Rev Proc

Examples
These tables show the amount exempt from a levy on wages, salary, and other income.
For example:
1. A single taxpayer who is paid weekly and claims three exemptions (including one for the taxpayer) has $299.04 exempt
from levy.
2. If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL STANDARD DEDUCTION space on Parts 3, 4, & 5
of the levy, $324.04 is exempt from this levy ($299.04 plus $25.00).
3. A taxpayer who is married, files jointly, is paid biweekly, and claims two exemptions (including one for the taxpayer) has
$673.08 exempt from levy.
4. If the taxpayer in number 3 is over 65 and has a spouse who is blind, this taxpayer should write 2 in the ADDITIONAL
STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy. Then, $753.85 is exempt from this levy ($673.08 plus $80.77).

26 CFR 601.201: Rulings and determination letters.

Procedures for Requesting Competent Authority Assistance Under Tax Treaties
Rev. Proc. 2006–54
TABLE OF CONTENTS
SECTION 1. PURPOSE AND BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037

.01 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037
.02 Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037
.03 Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037
SECTION 2. SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037

.01 In General.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Requests for Assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 General Process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Failure to Request Assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1037
1038
1038
1038

SECTION 3. GENERAL CONDITIONS UNDER WHICH THIS PROCEDURE APPLIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1038

.01 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Requirements of a Treaty.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Applicable Standards in Allocation Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Who Can File Requests for Assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Closed Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.06 Foreign Initiated Competent Authority Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.07 Requests Relating to Residence Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.08 Determinations Regarding Limitation on Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1038
1038
1038
1038
1038
1038
1038
1039

SECTION 4. PROCEDURES FOR REQUESTING COMPETENT AUTHORITY ASSISTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1039

.01 Time for Filing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Place of Filing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Additional Filing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Form of Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Information Required.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.06 Other Dispute Resolution Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.07 Other Documentation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.08 Updates.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.09 Conferences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1039
1039
1039
1039
1039
1040
1040
1040
1040

SECTION 5. SMALL CASE PROCEDURE FOR REQUESTING COMPETENT AUTHORITY ASSISTANCE . . . . . . . . . . . . . . . . . 1041

December 4, 2006

1035

2006–49 I.R.B.

.01 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041
.02 Small Case Standards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041
.03 Small Case Filing Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041
SECTION 6. RELIEF REQUESTED FOR FOREIGN INITIATED ADJUSTMENT WITHOUT COMPETENT
AUTHORITY INVOLVEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041
SECTION 7. COORDINATION WITH OTHER ADMINISTRATIVE OR JUDICIAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . 1041

.01 Suspension of Administrative Action with Respect to U.S. Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Coordination with IRS Appeals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Coordination with Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Coordination with Other Alternative Dispute Resolution and Pre-Filing Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Effect of Agreements or Judicial Determinations on Competent Authority Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.06 Accelerated Competent Authority Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1041
1042
1042
1042
1042
1042

SECTION 8. SIMULTANEOUS APPEALS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1043

.01 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Time for Requesting the Simultaneous Appeals Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) When Filing for Competent Authority Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) After Filing for Competent Authority Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Cases Pending in Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Request for Simultaneous Appeals Procedure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Role of IRS Appeals in the Simultaneous Appeals Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) IRS Appeals Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Assistance to U.S. Competent Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.06 Denial or Termination of Simultaneous Appeals Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Taxpayer’s Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) IRS’s Denial or Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.07 Returning to IRS Appeals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.08 IRS Appeals’ Consideration of Non-Competent Authority Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1043
1043
1043
1043
1043
1043
1044
1044
1044
1044
1044
1044
1044
1044

SECTION 9. PROTECTIVE MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1044

.01 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Filing Protective Claim for Credit or Refund with a Competent Authority Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) In General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Treatment of Competent Authority Request as Protective Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Protective Filing Before Competent Authority Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) In general. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Letter to Competent Authority Treated as Protective Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Notification Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) No Consultation between Competent Authorities until Formal Request is Filed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Effect of a Protective Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Treaty Provisions Waiving Procedural Barriers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1044
1044
1044
1045
1045
1045
1045
1045
1045
1045
1045

SECTION 10. APPLICATION OF REV. PROC. 99–32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1045
SECTION 11. DETERMINATION OF CREDITABLE FOREIGN TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1046
SECTION 12. ACTION BY U.S. COMPETENT AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1046

.01 Notification of Taxpayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Denial of Assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Extending Period of Limitations for Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 No Review of Denial of Request for Assistance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.06 Closing Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.07 Unilateral Withdrawal or Reduction of U.S. Initiated Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1046
1046
1046
1046
1046
1047
1047

SECTION 13. REQUESTS FOR RULINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047

.01 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047
.02 Foreign Tax Rulings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047

2006–49 I.R.B.

1036

December 4, 2006

SECTION 14. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047

.01 Requests to Which a User Fee Does Not Apply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.02 Requests to Which a User Fee Applies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Acceptance of Requests.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.04 Address to Send Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.05 Refunds of User Fee.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1047
1047
1047
1047
1047

SECTION 15. EFFECT ON OTHER DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047
SECTION 16. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1048
SECTION 17. PAPERWORK REDUCTION ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1048
SECTION 18. DRAFTING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1048

SECTION 1. PURPOSE AND
BACKGROUND
.01 Purpose. This revenue procedure
explains the procedures by which taxpayers may obtain assistance from the U.S.
competent authority under the provisions
of a tax treaty to which the United States
is a party. This revenue procedure updates and supersedes Rev. Proc. 2002–52,
2002–2 C.B. 242.
.02 Background. The U.S. competent
authority assists taxpayers with respect to
matters covered in the mutual agreement
procedure provisions of tax treaties. A tax
treaty generally permits taxpayers to request competent authority assistance when
they consider that the actions of the United
States, the treaty country, or both, result
or will result in taxation that is contrary
to the provisions of the treaty. For example, tax treaties generally permit taxpayers
to request assistance in order to relieve
economic double taxation arising from an
allocation under section 482 of the Internal
Revenue Code (the “Code”) or an equivalent provision under the laws of a treaty
country. Competent authority assistance
may also be available with respect to issues
specifically dealt with in other provisions
of a treaty. For example, many tax treaties
contain provisions permitting competent
authorities to resolve issues of fiscal residence or allowing a competent authority
to make a discretionary determination that
a taxpayer is entitled to the benefits of a
treaty under specific limitation on benefits
provisions. See sections 3.07 and 3.08
of this revenue procedure. The Deputy
Commissioner (International), Large and
Mid-Size Business Division, acts as the
U.S. competent authority in administering
the operating provisions of tax treaties,
including reaching mutual agreements

December 4, 2006

in specific cases, and in interpreting and
applying tax treaties. In interpreting and
applying tax treaties, the Deputy Commissioner (International), Large and Mid-Size
Business Division, acts only with the concurrence of the Associate Chief Counsel
(International). See Delegation Order
4–12 (formerly DO–114, Rev. 13), Internal Revenue Manual (“IRM”), Part
1 Organization, Finance and Management, Chapter 2 Servicewide Policies and
Authorities, Section 43 Delegation of Authorities for the Examining Process (IRM
1.2.43),
http://www.irs.gov/irm/part1/
ch02s10.html#d0e33677.
.03 Changes. Although most of the
changes made by this revenue procedure to
Rev. Proc. 2002–52 are minor edits for organization, accuracy, readability, or updating of citations to cross-referenced guidance, substantive changes have also been
made and may be summarized as follows:
(1) Sections 3.04, 3.08 and 7.06 have
been revised to clarify standards for acceptance of requests for competent authority
assistance.
(2) Sections 3.08, 4.04 and 5.03 have
been revised to clarify signature requirements for requests for determinations regarding limitation on treaty benefits.
(3) Section 4.04 has been revised to provide for filing copies of submissions on
electronic media.
(4) Sections 4.05 and 5.03 have been revised to provide additional detail regarding
information to be submitted with requests
for competent authority assistance.
(5) Sections 7.02 and 7.05 have been revised to clarify current practices regarding
coordination with IRS Appeals.
(6) Section 7.06 has been revised to
clarify the coordination of the accelerated
competent authority procedure with requests for Advance Pricing Agreements.

