an APA request will in certain
cases relate back to the date on which the
user fee was paid (see section 3.03(3)(b)).
More than one of these provisions just
cited could apply in combination to the
same APA request. For example, a com-
plete APA request could be considered to
have been filed by a particular date if (i)
the user fee is paid by that date, (ii) an
APA request is filed within the 120-day
period specified in section 3.03(3)(b), and
(iii) that APA request is not complete
when filed, but prompt supplementation to
cure minor deficiencies as specified in
section 3.04(1) renders the APA request
complete. As stated in section 3.04(1),
APMA's decision of whether, and when,
an APA request is complete or considered
complete is not subject to administrative
review.

(b) "Dollar File" Requests. For pur-
poses of this section, APMA will consider
a complete APA request as having been
filed by a particular date if (i) the correct
user fee is paid (within the meaning of
section 7502(a) of the Code) by such date,
and (ii) a complete APA request is filed
within 120 days of such date. APMA may
agree to extend such 120-day period by 30
days for good cause if the taxpayer re-
quests such an extension before the 120-
day period expires.

.04 Content and Form of Complete
APA Requests.

(1) In General. The Appendix sets
forth the required contents of an APA
request, identifies the order in which such
contents should be presented, and pro-
vides information and instructions on
other administrative matters relevant to
filing a request. APMA will consider an
APA request to be complete if it (1) is
accompanied by payment of the correct
user fee as specified in section 3.05, (2)
contains all the information required by
the Appendix (subject to any exceptions
agreed to by APMA), and (3) proposes
covered methods that provide a reason-
able basis on which to consider resolution
of the proposed covered issues. For this
purpose, a subsequent remedy of minor
deficiencies, made promptly under the cir-
cumstances, will relate back to the time of
original filing. In exceptional circum-
stances, APMA may also allow a subse-

quent remedy of substantial deficiencies,
made promptly under the circumstances,
to relate back to the time of original filing.
(Regarding deficiencies in the payment of
the user fee, see section 3.05(3).) APMA's
decision of whether, and when, a com-
plete APA request is filed or considered
filed is not subject to administrative re-
view. Any questions about filing an APA
request not addressed in this section or in
section 2 should be directed to APMA.

(2) Abbreviated APA Requests. The
taxpayer must obtain prior permission
from APMA to file an abbreviated APA
request. An abbreviated APA request that
the taxpayer files without such permission
will not be considered a complete APA
request under this section 3.04. An abbre-
viated APA request might be appropriate
for expansion of a competent authority
request under Rev. Proc. 2015-40 into
APA years under the circumstances de-
scribed in section 5.01(2), for APA re-
newals under the circumstances described
in section 8, in certain circumstances for
APA requests eligible for the small case
user fee as specified in section 3.04 of the
Appendix, and in other, exceptional cir-
cumstances. In evaluating the taxpayer's
request to file an abbreviated APA re-
quest, APMA will consider that in most
cases it can most efficiently process an
APA request when the APA request itself
contains all documents reasonably needed
to evaluate that request, even if some of
those documents have been submitted be-
fore to the IRS. Before requesting permis-
sion to file an abbreviated APA request,
the taxpayer should consider whether the
documents that it proposes to omit from
the APA request could alternatively be
provided as exhibits to that request.

(a) Abbreviated APA Requests Not El-
igible for Small Case APA User Fee. To
request permission to file an abbreviated
APA request that is not eligible for the
small case APA user fee as specified in
section 3.04 of the Appendix, the taxpayer
must file a pre-filing memorandum as de-
scribed in sections 3.02(4) and 3.02(6)(d).
After reviewing the pre-filing memoran-
dum and (if applicable) holding a pre-
filing conference (see section 3.02(8)(a)),
APMA will inform the taxpayer either
that APMA will accept an abbreviated
APA request (in which case APMA will
instruct the taxpayer on the content of the

request), or that APMA will require a
complete APA request.

(b) Abbreviated APA Requests Eligible
for Small Case APA User Fee. To request
permission to file an abbreviated APA re-
quest that is eligible for the small case
APA user fee, the taxpayer may contact
APMA informally to discuss the proposed
contents of the request. After discussion
with the taxpayer and consideration of any
written material submitted by the tax-
payer, APMA will inform the taxpayer
either that APMA will accept an abbrevi-
ated APA request (in which case APMA
will instruct the taxpayer on the content of
the request), or that APMA will require a
complete APA request.

(3) Any information submitted by a
taxpayer in connection with its APA re-
quest must be true, correct, and complete
(see the Appendix). All exhibits and doc-
uments included in or referred to in the
APA request must be explained, as neces-
sary, in sufficient detail to make their con-
tents readily understandable. Such an ex-
planation might include, for example,
definitions of terms used, explanations of
the goal and flow of calculations, the
sources of data, and the identity of a doc-
ument's creator and the purpose for which
it was created.

.05 User Fees.

(1) The user fee requirements and rules
of application are set forth in the Appen-
dix. A taxpayer that seeks a decision on
the user fee applicable to its APA request
must contact APMA informally or submit
a pre-filing memorandum.

(2) The taxpayer must pay the applica-
ble user fee no later than the date it files
the APA request. User fees must be paid
through the Pay.gov website.

(3) APMA will notify the taxpayer if it
has paid less than the correct user fee. In
such a case, the taxpayer has the option of
making up the difference or withdrawing
its APA request and receiving a refund of
the amount it has paid. In exceptional
cases, APMA may allow the remedy of
the insufficient user fee to relate back to
the date that the insufficient user fee was
paid for purposes of determining when a
complete APA request is considered to be
filed (see section 3.03(3)).

.06 APA Request as Protective Claim.
For proposed covered issues, a protective

claim for credit or refund may be made by
including the claim in a bilateral or mul-
tilateral APA request. To be a valid pro-
tective claim for credit or refund, the pro-
tective claim must fulfill the requirements
of section 11.02(3) of Rev. Proc. 2015-
40. See section 11 of Rev. Proc. 2015-40
and the Appendix. For purposes of the
annual notification requirement of section
11.05 of Rev. Proc. 2015-40, a protective
claim included in a bilateral or multilat-
eral APA request shall be deemed to be
continuously filed for as long as the sub-
ject matter of that claim is under consid-
eration by APMA as part of that APA
request.

.07 Effect of Filing. The submission of
a complete APA request, updated and sup-
plemented in accordance with the require-
ments of this section 3, will be a factor
taken into account in determining whether
the taxpayer has met the documentation
requirements of Treas. Reg. § 1.6662-
6(d)(2)(iii) for the proposed APA years.
Submission of a complete APA request
does not, in itself, suspend examination or
enforcement proceedings. Although
APMA will coordinate within the IRS to
minimize duplicative requests in conduct-
ing its due diligence, the taxpayer remains
obligated to respond to information docu-
ment requests issued, and according to
deadlines set, by other IRS offices in any
examination or enforcement proceedings.

.08 APA Term. The APA term will
comprise all of the prospective years and
rollback years (if any) covered by the
APA. In its APA request, the taxpayer
must propose a term for the APA that is
appropriate to the proposed covered is-
sue(s) and to the commercial factors sur-
rounding the taxpayer's industry and
line(s) of business. Although the appropri-
ate APA term will be determined on a
case-by-case basis, an APA request typi-
cally should propose at least five prospec-
tive years, unless the taxpayer states a
compelling reason to include fewer years.
Additionally, in the interest of principled,
effective, and efficient tax administration,
APMA typically will seek to set the APA
term so there are at least three unexpired
years (i.e., years that have not yet ended)
remaining in the APA term upon the ex-
ecution of the APA (in the case of a uni-
lateral APA) or upon the execution of the
underlying competent authority resolution

(in the case of a bilateral or multilateral
APA). APMA may require that the tax-
payer agree to extend the APA term in
order to achieve that goal. In the case of a
bilateral or multilateral APA, any pro-
posed term extension will be coordinated
with the relevant foreign competent au-
thority(ies).

### .09 Requested and Supplemental Items.

(1) The information, documents, and
materials required for APA requests that
are identified in the Appendix might not
exhaust the items an APA team needs to
evaluate a given APA request. If the APA
team determines that it needs additional
information to analyze the APA request,
the taxpayer will be asked, and thereby
required, to provide such information. The
taxpayer (or, as the case may be, related
foreign taxpayers) must respond similarly
to requests made by a foreign competent
authority, as applicable. The APA team
will endeavor to present focused, targeted
requests for additional information. To the
extent possible, the APA team will request
information that the taxpayer would be
likely to maintain in its normal course of
business or information that is readily ac-
cessible or could be produced without
placing undue burdens on the taxpayer. In
this regard, the APA team will discuss and
consider reasons offered by the taxpayer
to modify the request or to provide other,
but still responsive, information to that
which was requested.

(2) In general, the taxpayer should be
prepared to provide both (or all) compe-
tent authorities with any written re-
sponses, analyses, or other documents that
it provides to one competent authority,
whether such materials are provided in
response to a request from a competent
authority or are submitted voluntarily by
the taxpayer in support of its APA request.
In the interest of minimizing administra-
tive burdens, the APA team will work
with the taxpayer during the APA process
as necessary to find efficient procedures
for disseminating such materials to the
competent authorities, such as using in-
dexes to catalogue the materials that
have been provided to each competent
authority.

.10 Corrected and Updated
Information.

(1) After the APA request is filed, any
material errors or material omissions in
the APA request or in supplemental sub-
missions must be promptly corrected or
remedied.

(2) The taxpayer must timely notify
APMA of all material changes and up-
dates to information previously submitted
in connection with the APA request. The
taxpayer must also submit any informa-
tion or documents discovered or created
during the APA process that are material
to the APA request.

(3) Any financial data that are pro-
duced in connection with the APA request
during the APA process, and that relate to
the application of the proposed covered
methods to the proposed covered issues,
must be updated annually or on a schedule
that is mutually acceptable to the taxpayer
and to APMA. In addition, the APA re-
quest must be supplemented with a dem-
onstration of the application of the pro-
posed covered method(s) to the actual
financial results of the applicable mem-
bers of the proposed covered group for
each taxable year completed while the
APA request is pending. Such a supple-
mental submission must be provided
within 180 days of the close of the tax-
payer's taxable year, or by a date that is
mutually acceptable to the taxpayer and to
APMA. APMA recognizes that additional
time may be appropriate if the covered
methods require data from foreign parties
that have different taxable years than the
taxpayer. APMA may, at its discretion,
grant an extension or modify these re-
quirements if the taxpayer provides writ-
ten notification before the date the supple-
mental submission would otherwise be
due.

.11 Withdrawing the Request. The tax-
payer may withdraw its APA request at
any time before it executes the APA.
APMA generally will not refund user fees
if the taxpayer withdraws its APA request
after APMA has begun its due diligence.

## SECTION 4. ACTIONS ON APA REQUESTS

.01 Decision Letter and Contact Infor-
mation. APMA will notify the taxpayer in
writing that it has received the APA re-

quest. The letter will also provide the
name and contact information of the APA
team leader to whom the request has been
assigned. In addition, the letter will: (1)
state that the request is complete and that
the APA process will proceed (and, if
applicable, that the taxpayer must take
certain administrative or procedural steps
pertaining to the APA request), (2) state
that the request is provisionally accepted
but that the APA process will not proceed
until specified deficiencies in the request
have been addressed, or (3) state that the
request is rejected and describe the cir-
cumstances, if any, under which the re-
quest might be accepted.

.02 Denial or Discontinuation of the
APA Process.

