(The Transfer Pricing Examination Process was recently updated by the Department of Treasury – June 2018. TaxConnections posts this valuable eight part a series to keep you informed of these changes.)

C. Appeals Phase
As a best practice, the issue team will begin preparing the pre-Appeals presentation immediately after closing the case. Upon contact from Appeals that the case has been assigned, the issue team should:
• Request a pre-Appeals conference using Forms 3198 and 4665
• Contact the Appeals Officer and request examination’s presence at the taxpayer’s portion of the presentation
• Determine which LB&I team members should attend the pre-Appeals conference
• Determine the roles and responsibilities of the issue team members
• Hold mock presentations to prepare for the pre-conference meeting
• Hold the Appeals pre-conference meeting

Request a post-Appeals Conference and attend the meeting. The issue team should:
• Understand Appeals’ rationale for the outcome
• Review and analyze the Appeals Case Memorandum (ACM)
• Consider the impact to the subsequent year(s) risk assessment
Helpful References:
IRM 4.46.5 – Resolving the Examination
IRM 4.46.5.11 – Conference with Appeals
NOPA Preparation – Training Materials
Rev. Proc. 2015-40 – procedures for requesting CA assistance
Rev. Proc. 2006-54 – procedures for requesting CA assistance for tax treaties
IRM 4.46.5.4 – Issue Resolution Tools

D. U.S. Competent Authority Request
The APMA Director is the delegated U.S. Competent Authority (CA) for cases arising under the business profits and associated enterprises articles of U.S. tax treaties (transfer pricing issues). APMA endeavors to resolve CA cases under the MAP agreement article of a U.S. tax treaty through consultations with the applicable foreign competent authority.

E. Competent Authority Request Concerning U.S.-Initiated
Actions
Taxpayers are not required to wait until the conclusion of an examination to file a CA request for assistance with respect to CA issues. The taxpayer may request assistance immediately after the amount of the proposed adjustment is communicated to the
taxpayer in writing, e.g., with a Form 5701, NOPA, or a Form 4549, Income Tax Examination Changes.
The taxpayer should contact CA directly to request assistance. If a request for assistance is accepted by APMA, it will assume jurisdiction over the transfer pricing issue(s) accepted. The protection of the statute of limitations continues to be the
responsibility of the examination team if the case itself remains under the jurisdiction of examination.

1. Competent Authority Resolution
If the taxpayer accepts the terms of the tentative CA resolution, then APMA will close the case. APMA will provide the examination team with the results to be incorporated in the taxpayer’s RAR and to the extent authorized under the applicable U.S. tax treaty the CA resolution will be implemented notwithstanding any time limits or other procedural limitations under the Code and regulations. See Rev. Proc. 2015-40, Sec. 9.04.
If the taxpayer rejects the terms of the tentative CA resolution and either APMA or the foreign CA is unwilling to consult further, then APMA will formally close the case and return jurisdiction to examination.

2. Accelerated Competent Authority Procedure (ACAP)
A taxpayer may request that the terms of a CA resolution for a given taxable period be extended to cover subsequent taxable periods for which it has filed tax returns. See Rev. Proc. 2015-40, Sec. 4.01. In appropriate cases, APMA may request that the taxpayer expand the scope of its CA request to include ACAP years.
3. Simultaneous Appeals Procedures (SAP) SAP is an optional aspect of the CA process whereby Appeals works jointly with APMA
and the taxpayer toward the development of APMA’s position on an underlying U.S. initiated adjustment prior to APMA’s consultations with the foreign CA. See Rev. Proc. 2015-40, Sec. 6.04(2)(a).

SAP review will be initiated only upon a taxpayer’s request

Helpful Reference:
Rev. Proc. 2015-40 – procedures for requesting CA assistance
Rev. Proc. 2006-54 – procedures for requesting CA assistance for tax treaties

IV. Exhibits

A. Practice Units
Practice Units are reference and training tools for evaluating and developing potential issues encountered during the Planning, Execution, and Resolution phases of an examination. Practice Units are located on the “International Knowledge Base” site under the Tax Examination/Issues portion of the IRS Virtual Library on the Servicewide Knowledge Management (KM) SharePoint site.

