TEI comments on revisions to competent authority revenue procedure.

• Position: Tax Executives Institute, IRS Notice 2013-78

On March 10, 2014, TEI submitted comments to the IRS regarding Notice 2013-78, which proposes substantial revisions to Revenue Procedure 2006-54 for requesting assistance from the U.S. competent authority under U.S. tax treaties. TEI's comments focused on, among other things, the ability of the U.S. competent authority to expand the scope of mutual agreement procedure requests, the interaction between the U.S. competent authority and IRS exam and appeals, and the impact of the proposed revenue procedure on the compulsory payment rule for claiming a foreign tax credit. TEI's comments were prepared under the aegis of TEI's U.S. International Tax Committee, whose chair is Jim Silvestri of Capsugel. Benjamin R. Shreck, TEI tax counsel, coordinated the preparation of TEI's comments.

On November 22, 2013, the Internal Revenue Service (IRS) and Treasury Department released Notice 2013-78, (1) which proposes revisions to the revenue procedure for requesting assistance from the U.S. competent authority (New CA Procedure). The New CA Procedure reflects structural changes undertaken by the IRS since the publication of Revenue Procedure 2006-54, (2) which currently sets forth the procedures for competent authority requests. These changes include the establishment of the IRS's Large Business & International (LB&I) Division, the realignment and consolidation of the IRS's transfer pricing resources under its Director of Transfer Pricing Operations, and the creation of the Advance Pricing and Mutual Agreement (APMA) program. LB&I includes the office of the U.S. competent authority, which handles taxpayer requests for competent authority assistance through its APMA program and Treaty Assistance and Interpretation Team (TAIT).

The IRS and Treasury Department requested comments on the proposed revisions to Revenue Procedure 2006-54 on or before March 10, 2014. On behalf of Tax Executives Institute, Inc. (TEI), I am pleased to respond to the request for comments.

Tax Executives Institute

TEI is the preeminent association of in-house tax professionals in North America. Our approximately 7,000 members represent 3,000 of the leading corporations in the United States, Canada, Europe, and Asia. TEI represents a cross-section of the business community, and is dedicated to developing and effectively implementing sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. As a professional association, TEI is firmly committed to maintaining a tax system that works--one that is administrable and with which taxpayers can comply in a cost-efficient manner.

Members of TEI are responsible for managing the tax affairs of their companies and must contend daily with the provisions of the tax law relating to the operation of business enterprises, including requests for competent authority assistance, both in the United States and around the world. We believe that the diversity and professional training of our members enable us to bring a balanced and practical perspective to the issues raised by the proposed revisions to the revenue procedure for requesting assistance from the U.S. competent authority.

Overall Comments on the New CA Procedure

Notice 2013-78 proposes substantial revisions to the prior procedures governing competent authority assistance requests under applicable U.S. income tax treaties in Revenue Procedure 2006-54. TEI commends the IRS and Treasury Department for proposing revisions to Revenue Procedure 2006-54 to reflect changes in the IRS's structure related to requests for competent authority assistance, including the formation of APMA and TAIT. In particular, opening the competent authority process to taxpayer initiated adjustments is a welcome expansion of the mutual agreement procedure (MAP). However, other changes to Revenue Procedure 2006-54 raise troublesome issues, which are discussed...