(1) APMA may decline to enter into or
continue with the APA process, either at
the outset by rejecting the APA request or
by terminating or suspending the APA
process after it has accepted the APA re-
quest. APMA may take such actions if, for
example, any of the circumstances de-
scribed in, or similar to those described in,
section 7.02 of Rev. Proc. 2015-40 are
present, including failure to include the
materials required by this revenue proce-
dure in the APA request (see section 3) or
the materials requested by the APA team
during the APA process. APMA also will
terminate the APA process for a requested
unilateral APA if agreement cannot be
reached on the APA's terms. For re-
quested bilateral and multilateral APAs,
APMA may terminate the APA process if
a competent authority resolution is not
reached; however, in some cases APMA
and the taxpayer might then agree to ex-
ecute a unilateral APA.

(2) If APMA declines to continue with
the APA process after the process has
begun, APMA will determine whether to
refund the taxpayer's user fee. APMA will
base its decision on various consider-
ations, including the extent of the due
diligence and analysis the APA team had
undertaken before further assistance is de-
nied.

(3) APMA's decision to decline to ini-
tiate, or to suspend or terminate, the APA
process is not subject to administrative
review.

### .03 Initial Stages of APA Process.

(1) The APA team leader will contact
the taxpayer once APMA has determined
that the APA request is complete and that
the APA process should continue. In most
cases, the next step in the APA process is
to hold an opening conference. However,
depending on its experience and familiar-
ity with the proposed covered issue(s) and
method(s) and other aspects of the APA
request, the APA team may determine that
an opening conference is not needed. Gen-
erally, the APA team will forego an open-
ing conference only if it has no substantial
disagreement with what the APA request
proposes. If the APA team decides to hold
an opening conference, the APA team
leader will work with the taxpayer to set a
date for the conference. The APA team
may request that the taxpayer provide re-
sponses to specific questions from the
APA team about the APA request before
the opening conference or at the opening
conference. The APA team leader may set
or agree to a due date before the opening
conference for such responses and may
postpone the opening conference if the
responses are not provided by that date.

(2) An opening conference is intended
to facilitate the APA team's understand-
ing of the facts and circumstances under-
lying the taxpayer's proposed covered is-
sue(s), covered method(s), and terms and
conditions. The opening conference may
also involve a discussion of the taxpayer's
reasons for its selection of its proposed
covered method(s). The APA team may
also explore matters potentially interre-
lated with the proposed covered issues
and discuss the possibility of including
additional coverable issues, treaty coun-
tries, or years in the APA (see section
2.02(4)). At the opening conference, the
taxpayer should be prepared to discuss the
APA request in detail and to respond as
fully as possible to questions about the
facts and the proposals. In many cases, the
discussion will focus on the taxpayer's
responses to the APA team's questions
provided in advance of the opening con-
ference (see section 4.03(1)).

(3) The opening conference may also
cover procedural matters, including
whether a case plan will facilitate the
APA team's evaluation of the taxpayer's
APA request, and, if so, at what point in

the APA process it may be useful for the
APA team to adopt a case plan. Ordinar-
ily, a case plan will be adopted to facilitate
efficient processing of the taxpayer's APA
request. With or without a case plan, the
APA team will endeavor to move through
the APA process efficiently, given the
scope and complexity of the proposed
APA and the due diligence and analysis
the APA team needs to undertake. In pre-
paring a case plan, the APA team and the
taxpayer will discuss milestones, which
will depend on the nature of the covered
issue(s), the quality of the APA request
and any responses already provided by the
taxpayer, and the further due diligence
and analysis required. The time estimates
for these milestones as reflected in a case
plan are subject to revision. The time re-
quired to achieve milestones can be af-
fected by various factors including (a) the
quality and timeliness of information pro-
vided by the taxpayer, (b) the need to
consider interrelated matters (see section
2.04(4)), (c) the emergence of unantici-
pated issues (for example, because of a
change in the facts), (d) in the case of
bilateral or multilateral APA requests,
when the foreign competent authority(ies)
are prepared to discuss the case, and (e)
the ease with which an agreement can be
reached with the taxpayer for unilateral
APA requests or with the foreign compe-
tent authority(ies) for bilateral and multi-
lateral APA requests.

.04 Evaluation and Presentation
Stage of APA Process for Bilateral and
Multilateral APA Requests.

(1) In evaluating a bilateral or multilat-
eral APA request, the APA team will con-
sider requests from, and may invite or
require, the taxpayer to make presenta-
tions jointly to the APA team and to the
foreign competent authority(ies). The pro-
vision of such information simultaneously
to all competent authorities could facili-
tate efficient case processing. The APA
team will consult as needed with the for-
eign competent authority(ies) as to its in-
terest in joint presentations, and will no-
tify the taxpayer accordingly.

(2) During the APA process, the APA
team may also request teleconferences or
in-person meetings with the taxpayer to
discuss questions or concerns the APA
team may have about the taxpayer's APA

request, or to discuss the APA team's
provisional views on the request or as-
pects of the request. The APA team may
also invite the taxpayer to provide written
responses to memoranda discussing such
issues. For example, the APA team may
invite the taxpayer to respond to questions
or concerns the APA team has about the
discount rate the taxpayer has chosen for a
discounted cash flow analysis and to pro-
vide its comments regarding a different
discount rate that the APA team considers
a viable alternative. Depending on the
case, the APA team may simultaneously
provide such invitation to the taxpayer
and a copy to the foreign competent au-
thority(ies) and invite the taxpayer to di-
rect its responses to both the foreign com-
petent authority(ies) and the APA team.

(3) The APA team may reach a point in
the APA process when it prepares to for-
mally present its view on the APA request
to the foreign competent authority(ies). At
this point, the APA team will convey the
substance of its views to the taxpayer,
generally in a paper or memorandum hav-
ing a length, content, and format appro-
priate to the scope and duration of the
APA process and to the size and complex-
ity of the proposed covered issue(s) and
method(s) and other relevant facts and
circumstances surrounding the case. In
some cases, the APA team may present
the paper or memorandum to the taxpayer
for its comment before the APA team
formally presents its views to the foreign
competent authority(ies). In other cases,
the APA team may issue the paper or
memorandum simultaneously to the tax-
payer and to the foreign competent au-
thority(ies). The taxpayer would then be
invited to provide its comments to both
the APA team and the foreign competent
authority(ies) for their discussion and con-
sideration towards reaching a competent
authority resolution. The decision as to
which approach is taken is within the dis-
cretion of the APA team.

(4) The APA team will then endeavor
with the foreign competent authority(ies)
to reach a competent authority resolution
that will underlie the APA that will be
executed between the taxpayer and the
IRS. The mutual agreement procedure ar-
ticle in arbitration treaties requires that the
competent authorities refer certain cases
to mandatory arbitration in the event di-

rect discussion between the competent au-
thorities does not lead to a mutual agree-
ment within a prescribed time period.
Taxpayers requesting bilateral or multilat-
eral APAs should consult the mutual
agreement procedure article under the ap-
plicable U.S. tax treaty to determine
whether it is an arbitration treaty and the
extent to which mandatory arbitration ap-
plies to cases initiated by bilateral or mul-
tilateral APA requests under such treaty.
See section 10 of Rev. Proc. 2015-40.

.05 Evaluation and Presentation
Stage of APA Process for Unilateral
APA Requests.

Many of the steps involved in the eval-
uation and presentation stage of the APA
process as applied to unilateral APA re-
quests are similar to those relating to bi-
lateral and multilateral APA requests. For
example, at various points the APA team
may invite the taxpayer to respond, either
orally or in writing, as appropriate, to its
questions or concerns about, or provi-
sional views on, the APA request. The
primary difference is that, in the case of a
unilateral APA request, the APA team and
the taxpayer will proceed directly to final-
ize an APA after the APA team has com-
pleted its due diligence and evaluation of
the APA request and the APA team and
the taxpayer have agreed to the APA's
covered issue(s), covered method(s), and
terms and conditions.

### .06 Execution of Agreement.

With regard to either a unilateral APA
or a bilateral or multilateral APA, the
agreement will become effective on the
date when it is has been executed by both
the IRS and each entity included within
the definition of the taxpayer in section
1.04, and the APA then will have effect as
provided therein. When an APA's covered
group includes a member of a consoli-
dated group other than the common parent
(as defined in Treas. Reg. § 1.1502-1), the
common parent must sign the APA as
provided in Treas. Reg. § 1.1502-77. The
person who signs an APA for a corpora-
tion must be an authorized officer of that
corporation, have personal knowledge of
the APA's covered issue(s), covered
method(s), and terms and conditions, per-
form duties not limited to obtaining letter

rulings or determination letters from the
IRS or entering into APAs, and have au-
thorization to sign that corporation's in-
come tax return pursuant to section 6062
of the Code. An APA for a non-corporate
taxpayer must be signed by an individual
who has personal knowledge of the
APA's covered issue(s), covered meth-
od(s), and terms and conditions, and who
is authorized to sign that taxpayer's in-
come tax return pursuant to section 6061
or 6063 of the Code, as applicable. In the
case of a partnership, APMA may addi-
tionally require that some or all partners
sign the APA. Any questions about the
required signatory or signatories of an
APA should be directed to the APA team
leader.

.07 Not an Examination. APMA's
evaluation of the APA request will not
constitute an examination or inspection of
the taxpayer's books and records under
section 7605(b) or other provisions of the
Code.

SECTION 5. COORDINATION WITH
REV. PROC. 2015-40 AND
ROLLBACKS

.01 Extension of a Competent
Authority Resolution under Rev. Proc.
2015-40 to an APA.

(1) Under Rev. Proc. 2015-40, APMA
may propose that a taxpayer pursue
ACAP to extend a competent authority
resolution in its competent authority case
to one or more ACAP years. APMA may
also discuss with the taxpayer the possi-
bility of extending the competent author-
ity resolution forward into an APA.

(2) A request to extend a competent
authority resolution under Rev. Proc.
2015-40 forward into an APA may be
made either by filing a complete APA
request, or by filing an abbreviated APA
request with APMA's permission pursu-
ant to section 3.04(2). An abbreviated
APA request might be appropriate pro-
vided that the taxpayer establishes that the
applicable law, facts and circumstances,
economic conditions, proposed covered
issue(s) and method(s), and other relevant
factors surrounding the taxpayer's pro-
posed APA years are reasonably expected
to be substantially the same as such fac-
tors surrounding the years in its competent
authority case under Rev. Proc. 2015-40.

.02 Rollbacks.

(1) An APA is primarily a means to
resolve coverable issues for prospective
years. However, an APA may apply the
covered methods (with appropriate modi-
fications, if necessary) to one or more
earlier, rollback years. (See generally, sec-
tion 3.03.) Typically the taxpayer requests
a rollback, but APMA may also consider a
rollback even in the absence of a taxpay-
er's request.

(2) A rollback request generally should
be included in the taxpayer's APA request
(see the Appendix). APMA may, in its
discretion, consider a later written request
for a rollback.

(3) Whether included in the APA re-
quest or in a subsequent written request,
the rollback request must include the same
kind of information regarding the pro-
posed rollback years that is required to be
submitted regarding the proposed pro-
spective years.

(4) After coordinating and collaborat-
ing with other offices within the IRS,
APMA will inform the taxpayer whether
its rollback request has been accepted for
consideration. Except in unusual circum-
stances, APMA will not agree to cover a
closed filed year with a rollback of a uni-
lateral APA request. For a rollback that is
requested in conjunction with a bilateral
or multilateral APA request, APMA will
(i) agree to cover an open filed year only
if it would agree to accept a competent
authority or ACAP request covering such
year (see section 7.02 of Rev. Proc. 2015-
40), and (ii) agree to cover a closed filed
year only if it would agree to accept a
competent authority or ACAP request
covering such year and only if the appli-
cable U.S. tax treaty(ies) allows the cor-
responding competent authority resolution
to be implemented in that filed year.