1037

(7) Section 8.04 has been revised to
clarify current practices regarding the processing of requests for the Simultaneous
Appeal procedure.
(8) Section 9.03(3) has been revised to
reduce the frequency with which taxpayers
filing protective claims are required to notify the U.S. competent authority as to their
intent to file a request for assistance.
(9) Section 10 has been revised to clarify the role of the U.S. competent authority in considering requests regarding conforming a taxpayer’s accounts and allowing repatriation of certain amounts following an allocation of income between related U.S. and foreign corporations under
section 482 of the Code.
(10) Section 12.02(8) has been revised
to provide for denial of competent authority assistance where the underlying transaction is listed for purposes of the applicable Treasury regulations as a tax avoidance
transaction.
(11) Section 14 has been revised to implement user fees for requests for determinations regarding limitation on treaty benefits.
SECTION 2. SCOPE
.01 In General. This revenue procedure
addresses procedures for obtaining assistance from the U.S. competent authority
under the provisions of an income, estate
or gift tax treaty entered into between the
United States and another country. The
U.S. competent authority assists taxpayers with respect to matters covered in tax
treaties in the manner specified in the
mutual agreement procedure provisions
or other provisions of the relevant tax
treaty. Taxpayers are urged to examine
the specific provisions of the treaty under
which they seek relief, in order to deter-

2006–49 I.R.B.

mine whether relief may be available in
their particular case. If, after examining
the applicable treaty, a taxpayer is unsure
whether relief is available, the taxpayer
should contact competent authority. This
revenue procedure is not intended to limit
any specific treaty provisions relating to
competent authority matters.
.02 Requests for Assistance. In general, requests by taxpayers for competent
authority assistance must be submitted
in accordance with this revenue procedure. However, where a treaty or other
published administrative guidance provides specific procedures for requests for
competent authority assistance, those procedures will apply, and the provisions of
this revenue procedure will not apply to
the extent inconsistent with such procedures. Taxpayers may consult the “Tax
Information for International Businesses”
and “Competent Authority Agreements”
pages at www.irs.gov for links to a variety
of agreements and other documents that
may modify the procedures set forth in
this revenue procedure.
.03 General Process. If a taxpayer’s
request for competent authority assistance
is accepted, the U.S. competent authority
generally will consult with the appropriate
foreign competent authority and attempt to
reach a mutual agreement that is acceptable to all parties. The U.S. competent authority also may initiate competent authority negotiations in any situation deemed
necessary to protect U.S. interests. Such
a situation may arise, for example, when
a taxpayer fails to request competent authority assistance after agreeing to a U.S.
or foreign tax assessment that is contrary to
the provisions of an applicable tax treaty or
for which correlative relief may be available.
.04 Failure to Request Assistance. Failure to request competent authority assistance or to take appropriate steps as necessary to maintain the availability of the
remedy may cause a denial of part or all of
any foreign tax credits claimed. See Treas.
Reg. §1.901–2(e)(5)(i). See also section 9
of this revenue procedure concerning protective measures and section 11 of this revenue procedure concerning the determination of creditable foreign taxes.

2006–49 I.R.B.

SECTION 3. GENERAL CONDITIONS
UNDER WHICH THIS PROCEDURE
APPLIES
.01 General. The exclusions, exemptions, deductions, credits, reductions in
rate, and other benefits and safeguards
provided by treaties are subject to conditions and restrictions that may vary in
different treaties. Taxpayers should examine carefully the specific treaty provisions
applicable in their cases to determine the
nature and extent of treaty benefits or
safeguards they are entitled to and the
conditions under which such benefits or
safeguards are available. See section 9 of
this revenue procedure, which prescribes
protective measures to be taken by the
taxpayer and any concerned related person with respect to U.S. and foreign tax
authorities. See also section 12.02 of this
revenue procedure for circumstances in
which competent authority assistance may
be denied.
.02 Requirements of a Treaty. There is
no authority for the U.S. competent authority to provide relief from U.S. tax or to provide other assistance due to taxation arising under the tax laws of a foreign country
or the United States, unless such authority
is granted by a treaty. See also Rev. Proc.
2006–23, 2006–20 I.R.B. 900, for procedures for requesting the assistance of the
IRS when a taxpayer is or may be subject
to inconsistent tax treatment by the IRS
and a U.S. possession tax agency.
.03 Applicable Standards in Allocation
Cases. With respect to requests for competent authority assistance involving the
allocation of income and deductions between a U.S. taxpayer and a related person, the U.S. competent authority and its
counterpart in the treaty country will be
bound by the arm’s length standard provided by the applicable provisions of the
relevant treaty. The U.S. competent authority will also be guided by the arm’s
length standard consistent with the regulations under section 482 of the Code and
the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as published from time to time by
the Organisation for Economic Co-operation and Development. When negotiating
mutual agreements on the allocation of income and deductions, the U.S. competent
authority will take into account all of the

1038

facts and circumstances of the particular
case and the purpose of the treaty, which
is to avoid double taxation.
.04 Who Can File Requests for Assistance. The U.S. competent authority will
consider requests for assistance from U.S.
persons, as defined in section 7701(a)(30)
of the Code, and from non-U.S. persons as
permitted under an applicable tax treaty.
As noted in section 12.02 of this revenue procedure, there are circumstances
in which the U.S. competent authority
will not pursue assistance. For purposes
of this revenue procedure, except where
the context otherwise requires, the term
“taxpayer” refers to the person requesting
competent authority assistance.
.05 Closed Cases. A case previously
closed after examination will not be reopened in order to make an adjustment
unfavorable to the taxpayer except in the
presence of an exceptional circumstance
described in Rev. Proc. 2005–32, 2005–23
I.R.B. 1206 (providing procedures for reopening cases if fraud, substantial error,
or certain other circumstances are present).
The U.S. competent authority may, but is
not required to, accept a taxpayer’s request
for competent authority consideration that
will require the reopening of a case closed
after examination.
.06 Foreign Initiated Competent Authority Request. When a foreign competent authority refers a request from a
foreign person to the U.S. competent authority for consultation under the mutual
agreement procedure, the U.S. competent
authority generally will require the U.S.
related person (in the case of an allocation
of income or deductions between related
persons) or may require the foreign person (in other cases) to file a request for
competent authority assistance under this
revenue procedure.
.07 Requests Relating to Residence Issues. U.S. competent authority assistance
may be available to taxpayers seeking
to clarify their residency status in the
United States. Examples include cases in
which taxpayers believe that they are erroneously treated as non-U.S. residents by
treaty countries or cases where taxpayers
are treated as dual residents despite the
objective tie-breaker provisions contained
in the applicable treaties. Generally, competent authority assistance is limited to
situations where resolution of a residency

December 4, 2006

issue is necessary in order to avoid double
taxation or to determine the applicability
of a benefit under the treaty. Further, a request for assistance regarding a residency
issue will be accepted only if it is established that the issue requires consultation
with the foreign competent authority in
order to ensure consistent treatment by
the United States and the applicable treaty
country. The U.S. competent authority
does not issue unilateral determinations
with respect to whether an individual is a
resident of the United States or of a treaty
country.
.08 Determinations Regarding Limitation on Benefits. Many treaties contain a
limitation on benefits article that enumerates prescribed requirements that must be
met to be eligible for benefits under the
treaty. The U.S. competent authority will
not issue determinations regarding a taxpayer’s status under one of the prescribed
requirements in a limitation on benefits
provision. However, certain treaties provide that the competent authority may,
as a matter of discretion, determine the
availability of treaty benefits where the
prescribed requirements are not met. Requests for assistance in such cases should
comply with this revenue procedure and
any other specific procedures that may
be issued from time to time. A request
may be with respect to an initial discretionary determination, a renewal or
a redetermination. The request should
take the form of a letter as described in
section 4.04 of this revenue procedure,
except that if the requester does not file
federal tax returns and cannot identify a
person authorized to sign such returns,
the letter may be dated and signed by any
authorized representative or officer of the
requester. Taxpayers who are requesting a discretionary determination under
a limitation on benefits provision should
include the user fee as described in Section 14 of this revenue procedure as well
as the information described in Exhibit
4.60.3–3 of the Internal Revenue Manual (“IRM”), Part 4 Examining Process,
Chapter 60 International Procedure, Section 3 Tax Treaty Related Matters (IRM
4.60.3),
http://www.irs.gov/irm/part4/
ch45s03.html.