Following are some examples of Practice Units that can be used to assist with the Planning Phase of a transfer pricing examination and are available on irs.gov:
• Arm’s Length Standard
• Overview of IRC Section 482
• Common Ownership or Control Under IRC 482 – Inbound
• Common Ownership or Control Under IRC 482 – Outbound
• Review of Transfer Pricing Documentation by Outbound Taxpayers
• Review of Transfer Pricing Documentation by Inbound Taxpayers
• Three Requirements of IRC 482
• Effectively Connected Income (ECI)
Following are some examples of Practice Units that can be used to assist with the Execution Phase of a transfer pricing examination and are available on irs.gov:
• Accounting for Intangibles and Services Associated with the Sale of Tangible Property Outbound
• Best Method Determination for an Inbound Distributor
• Calculating the Net Adjustment Penalty for a Substantial Valuation Misstatement
• Change in Participation in a Cost Sharing Arrangement (CSA) – Controlled Transfer of Interests and Capability Variation
• Comparability Analysis for Tangible Goods Transactions
• Comparison of the Arm’s Length Standard with Other Valuation Approaches -Outbound
• Conducting Functional Analysis for Foreign Base Company Income
• Cost Sharing Arrangements vs. Licensing Alternative
• CPM Simple Distributor Inbound
• CPM Simple Distributor Outbound
• Distinguishing Between Sale, License and other Transfers of Intangibles to CFCs by US Transferors
• Dual Consolidated Losses Overview
• Foreign Shareholder Activities and Duplicative Services
• Foreign to Foreign Transactions 367(b) Overview
• High Value Services: Technical and Marketing Fees – Inbound
• Inbound Resale Price Method Routine Distributor
• Intercompany Interest Rates under the Situs Rule of IRC Section 482
• IRC 367(d) Transactions in Conjunction with Cost Sharing Arrangements (CSA)
• License of Foreign Owned Intangible Property by US Entity
• License of Intangible Property from U.S. Parent to a Foreign Subsidiary
• Management Fees
• Outbound Liquidation of US Corp to Foreign Parent IRC Section 376(e)(2) Overview
• Outbound Services by US Companies to CFCs
• Outbound Transfer of Foreign Stock
• Outbound Transfers of Property to Foreign Corporation – IRC Section 367 Overview
• Pricing of Platform Contribution Transaction (PCT) in Cost Sharing Arrangements (CSA) Initial Transaction
• Pricing of Platform Contribution Transaction (PCT) in Cost Sharing Arrangements (CSA) Acquisition of Subsequent IP
• Purchase of Tangible Goods from a Foreign Parent CUP Method
• Residual Profit Split Method – Inbound
• Revenue Procedure 99-32 Outbound Guidance
• Residual Profit Split Method – Outbound
• Sale of Tangibles Goods from a CFC to a USP CUP Method
• Services Cost Method Inbound Services
• Using an IRC 6038(A) Summons when a U.S. Corporation is 25% Foreign Owned Following are some examples of Practice Units that can be used to assist with the Resolution Phase of a transfer pricing examination and are available on irs.gov:
• Advance Pricing Agreements for Tangible Goods Transactions – Inbound
• Advance Pricing Agreements for Tangible Goods Transactions – Outbound
• Competent Authority Revenue Procedure 2015-40 Guidance; U.S.-initiated Adjustments
• Revenue Procedure 99-32 Inbound Guidance
The public can view these Practice Units on www.irs.gov and new units are continually added. There may be additional Practice Units relevant to the particular facts or circumstances of a transfer pricing examination that are not included in this Exhibit.

(This Is Part VIII of VIII On Department of Treasury- Transfer Pricing Examination Process And Updates.)