(5) Regardless of whether the taxpayer
pursues a rollback request, APMA re-
serves the right to coordinate with appli-
cable IRS offices to pursue a rollback to
any or all of the taxpayer's open back
years. In general, APMA will consider
taking such action where there is suffi-
cient similarity in relevant facts and cir-
cumstances across the proposed prospec-
tive years and the taxpayer's open back
years. APMA will inform the taxpayer in
writing, either before the APA process

begins or at any time during the APA pro-
cess, whether it will pursue a rollback and
the back years it will seek to cover. If the
taxpayer refuses to accept a rollback, and
after considering the taxpayer's reasons for
the refusal, APMA may decline to initiate
the APA process or may suspend or termi-
nate the process if it has already begun (see
section 2.02(4)(a)). Even if APMA does not
require a rollback, APMA might still condi-
tion its agreement to an APA on the APA's
terms being consistent with the tax treat-
ment of issues in what might otherwise have
been one or more rollback years (see section
2.02(4)(a)).

(6) A rollback request submitted in
connection with a bilateral or multilateral
APA request is subject to the provisions
regarding coordination with IRS Appeals
set forth in section 6.04 of Rev. Proc.
2015-40, and is subject to the require-
ment that the taxpayer submit a waiver of
ex parte communication (see Appendix,
section 1.03, Exhibit 4).

(7) A taxpayer's rollback request sub-
mitted in connection with a bilateral or
multilateral APA request and involving a
taxable period and issue that are either
designated for litigation, in litigation, or
the subject of a judicial determination or
litigation settlement, or involving a tax-
able period for which the taxpayer other-
wise is in litigation concerning its federal
tax liability will be governed by the pro-
visions regarding coordination set forth in
section 6.05 of Rev. Proc. 2015-40.

SECTION 6. LEGAL EFFECT OF THE
APA

.01 Binding Agreement. An APA is a
binding agreement between the taxpayer
and the IRS.

.02 Effect of Compliance. If the taxpayer
complies with the APA terms and condi-
tions, the IRS will not contest the applica-
tion of the covered method(s) to the covered
issue(s) of the APA except as provided in
this revenue procedure. The taxpayer re-
mains otherwise subject to U.S. income tax
laws and applicable U.S. tax treaties.

.03 Scope of Agreement. Except as oth-
erwise provided in this section, an APA
will have no legal effect except with re-
spect to the taxpayer, taxable years, and
issues to which the APA specifically re-
lates. If a covered issue is the transfer of
intangible property (which does not con-

stitute a platform contribution transaction
as defined in Treas. Reg. § 1.482-
7(b)(1)(ii)) within the meaning of Treas.
Reg. § 1.482-4, the APA may provide
that such transfer will not be subject to
periodic adjustments, during or after the
APA term, under Treas. Reg. § 1.482-
4(f)(2) or (6). If a covered issue is a plat-
form contribution transaction, the APA
may provide that such transaction will not
be treated as a Trigger PCT within the
meaning of Treas. Reg. § 1.482-7(i)(6)(i)
for purposes of making periodic adjust-
ments, during or after the APA term, un-
der Treas. Reg. § 1.482-7(i)(6).

.04 Use as Evidence. Unless provided
otherwise by written agreement or regula-
tions, the IRS and the taxpayer may not
introduce the APA or non-factual oral and
written representations made in conjunc-
tion with the APA request as evidence in
any judicial or administrative proceeding
regarding any tax year, issue, or person
not covered by the APA. This paragraph
does not preclude the IRS and the tax-
payer from agreeing to roll back the
APA's covered method(s), or the IRS's
use of any non-factual material otherwise
discoverable or obtained other than in the
APA process merely because the parties
considered the same or similar material in
the APA process.

.05 Use as Admissions. Unless provided
otherwise by written agreement or regula-
tions, the IRS and the taxpayer may not
introduce a proposed, cancelled, or revoked
APA, or any non-factual oral or written rep-
resentations or submissions made during the
APA process, as an admission by the other
party, in any judicial or administrative pro-
ceeding regarding any taxable year of the
requested APA term. This paragraph does
not preclude the IRS's use of any non-
factual material otherwise discoverable or
obtained other than in the APA process
merely because APMA and the taxpayer
considered the same or similar material in
the APA process.

## SECTION 7. ADMINISTERING THE APA

.01 Reporting of Income, APA
Primary Adjustments, Conforming
Adjustments, and Repatriation of Funds.

(1) Reporting of Income and APA Pri-
mary Adjustments. The taxpayer's report-

ing of income, deductions, credits, allow-
ances, basis, or any other item or element
affecting taxable income during the APA
term must clearly reflect the application of
the covered method(s) to the covered is-
sue(s). In some cases, such reporting for
an APA year will require an adjustment to
the amounts shown in the taxpayer's
books and records for that APA year
and/or to the amounts reflected on a U.S.
return (APA primary adjustment). An
"APA primary adjustment" for an APA
year must be reported (a) on a timely-filed
U.S. return for such APA year, (b) on an
amended U.S. return for such APA year
that is filed within 120 days of the APA's
effective date, or (c) by an alternative
means that is specified in the APA. Man-
ners (b) and (c) in the previous sentence
are permitted only if the original U.S.
return for such APA year is timely filed no
later than 60 days after the APA's effec-
tive date. For an APA year for which the
taxpayer reports an adjustment under
manner (b) or (c), the computation of any
required estimated tax installments for the
taxable year will not take into account the
APA primary adjustment and any related
adjustments (see section 7.01(2)). Further,
for such an APA year, the taxpayer will
not be subject to the failure to pay penal-
ties under sections 6651 and 6655 of the
Code, or the failure to make timely de-
posit of taxes penalty under section 6656
of the Code, by reason of the APA pri-
mary adjustment and any related adjust-
ments.

(2) Conforming Adjustments and Repa-
triation of Funds. This section 7.01(2) ap-
plies only to APA primary adjustments
that arise from applying a covered method
that addresses the allocation of income,
deductions, credits, allowances, basis, or
any other item or element affecting tax-
able income between members of a con-
trolled group. (Such allocation generally
would be governed for U.S. tax purposes
by section 482 or 367(d) of the Code, as
modified by any applicable treaty provi-
sion.) Thus, this section 7.01(2) would not
apply, for example, to APA primary ad-
justments attributable to a U.S. permanent
establishment of a foreign corporation.

(a) Need for Conforming Adjustments;
Payment of Funds. For an APA primary
adjustment, a further adjustment is needed
to conform the accounts of the affected

members of the controlled group (con-
forming adjustment). In some cases the
"conforming adjustment" can be accom-
plished by a payment of funds between
the affected members; such payment is
referred to as a repatriation of funds when
the affected members are in different
countries.

(b) Application of Rev. Proc. 99-32.
Rev. Proc. 99-32, 1999-2 C.B. 296, or
successor guidance, will govern the repa-
triation of funds to conform the accounts
following an APA primary adjustment,
unless the competent authority repatria-
tion specified in section 7.01(2)(c) applies
to that APA primary adjustment.

(c) Competent Authority Repatriation.
For bilateral and multilateral APAs,
APMA will apply the rules and principles
set forth in section 4.02 of Rev. Proc.
2015-40 governing competent authority
repatriation to determine the terms of any
repatriation of funds to conform the ac-
counts following an APA primary adjust-
ment, if competent authority repatriation
is agreed to as part of the competent au-
thority resolution underlying the APA.
APMA will not include competent author-
ity repatriation as part of the competent
authority resolution unless the following
two conditions are satisfied: (i) no person
(whether or not a "United States taxpayer"
within the meaning of Rev. Proc. 99-32
or successor guidance) that will make or
receive repatriation payments would be
barred from making or receiving repatria-
tion payments under the principles of sec-
tion 3.01 or 3.03 of Rev. Proc. 99-32 or
successor guidance, and (ii) the taxpayer
explicitly requests competent authority re-
patriation in its APA request, or in a sup-
plemental written submission filed with
APMA prior to a tentative competent au-
thority resolution being reached.

(d) Implementation in APA. Whether
unilateral, bilateral, or multilateral, the
APA will specify the terms of conforming
adjustments, including, but not limited to,
the terms of any repatriation of funds.

(e) Documentation in annual reports.
The taxpayer must document how the
conforming adjustment for any APA pri-
mary adjustment is made, including the
relevant amounts, timing, and manner of
all payments and deemed payments, and
must disclose these facts in the APA an-
nual report for the APA year to which the

APA primary adjustment relates (see sec-
tion 7.02).

.02 Annual Reports.

(1) An APA annual report must be filed
for each APA year. The report must dem-
onstrate the taxpayer's compliance with
the APA terms and conditions, including
the amount of any APA primary adjust-
ment for a given APA year. The report
must also include all other items required
by the APA and should disclose any pend-
ing requests to renew, modify, or cancel
the APA. In addition, the report must
identify and correct any materially false,
incorrect, or incomplete information sub-
mitted during the APA process that the
taxpayer discovers during the APA year.

(2) The taxpayer must file annual re-
ports on or before the later of (i) the
fifteenth day of the twelfth month follow-
ing the close of the APA year, and (ii) 90
days after the effective date of the APA.
APMA may agree to alternative filing
dates if requested by the taxpayer. For
bilateral and multilateral APAs, APMA
may require the taxpayer to simultane-
ously file a copy of the annual report with
the applicable foreign competent authori-
ty(ies).

(3) The taxpayer must file one original
annual report containing a signed original
of the "penalties of perjury" declaration,
one printed copy of the contents of the
original annual report, and one electronic
copy of the contents of the original annual
report. The taxpayer must file all three
copies of the annual report with APMA at
the address set forth in the Appendix. The
electronic copy of the annual report must
follow the rules for media and format of
electronic submissions described in the
Appendix. Upon request, the taxpayer
must file additional printed copies.

(4) The taxpayer will be notified if it is
necessary to clarify or complete the infor-
mation submitted in the annual report. The
taxpayer must supply the additional infor-
mation by the date specified in the notice.

(5) Any request that the taxpayer re-
ceives to clarify or complete information
in an annual report is not an examination
or the commencement of an examination
of the taxpayer for purposes of section
7605(b) of the Code or any other provi-
sion of the Code.

(6) The taxpayer must amend its an-
nual report within 45 days after becoming
aware of any information that is materi-
ally incomplete or incorrect or of any in-
correct application of the covered meth-
od(s) presented in the report.

(7) APMA may, at its discretion, grant
an extension to submit the annual report if
the taxpayer provides written notification
of its request before the due date and
explains the circumstances necessitating
the extension.

(8) The annual report must contain the
following declarations, as applicable:

Under penalties of perjury, I declare
that I have examined this annual
report including accompanying doc-
uments, and, to the best of my
knowledge and belief, this annual
report contains all the relevant facts
relating to the annual reporting re-
quirements pursuant to the APA,
and such facts are true, correct, and
complete.

[If applicable: An adjustment to
conform taxable income and other
relevant items to reflect the results
reported herein has been reported to
IRS Examination.]

[If applicable: An amended income
tax return to conform taxable in-
come and other relevant items to
reflect the results reported herein
[has been] [will be] filed with the
appropriate Internal Revenue Ser-
vice Center.]