December 4, 2006

SECTION 4. PROCEDURES FOR
REQUESTING COMPETENT
AUTHORITY ASSISTANCE
.01 Time for Filing. A request for competent authority assistance generally may
be filed at any time after an action results
in taxation not in accordance with the provisions of the applicable treaty. In a case
involving a U.S. initiated adjustment of tax
or income resulting from a tax examination, a request for competent authority assistance may be submitted as soon as practicable after the amount of the proposed
adjustment is communicated in writing to
the taxpayer (e.g., a Notice of Proposed
Adjustment). Where a U.S. initiated adjustment has not yet been communicated
in writing to the taxpayer, the U.S. competent authority generally will deny the request as premature. In the case of a foreign
examination, a request may be submitted
as soon as the taxpayer believes such filing is warranted based on the actions of
the country proposing the adjustment. In a
case involving the re-allocation of income
or deductions between related persons, the
request should not be filed until such time
that the taxpayer can establish that there is
a probability of double taxation. In cases
not involving an examination, a request
can be made when the taxpayer believes
that an action or potential action warrants
the assistance of the U.S. competent authority. Examples of such action include:
(a) a ruling or promulgation by a foreign
tax authority concerning a taxation matter;
and (b) the withholding of tax by a withholding agent. Except where otherwise
provided in an applicable treaty, taxpayers
have discretion over the time for filing a
request; however, delays in filing may preclude effective relief. See section 9 of this
revenue procedure, which explains protective measures to be taken by the taxpayer
and any concerned related person with respect to U.S. and foreign tax authorities.
See also section 7.06 of this revenue procedure for rules relating to accelerated issue resolution and competent authority assistance.
.02 Place of Filing. The taxpayer must
send all written requests for, or any inquiries regarding, U.S. competent authority assistance to the Deputy Commissioner
(International), Large and Mid-Size Business Division, Attn: Office of Tax Treaty,

1039

Internal Revenue Service, 1111 Constitution Avenue, NW, Routing: MA3–322A,
Washington, D.C. 20224.
.03 Additional Filing. In the case of
U.S. initiated adjustments, the taxpayer
also must file a copy of the request with
the office of the IRS where the taxpayer’s
case is pending. If the request is filed
after the matter has been designated for
litigation or while a suit contesting the
relevant tax liability of the taxpayer is
pending in a United States court, a copy
of the request also must be filed with the
Office of Associate Chief Counsel (International), Internal Revenue Service, 1111
Constitution Avenue, N.W., Washington,
D.C. 20224, with a separate statement attached identifying the court where the suit
is pending and the docket number of the
action.
.04 Form of Request. A request for U.S.
competent authority assistance must be in
the form of a letter addressed to the Deputy
Commissioner (International), Large and
Mid-Size Business Division. It must be
dated and signed by a person having the
authority to sign the taxpayer’s federal tax
returns. The request must contain a statement that competent authority assistance is
being requested and must include the information described in section 4.05 of this
revenue procedure. In addition to the original signed submission, a copy of the text
of the request and any materials contemporaneously prepared in support of the request must also be submitted, in Adobe
PDF or Microsoft Word format, in the form
of a CD, DVD, or 3.5-inch diskette. See
section 5 of this revenue procedure for requests involving small cases.
.05 Information Required. The following information must be included in the request for competent authority assistance:
(1) a reference to the specific treaty and
the provisions therein pursuant to which
the request is made;
(2) the names, addresses, U.S. taxpayer
identification number and foreign taxpayer
identification number (if any) of the taxpayer and, if applicable, all related persons
involved in the matter;
(3) a brief description of the issues for
which competent authority assistance is requested, including a description of the relevant transactions, activities or other circumstances involved in the issues raised
and the basis for the adjustment, if any;

2006–49 I.R.B.

(4) if applicable, a description of the
control and business relationships between
the taxpayer and any relevant related person for the years in issue, including any
changes in such relationship to the date of
filing the request;
(5) the years and amounts involved with
respect to the issues in both U.S. dollars
and foreign currency;
(6) the IRS office that has made or is
proposing to make the adjustment or, if
known, the IRS office with examination
jurisdiction over the taxpayer;
(7) an explanation of the nature of the
relief sought or the action requested in
the United States or in the treaty country
with respect to the issues raised, including a statement as to whether the taxpayer
wishes to apply for treatment similar to
that provided under Rev. Proc. 99–32,
1999–2 C.B. 296 (referred to in this revenue procedure as “Rev. Proc. 99–32
treatment” and explained in further detail
in section 10 of this revenue procedure);
(8) a statement whether the period of
limitations for the years for which relief is
sought has expired in the United States or
in the treaty country;
(9) a statement of relevant domestic and
foreign judicial or administrative proceedings that involve the taxpayer and related
persons, including all information related
to notification of the treaty country;
(10) to the extent known by the taxpayer, a statement of relevant foreign judicial or public administrative proceedings
that do not involve the taxpayer or related persons but involve the same issue
for which competent authority assistance
is requested;
(11) a statement whether the request
for competent authority assistance involves issues that are currently, or were
previously, considered part of an Advance
Pricing Agreement (“APA”) proceeding
or other proceeding relevant to the issue
under consideration in the United States or
part of a similar proceeding in the foreign
country;
(12) if applicable, powers of attorney
with respect to the taxpayer, and the request should identify the individual to
serve as the taxpayer’s initial point of
contact for the competent authority;
(13) if the jurisdiction of an issue is with
an IRS Appeals office, a summary of prior
discussions of the issue with that office and
contact information regarding the IRS Ap-

2006–49 I.R.B.

peals officer handling the issue; also, if
appropriate, a statement whether the taxpayer is requesting the Simultaneous Appeals procedure as provided in section 8 of
this revenue procedure;
(14) in a separate section, the statement
and information required by section 9.02
of this revenue procedure if the request is
to serve as a protective claim;
(15) on a separate document, a statement that the taxpayer consents to the disclosure to the competent authority of the
treaty country (with the name of the treaty
country specifically stated) and that competent authority’s staff, of any or all of the
items of information set forth or enclosed
in the request for U.S. competent authority assistance within the limits contained in
the tax treaty under which the taxpayer is
seeking relief. The taxpayer may request,
as part of this statement, that its trade secrets not be disclosed to a foreign competent authority. This statement must be
dated and signed by a person having authority to sign the taxpayer’s federal tax
returns and is required to facilitate the administrative handling of the request by the
U.S. competent authority for purposes of
the recordkeeping requirements of section
6103(p) of the Code. Failure to provide
such a statement will not prevent the U.S.
competent authority from disclosing information under the terms of a treaty. See
section 6103(k)(4) of the Code. Taxpayers
are encouraged to provide duplicates to the
U.S. and foreign competent authorities of
all information otherwise disclosable under the treaty;
(16) a penalties of perjury statement in
the following form:
Under penalties of perjury, I declare
that I have examined this request, including accompanying documents, and,
to the best of my knowledge and belief, the facts presented in support of
the request for competent authority assistance are true, correct and complete.
The declaration must be dated and signed
by the person or persons on whose behalf the request is being made and not by
the taxpayer’s representative. The person
signing for a corporate taxpayer must be
an authorized officer of the taxpayer who
has personal knowledge of the facts. The
person signing for a trust, an estate or a
partnership must be respectively, a trustee,
an executor or a partner who has personal
knowledge of the facts; and

1040

(17) any other information required or
requested under this revenue procedure, as
applicable. See, e.g., section 7.06 of this
revenue procedure, which requires the provision of certain information in the case of
a request for the accelerated competent authority procedure, and section 10 of this
revenue procedure, which requires the provision of certain information in the case
of a request for Rev. Proc. 99–32 treatment. Requests for supplemental information may include items such as detailed financial information, comparability analysis, or other material relevant to a transfer
pricing analysis.
.06 Other Dispute Resolution Programs. Requests for competent authority
assistance that involve an APA or Pre-Filing Agreement request must include the
information required under Rev. Proc.
2006–9, 2006–2 I.R.B. 278 (concerning
APAs), and Rev. Proc. 2005–12, 2005–2
I.R.B. 311 (concerning Pre-Filing Agreements).
.07 Other Documentation. In addition, on request, the taxpayer must submit
any other information or documentation
deemed necessary by the U.S. or foreign competent authority for purposes
of reaching an agreement. This includes
English translations of any documentation
required in connection with the competent
authority request.
.08 Updates. The taxpayer must keep
the U.S. competent authority informed of
all material changes in the information or
documentation previously submitted as
part of, or in connection with, the request
for competent authority assistance. The
taxpayer also must provide any updated
information or new documentation that
becomes known or is created after the request is filed and which is relevant to the
resolution of the issues under consideration.
.09 Conferences. To the extent possible, the U.S. competent authority will consult with the taxpayer regarding the status and progress of the mutual agreement
proceedings. The taxpayer may request a
pre-filing conference with the U.S. competent authority to discuss the mutual agreement process with respect to matters covered under a treaty, including discussion of
the proper time for filing, the practical aspects of obtaining relief and actions necessary to facilitate the proceedings. Simi-

December 4, 2006

larly, after a matter is resolved by the competent authorities, a taxpayer may also request a conference with the U.S. competent authority to discuss the resolution.

