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Notice 2013-78 - proposals for a more efficient competent authority process?

USA

The Internal Revenue Service recently published draft proposed guidance on the competent authority process in the form of Notice 2013-78. Taxand USA investigates the Notice and discusses the important factors affecting taxpayers. 

The new guidance proposes updates to the set of procedures to be followed by taxpayers seeking assistance of the competent authority under the Mutual Agreement Procedures (MAP) and related provisions to US income tax treaties, and is intended to replace the existing Revenue Procedure 2006-54. It will be finalised after the public comment period (ending 10 March 2014). 

This update to the MAP has been much anticipated since the IRS undertook a broad organisational restructuring of its national transfer pricing resources, having combined the competent authority and Advance Pricing Agreement (APA) teams under one roof in the office of Advance Pricing and Mutual Agreement (APMA). The IRS simultaneously released Notice 2013-79, which provides proposed new guidance specific to obtaining an APA. This article focuses on some of the more notable proposed changes to the MAP guidance, although several provisions overlap with the APA procedures. 

The overall intention of MAP is to alleviate double taxation arising under the relevant income tax treaties. This revenue procedure informs taxpayers of the required actions they must undertake to secure the assistance of the US competent authority. While the revenue procedure provides detailed guidance on the US side of the transaction, it is important to remember that individual treaties may contain important provisions outlining the steps necessary for requesting relief. Additionally, each foreign tax authority maintains its own procedural guidance for the information required to request relief in that jurisdiction.

Notice 2013-78 proposes several key updates or clarifications. Noteworthy changes include:

  • MAP relief & voluntary adjustments
  • Coordination with other dispute venues
  • Pre-filing discussions: formalisng and clarification the parameters for requesting a pre-filing conference
  • Information sharing and taxpayer cooperation: any case materials provided to one competent authority are also to be provided to the other competent authority

Discover more: Notice 2013-78 - proposals for a more efficient competent authority process?


Your Taxand contact for further queries is:
Marc Alms
T. +1 212 763 1887
E. malms@alvarezandmarsal.com 

Also published in Thomson Reuters' Taxnet Pro, 14 February 2014

Taxand's Take

The proposed revenue procedure features important updates that should clarify the steps necessary to request MAP relief and is designed to increase process efficiency for taxpayers and tax authorities alike. Taxpayers are advised to carefully consider the specific language of the relevant tax treaties and take necessary steps to preserve their rights to seek MAP relief.

Taxand's Take Author

Marc Alms
Global TP & business restructuring service line co-leader
USA

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