(9) The taxpayer must sign the decla-
ration(s) according to the instructions in
the Appendix regarding perjury state-
ments.

(10) Failure to file an annual report that
is timely, complete, and accurate may be
grounds for canceling or revoking the
APA under section 7.06.

.03 Examination.

(1) With respect to the covered is-
sue(s), the IRS will not reconsider the
covered method(s) but will instead limit
the examination of a taxpayer's income
tax return in any given APA year to, and
may require that the taxpayer establish,
the following: (i) the taxpayer's compli-
ance with the APA terms and conditions,
(ii) the accuracy of the APA annual re-
port's material representations, and (iii)
the correctness of the supporting data and

computations used to apply the covered
method(s).

(2) The IRS may audit and propose
adjustments to the taxpayer's results as
determined under the APA's covered
method(s) without affecting the APA's
validity or applicability. The taxpayer
may agree with the proposed adjustments
in the same manner as any other adjust-
ment, in which case the IRS will assess
any resulting additional tax or refund any
resulting overpayment of tax accordingly.
If it does not agree with the proposed
adjustment, the taxpayer may contest it
through available administrative and judi-
cial procedures. The taxpayer must in-
clude the audit adjustments as finally de-
termined for the purpose of applying the
covered method(s), and must then make
any resulting APA primary adjustments.

.04 Record Retention.

(1) The taxpayer must maintain books
and records that are sufficiently detailed to
verify that it has complied with the APA
terms and conditions. The taxpayer's
compliance with this paragraph fulfills the
record-keeping requirements of sections
6038A and 6038C of the Code as applied
to the covered issue(s).

(2) Upon examination of the covered
issue(s), IRS may request that the tax-
payer submit additional information or
translate specific documents within 30
days. The IRS may extend this period for
good cause. The fact that a non-U.S. ju-
risdiction may impose a penalty upon the
taxpayer or other person for disclosing
any such requested material will not con-
stitute reasonable cause for noncompli-
ance with the IRS's request.

.05 Revising the APA.

(1) An APA may be revised by agree-
ment of the parties, and any such revision
is effective upon the date of the execution
of the revision. APMA may agree to re-
vise an APA in lieu of canceling or revok-
ing it.

(2) If APMA is willing to agree to a
revision proposed by the taxpayer to a
bilateral or multilateral APA, it will seek
the consent of the applicable foreign com-
petent authority(ies) with respect to the
revision. If the U.S. and foreign compe-
tent authority(ies) agree to such revision,

or agree to another revision acceptable to
the taxpayer, then APMA will agree with
the taxpayer to revise the APA. If the U.S.
and foreign competent authority(ies) can-
not so agree, the APA remains in force
without revision. However, in some cases
APMA and the taxpayer may then agree,
for U.S. domestic purposes, to (i) revise
the APA with respect to one or more APA
years, or (ii) cancel the APA as of a spe-
cific date.

### .06 Revoking or Canceling the APA.

(1) APMA may revoke an APA due to
fraud or malfeasance (as those terms are
used in section 7121 of the Code), or
disregard (as that term is used in sections
6662(b)(1) and (c) of the Code) by the
taxpayer in connection with the APA, in-
cluding, but not limited to, fraud, malfea-
sance, or disregard involving (i) material
facts in the request or subsequent submis-
sions (including an annual report) or (ii)
lack of good faith compliance with the
APA terms and conditions.

(2) APMA may cancel an APA due to
the taxpayer's misrepresentation, mistake
with respect to a material fact, failure to
state a material fact, failure to file a timely
annual report, or lack of good faith com-
pliance with the APA terms and condi-
tions.

(3) Unless the parties agree to revise
the APA, APMA will cancel an APA in
the event of a failure of a critical assump-
tion or a material change in governing
case law, statute, regulation, or applicable
treaty.

(4) For purposes of this section 7.06(1)
and (2), APMA will consider facts mate-
rial if, for example, knowledge of the facts
could reasonably have resulted in an APA
with significantly different terms and con-
ditions. With respect to annual reports,
APMA will consider facts material if, for
example, knowledge of the facts would
have resulted in (a) a materially different
allocation of income, deductions, or cred-
its than those reported in the annual re-
port, or (b) the failure to meet a critical
assumption.

(5) APMA may waive cancellation if
the taxpayer can show good faith and rea-
sonable cause and agrees to make all ad-
justments proposed to correct for the mis-
representation, mistake regarding a

material fact, failure to state a material
fact, or noncompliance.

(6) If APMA revokes an APA, the re-
vocation relates back to the first day of the
first APA year. The IRS may (a) deter-
mine deficiencies in income taxes and ad-
ditions thereto, (b) deny relief under Rev.
Proc. 99-32 or successor guidance, (c)
allow the taxpayer relief under Rev. Proc.
99-32 or successor guidance, but deter-
mine the interest on any account receiv-
able established under section 4.01 of
Rev. Proc. 99-32 or successor guidance
without mutual agreement or correlative
relief, (d) revoke the APA as an "egre-
gious case" under Rev. Rul. 80-231,
1980-2 C.B. 219, to deny the taxpayer a
foreign tax credit, and (e) deny a request
for relief submitted under Rev. Proc.
2015-40. APMA will seek to coordinate
these or any other actions concerning the
revocation of a bilateral or multilateral
APA with the foreign competent authori-
ty(ies).

(7) APMA's cancellation of an APA
generally is effective as of the beginning
of the taxable year in which the critical
assumption failed or the beginning of the
taxable year to which the misrepresenta-
tion, mistake regarding a material fact,
failure to state a material fact, or noncom-
pliance relates. If, however, the cancella-
tion results from a change in case law,
statute, regulation, U.S. tax treaty, or co-
ordination agreement, the cancellation
generally is effective at the beginning of
the year that contains the effective date of
the change in case law, statute, regulation,
U.S. tax treaty, or coordination agree-
ment.

(8) For periods following the effective
date of the cancellation, the APA has no
further force and effect with respect to the
IRS and the taxpayer for U.S. income tax
purposes. APMA will seek to coordinate
any action concerning the cancellation of
a bilateral or multilateral APA with the
foreign competent authority(ies).

.07 Change in Case Law, Statute, Reg-
ulation, or Treaty. If controlling U.S. case
law, statutes, regulations, or treaties
change the federal income tax treatment
of any matter covered by the APA, the
new case law, statute, regulation, or treaty
provision supersedes any inconsistent
terms and conditions of the APA.

## SECTION 8. RENEWING THE APA

.01 General. A request to renew a cur-
rent APA may be made either by filing a
complete APA request or by filing an ab-
breviated APA request with APMA's per-
mission pursuant to section 3.04(2). An
abbreviated APA request might be appro-
priate if the taxpayer can establish to AP-
MA's satisfaction that the applicable law,
facts and circumstances, economic condi-
tions, proposed covered issue(s) and
method(s), and other relevant factors sur-
rounding the current APA are reasonably
expected to be substantially the same as
those in the proposed renewal APA years.

.02 Timing. Taxpayers are encouraged
to file a request to renew a current APA at
least nine months before the expiration of
the final APA year.

## SECTION 9. DISCLOSURE

.01 Confidentiality. An APA, any back-
ground information relating to an APA,
and the taxpayer's APA request and any
supplementary materials submitted in
conjunction with the APA request are re-
turn information and are confidential. See
sections 6103, 6105, 894, and 7852(d) of
the Code.

.02 Not "Written Determinations." An
APA, any background information relat-
ing to an APA, an APA request, and any
supplementary materials submitted in
conjunction with the APA request are not
"written determinations" and are not open
to public inspection. See section 6110 of
the Code.

.03 Statutory Report. The Secretary
must prepare an annual report for public
disclosure. See section 521(b) of the
Ticket to Work and Work Incentives Im-
provement Act of 1999, Pub. L. 106-170,
113 Stat. 1860, 1925. That report includes
specifically designated information con-
cerning all APAs, in a form that does not
identify taxpayers, their trade secrets, or
proprietary or confidential business or fi-
nancial information.

.04 Exchange of Information. APAs,
annual reports, and factual information
contained in APA requests are subject to
exchange of information under U.S. tax
treaties or U.S. income tax information
exchange agreements in accordance with
the terms of such treaties and agreements
(including terms regarding relevancy,

confidentiality, and the protection of trade
secrets). In cases in which the exchange of
information would be discretionary, infor-
mation may be exchanged to the extent
consistent with principled, effective, and
efficient tax administration and the prac-
tices of the relevant foreign competent
authority(ies), including where relevant
the existence and application by the for-
eign competent authority(ies) of rules
similar to those described in sections 6.04
and 6.05.

## SECTION 10. EFFECT ON OTHER DOCUMENTS

Rev. Procs. 2006-9, 2006-1 C.B. 278,
and 2008-31, 2008-1 C.B. 1133, are
modified and superseded by this revenue
procedure. Rev. Proc. 2015-40, 2015-35
I.R.B. 236 is amplified.

## SECTION 11. EFFECTIVE DATE AND TRANSITION RULE

.01 General. This revenue procedure
will apply to all APA requests filed under
this revenue procedure. An APA request
filed after August 31, 2015 may instead be
filed under Rev. Proc. 2006-9 only if a
substantially complete APA request is
filed under that revenue procedure no later
than December 29, 2015. For purposes of
this section, the 120-day allowance in sec-
tion 4.07(2) of Rev. Proc. 2006-9 shall
not apply in determining the date on
which a substantially complete APA re-
quest is considered filed under Rev. Proc.
2006-9. APA requests filed on or before
December 29, 2015 should clearly state
under which revenue procedure they are
filed.

.02 Rollbacks. Rev. Proc. 2006-9 is
retroactively amended so that rollbacks
(within the meaning of section 8 of Rev.
Proc. 2006-9) may be implemented and
given legal effect in an APA (within the
meaning of Rev. Proc. 2006-9 as modi-
fied by Rev. Proc. 2008-31, 2008-1 C.B.
1133). This retroactive amendment ap-
plies to any APA governed by Rev. Proc.
2006-9 that includes such a rollback.

## SECTION 12. PAPERWORK REDUCTION ACT

The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office of

Management and Budget in accordance
with the Paperwork Reduction Act (44
U.S.C. 3507) under control number
1545-1503.

An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less the collection of information displays
a valid control number.

The collection of information in this
revenue procedure is in sections 3.02,
3.04, 3.06, 3.09, 3.10, 4.04, 4.05, 5.01,
5.02, 7.02, 7.04 and 8.01 and in the Ap-
pendix. This information is required, and
will be used, to provide the IRS sufficient
information to evaluate and process the
APA request or to determine whether the
taxpayer is in compliance with the terms
and conditions of an APA. APMA will
use this information to evaluate the pro-
posed covered method(s) and the taxpay-
er's compliance with the terms and con-
ditions of any APA to which it is a party.
The collection of information is required
to obtain an APA. The likely respondents
are business or other for-profit institu-
tions.

The estimated total annual reporting
and/or recordkeeping burden is 10,900
hours.

The estimated average burden for an
APA pre-filing memorandum (and, if ap-
plicable, pre-filing conference) is 10
hours, the estimated average burden for an
APA request is 60 hours, and the esti-
mated average burden for preparation of
an annual report by a party to an APA is
15 hours. The estimated number of re-
spondents and/or recordkeepers is 390.

The estimated annual frequency of re-
sponses is one request or report per year
per applicant or party to an APA, except
that a taxpayer requesting an APA may
also submit a pre-filing memorandum
(and, if applicable, attend a pre-filing con-
ference).