SECTION 5. SMALL CASE
PROCEDURE FOR REQUESTING
COMPETENT AUTHORITY
ASSISTANCE
.01 General. To facilitate requests for
assistance involving small cases, this section provides a special procedure simplifying the form of a request for assistance
and, in particular, the amount of informa-

Taxpayer

Proposed
Adjustment

Individual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporation/Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.03 Small Case Filing Procedure. The
abbreviated request for competent authority assistance under the small case procedure must be dated and signed by a person having the authority to sign the taxpayer’s federal tax returns. Although other
information and documentation may be requested at a later date, the initial request for
assistance should include the following information and materials:
(1) a statement indicating that this is a
matter subject to the small case procedure;
(2) the name, address, U.S. taxpayer
identification number and foreign taxpayer
identification number (if any) of the taxpayer and, if applicable, all related persons
involved in the matter;
(3) a description of the issue and the
nature of the relief sought;
(4) the taxable years and amounts involved with respect to the issues in both
U.S. and foreign currency;
(5) the name of the treaty country;
(6) if applicable, powers of attorney
with respect to the taxpayer;
(7) on a separate document, a statement
that the taxpayer consents to the disclosure
to the competent authority of the treaty
country (with the name of the treaty country specifically stated) and that competent
authority’s staff, of any or all of the items
of information set forth or enclosed in the
request for U.S. competent authority assistance within the limits contained in the tax
treaty under which the taxpayer is seeking relief. The taxpayer may request, as
part of this statement, that its trade secrets
not be disclosed to a foreign competent authority. This statement must be dated and

December 4, 2006

tion that initially must be submitted. All
other requirements of this revenue procedure continue to apply to requests for assistance made pursuant to this section.
.02 Small Case Standards. A taxpayer
may file an abbreviated request for competent authority assistance in accordance
with this section if the total proposed
adjustment involved in the matter is not
greater than the following:

$200,000
$1,000,000
$200,000

signed by a person having authority to sign
the taxpayer’s federal tax returns and is required to facilitate the administrative handling of the request by the U.S. competent
authority for purposes of the recordkeeping requirements of section 6103(p) of the
Code. Failure to provide such a statement
will not prevent the U.S. competent authority from disclosing information under the
terms of a treaty. See section 6103(k)(4)
of the Code; and
(8) a penalties of perjury statement in
the following form:
Under penalties of perjury, I declare
that I have examined this request, including accompanying documents, and,
to the best of my knowledge and belief, the facts presented in support of
the request for competent authority assistance are true, correct and complete.
The declaration must be dated and signed
by the person or persons on whose behalf the request is being made and not by
the taxpayer’s representative. The person
signing for a corporate taxpayer must be
an authorized officer of the taxpayer who
has personal knowledge of the facts. The
person signing for a trust, an estate or a
partnership must be respectively, a trustee,
an executor or a partner who has personal
knowledge of the facts.
SECTION 6. RELIEF REQUESTED
FOR FOREIGN INITIATED
ADJUSTMENT WITHOUT
COMPETENT AUTHORITY
INVOLVEMENT
Taxpayers seeking correlative relief
with respect to a foreign initiated adjust-

1041

ment involving a treaty matter should
present their request to the U.S. competent
authority. However, when the adjustment
involves years under the jurisdiction of
the Industry or Area Director or IRS Appeals, taxpayers sometimes try to obtain
relief from these offices. This may occur,
for example, if the adjustment involves
a re-allocation of income or deductions
involving a related person in a country
with which the United States has an income tax treaty. In these cases, taxpayers
will be advised to contact the U.S. competent authority office. In appropriate
cases, the U.S. competent authority will
advise the Industry or Area Director or
IRS Appeals office on appropriate action.
The U.S. competent authority may request
the taxpayer to provide the information
described under sections 4.05 and 4.07 of
this revenue procedure. Failure to request
competent authority assistance may result
in denial of correlative relief with respect
to the issue, including applicable foreign
tax credits.
SECTION 7. COORDINATION WITH
OTHER ADMINISTRATIVE OR
JUDICIAL PROCEEDINGS
.01 Suspension of Administrative Action with Respect to U.S. Adjustments.
When a request for competent authority
assistance is accepted with respect to a
U.S. initiated adjustment, the IRS will
postpone further administrative action
with respect to the issues under competent
authority consideration (such as assessment or collection procedures), except:
(a) in situations in which the IRS may be

2006–49 I.R.B.

requested otherwise by the U.S. competent authority; or (b) in situations involving cases pending in court and in other
instances in which action must be taken to
avoid prejudicing the U.S. Government’s
interest. The normal administrative procedures continue to apply, however, to
all other issues not under U.S. competent
authority consideration. For example, if
there are other issues raised during the
examination and the taxpayer is not in
agreement with these issues, the usual
procedures for completing the examination with respect to these issues apply. If
the taxpayer is issued a Notice of Proposed
Adjustment with respect to these issues
and prepares a protest of the unagreed
issues, the taxpayer need not include any
unagreed issue under consideration by
the competent authority. Following the
receipt of a taxpayer’s protest, normal
IRS Appeals procedures will be initiated
with respect to those issues not subject to
competent authority consideration.
.02 Coordination with IRS Appeals.
Taxpayers who disagree with a proposed
U.S. adjustment have the option of pursuing their right of administrative review with IRS Appeals before requesting
competent authority assistance; making
a request pursuant to the Simultaneous
Appeals procedure in section 8 of this
revenue procedure; or requesting competent authority assistance immediately
for bilateral consideration. Taxpayers requesting unilateral withdrawal of a U.S.
adjustment without consultation with the
treaty country must direct such a request
to IRS Appeals rather than to the U.S.
competent authority. Taxpayers who are
pursuing their rights with IRS Appeals
may contact the U.S. competent authority
if they believe they have a potential competent authority issue. If a taxpayer does
not go through the Simultaneous Appeals
procedure and instead enters into settlement discussions with IRS Appeals before
making a competent authority request,
the U.S. competent authority may rely
upon, but will not necessarily be bound
by, such previous consideration by IRS
Appeals when considering the case (see
also section 7.05 of this revenue procedure
regarding settlements with IRS Appeals
and section 8.05 of this revenue procedure
regarding the role of IRS Appeals in the
Simultaneous Appeals procedure). If a

2006–49 I.R.B.

