On April 25, 2023, the IRS’s Advance Pricing and Mutual Agreement (“APMA”) Program issued new interim guidance for its review of taxpayer Advance Pricing Agreement (“APA”) requests. Notably, the guidance introduces an “optional pre-submission review” for taxpayers that wish to submit a prefiling memorandum before submitting a formal APA request. Based on the pre-submission review, APMA will give a preliminary opinion whether it believes that an APA is well-suited to achieve tax certainty for the proposed covered transactions. The new interim guidance also instructs APMA personnel on how to review formal taxpayer APA requests for acceptance to the program, or whether to suggest an “alternative workstream” such as the International Compliance Assurance Program (“ICAP”)[1] or a joint audit.
Overall, the recent interim guidance is significant for taxpayers that intend to seek both new and renewal APAs. While the interim guidance is not intended to limit the number of APA requests that the APMA Program accepts, the clear message is that taxpayers should no longer take acceptance into the APA process as a given. The impact of the new guidance will likely be a new emphasis on early engagement with the APMA Program and treaty partners and effective advocacy beginning at the prefiling stage. This blog post is a preliminary reporting of this development, with further analysis to follow in a Legal Update.
[1] See our prior post about the ICAP program for more information: ICAP, a New Tool in the Multiverse of Multinational Tax Dispute Management (May 25, 2021).