## SECTION 13. DRAFTING INFORMATION

The principal authors of this document
are John Hughes and Robert Weissler of
the Office of the Deputy Commissioner
(International), LB&I, and Angela Hol-
land of the Office of the Associate Chief
Counsel (International). For further infor-
mation regarding this revenue procedure,
please contact Mr. Hughes at (202) 515-
4307 or Ms. Holland at (202) 317-6939
(not toll free numbers).

## APPENDIX APA REQUEST REQUIREMENTS

This Appendix sets forth instructions
on preparing and filing an APA request.
Unless APMA has explicitly instructed
the taxpayer in writing to file an abbrevi-
ated APA request pursuant to section
3.04(2) of the revenue procedure, the
APA request must be prepared and sub-
mitted according to the instructions pro-
vided in this Appendix. APMA may reject
an APA request that does not comply with
these instructions.

An APA request that is not an abbre-
viated APA request will provide the infor-
mation specified below. An APA request,
whether or not abbreviated, should also
include any additional material that the
taxpayer believes is important to facilitate
the APA team's evaluation of the request.
The level of detail required in the APA

request will depend on the facts and cir-
cumstances of each case and will be gov-
erned by relevancy and materiality con-
siderations (keeping in mind that the APA
request should provide enough informa-
tion to allow the reader to concur that a
matter is not relevant or material). The
information in the APA request should be
tailored to the facts relating to the pro-
posed covered group, the proposed cov-
ered issue(s), and relevant legal authority.
It should also take into account discus-
sions with APMA in any pre-filing mem-
orandum or pre-filing conference.

Section 1 of this Appendix addresses
the required content of APA requests.
Section 2 sets forth instructions on sub-
mitting printed and electronic copies of
APA requests. Section 3 presents instruc-
tions on paying user fees for APA re-
quests. Section 4 provides addresses and
contact information.

## SECTION 1. CONTENT OF COMPLETE APA REQUESTS

.01 General. An APA request must in-
clude a request letter followed by the ex-
hibits presented in the order as listed in
this section. This section contains cross-
references to parts of the request letter
(e.g., PART 2.1) and to particular exhibits
(e.g., Exhibit 3). The required exhibits
may be followed by any other exhibits the
taxpayer believes are necessary or useful
to facilitate APMA's review of its APA

request. An original of the request letter,
signed and dated by the taxpayer or the
taxpayer's authorized representative, must
be included in one of the three required
printed copies of the APA request (see
section 2 of this Appendix). If the taxpay-
er's authorized representative signs the
original of the request letter, the taxpayer
and authorized representative must satisfy
the relevant instructions on signatures in
Rev. Proc. 2005-1, 2005-1 I.R.B. 1 or
successor guidance. The request letter and
the exhibits must contain or respond to the
required statements, descriptions, expla-
nations, and other requested information.
If the taxpayer believes a required item is
not applicable to its APA request, this
must be shown as "N/A" or "Not Appli-
cable" (as opposed to being left blank). If
the taxpayer maintains that it is unable to
provide the required item or seeks an ex-
ception to the filing requirement, it must
provide a statement of its reasons for not
providing the item or its basis for the
exception it seeks (as opposed to leaving
the entry blank). APMA may permit ex-
ceptions to the filing requirements in this
Appendix on a case-by-case basis.

.02 Request Letter. The request letter
must be presented according to the in-
structions and structure set forth below,
and must include a table of contents giv-
ing the page on which each part and sub-
part begins.

Part 1. Executive Summary

1.1

Identifying information: List the name, address, and taxpayer identification number(s) of each member of the proposed covered group and the Standard Industrial Classification ("SIC") and the North American Industry Classification System ("NAICS") codes (number and code description) of the controlled group as reported on the taxpayer's most recently filed federal tax returns

1.2

Summary of APA request: Provide an executive summary of the content of the APA request that addresses the following:

a. Whether the taxpayer proposes a unilateral APA or a bilateral or multilateral APA, and, if applicable, the U.S. tax treaty(ies) and treaty articles governing the APA request;

b. Whether the APA request proposes a renewal of an existing APA or the extension of a competent authority resolution from competent authority or ACAP years into APA years;

c. The proposed prospective years and the proposed rollback years; d. The proposed covered issue(s) and an estimated dollar value of such issue(s) in the proposed APA years; and

e. The proposed covered method(s), including, as applicable, the proposed tested party(ies), profit level indica- tor(s), and interquartile range(s)

## Part 2. Administrative Information

2.1

Authorization: List the names of and contact information for all individuals authorized by a Form 2848 to rep- resent the taxpayer in connection with the APA request and all individuals authorized by a Form 8821 to in- spect or receive confidential tax information about the taxpayer in connection with the APA request, along with a designation as to which individual will serve as the point of contact for the APA team

2.2

IRS office: Identify the IRS office having examination jurisdiction over the taxpayer, together with the name of and contact information for the taxpayer's IRS Examination team manager if the taxpayer is under examination when the APA request is filed

2.3

Filed years: Provide a table with the following information for each member of the proposed covered group: a. All open filed years in the United States and the relevant treaty country(ies), whether or not such years are currently under examination by the IRS or a foreign tax authority; b. The expiration dates of statutes of limitations for all open filed years in the United States and in the relevant treaty country(ies) c. All open filed years in which a proposed covered issue or a substantially similar issue is under review by IRS Appeals or its equivalent in the relevant treaty country(ies); and d. All open filed years in which an actual or proposed adjustment has been made by either the IRS or a foreign tax authority relating to the proposed covered issue(s) or to substantially similar issues

2.4

Request for SAP review: If applicable, include a statement that the APA request is intended to serve as a request for SAP review for specified taxable years, pursuant to section 5.02(6) of the revenue procedure

2.5

Optional e-mail memorandum of understanding: At the taxpayer's option, an executed memorandum of understanding in the form prescribed by APMA (as may be posted on the APMA website or otherwise available by contacting APMA) permitting APMA to communicate with the taxpayer's authorized representatives through encrypted e-mail

## Part 3. Proposed Covered Issue(s)

3.1

Pre-filing information: Provide the following information: a. Whether a mandatory or optional pre-filing memorandum was filed; and b. Whether a pre-filing conference was held and, if so, the date of and attendees at the conference

3.2

Rollback: Provide the following information: a. If the taxpayer is seeking consideration of a rollback, list the proposed rollback years; and b. If the taxpayer is not seeking consideration of a rollback, discuss the reasons as to why a rollback is not appropriate

3.3

Background on proposed covered group: Provide background on the following points, with reference to the covered issue diagrams: a. The general history of the business operations of the proposed covered group and of the controlled group; b. The worldwide gross revenue of the controlled group in the most recent taxable year available; c. The functional currency of each member of the proposed covered group;

d. For each member of the proposed covered group, any business line(s) that is (are) outside the scope of the proposed covered issue(s); and

e. The industry in which the proposed covered group operates, including discussion of relevant macroeco- nomic and other industry-wide factors affecting the proposed covered group, the commercial features of the markets and geographical areas in which the proposed covered group operates, and the participants and competitors in the proposed covered group's industry

3.4

Narrative with reference to proposed covered issues in covered issue diagrams: For each proposed covered issue, provide a detailed discussion of the following, with reference to the covered issue diagrams in Exhibit 11: a. The functions performed by each member of the proposed covered group in relation to the proposed covered issue; b. The assets employed by each member of the proposed covered group in relation to the proposed covered issue; c. The risks assumed by each member of the proposed covered group in relation to the proposed covered issue; d. Transactional or commercial flows relating to the proposed covered issue(s) between and among members or business units of the proposed covered group, between members or business units of the proposed covered group and customers and other uncontrolled parties, and between members or business units of the proposed covered group and members or business units of the controlled group outside of the proposed covered group; e. Principal intercompany contracts or other agreements, written or otherwise, between and among members of the proposed covered group relating to the proposed covered issue(s); and f. Unless the proposed covered method involves a profit split (within the meaning of Treas. Reg. § 1.482-6 or Chapter II of the OECD Guidelines) between two or more members of the proposed covered group, the identity of the member of the controlled group that is proposed to be regarded as the principal in relation to the proposed covered issue, whether or not it is a member of the proposed covered group

3.5

Narrative with reference to non-proposed covered issues in covered issue diagrams: For each issue that is not a pro- posed covered issue, but is an issue that APMA might reasonably consider in analyzing the proposed covered issues under the principles expressed in section 2.02(4)(a), a discussion of why in the interest of principled, effective, and efficient tax administration such issue need not be a covered issue, and of the extent to which such issue should be considered in the APA process

3.6

Rulings, determinations, and proceedings: Provide information on the following: a. Current or expired rulings issued by a relevant foreign tax authority covering intercompany transactions or busi- ness activities of members of the proposed covered group that are similar to the proposed covered issue(s); b. The terms of any competent authority resolution addressing intercompany transactions or business activities of members of the proposed covered group that are similar to the proposed covered issue(s); and c. Any judicial or administrative proceedings in the United States or in the relevant treaty country(ies) to which any members of the proposed covered group are or have been parties involving intercompany transactions or business activities that are similar to the proposed covered issue(s)

3.7

Ancillary issues: List the ancillary issues (if any) proposed to be covered by the APA

### Part 4. Proposed Covered Method(s)

4.1

Selection and application of proposed covered method(s): Discuss the selection of the proposed covered method(s) with reference to the standards governing the selection of the "best method" under Treas. Reg. § 1.482-1(c) and, in the case of bilateral or multilateral APA requests, the selection of the "most appropriate" method under Chapter I of the OECD Guidelines, and how overall that method is applied, including the definition of the tested party(ies)

4.2

Search and screening process: Describe the research and screening process and criteria used to identify and select independent comparable agreements or independent companies or other market data upon which the proposed cov- ered method is based, including the initial search universe, the qualitative and quantitative screens used to accept or reject potential comparable agreements or companies or other market data, the order in which different criteria were ap- plied, the precise specification of each criterion (including for example the precise way in which multiyear averages are used, or in which requirements are applied across multiple years), and the numbers of potential comparable agreements or companies or other market data accepted and rejected at the different stages of the search and screening process

4.3

Application of proposed covered method(s): Provide a detailed explanation of (a) the data and assumptions used and (b) any adjustments made to the selected proposed comparable agreements or results of independent companies or other mar- ket data, or to the results of the tested party, such as adjustments relating to: (i) product line segregations, (ii) differences in accounting practices, (iii) differences in functions performed, assets employed, or risks assumed (especially noting working capital or other balance sheet adjustments made to the tested party(ies) or to the comparables and any differences between such adjustments and the adjustments incorporated into the APA template (as may be posted on the APMA website or otherwise available by contacting APMA), (iv) volume or scale differences, or (v) differences in economic or market con- ditions

4.4

Demonstration of proposed covered method(s): Provide a table summarizing the results of applying the proposed covered method(s) to the relevant members of the proposed covered group for (i) all proposed rollback years, (ii) the most recent three back years, if they are not proposed rollback years (or as many such back years as have data available, if not all have data available), (iii) the first proposed APA year, using actual data if available and otherwise using forecasted data, and (iv) other proposed APA years, using forecasted data, to the extent forecasts are available

4.5

Segmentation of financial results: If the proposed covered method(s) is (are) applied to a subset of the assets, liabilities, income, and expenses in the financial statements (see Exhibit 18), provide a segmentation of the financial statements and describe in detail (i) those items in the segmented financial statements that have been allocated or apportioned to the appli- cable proposed covered issue(s) and to other issues, and (ii) the method(s) of allocation or apportionment applied

## Part 5. Proposed APA Terms and Conditions

### 5.1

Review of proposed APA: Provide a detailed discussion and explanation of the proposed APA terms and condi-
tions as reflected in the draft APA submitted with the APA request (see Exhibit 15), noting, in particular, any
proposed APA terms and conditions that differ from the APA terms and conditions as reflected in the model
APA (see Exhibit 15)

.03 Exhibits. The APA request must
also include the following exhibits after
the request letter, separated and ordered as
indicated. Additional exhibits may be pro-
vided as needed. The taxpayer should be
prepared to translate, upon request, material

in exhibits that is presented in a foreign
language. While all of the exhibits must
be included as part of a complete APA
request, certain exhibits are required to be
produced in both printed and electronic
forms; other exhibits need be produced

only in electronic form (see section 2 of
this Appendix). The description of Exhibit
7, the "penalties of perjury" declaration, is
written so as to accommodate such a decla-
ration accompanying both an APA request
and a supplemental submission.