taxpayer enters into the Appeals arbitration program (see Rev. Proc. 2006–44,
2006–44 I.R.B. 800), the taxpayer generally may not request competent authority
assistance until the arbitration process
is completed. However, if the taxpayer
demonstrates that a request for competent
authority assistance is necessary to keep
open a statute of limitations in the treaty
country, then competent authority assistance may be requested while arbitration is
pending, and the U.S. competent authority
will suspend action on the case until arbitration is completed. If a taxpayer makes a
competent authority request, the taxpayer
is deemed to consent to communications
between the U.S. competent authority and
IRS Appeals regarding the matter. See
Rev. Proc. 2000–43, 2000–2 C.B. 404.
.03 Coordination with Litigation. The
U.S. competent authority will not, without
the consent of the Associate Chief Counsel
(International), accept (or continue to consider) a taxpayer’s request for assistance if
the request involves a taxable period pending in a United States court or involves a
matter pending in a United States court or
designated for litigation for any taxable period. If the case is pending in the United
States Tax Court, the taxpayer may, in appropriate cases, be asked to join the IRS in
a motion to sever issues or delay trial pending completion of the competent authority proceedings. If the case is pending in
any other court, the Associate Chief Counsel (International) will consult with the Department of Justice about appropriate action, and the taxpayer may, in appropriate
cases, be asked to join the U.S. Government in a motion to sever issues or delay
trial pending completion of the competent
authority proceedings. Final decision on
severing issues or delaying trial rests with
the court. The filing of a competent authority request does not, however, relieve the
taxpayer from taking any action that may
be necessary or required with respect to litigation.
.04 Coordination with Other Alternative Dispute Resolution and Pre-Filing
Procedures. Competent authority assistance is available to taxpayers in conjunction with other alternative dispute
resolution and pre-filing procedures in
order to ensure taxation in accordance
with tax treaty provisions. Other revenue
procedures and IRS publications should

1042

be consulted as necessary with regard to
specific matters. See, e.g., Rev. Proc.
2006–9, 2006–2 I.R.B. 278 (concerning
APAs); Rev. Proc. 2005–12, 2005–2
I.R.B. 311 (concerning Pre-Filing Agreements); or Rev. Proc. 98–21, 1998–1
C.B. 585 (concerning Article XIII(8) of
the U.S.-Canada treaty). Taxpayers with
applications under any other dispute resolution procedures should seek competent
authority assistance as early as possible if
they believe they have potential competent
authority issues.
.05 Effect of Agreements or Judicial Determinations on Competent Authority Proceedings. If a taxpayer either executes a
closing agreement with the IRS (whether
or not contingent upon competent authority relief) with respect to a potential competent authority issue or reaches a settlement on the issue with IRS Appeals (including an Appeals settlement through the
arbitration process) or with Chief Counsel pursuant to an executed closing agreement or other written agreement such as
Form 870–AD, the U.S. competent authority will endeavor only to obtain a correlative adjustment from the treaty country and
will not undertake any actions that would
otherwise change such agreements. However, the U.S. competent authority will,
in appropriate cases, consider actions necessary for the purpose of providing treatment similar to that provided in Rev. Proc.
99–32. Once a taxpayer’s tax liability for
the taxable periods in issue has been determined by a U.S. court (including settlement of the proceedings before or during
trial), the U.S. competent authority similarly will endeavor only to obtain correlative relief from the treaty country and will
not undertake any action that would otherwise reduce the taxpayer’s federal tax liability for the taxable periods in issue as determined by a U.S. court. Taxpayers therefore should be aware that in these situations, as well as in situations where a treaty
country takes a similar position with respect to issues resolved under its domestic
laws, relief from double taxation may be
jeopardized.
.06 Accelerated Competent Authority
Procedure. A taxpayer requesting competent authority assistance with respect to an
issue raised by the IRS also may request
that the competent authorities attempt to
resolve the issue for subsequent taxable

December 4, 2006

periods for which returns have been filed,
if the same issue continues in those periods. See also Rev. Proc. 94–67, 1994–2
C.B. 800, concerning the Accelerated Issue Resolution (“AIR”) process. The U.S.
competent authority will consider the request and will contact the appropriate IRS
field office to consult on whether the issue
should be resolved for subsequent taxable
periods. If the IRS field office consents to
this procedure, the U.S. competent authority will address with the foreign competent
authority the request for such taxable periods. For purposes of resolving the issue,
the taxpayer must furnish all relevant
information and statements that may be
requested by the U.S. competent authority
pursuant to this revenue procedure. In addition, if the case involves a Coordinated
Industry Case (“CIC”) taxpayer, the taxpayer must furnish all relevant information
and statements requested by the IRS, as
described in Rev. Proc. 94–67, 1994–2
C.B. 800. If the case involves a non-CIC
taxpayer, the taxpayer must furnish all relevant information and statements that may
be requested by the IRS field office. A
request for the accelerated competent authority procedure may be made at the time
of filing a request for competent authority
assistance or at any time thereafter, but
generally before conclusion of the mutual
agreement in the case; however, taxpayers
are encouraged to request the procedure
as early as practicable. The application
of the accelerated procedure may require
the prior consent of the Associate Chief
Counsel (International). See section 7.03
of this revenue procedure. A request for
the accelerated competent authority procedure must contain a statement that the
taxpayer agrees that: (a) the inspection
of books of account or records under the
accelerated competent authority procedure
will not preclude or impede (under section
7605(b) or any administrative provision
adopted by the IRS) a later examination of
a return or inspection of books of account
or records for any taxable period covered
in the accelerated competent authority
assistance request; and (b) the IRS need
not comply with any applicable procedural restrictions (for example, providing
notice under section 7605(b)) before beginning such examination or inspection.
The accelerated competent authority procedure is not subject to the AIR process
limitations. The accelerated competent

December 4, 2006

authority procedure is implicitly invoked
when a taxpayer requests a rollback of its
requested bilateral APA to already filed
years. Thus, the provisions of section
7.06 of this revenue procedure also apply
when a rollback is requested pursuant to
Rev. Proc. 2006–9, which governs requests for APAs filed with the Office of
Associate Chief Counsel (International),
Advance Pricing Agreement Program.
SECTION 8. SIMULTANEOUS
APPEALS PROCEDURE
.01 General. A taxpayer filing a request
for competent authority assistance under
this revenue procedure may, at the same
time or at a later date, request IRS Appeals’ consideration of the competent authority issue under the procedures and conditions provided in this section. The U.S.
competent authority also may request IRS
Appeals’ involvement if it is determined
that such involvement would facilitate the
negotiation of a mutual agreement in the
case or otherwise would serve the interest of the IRS. The taxpayer may, at any
time, request a prefiling conference with
the offices of the Chief of IRS Appeals
and the U.S. competent authority to discuss the Simultaneous Appeals procedure.
See also section 7.02 of this revenue procedure for coordination with the competent authority of cases already in IRS Appeals. However, arbitration or mediation
procedures that otherwise would be available through the IRS Appeals process are
not available for cases in the Simultaneous Appeals procedure. See Rev. Proc.
2006–44, 2006–44 I.R.B. 800, and Rev.
Proc. 2002–44, 2002–2 C.B. 10.
.02 Time for Requesting the Simultaneous Appeals Procedure.
(1) When Filing for Competent Authority Assistance. The Simultaneous Appeals
procedure may be invoked at any of the
following times:
(a) When the taxpayer applies for competent authority assistance with respect to
an issue for which the examining IRS office has proposed an adjustment and before
the protest is filed;
(b) When the taxpayer files a protest
and decides to sever the competent authority issue and seek competent authority assistance while other issues are referred to
IRS Appeals; and

1043

(c) When the case is in IRS Appeals and
the taxpayer later decides to request competent authority assistance with respect to
the competent authority issue. The taxpayer may sever the competent authority
issue for referral to the U.S. competent authority and invoke the Simultaneous Appeals procedure at any time when the case
is in IRS Appeals but before settlement of
the issue. Taxpayers, however, are encouraged to invoke the Simultaneous Appeals
procedure as soon as possible, preferably
as soon as practicable after the first IRS
Appeals conference.
(2) After Filing for Competent Authority
Assistance. The taxpayer may request the
Simultaneous Appeals procedure at any
time after requesting competent authority
assistance. However, a taxpayer’s request
for the Simultaneous Appeals procedure
generally will be denied if made after the
date the U.S. position paper is communicated to the foreign competent authority,
unless the U.S. competent authority determines that the procedure would facilitate
an early resolution of the competent authority issue or otherwise is in the best interest of the IRS.
.03 Cases Pending in Court. If the matter is pending before a U.S. court or has
been designated for litigation and jurisdiction has been released to the U.S. competent authority, a request for the Simultaneous Appeals procedure may be granted
only with the consent of the U.S. competent authority and the Office of Associate
Chief Counsel (International).
.04 Request for Simultaneous Appeals
Procedure. The taxpayer’s request for the
Simultaneous Appeals procedure should
be addressed to the U.S. competent authority either as part of the initial competent authority assistance request or, if made
later, as a separate letter to the U.S. competent authority. The request should state
whether the issue was previously protested
to IRS Appeals for the periods in competent authority or for prior periods (in which
case a copy of the relevant portions of the
protest and an explanation of the outcome,
if any, should be provided). The U.S. competent authority will send a copy of the request to the Chief of IRS Appeals, who,
in turn, will forward a copy to the appropriate Area Director. The U.S. competent
authority will consult with IRS Appeals to
determine whether the Simultaneous Ap-

