U.S.: Explanation of New APA Guidance | KPMG | US
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U.S.: Explanation of New APA Guidance

U.S.: Explanation of New APA Guidance


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The IRS on 12 August 2015 released a revenue procedure—Rev. Proc. 2015-41—providing guidance and updated procedures regarding advance pricing agreements (APAs). Rev. Proc. 2015-41 addresses the process of how to request and obtain an APA from the IRS’s Advance Pricing and Mutual Agreement (APMA) program and with respect to the administration of executed APAs.

Rev. Proc. 2015-41 [PDF 241 KB] updates and supersedes Rev. Proc. 2006-9, as modified by Rev. Proc. 2008-31 (which is also superseded).


A proposed version of this revenue procedure was released for public comment in Notice 2013-79 (the "draft APA revenue procedure"). Rev. Proc. 2015-41 was issued following IRS and Treasury Department consideration of public comments, and also reflects the continuing internal monitoring and modifications of APMA’s administrative procedures concerning effective administration of APAs.

The IRS also released Rev. Proc. 2015-40 [PDF 245 KB] as guidance on the process of requesting and obtaining assistance under U.S. tax treaties from the U.S. Competent Authority ("CA assistance"), acting through APMA and the Treaty Assistance and Interpretation Team of the Deputy Commissioner (International), Large Business and International division of the IRS.

The discussion that follows explains the principal differences between Rev. Proc. 2015-41 and Rev. Proc. 2006-9. When appropriate, the provisions of Rev. Proc. 2015-41 will be compared and contrasted with the provisions of the "draft APA revenue procedure" or those of Rev. Proc. 2015-40 with respect to "CA assistance."


Rev. Proc. 2015-41 clarifies that APMA may require, 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, covered issues or interrelated issues in other years, and covered issues or interrelated issues in the same or other years as applied to other countries).

APMA will impose these requirements with due regard to considerations of principled, effective, and efficient tax administration—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.

Rev. Proc. 2015-41 provides some non-exclusive examples of fact patterns that may present interrelated matters:

  • The taxpayer proposes to cover the license of intangible property to a related licensee that previously sold the intangible property to the licensor.
  • The taxpayer proposes to cover services that entail the use of intangible property to a related recipient that had previously sold the intangible property to the provider of the services.
  • In evaluating a platform contribution transaction in a cost sharing arrangement, APMA may also consider whether intangible development costs are being properly shared.
  • The taxpayer proposes a bilateral to cover sales of goods from a related manufacturer in a treaty country to a U.S. distributor, when the U.S. distributor resells most of those goods to a related distributor in another country.
  • Other issues would include cases involving transactions within a global trading arrangement or involving hybrid entities or entities disregarded for U.S. tax purposes.

Rollback years may be formally covered within an APA. Under these provisions, a rollback will be included in an APA when a rollback is requested by the taxpayer and approved after coordination and collaboration between APMA and other offices within the IRS. In some cases, rollback will be required by APMA as a condition of beginning or continuing the APA process, after coordination and collaboration with other offices within the IRS.

Taxpayers in the APA process are required to execute consent agreements to extend the period of limitations for assessment of tax for each year of the proposed APA term. The required consent could be either general or restricted. Rev. Proc. 2015-41 expressly provides that APMA will coordinate and collaborate with other offices within the IRS and with the taxpayer on the type of consent the taxpayer will be instructed to execute. If a restricted consent is considered to be appropriate, the form of the consent will follow standardized language provided by APMA. In most cases, Rev. Proc. 2015-41 provides that taxpayers are to submit a general consent.

The flexibility required of taxpayers requesting an APA under Rev. Proc. 2015-41 differs from that imposed on taxpayers requesting "CA assistance" under Rev. Proc. 2015-40. Unlike APA procedures, "CA assistance" is not denied if the taxpayer declines to cover additional interrelated issues or years or declines to extend the statute of limitation.


Before filing an APA request, APMA invites—and in some cases, requires—the taxpayer to meet with APMA in a pre-filing conference prior to filing the APA request. Similarly, APMA invites, and sometimes requires, the taxpayer to submit a pre-filing memorandum prior to filing the APA request.

A taxpayer that wants a pre-filing conference must submit its request as part of a mandatory or optional pre-filing memorandum. A pre-filing memorandum is mandatory if:

  • The taxpayer seeks to file a unilateral APA request for an issue that could be covered by a bilateral APA;
  • The taxpayer seeks to file an abbreviated APA request; or
  • The covered issues involve certain intangibles issues, global trading, business restructuring, or certain unincorporated, pass-through, hybrid, or disregarded entities.

A mandatory pre-filing memorandum must have a length and include content appropriate to the size and complexity of the proposed covered issues, and must be in memorandum form. An optional pre-filing memorandum must have appropriate length and form, but format may be chosen by the taxpayer. A pre-filing memorandum must contain the following information:

  • Whether the taxpayer seeks a pre-filing conference, and issues to be discussed
  • Three possible meeting dates
  • Covered issue diagrams, if mandatory
  • If mandatory and seeking an abbreviated APA request, must present proposed omissions and arguments therefor
  • Name and taxpayer’s point of contact, including a Form 2848, as necessary
  • A list of all open back years and examination status


The required contents of APA requests that were specified in the Appendix of the "draft APA revenue procedure" have been refined, but generally retained. Compared to Rev. Proc. 2006-9, these requirements are "front loaded" to allow APMA to make efficient decisions with respect to the case.

Rev. Proc. 2015-41 provides expanded guidance as to when an APA request will be considered complete. Insufficiency of filing may affect the date of filing for the request.
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


Overall, the APA user fees have increased compared to those contained in Rev. Proc. 2006-9.

  • Generally APA requests have increased from $50,000 to $60,000 for each request, except as otherwise specified.
  • Multiple APA requests filed by the same controlled group within a 60-day period, will be charged $60,000, plus $30,000 for each foreign competent authority involved (if any) beyond the first two.

Renewal requests have remained at $35,000 for each request that does not require a substantial expansion of the APA’s scope or a substantial change in the covered method(s), provided that the pertinent facts remain substantially the same.

The user fee for amendments to APAs increased from $10,000 to $12,500 for each amendment to a current unilateral, bilateral, or multilateral APA.

The "small case" taxpayer user fee increased from $22,500 to $30,000 for each eligible request, and the requirements have become more restrictive. Under Rev. Proc. 2015-41, an APA request is eligible for the small case APA user fee only if all of the following apply:

  • The controlled group has sales revenues, within the meaning of Reg. section 1.482-5(d)(1), of less than $500 million in each of its most recent three back years.
  • The aggregate value of the proposed covered issue(s) is not expected to exceed $50 million in any given year of the proposed APA years.
  • 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.
  • No proposed covered issue involves intangible property arising from, or otherwise related to, an intangible development arrangement.


  • Rev. Proc. 2015-41 generally applies to all APA requests filed after 31 August 2015.
  • An APA request filed after 31 August 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 29 December 2015.
  • The 120-day allowance in section 4.07(2) of Rev. Proc. 2006-9 will not apply in determining the date on which a substantially complete APA request is considered filed under Rev. Proc. 2006-9.
  • APA requests filed on or before 29 December 2015 must clearly state under which revenue procedure they are filed.

For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice:

Steven Wrappe | (408) 367-4185 | swrappe@kpmg.com
Jana Lessne | (202) 533-3066 | jlessne@kpmg.com


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