Exhibit 1

Contents of exhibits: Provide a table or similar comprehensive list of the exhibits submitted, indicating the form (printed, electronic, or both) in which they are submitted

Exhibit 2

Authorization form: Include a properly executed Form 2848 (Power of Attorney and Declaration of Representative) for all individuals authorized to represent the taxpayer in connection with the APA request or Form 8821 (Tax Information Authorization) for all individuals authorized to inspect or re- ceive confidential tax information about the taxpayer in connection with the APA request

Exhibit 3

Protective claim: In the case of a bilateral or multilateral APA request, provide a statement affirming whether the APA request is to serve as a protective claim pursuant to section 11 of Rev. Proc. 2015-40 and, if so, include the information required by section 11.02(3) of Rev. Proc. 2015-40

Exhibit 4

Waiver of ex parte communication: If the APA request involves proposed rollback years in which the proposed covered issue(s) or a related issue is unresolved and under consideration by IRS Appeals, include a waiver, modeled on the following language, of the taxpayer's right to be present during communications between IRS Appeals and members of the APA team: Waiver of Ex Parte Communication: [Name of taxpayer(s)] agrees to the par- ticipation of IRS Appeals in the consideration of this APA request and hereby waives its right to be present during, or to participate in, meetings relating to the APA request or to be a party to discussions concerning the proposed cov- ered issue(s) between IRS Appeals and members of the APA team

Exhibit 5

Consent to disclosure: In the case of a bilateral or multilateral APA request, include a declaration, dated and signed by an authorized officer of the taxpayer having personal knowledge of the facts concerning the proposed covered issue(s), that the taxpayer consents to the disclosure of the contents of the APA request - other than trade secrets, if the taxpayer so requests - to the applicable foreign competent authority(ies) within the limits contained in the U.S. tax treaty(ies) governing the APA request

Exhibit 6

Consents regarding period of limitations: Any executed consents to extend the period of limitations for assessment of tax that are required under section 2.03(3)(a) of the revenue procedure

Exhibit 7

"Penalties of perjury" declaration: Include the following "penalties of perjury" declaration:

Under penalties of perjury, I declare that I have examined this [APA request] [sup- plemental submission relating to an APA request], including accompanying docu- ments, and, to the best of my knowledge and belief, the [APA request] [supple- mental submission] contains all the relevant facts relating to the [APA request] [supplemental submission], and such facts are true, correct, and complete. The declaration must be signed by the taxpayer on whose behalf the request is being made and not by the taxpayer's representative. The person signing for a corporate taxpayer must be an authorized officer of the taxpayer who has personal knowledge of the facts, whose duties are not limited to obtaining letter rulings or determination letters from the IRS or negotiating APAs, and who is authorized to sign the taxpayer's income tax return pursuant to section 6062 of the Code. The person signing for any non-corporate taxpayer must be an individual who has personal knowledge of the facts and who is authorized to sign in accor- dance with sections 6061 or 6063 of the Code, as applicable

Exhibit 8

3 of this Appendix) User fee receipt: Include a copy of the receipt obtained after paying the required APA user fee (see section

Exhibit 9

Documents submitted to foreign competent authorities: List all documents or written submissions provided to a foreign tax authority or foreign competent authority in connection with the APA request, either prior to or concurrently with the submission of the APA request to APMA, noting the documents or written sub- missions for which English translations are available and any documents or written submissions provided to a foreign tax authority or foreign competent authority in connection with the APA request that are not included in the APA request submitted to APMA

Exhibit 10

the APA request Pre-filing submissions: Include any pre-filing memoranda or other materials submitted in connection with

Exhibit 11

Covered issue diagrams: Include diagrams, charts, or similar representations depicting the following infor- mation as it relates to the proposed covered issues and any interrelated matters that APMA might reason- ably consider in analyzing the proposed covered issues under the principles expressed in section 2.02(4)(a), each presented in a manner similar to and with a degree of detail no less than that presented in the dia- grams accompanying the case studies "Alpha" through "Foxtrot" in Joint Committee on Taxation, Present Law and Background Related to Possible Income Shifting and Transfer Pricing (JCX-37-10), July 20, 2010 (available at www.jct.gov; see also APMA website): a. The controlled group's legal structure, with clear indications as to the members of the proposed covered group; b. The controlled group's tax structure, with clear indications as to, among other items, ownership relation- ships and tax filing characterizations of members of the proposed covered group under the Code and under applicable rules in the relevant treaty country(ies) (e.g., partnerships, branches, or disregarded en- tities); c. The controlled group's and proposed covered group's business units or similar organizational divisions as used for management purposes, together with a table, narrative, or other reconciliation showing the relationship between such business units and the legal entities comprising the controlled and proposed covered groups; d. The value chain of the proposed covered group, comprising commercial or transactional flows between and among members or business units of the proposed covered group, between members or business units of the proposed covered group and customers and other uncontrolled parties, and between mem- bers or business units of the proposed covered group and any other members or business units of the controlled group outside the proposed covered group; and e. Organization or management charts identifying executive-level functional or occupational roles within the business units or within members of the proposed covered group that are relevant to the proposed covered issue(s) (e.g., vice president of marketing for transactions involving sales of tangible goods), together with (i) the names of individuals occupying such executive-level functional roles at the time the APA request is filed, and (ii) headcounts for the relevant business units or members of the proposed covered group

Exhibit 12

APAs: Include a copy of the most recent APA, if any, that the taxpayer or another member of the proposed covered group has entered into with (i) the IRS, and (ii) each involved foreign tax authority, concerning transactions or other business activities within the scope of the proposed covered issue(s)

Exhibit 13

Selection process: Provide a table or similar report on the step-by-step results of applying criteria for select- ing comparable agreements or independent comparable companies or other market data, including a table or matrix showing the reason(s) for rejecting agreements or independent companies or other market data (see PART 4.2)

Exhibit 14

Information on selected comparables: As applicable, include a detailed discussion of the contractual terms (within the meaning of Treas. Reg. § 1.482-1(d)(3)(ii)) of selected comparable agreements, including the form of consideration charged or paid, and for APA requests in which the proposed covered method(s) involve(s) an application of the comparable profits method (as defined in Treas. Reg. § 1.482-5) or the transactional net margin method (as defined in the OECD Guidelines), include (i) unadjusted income state- ment data for the most recent five taxable years (or as many years as are available, if fewer than five years are available) and balance sheet data for the most recent six taxable years (or as many years as are avail- able, if fewer than six years are available) of the selected independent comparable companies, and (ii) (if applicable) the application to such financial data of any adjustments pursuant to the proposed covered method(s) (see PARTS 4.3 and 4.4)

Exhibit 15

Proposed draft APA: Provide a proposed draft APA in a form substantially similar to APMA's current model APA (as may be posted on the APMA website or otherwise available by contacting APMA), to- gether with a "redline" version of the same showing the differences between the model APA and the pro- posed draft APA

Exhibit 16

Application of APA template: For APA requests in which the proposed covered method involves an appli- cation of the comparable profits method (as defined in Treas. Reg. § 1.482-5) or the transactional net mar- gin method (as defined in the OECD Guidelines), provide income statement data for the most recent five taxable years (or as many years as are available, if fewer than five years are available) and balance sheet data for the most recent six taxable years (or as many years as are available, if fewer than six years are available) for the relevant member(s) of the proposed covered group, using the APA template (as may be posted on the APMA website or otherwise available by contacting APMA)

Exhibit 17

Federal income tax filings: Provide copies of the following federal income tax forms for each of the three most recent filed years of the taxpayer: a. Form 1120 or applicable equivalent; b. Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations); c. Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business); and d. Form 8858 (Information Return of U.S. Persons With Respect to Foreign Disregarded Entities)

Exhibit 18

Financial statements: Provide copies of financial statements, including full income statements, balance sheets, and cash flow statements (audited, if available, and in English, if available), for each relevant mem- ber of the proposed covered group for each of the most recent three back years and specify the accounting standard used (e.g., U.S. GAAP)

Exhibit 19

Section 6662 documentation: Include a copy of the documentation prepared in consideration of section 6662(e) of the Code (and, if applicable, a copy of similar documentation filed with or subject to request by the relevant foreign tax authority(ies)) relating to intercompany transactions or business activities that are within the scope of the proposed covered issue(s) for each relevant member of the proposed covered group for each of the most recent three back years

Exhibit 20

Regulatory filings: Include a copy of the Form 10-K or similar annual SEC filing submitted for U.S. regu- latory purposes by the controlled group for each of the most recent three back years

Exhibit 21

APA annual reports: For renewal APA requests, provide all APA annual reports filed with APMA with respect to the current APA

Exhibit 22

Intercompany agreements: Include copies of any written intercompany contracts or agreements between the taxpayer and other members of the proposed covered group that are within the scope of the proposed cov- ered issue(s), with a statement of when each contract or agreement was actually executed, and a summary of any oral intercompany agreements that are material to the proposed covered issues. For proposed APAs relating to intangible development arrangements, these agreements or contracts would include, as applica- ble, documents forming or revising the intangible development arrangement and documents relating to use under the intangible development arrangement of rights, resources, and capabilities owned by participants or related non-participants.

### SECTION 2. MANNER AND MEDIA OF APA REQUEST FILINGS

.01 General. The taxpayer must pro-
vide copies of its APA request as fol-
lows: one (1) original, bound printed
submission containing signed originals
of the request letter and "penalties of
perjury" declaration and, as applicable,
of the authorization forms, consent to
disclosure, and e-mail authorization, to-
gether with copies of all other required
printed information, two (2), as applica-
ble, original signed consents to extend
the period of limitations for assessment
of tax that are required under section
3.03(3) of the revenue procedure, placed
in a separate, clearly labeled envelope,
two (2) bound photocopies of the con-
tents of the original printed submission,
and three (3) electronic copies of the
contents of the original printed submis-
sion, together with the required
electronic-only attachments, on CD or
flash drive or similar acceptable elec-
tronic storage medium. All of these
originals and copies of the APA request
must be filed with APMA at the address
set forth in section 4 of this Appendix.
Upon request, the taxpayer must provide
additional electronic copies and/or
bound photocopies of the contents of the
original printed submission.

.02 Contents and Format of Printed
Submissions. Each printed copy of the
APA request must contain (i) the request
letter, and (ii) Exhibits 1 through 15.
The exhibits must be tabbed and ordered
as presented in section 1 of this Appen-
dix. If an exhibit is not applicable to the
APA request, a statement to this effect
must be included in the relevant tabbed
section. The original signed consents to
extend the period of limitations for as-

sessment of tax should be individually
stapled as needed, with all such consents
bound together with a binder clip.