2006–49 I.R.B.

peals procedure should be invoked. When
the U.S. competent authority invokes the
Simultaneous Appeals procedure, the taxpayer will be notified. The U.S. competent
authority has jurisdiction of the issue when
the Simultaneous Appeals procedure is invoked.
.05 Role of IRS Appeals in the Simultaneous Appeals Procedure.
(1) IRS Appeals Process. The IRS Appeals representative assigned to the case
will consult with the taxpayer and the
U.S. competent authority for the purpose
of reaching a resolution of the unagreed
issue under competent authority jurisdiction before the issue is presented to
the foreign competent authority. For this
purpose, established IRS Appeals procedures generally apply. The IRS Appeals
representative will consult with the U.S.
competent authority during this process
to ensure appropriate coordination of the
IRS Appeals process with the competent
authority procedure, so that the terms of a
tentative resolution and the principles and
facts upon which it is based are compatible
with the position that the U.S. competent
authority intends to present to the foreign
competent authority with respect to the issue. Any resolution reached with the IRS
under this procedure is subject to the competent authority process and, therefore, is
tentative and not binding on the IRS or
the taxpayer. The IRS will not request
the taxpayer to conclude the IRS Appeals
process with a written agreement. The
conclusions of the tentative resolution,
however, generally will be reflected in the
U.S. position paper used for negotiating a
mutual agreement with the foreign competent authority. The procedures under
this section do not give taxpayers the right
to receive reconsideration of the issue by
IRS Appeals where the taxpayer applied
for competent authority assistance after
having received substantial IRS Appeals
consideration. Rather, the IRS may rely
upon, but will not necessarily be bound
by, such previous consideration by IRS
Appeals when considering the case under
the Simultaneous Appeals procedure.
(2) Assistance to U.S. Competent Authority. The U.S. competent authority is
responsible for developing a U.S. position
paper with respect to the issue and for conducting the mutual agreement procedure.
Generally, requesting IRS Appeals’ con-

2006–49 I.R.B.

sideration of an issue under competent authority jurisdiction will not affect the manner in which taxpayers normally are involved in the competent authority process.
.06 Denial or Termination of Simultaneous Appeals Procedure.
(1) Taxpayer’s Termination. The taxpayer may, at any time, withdraw its request for the Simultaneous Appeals procedure.
(2) IRS’s Denial or Termination. The
U.S. competent authority, the Chief of
IRS Appeals or the appropriate Industry
or Area Director may decide to deny or
terminate the Simultaneous Appeals procedure if the procedure is determined to
be prejudicial to the mutual agreement
procedure or to the administrative appeals
process. For example, a taxpayer that received IRS Appeals consideration before
requesting competent authority assistance,
but was unable to reach a settlement in
IRS Appeals, may be denied the Simultaneous Appeals procedure. A taxpayer
may request a conference with the offices
of the U.S. competent authority and the
Chief of IRS Appeals to discuss the denial
or termination of the procedure.
.07 Returning to IRS Appeals. If the
competent authorities fail to agree or if the
taxpayer does not accept the mutual agreement reached by the competent authorities,
the taxpayer will be permitted to refer the
issue to IRS Appeals for further consideration.
.08 IRS Appeals’ Consideration of NonCompetent Authority Issues. The Simultaneous Appeals procedure does not affect the taxpayer’s rights to IRS Appeals’
consideration of other unresolved issues.
The taxpayer may pursue settlement discussions with respect to the other issues
without waiting for resolution of the issues
under competent authority jurisdiction.
SECTION 9. PROTECTIVE
MEASURES
.01 General. In negotiating treaties, the
United States seeks to secure an agreement
with the treaty country that any competent authority agreement reached with
the treaty country will be implemented
notwithstanding any time limits or other
procedural limitations in the domestic law
of either country. However, treaty provisions that provide a competent authority

1044

with the ability to waive such limitations
do not affect the application of statutes of
limitation in the event that a request for
competent authority assistance is declined
or the competent authorities are unable
to reach an agreement. In addition, the
particular treaty or the posture of the particular case may indicate that the taxpayer
or a related person must take protective
measures with the U.S. and foreign tax
authorities so that the implementation of
any agreement reached by the competent
authorities or alternative remedies outside
of the competent authority process are not
barred by administrative, legal or procedural barriers. Such barriers may arise
either before or after a competent authority request is filed. Protective measures
include, but are not limited to: (a) filing
protective claims for refund or credit; (b)
extending any period of limitations on
assessment or refund; (c) avoiding the
lapse or termination of the taxpayer’s
right to appeal any tax determination;
(d) complying with all applicable procedures for invoking competent authority
consideration, including applicable treaty
provisions dealing with time limits within
which to invoke such remedy; and (e)
contesting an adjustment or seeking an
appropriate correlative adjustment with
respect to the U.S. or treaty country tax. A
taxpayer should take protective measures
in a timely manner, that is, in a manner
that allows sufficient time for appropriate
procedures to be completed and effective
before barriers arise. Generally, a taxpayer
should consider, at the time an adjustment
is first proposed, which protective measures may be necessary and when such
measures should be taken. However, earlier consideration of appropriate actions
may be desirable, for example, in the
case of a recurring adjustment or where
the taxpayer otherwise is on notice that
an adjustment is likely to be proposed.
Taxpayers may consult with the U.S. competent authority to determine the need for
and timing of protective measures in their
particular case.
.02 Filing Protective Claim for Credit
or Refund with a Competent Authority Request.
(1) In General. A valid protective claim
for credit or refund must meet the requirements of section 6402 of the Code and
the regulations thereunder. Accordingly, a

December 4, 2006

protective claim must: (a) fully advise the
IRS of the grounds on which credit or refund is claimed; (b) contain sufficient facts
to apprise the IRS of the exact basis of the
claim; (c) state the year for which the claim
is being made; (d) be on the proper form;
and (e) be verified by a written declaration
made under penalties of perjury.
(2) Treatment of Competent Authority
Request as Protective Claim. The IRS
will treat a request for competent authority
assistance itself as one or more protective
claims for credit or refund with respect
to issues raised in the request and within
the jurisdiction of the U.S. competent
authority and will not require a taxpayer
to file the form described in Treas. Reg.
§301.6402–3 with respect to those issues,
provided that the request meets the other
requirements of section 6402 of the Code
and the regulations thereunder, as described in section 9.02(1) of this revenue
procedure. The information constituting
the protective claim should be set forth in
a separate section of the request for assistance and captioned “Protective claim
pursuant to section 9.02 of Rev. Proc.
2006–54.” The penalties of perjury statement described in section 4.05(16) of this
revenue procedure satisfies the requirement for the written declaration and a
separate declaration is not required.
.03 Protective Filing Before Competent
Authority Request.
(1) In general. There may be situations in which a taxpayer will be unable
to file a formal competent authority assistance request before the period of limitations expires with respect to the affected
U.S. return. In these situations, before the
period of limitations expires, the taxpayer
should file a protective claim for credit
or refund of the taxes attributable to the
potential competent authority issue to ensure that alternative remedies outside of
the competent authority process will not be
barred. A protective filing may be appropriate where: (a) the treaty country is considering but has not yet proposed an adjustment; (b) the treaty country has proposed
an adjustment but the related taxpayer in
the treaty country decides to pursue administrative or judicial remedies in the foreign
country; or (c) the terms of the applicable
treaty require notification to be made to the
competent authority within a certain time
period. In considering whether to accept

December 4, 2006

a taxpayer’s request for competent authority assistance, the U.S. competent authority will consider whether the proper treaty
notification has been made in accordance
with this subsection.
(2) Letter to Competent Authority
Treated as Protective Claim. In situations in which a protective claim is filed
prior to submitting a request for competent authority assistance, the taxpayer may
make a protective claim in the form of a
letter to the competent authority. The letter
must indicate that the taxpayer is filing a
protective claim and set forth, to the extent
available, the information required under
section 4.05(1) through (17) or under section 5.03(1) through (8) of this revenue
procedure, as applicable. The letter must
include a penalties of perjury statement as
described in sections 4.05(16) and 5.03(8)
of this revenue procedure. The letter must
be filed in the same place and manner as a
request for competent authority assistance.
The IRS will treat the letter as a protective
claim(s) with respect to issues raised in
the letter and within the jurisdiction of the
U.S. competent authority and will not require a taxpayer to file the form described
in Treas. Reg. §301.6402–3 with respect
to those issues, provided that the request
meets the other requirements described in
section 9.02(1) of this revenue procedure.
The letter must include the caption “Protective claim pursuant to section 9.03 of
Rev. Proc. 2006–54.”
(3) Notification Requirement. After filing a protective claim, the taxpayer periodically must notify the U.S. competent authority whether the taxpayer still is considering filing for competent authority assistance. The notification must be filed every twelve months until the formal request
for competent authority assistance is filed.
The U.S. competent authority may deny
competent authority assistance if the taxpayer fails to file this annual notification.
(4) No Consultation between Competent Authorities until Formal Request is
Filed. The U.S. competent authority generally will not undertake any consultation
with the foreign competent authority with
respect to a protective claim filed under
section 9.03 of this revenue procedure.
The U.S. competent authority will place
the protective claim in suspense until
either a formal request for competent authority assistance is filed or the taxpayer

1045

notifies the U.S. competent authority that
competent authority consideration is no
longer needed. In appropriate cases, the
U.S. competent authority will send the
taxpayer a formal notice of claim disallowance.
.04 Effect of a Protective Claim.
Protective claims filed under section
9.02 or 9.03 of this revenue procedure will
only allow a credit or refund to the extent
of the grounds set forth in the protective
claim and only to the extent agreed to by
the U.S. and foreign competent authorities
or to the extent unilaterally allowed by the
U.S. competent authority. This revenue
procedure does not grant a taxpayer the
right to invoke section 482 of the Code
in its favor or compel the IRS to allocate
income or deductions or grant a tax credit
or refund.
.05 Treaty Provisions Waiving Procedural Barriers.
In those cases where the mutual agreement article authorizes a competent authority to waive or remove procedural barriers to the credit or refund of tax, taxpayers may be allowed a credit or refund
of tax even though the otherwise applicable period of limitations has expired,
prior closing agreements have been entered into, or other actions have been taken
or omitted that ordinarily would foreclose
relief in the form of a credit or refund
of tax. However, under these provisions
there may still be situations in which taxpayers should take appropriate protective
measures as described under this revenue
procedure or under applicable foreign procedures. For example, procedural limitations cannot be waived if a request for
competent authority assistance is declined
or the competent authorities are unable to
reach agreement. In addition, some countries may take the position that domestic
statutes of limitation on refunds cannot be
waived under the relevant treaty. Because
there are circumstances that are not under
the control of taxpayers or the U.S. competent authority it is advisable that taxpayers take protective measures to increase the
possibility that appropriate relief is available to them in all circumstances.
SECTION 10. APPLICATION OF
REV. PROC. 99–32
Rev. Proc. 99–32, 1999–2 C.B. 296,
generally provides a means to conform a

2006–49 I.R.B.

taxpayer’s accounts and allow repatriation
of certain amounts following an allocation
of income between related U.S. and foreign corporations under section 482 of the
Code without the federal income tax consequences of the adjustments that would
otherwise have been necessary to conform
the taxpayer’s accounts in light of the allocation of income. In situations where a
section 482 allocation is the subject of a
request for competent authority assistance,
the competent authority may provide relief
consistent with the principles of Rev. Proc.
99–32 with respect to any new or pending requests for Rev. Proc. 99–32 treatment relating to such allocation. Accordingly, if a taxpayer intends to seek Rev.
Proc. 99–32 treatment in connection with
competent authority assistance relating to
a section 482 allocation, the taxpayer must
request Rev. Proc. 99–32 treatment in
conjunction with its request for competent
authority assistance. If a taxpayer has already requested Rev. Proc. 99–32 treatment at the time it submits a request for
competent authority assistance relating to
a section 482 allocation, consideration of
Rev. Proc. 99–32 treatment must be transferred to the U.S. competent authority and
a copy of the pending Rev. Proc. 99–32 request forwarded along with the request for
competent authority assistance.
SECTION 11. DETERMINATION OF
CREDITABLE FOREIGN TAXES
For purposes of determining the amount
of foreign taxes creditable under sections
901 and 902 of the Code, any amounts
paid to foreign tax authorities that would
not have been due if the treaty country
had made a correlative adjustment may
not constitute a creditable foreign tax. See
Treas. Reg. §1.901–2(e)(5)(i) and Rev.
Rul. 92–75, 1992–2 C.B. 197. Acts or
omissions by the taxpayer that preclude
effective competent authority assistance,
including failure to take protective measures as described in section 9 of this
revenue procedure or failure to seek competent authority assistance, may constitute
a failure to exhaust all effective and practical remedies as may be required to claim a
credit. See Treas. Reg. §1.901–2(e)(5)(i).
Further, the fact that the taxpayer has
sought competent authority assistance
but obtained no relief, either because the
competent authorities failed to reach an

2006–49 I.R.B.

agreement or because the taxpayer rejected
an agreement reached by the competent
authorities, generally will not, in and of
itself, demonstrate that the taxpayer has
exhausted all effective and practical remedies to reduce the taxpayer’s liability for
foreign tax (including liability pursuant
to a foreign tax audit adjustment). Any
determination within the IRS of whether
a taxpayer has exhausted the competent
authority remedy must be made in consultation with the U.S. competent authority.
SECTION 12. ACTION BY U.S.
COMPETENT AUTHORITY
.01 Notification of Taxpayer. Upon receiving a request for assistance pursuant to
this revenue procedure, the U.S. competent
authority will notify the taxpayer whether
the facts provide a basis for assistance.
.02 Denial of Assistance. The U.S.
competent authority generally will not accept a request for competent authority assistance or will cease providing assistance
to the taxpayer if:
(1) competent authority determines that
the taxpayer is not entitled to the treaty
benefit or safeguard in question or to the
assistance requested;
(2) the taxpayer is willing only to accept a competent authority agreement
under conditions that are unreasonable
or prejudicial to the interests of the U.S.
Government;
(3) the taxpayer rejected the competent
authority resolution of the same or similar
issue in a prior case;
(4) the taxpayer does not agree that
competent authority negotiations are a
government-to-government activity that
does not include the taxpayer’s participation in the negotiation proceedings;
(5) the taxpayer does not furnish upon
request sufficient information to determine
whether the treaty applies to the taxpayer’s
facts and circumstances;
(6) the taxpayer was found to have acquiesced in a foreign initiated adjustment
that involved significant legal or factual
issues that otherwise would be properly
handled through the competent authority process and then unilaterally made a
corresponding correlative adjustment or
claimed an increased foreign tax credit,
without initially seeking U.S. competent
authority assistance;