.03 Contents and Format of
Electronic Copies.

(1) The electronic copies of the APA
request must contain (i) the request let-
ter, and (ii) Exhibits 1 through 22 and
any additional exhibits. The exhibits
should consist of separate electronic
files named in a manner that corre-
sponds to the exhibit numbers and de-
scriptive captions presented in section 1
of this Appendix. If an exhibit is not
applicable to the APA request, a state-
ment to this effect must be included in
the electronic file.

(2) The electronic copies of the APA
request must include the request letter in
both Microsoft Word ("Word") and in
Adobe Portable Document (".pdf") for-
mats. Exhibit 15 must be provided in
Word format. All other exhibits readily
available in Word or Microsoft Excel
("Excel") format should be provided in
those forms as applicable, instead of, or in
addition to, .pdf format.

(3) All electronic documents provided
in conjunction with an APA request and
throughout the APA process must be
searchable, unless the file is not readily
available in searchable form (e.g., a pho-
tocopy of an intercompany agreement).

(4) All documents presented in Excel
format must be provided with formulas
and internal cell references intact.

(5) For some APA requests (especially
complex APA requests), the taxpayer may
choose to additionally provide a book-
marked .pdf file that includes the entire
contents of the APA request. In some

cases, APMA may require that the tax-
payer provide such a file.

## SECTION 3. USER FEES

.01 General. User fees must be paid
through the Pay.gov website. Instructions
on making user fee payments are available
on the APMA website. APMA will not
consider an APA request complete, and
will hold the APA request in suspense,
until the correct user fee is paid through
the Pay.gov website.

.02 Separate Fees. Subject to the pro-
visions of this section, a separate user fee
is required for each APA request submit-
ted by each controlled group. For this
purpose, a multilateral request is consid-
ered to be a set of bilateral requests for
each country involved.

### .03 Amounts.

(1) In General. The user fee amounts
are as follows:

(a) $60,000 for each APA request, ex-
cept as otherwise specified in this section;

(b) $35,000 for each request to renew
an APA that does not propose a substan-
tial expansion of the APA's scope or a
substantial change in the covered meth-
od(s) (other than updating of the results
under the covered method(s)), provided
that the pertinent facts remain substan-
tially the same, unless such renewal is
eligible for the small case APA user fee;
(c) $30,000 for each APA request eli-
gible for the small case APA user fee; and

(d) $12,500 for each amendment to a cur-
rent unilateral, bilateral, or multilateral APA.

(2) Multiple Requests. If multiple APA
requests are filed by the same controlled
group within a sixty-day period, the max-
imum total fee charged will be $60,000,

plus $30,000 for each foreign competent
authority involved (if any) beyond the first
two.

.04 Small Case APA User Fee

Eligibility. An APA request is eligible for
the small case APA user fee only if all of
the following apply: (i) the controlled
group has sales revenues, within the
meaning of Treas. Reg. § 1.482-5(d)(1),
of less than $500 million in each of its
most recent three back years, (ii) the ag-
gregate value of the proposed covered is-
sue(s) is not expected to exceed $50 mil-
lion in any given year of the proposed
APA years, (iii) the aggregate value of
any transfer of rights in, or rights to use,
intangibles is not expected to exceed $10
million in any given year of the proposed
APA years, and (iv) no proposed covered
issue involves intangible property arising

from, or otherwise related to, an intangi-
ble development arrangement.

.05 Fees for Amendments. For pur-
poses of section 3.03 of this Appendix, an
amendment includes coverage of addi-
tional issues, material changes to a pro-
posed covered method, and any other ma-
terial additions or changes to the terms
and conditions of the APA. APMA will
not impose this amendment fee if APMA
or a foreign competent authority initiates
the request to amend the proposed cov-
ered issue(s) or method(s).

## SECTION 4. ADDRESSES AND CONTACT INFORMATION

Deputy Commissioner (International)
Large Business and International
Division

Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
SE:LB:IN:TPO:APMA:M3-370
(Attention: APMA)

All mail should be sent to this mailing
address, including regular mail, express
mail, overnight mail, and mail sent by
USPS, FedEx, UPS, or any other carrier.
Contact information for APMA and addi-
tional information is as follows.

Telephone

Telephone numbers are available through the "contact us" link on the APMA website

Website

www.irs.gov/Businesses/Corporations/APMA

Headquarters

801 Ninth Street, N.W.

Physical Location

Washington, D. C. 20001

(Mail not accepted at this location)

## Part IV. Items of General Interest

### FEDERAL TAX TREATMENT OF IDENTITY PROTECTION SERVICES PROVIDED TO DATA BREACH VICTIMS

Announcement 2015-22

Identity theft, also known as identity
fraud, occurs when a person wrongfully
obtains and uses another person's per-
sonal information (for example, name, so-
cial security number, or banking or credit
account numbers) in a way that involves
fraud or deception, typically for economic
gain. Identity theft is a growing problem
in the United States. Identity theft has
been the number one consumer complaint
to the Federal Trade Commission for fif-
teen consecutive years. The Bureau of
Justice Statistics estimates that 16.6 mil-
lion people were victims of identity theft
in 2012, the latest year for which data is
available. In addition, recent high-profile
data breaches at various organizations
have exposed many more millions of per-
sons to the risk of identity theft.

Businesses, government agencies, and
other organizations make significant ef-
forts to secure the personal information of
their customers and employees. Notwith-
standing these efforts, a data breach of an
organization's recordkeeping systems,
whether due to computer "hacking" or
otherwise, can expose this information to
identity thieves. In response to such data
breaches, organizations often provide
credit reporting and monitoring services,
identity theft insurance policies, identity

restoration services, or other similar ser-
vices (collectively "identity protection
services") to the customers, employees, or
other individuals whose personal informa-
tion may have been compromised as a
result of the data breach. These identity
protection services are intended to prevent
and mitigate losses due to identity theft
resulting from the data breach.

Questions have been raised concerning
the taxability of identity protection ser-
vices provided at no cost to customers,
employees, or other individuals whose
personal information may have been com-
promised in a data breach. Existing guid-

ance does not specifically address these
questions.

The IRS will not assert that an individ-
ual whose personal information may have
been compromised in a data breach must
include in gross income the value of the
identity protection services provided by
the organization that experienced the data
breach. Additionally, the IRS will not as-
sert that an employer providing identity
protection services to employees whose
personal information may have been com-
promised in a data breach of the employ-
er's (or employer's agent or service pro-
vider's) recordkeeping system must
include the value of the identity protection
services in the employees' gross income
and wages. The IRS will also not assert
that these amounts must be reported on an
information return (such as Form W-2 or
Form 1099-MISC) filed with respect to
such individuals. This announcement does
not apply to cash received in lieu of iden-
tity protection services, or to identity pro-
tection services received for reasons other
than as a result of a data breach, such as
identity protection services received in
connection with an employee's compen-
sation benefit package. This announce-
ment also does not apply to proceeds re-
ceived under an identity theft insurance
policy; the treatment of insurance recov-
eries is governed by existing law.

The Treasury Department and the IRS
request comments on whether organiza-
tions commonly provide identity protec-
tion services in situations other than as a
result of a data breach, and whether addi-
tional guidance would be helpful in clar-
ifying the tax treatment of the services
provided in those situations. Comments
should be submitted in writing on or be-
fore October 13, 2015 to the following
address:

Internal Revenue Service
CC:PA:LPD:PR

(Announcement 2015-22)
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Comments also may be sent electronically
to notice.comments@irscounsel.treas.gov.
Please include "Announcement 2015-22" in

the subject line. All comments will be avail-
able for public inspection.

The principal author of this announce-
ment is Seoyeon Sharon Park of the Office
of Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this announcement, contact Ms.
Park at (202) 317-7006 (not a toll-free
number).

## Extension of Time to File Certain Information Returns

REG-132075-14

AGENCY: Internal Revenue Service
(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: In the Rules and Regula-
tions section of this issue of the Internal
Revenue Bulletin, the IRS is issuing tem-
porary regulations that will remove the
automatic extension of time to file infor-
mation returns on forms in the W-2 series
(except Form W-2G). The temporary reg-
ulations will allow only a single 30-day
non-automatic extension of time to file
these information returns. In addition, the
temporary regulations will update the list
of information returns subject to the rules
regarding extensions of time to file. These
proposed regulations incorporate the tem-
porary regulations with respect to exten-
sions of time to file information returns on
forms in the W-2 series (except Form
W-2G). In addition, these proposed regu-
lations would remove the automatic 30-
day extension of time to file all informa-
tion returns listed in the temporary
regulation.

DATES: Written or electronic comments
and requests for a public hearing must be
received by November 12, 2015.

ADDRESSES: Send submissions to: CC:
PA:LPD:PR (REG-132075-14), room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be hand-
delivered between the hours of 8 a.m. and
4 p.m. to CC:PA:LPD:PR (REG-132075-

14), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW.,
Washington, DC, or sent via the Federal
eRulemaking Portal at www.regulations.gov
(IRS REG-132075-14).

### FOR FURTHER INFORMATION

CONTACT: Concerning these proposed
regulations, Jonathan R. Black, (202) 317-
6845; concerning submissions of com-
ments and/or requests for a hearing, Re-
gina Johnson (202) 317-6901 (not toll-
free numbers).

### SUPPLEMENTARY INFORMATION:

#### Background and Explanation of Provisions

Temporary regulations § 1.6081-8T in
the Rules and Regulations section of this
issue of the Internal Revenue Bulletin
will amend 26 CFR part 1 by removing
the automatic extension of time to file
information returns on forms in the W-2
series (except Form W-2G), effective for
filing season 2017. The temporary regula-
tions will allow only a single 30-day non-
automatic extension of time to file these
information returns that the IRS may, in
its discretion, grant if the IRS determines
that an extension of time to file is war-
ranted based on the filer's or transmitter's
explanation attached to a Form 8809,
"Application for Extension of Time to
File Information Returns," signed under
penalties of perjury. The temporary regu-
lations will also add Forms 3921, 3922,
1094-C, and forms in the 1097 series to
the list of information returns covered by
§ 1.6081-8T(a) and clarify that Forms
1095-B and 1095-C, but not Form
1095-A, are covered by the rules in
§ 1.6081-8T(a).

These proposed regulations would re-
move the automatic 30-day extension of
time to file the information returns listed
in § 1.6081-8T(a) and allow only a single
non-automatic extension of time to file all
information returns listed in § 1.6081-8T.

The IRS anticipates that, as described
in the temporary regulations with respect
to forms in the W-2 series (other than
Forms W-2G), under the proposed regu-
lations, the IRS will grant the non-
automatic 30-day extension of time to file
information returns listed in § 1.6081-
8(a) only in limited cases where the filer's

or transmitter's explanation demonstrates
that an extension of time to file is needed
as a result of extraordinary circumstances
or catastrophe, such as a natural disaster
or fire destroying the books and records a
filer needs for filing the information re-
turns.

Treasury and the IRS request com-
ments on the appropriate timing of the
removal of the automatic 30-day exten-
sion of time to file information returns
covered by these proposed regulations,
such as Form 1042-S, including whether
special transitional considerations should
be given for any category or categories of
forms or filers relative to other forms or
filers. Although these regulations are pro-
posed to be effective for requests for ex-
tensions of time to file information returns
due on or after January 1 of the calendar
year immediately following the date of
publication of a Treasury decision adopt-
ing these rules as final regulations in the
Federal Register, removal of the auto-
matic 30-day extension of time to file will
not apply to information returns (other
than forms in the W-2 series except
Forms W-2G) due any earlier than Janu-
ary 1, 2018. Please follow the instructions
in the "Comments and Requests for Public
Hearing" portion of this preamble.

The temporary regulations affect tax-
payers who are required to file informa-
tion returns on forms in the W-2 series
(except Forms W-2G) and need an exten-
sion of time to file. These proposed regu-
lations also affect taxpayers who need an
extension of time to file any of the infor-
mation returns listed in § 1.6081-8T(a).

The substance of the temporary regu-
lations is incorporated in these proposed
regulations. The preamble to the tempo-
rary regulations explains these amend-
ments. These proposed regulations would
also expand the rules in § 1.6081-8T(b)
to the other information returns, which are
listed in § 1.6081-8T(a).

#### Proposed Effective/Applicability Date

The regulations, as proposed, would
apply to requests for extensions of time to
file information returns due on or after
January 1 of the calendar year immedi-
ately following the date of publication of a
Treasury decision adopting these rules as
final regulations in the Federal Register.

#### Special Analyses

Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby
certified that this proposed rule, if ad-
opted, would not have a significant eco-
nomic impact on a substantial number of
small entities. As stated in this preamble,
the proposed regulations would remove
the automatic 30-day extension of time to
file certain information returns (Form
W-2G, 1042-S, 1094-C, 1095-B,
1095-C, 1097 series, 1098 series, 1099
series, 3921, 3922, 5498 series, and 8027).
Under the proposed regulations, filers and
transmitters would be permitted to request
only one 30-day extension of time to file
these information returns by timely sub-
mitting a Form 8809, including an expla-
nation of the reasons for requesting the
extension and signed under penalty of per-
jury. Although the proposed regulation
may potentially affect a substantial num-
ber of small entities, the economic impact
on these entities is not expected to be
significant because filers who are unable
to timely file as a result of extraordinary
circumstances or catastrophe may con-
tinue to obtain a 30-day extension through
the Form 8809 process, which takes ap-
proximately 20 minutes to prepare and
submit to the IRS. Pursuant to section
7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking has been
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administra-
tion for comment on its impact on small
business.

#### Comments and Requests for Public Hearing

Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are
submitted timely to the IRS as prescribed
in the preamble under the "Addresses"
heading. Treasury and the IRS request
comments on all aspects of the proposed

regulations. All comments submitted will
be made available at www.regulations.gov
or upon request. A public hearing will be
scheduled if requested in writing by any
person that timely submits written com-
ments. If a public hearing is scheduled,
notice of the date, time, and place for the
public hearing will be published in the
Federal Register.

#### Drafting Information

The principal author of these regula-
tions is Jonathan R. Black of the Office of
the Associate Chief Counsel (Procedure
and Administration).

* * * * *

#### Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:

PART 1-INCOME TAXES

Paragraph 1. The authority citation for
part 1 continues to read as follows:

Authority: 26 U.S.C. 7805 *

Par. 2. Section 1.6081-8 is revised to
read as follows:

§ 1.6081-8 Extension of time to file
certain information returns.

(a) In general. Except as provided in
paragraph (e) of this section, a person
required to file an information return (the
filer) on forms in the W-2 series (includ-

ing Forms W-2, W-2AS, W-2G,
W-2GU, and W-2VI), 1097 series, 1098
series, 1099 series, or 5498 series, or on
Forms 1042-S, 1094-C, 1095-B,
1095-C, 3921, 3922, or 8027, or the per-
son transmitting the information return for
the filer (the transmitter), may only re-
quest one non-automatic 30-day extension
of time to file the information return be-
yond the due date for filing it. To make
such a request, the filer or transmitter must
submit an application for an extension of
time to file in accordance with paragraph
(b) of this section. No additional extension
of time to file will be allowed pursuant to
§ 1.6081-1 beyond the 30-day extension
of time to file provided by this paragraph.

(b) Requirements. To satisfy this para-
graph (b), a filer or transmitter must-

(1) Submit a complete application on
Form 8809, "Application for Extension of
Time to File Information Returns," or in
any other manner prescribed by the Com-
missioner, including a detailed explana-
tion of why additional time is needed;

(2) File the application with the Inter-
nal Revenue Service in accordance with
forms, instructions, or other appropriate
guidance on or before the due date for
filing the information return; and

(3) Sign the application under penalties
of perjury.

(c) Penalties. See sections 6652, 6693,
and 6721 through 6724 for failure to com-
ply with information reporting require-
ments on information returns described in
paragraph (a) of this section.

(d) No effect on time to furnish state-
ments. An extension of time to file an
information return under this section does
not extend the time for furnishing a state-
ment to the person with respect to whom
the information is required to be reported.

(e) Form W-2 filed on expedited basis.
This section does not apply to an informa-
tion return on a form in the W-2 series if
the procedures authorized in Rev. Proc.
96-57 (1996-2 CB 389) (or a successor
revenue procedure) allow an automatic
extension of time to file the information
return. See § 601.601(d)(2)(ii)(b) of this
chapter.

(f) Effective/applicability date. This
section applies to requests for extensions
of time to file information returns due on
or after January 1 of the calendar year
immediately following the date of publi-
cation of a Treasury decision adopting
these rules as final regulations in the Fed-
eral Register.

§ 1.6081-8T [Removed]

Par. 3. Section 1.6081-8T is removed.

John Dalrymple,
Deputy Commissioner for
Services and Enforcement.

(Filed by the Office of the Federal Register on August 12,
2015, 8:45 a.m., and published in the issue of the Federal
Register for August 13, 2015, 80 F.R. 48472)

# Definition of Terms

Revenue rulings and revenue procedures
(hereinafter referred to as "rulings") that
have an effect on previous rulings use the
following defined terms to describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).

Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.

Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.

Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.

Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

# Abbreviations

The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

F.R .- Federal Register.

FUTA-Federal Unemployment Tax Act.

FX-Foreign corporation.

G.C.M .- Chief Counsel's Memorandum.

GE-Grantee.

TFE-Transferee.

TFR-Transferor.

CI-City.

GR-Grantor.

IC-Insurance Company.

TP-Taxpayer.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

TR-Trust.

CY-County.

LE-Lessee.

TT-Trustee.

D-Decedent.

LP-Limited Partner.

U.S.C .- United States Code.

DC-Dummy Corporation.

X-Corporation.

DE-Donee.

Del. Order-Delegation Order.

Nonacq .- Nonacquiescence.

O Organization.

DR-Donor.

P-Parent Corporation.

PHC-Personal Holding Company.

PO-Possession of the U.S.

PR-Partner.

PRS-Partnership.

PTE-Prohibited Transaction Exemption.
Pub. L .- Public Law.

REIT-Real Estate Investment Trust.

Rev. Proc .- Revenue Procedure.

Rev. Rul .- Revenue Ruling.

S-Subsidiary.

S.P.R .- Statement of Procedural Rules.

Stat .- Statutes at Large.

BK-Bank.

B.T.A .- Board of Tax Appeals.

T.C .- Tax Court.

C-Individual.

T.D .- Treasury Decision.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

GP-General Partner.

T.I.R .- Technical Information Release.

COOP-Cooperative.

LR-Lessor.

M-Minor.

Y-Corporation.

Z-Corporation.

DISC-Domestic International Sales Corporation.

E-Estate.

EE-Employee.

E.O .- Executive Order.

ER-Employer.

ERISA-Employee Retirement Income Security Act.
EX-Executor.

F-Fiduciary.

FC-Foreign Country.

FICA-Federal Insurance Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

T-Target Corporation.

## Numerical Finding List1

Bulletins 2015-27 through 2015-35

### Announcements:

2015-17, 2015-28 I.R.B. 67
2015-18, 2015-33 I.R.B. 198

2015-19, 2015-32 I.R.B. 157

2015-21, 2015-34 I.R.B. 235
2015-22, 2015-35 I.R.B. 288

### Notices:

2015-43, 2015-29 I.R.B. 73
2015-46, 2015-28 I.R.B. 64

2015-47, 2015-30 I.R.B. 76

2015-48, 2015-30 I.R.B. 77

2015-49, 2015-30 I.R.B. 79
2015-50, 2015-30 I.R.B. 81
2015-51, 2015-31 I.R.B. 133
2015-52, 2015-35 I.R.B. 227
2015-53, 2015-33 I.R.B. 190
2015-54, 2015-34 I.R.B. 210
2015-55, 2015-34 I.R.B. 217
2015-56, 2015-35 I.R.B. 235

### Proposed Regulations:

REG-109370-10, 2015-33 I.R.B. 198

REG-115452-14, 2015-32 I.R.B. 158

REG-132075-14, 2015-35

I.R.B. 288

REG-138526-14, 2015-28

I.R.B. 67

REG-102648-15, 2015-31 I.R.B. 134

REG-102837-15, 2015-27 I.R.B. 43

### Revenue Procedures:

2015-34, 2015-27 I.R.B. 4

2015-36, 2015-27 I.R.B. 20

2015-38, 2015-34 I.R.B. 220

2015-39, 2015-33 I.R.B. 195

2015-40, 2015-35 I.R.B. 236

2015-41, 2015-35 I.R.B. 263

### Revenue Rulings:

2015-15, 2015-27 I.R.B. 1
2015-16, 2015-31 I.R.B. 130
2015-18, 2015-34 I.R.B. 209

### Treasury Decisions:

9723, 2015-31 I.R.B. 84

9726, 2015-31 I.R.B. 98

9727, 2015-32 I.R.B. 154
9728, 2015-33 I.R.B. 169
9729, 2015-35 I.R.B. 221
9730, 2015-35 I.R.B. 223

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2015-01 through 2015-26 is in Internal Revenue Bulletin
2015-26, dated June 29, 2015.

### Finding List of Current Actions on Previously Published Items1

Bulletins 2015-27 through 2015-35

Notices:
2014-4
Modified by
Notice 2015-51, 2015-31 I.R.B. 133

#### Revenue Procedures:

1992-75
Clarified by
Rev. Proc. 2015-40, 2015-35 I.R.B. 236

2003-40
Modified by
Rev. Proc. 2015-40, 2015-35 I.R.B. 236

2006-9
Modified by
Rev. Proc. 2015-41, 2015-35 I.R.B. 263

2006-9
Superseded by
Rev. Proc. 2015-41, 2015-35 I.R.B. 263

2006-54
Modified by
Rev. Proc. 2015-40, 2015-35 I.R.B. 236

2006-54
Superseded by
Rev. Proc. 2015-40, 2015-35 I.R.B. 236

2008-31
Modified by
Rev. Proc. 2015-41, 2015-35 I.R.B. 263

2008-31
Superseded by
Rev. Proc. 2015-41, 2015-35 I.R.B. 263

2011-49
Modified by
Rev. Proc. 2015-36, 2015-27 I.R.B. 20

2011-49
Superseded by
Rev. Proc. 2015-36, 2015-27 I.R.B. 20

2015-14
Modified by
Rev. Proc. 2015-39, 2015-33 I.R.B. 195

2015-40
Amplified by
Rev. Proc. 2015-41, 2015-35 I.R.B. 263

2015-41
Amplified by
Rev. Proc. 2015-40, 2015-35 I.R.B. 236

# Internal Revenue Service Washington, DC 20224

Official Business
Penalty for Private Use, $300

# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

# We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
(www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
NW, IR-6230 Washington, DC 20224.

Internal Revenue Bulletin 2015-35 (PDF rendition): IRS Revenue Procedures

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