1046

(7) the taxpayer: (a) fails to comply
with this revenue procedure; (b) failed to
cooperate with the IRS during the examination of the periods in issue and such
failure significantly impedes the ability of
the U.S. competent authority to negotiate and conclude an agreement (e.g., significant factual development is required
that cannot effectively be completed outside the examination process); or (c) fails
to cooperate with the U.S. competent authority (including failing to provide sufficient facts and documentation to support
its claim of double taxation or taxation
contrary to the treaty) or otherwise significantly impedes the ability of the U.S. competent authority to negotiate and conclude
an agreement; or
(8) the transaction giving rise to the request for competent authority assistance:
(a) is more properly within the jurisdiction of IRS Appeals; (b) includes an issue
pending in a U.S. Court, or designated for
litigation, unless competent authority consideration is concurred in by the U.S. competent authority and the Associate Chief
Counsel (International); (c) is a listed
transaction for purposes of Treas. Reg.
§1.6011–4(b)(2) and §301.6111–2(b)(2);
or (d) involves fraudulent activity by the
taxpayer.
.03 Extending Period of Limitations for
Assessment. If the U.S. competent authority accepts a request for assistance, the taxpayer may be requested to execute a consent to extend the period of limitations for
assessment of tax for the taxable periods
in issue. Failure to comply with the provisions of this subsection can result in denial
of assistance by the U.S. competent authority with respect to the request.
.04 No Review of Denial of Request for
Assistance. The U.S. competent authority’s denial of a taxpayer’s request for assistance or dismissal of a matter previously
accepted for consideration pursuant to this
revenue procedure is final and not subject
to administrative review.
.05 Notification. The U.S. competent
authority will notify a taxpayer requesting
assistance under this revenue procedure of
any agreement that the U.S. and the foreign competent authorities reach with respect to the request. If the taxpayer accepts the resolution reached by the competent authorities, the agreement will provide that it is final and is not subject to fur-

December 4, 2006

ther administrative or judicial review. If
the competent authorities fail to agree, or
if the agreement reached is not acceptable
to the taxpayer, the taxpayer may withdraw
the request for competent authority assistance and may then pursue all rights otherwise available under the laws of the United
States and the treaty country. Where the
competent authorities fail to agree, no further competent authority remedies generally are available, except with respect to
treaties that provide for arbitration of the
dispute. See, e.g., Article 25(5) of the
U.S.-German income tax treaty. A request
for arbitration must be made in accordance
with the procedures prescribed under the
applicable treaty and related documents,
including procedures that the IRS may promulgate from time to time.
.06 Closing Agreement. When appropriate, the taxpayer may be requested to
enter into a closing agreement that reflects
the terms of the mutual agreement and
of the competent authority assistance provided and that is executed in conformity
with sections 6.07 and 6.17 of Rev. Proc.
68–16, 1968–1 C.B. 770 (as modified by
Rev. Proc. 94–67, 1994–2 C.B. 800).
.07 Unilateral Withdrawal or Reduction
of U.S. Initiated Adjustments. With respect
to U.S. initiated adjustments under section
482 of the Code, the primary goal of the
mutual agreement procedure is to obtain
a correlative adjustment from the treaty
country. For other types of U.S. initiated
adjustments, the primary goal of the U.S.
competent authority is the avoidance of
taxation not in accordance with an applicable treaty. Unilateral withdrawal or reduction of U.S. initiated adjustments, therefore, generally will not be considered. For
example, the U.S. competent authority will
not withdraw or reduce an adjustment to
income, deductions, credits or other items
solely because the period of limitations has
expired in the foreign country and the foreign competent authority has declined to
grant any relief. If the period provided by
the foreign statute of limitations has expired, the U.S. competent authority may
take into account other relevant facts to
determine whether such withdrawal or reduction is appropriate and may, in extraordinary circumstances and as a matter of
discretion, provide such relief with respect
to the adjustment to avoid actual or economic double taxation. In no event, how-

December 4, 2006

ever, will relief be granted where there is
fraud or negligence with respect to the relevant transactions. In keeping with the
U.S. Government’s view that tax treaties
should be applied in a balanced and reciprocal manner, the United States normally
will not withdraw or reduce an adjustment
where the treaty country does not grant
similar relief in equivalent cases.
SECTION 13. REQUESTS FOR
RULINGS
.01 General. Requests for advance rulings regarding the interpretation or application of a tax treaty, as distinguished from
requests for assistance from the U.S. competent authority pursuant to this revenue
procedure, must be submitted to the Associate Chief Counsel (International). See
Rev. Proc. 2006–1, 2006–1 I.R.B. 1, and
Rev. Proc. 2006–7, 2006–1 I.R.B. 242.
.02 Foreign Tax Rulings. The IRS does
not issue advance rulings on the effect of
a tax treaty on the tax laws of a treaty
country for purposes of determining the
tax of the treaty country.
SECTION 14. FEES
.01 Requests to Which a User Fee Does
Not Apply. Except as provided in section 14.02 of this revenue procedure, no
user fees are required with respect to a request for U.S. competent authority assistance pursuant to this revenue procedure.
.02 Requests to Which a User Fee Applies. In general, a $15,000 user fee applies to all requests for determinations on
limitation on benefits, as described in section 3.08 of this revenue procedure. The
fee will apply regardless of whether the request is for: (a) an initial determination;
(b) a renewal of a previously issued determination; or (c) a supplemental determination required, for example, if there is a material change in fact or if the taxpayer seeks
benefits with respect to a different type of
income or requests a lower rate of withholding tax on dividends. If a request is
submitted that requires the U.S. competent
authority to make a discretionary determination for more than one entity, a separate
user fee will be charged for each entity.
.03 Acceptance of Requests. A user fee
will not be charged until the U.S. competent authority has formally accepted the re-

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quest for consideration. Within 30 days of
receipt of a complete submission, the U.S.
competent authority will provide written
notice to the taxpayer as to whether the request will be accepted or rejected for consideration. If a request is accepted, the
taxpayer will be required to mail a check
or money order in the appropriate amount,
along with a copy of the written notice of
acceptance to the IRS office identified below. The check or money order should be
payable to the United States Treasury. The
fee may be refunded as provided in section
14.05 of this revenue procedure.
.04 Address to Send Payment. The user
fee should be sent along with a copy of the
written notice of acceptance to the mailing
address listed below:
IRS/BFC
P.O. Box 9002
Beckley, WV 25802
.05 Refunds of User Fee. In general, a
user fee will not be refunded once the U.S.
competent authority accepts a request for
consideration and the user fee is paid. For
example, the IRS will not refund the user
fee if the request for a discretionary determination is withdrawn by the taxpayer or if
the taxpayer fails to submit additional information as requested by the U.S. competent authority. A user fee may be refunded,
however, if: (a) a higher user fee is paid
than is required; or (b) taking into account
all the facts and circumstances, including
the IRS’s resources devoted to the request,
the Competent Authority declines to rule
and, in his or her sole discretion, decides a
refund is appropriate.
SECTION 15. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2006–26, 2006–21 I.R.B.
936, and Rev. Proc. 2002–52, 2002–2
C.B. 242, are modified and superseded
by this revenue procedure. Rev. Proc.
2006–9, 2006–9 I.R.B. 278 is amplified.
Rev. Rul. 92–75, 1992–2 C.B. 197, is
clarified. References in this revenue procedure to Rev. Proc. 99–32 will be treated
as references to Rev. Proc. 65–17, 1965–1
C.B. 833, as modified, amplified and clarified from time to time, for taxable years
beginning before August 24, 1999.

2006–49 I.R.B.

SECTION 16. EFFECTIVE DATE
This revenue procedure is effective for
requests for U.S. competent authority assistance and Rev. Proc. 99–32 treatment
filed after December 4, 2006.
SECTION 17. PAPERWORK
REDUCTION ACT
The collection of information contained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accordance with the Paperwork Reduction Act
(44 U.S.C. § 3507) under control number
1545–2044.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
control number.

2006–49 I.R.B.

The collection of information in this
revenue procedure is in sections 4.04, 4.05,
5.03, 7.06, 8.04, and 9.03. This information is required, and will be used, to evaluate and process the request for competent
authority assistance. The collection of information is required to obtain competent
authority assistance. The likely respondents are individuals or business or other
for-profit institutions.
The estimated total annual reporting
and/or recordkeeping burden is 9,000
hours.
The estimated annual burden per respondent/recordkeeper is 30 hours. The
estimated number of respondents and/or
recordkeepers is 300.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in

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the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by section 6103 of the Code.
SECTION 18. DRAFTING
INFORMATION
The principal authors of this revenue procedure are Aziz Benbrahim
and Vincent Salvo of the Office of the
Deputy Commissioner (International),
Large and Mid-Size Business Division,
and Mae J. Lew and Denen A. Norfleet
of the Office of Associate Chief Counsel
(International). For further information
regarding this revenue procedure, contact
either Mr. Benbrahim or Mr. Salvo at
(202) 435–5000 or Ms. Norfleet at (202)
435–5262 (not toll-free calls).

December 4, 2006