This procedure may also be used, in accordance with paragraph 3, to resolve problems related to the interpretation of agreements and for consultations aimed at eliminating cases of double taxation which are not governed by the agreements themselves. In addition, paragraph 4 allows the competent authorities to communicate directly with each other and, if necessary, to conduct a mutual consultation procedure by a specially designated Commission. Paragraph 5 provides for the possibility of initiating arbitration proceedings to ensure the effectiveness of the MAGP. The provisions of this section and IRM 4.60.3 also apply to cases involving inconsistent processing by the U.S. Service and the U.S. Property Tax Administration. Call the Tax Treaty Department for assistance. Address notifications as follows: The procedures used to resolve foreign-initiated adjustments that affect a U.S. tax return or are claimed during an audit by a U.S. taxpayer are explained in IRM 4.60.2.5. An allocation/allocation case (hereinafter referred to as a “transfer pricing case”) is a MAP case in which the taxpayer`s MAP application refers either to the following: An interesting point to have a clearer understanding of this process in practice, although it is always important to review national regulations, would be the MAP Statistical Reporting Framework, developed by the OECD as guidance for competent authorities to report their cases and has been published.

for statistical purposes. This reporting framework develops the typical process of a MAP case, which could be summarized as follows: In the case of the Agreement on the Coordination of Tax Administration, you have the right to obtain a double taxation exemption in accordance with Rev. Proc. 89–8, 1989–1 C.B. 778. You do not have to sign the final agreement required by tax procedure 99-32, 1999-2 C.B. 297 if you intend to request a review from the competent authority. The procedures set out in MR 4.60.3 also apply to U.S. possessions, except that form letter 1915P [Appendix 4.60.2-2] with Annex 1853 (P) / 1915 (P) [Appendix 4.60.2-3] is to be replaced by form letter 1853 (P). A separate timeline should be created for each U.S. property dealing with the issue. The taxpayer submits the request and, in principle, the competent authority receiving the request should notify the other competent authority concerned of the taxpayer`s request together with the relevant data of the case (taxpayer data, registered tax years, brief description of the case, date of receipt, contact details of the official in charge of the case, B.

among others). Once the case has been examined, the receiving competent authority will, if necessary, request additional information, on the understanding that it fulfils the conditions for granting access to the MAGP. If no additional information is needed, the analysis process continues. You must not execute the final agreement required by Rev. Proc. 99–32, 1999–2 C.B. 297, if you intend to ask the International Director to conduct the mutual agreement procedure with (name of U.S. property).

A MAGP may be initiated on the basis of a double taxation convention (DTA) in force between Italy and a Contracting Party, the essential feature of which is that the competent authorities concerned endeavour, by mutual agreement, to eliminate charges which do not comply with the provisions of the DTA (i.e. they are subject to due diligence). “If a person considers that the acts of one or both of the Contracting States entail or will entail for him a taxation which is not in conformity with this Convention, he may, irrespective of the remedies provided for by the domestic law of those States, submit his case to the competent authority of one of the two Contracting States. The case must be brought within three years of the first notification of the action giving rise to taxation not in accordance with the provisions of the Convention. If a taxpayer wishes to appeal unannounced questions (including MAP questions), EI prepares an unannounced EI report explaining the amount of the adjustment and the tax effect for all matters. After approval of the unapproved IE report and the MAP report, a 30-day letter is issued. After that, the regular procedures for reviewing the protest and forwarding the case to appeals will be followed. For matters relating to the MAP, IE must attach to the report a statement informing the taxpayer that any protest filed must include language indicating to the appeals officer that the agreement on the WFP matters is provisional until the taxpayer accepts the decision of the competent authority. This allows taxpayers to protect their right to protest against the POPs issue at a later date.

Revenue Procedure 2015-40 contains the MAP procedure rules that apply to U.S. taxpayers who wish to be exempted by the competent U.S. authority. To this end, the “U.S. Competent Authority” includes the Advance Pricing and Mutual Agreement Program (“APMA”), which is responsible for transfer pricing and other allocation cases, and the Treaty Assistance and Interpretation Team (“TAIT”), which is responsible for all other MAP cases. As part of this revenue process, WFP may be requested for adjustments initiated by the United States, initiated abroad or, in some cases, initiated by taxpayers. From 1 January 2017, the Italian tax administration will be responsible for handling POPs cases concerning certain taxpayers under the European Arbitration Convention and/or the Double Taxation Convention, including ongoing cases initiated before 2017. Field staff should be familiar with the revenue procedures, decisions and regulations that apply to MAP applications. Under Article 8 of the Arbitration Agreement, the competent authority is not obliged to initiate the MAGP or arbitration proceedings if one of the undertakings concerned is liable to serious penalties resulting from the acts leading to the profit adjustments.

The Mutual Agreement Procedure (“MAP”) is a useful dispute resolution mechanism for multinational enterprises facing transfer pricing or other valuations that result in double taxation, whether in the United States or abroad. In order to take full advantage of the MAP procedure, taxpayers should carefully observe the applicable procedures in order to maximise their chances of success. ARs should ensure that the following notification wording is included in cic`s Taxpayer Audit Plan (Coordinated Industry Case (CIC): “During the audit, adjustments to your tax liability may be recommended that result in economic double taxation due to their various affiliates operating abroad. Therefore, we recommend that you advise your foreign subsidiaries in these countries to inform the relevant tax authorities of the postponement of the expiry of the legal limitation period for refunds or other tax adjustments. This procedure should not be limited to the foreign subsidiaries listed on page 4 of this part of the audit plan. In the event that these adjustments affect the tax liability of an affiliate operating in a contracting country, you have the right to obtain from the competent authority consideration for the exemption from economic double taxation in accordance with Rev. Proc. 96–13.” For all cases involving potential double taxation issues, a MAP report must be prepared regardless of whether a MAP request has been initiated or not. Once a taxpayer has submitted a MAP application, the Field Manager`s tax contract secures the relevant parts of the IE report and map-related documents (MAP report). A copy of the IE report (Form 3963) will be the first page of the MAP report. The CP report should include the following: in the event of failure of an agreement between the competent authorities of the Member States, Legislative Decree No 49/2020 allows a person to submit a request for the establishment of an advisory committee or an alternative dispute resolution commission.

The elements of the case are divided by position papers that contain the basis for explaining the position taken by the court and the taxpayer`s arguments to facilitate the discussion with the other competent authority (they exchange as many documents as necessary). The field office or complaints office to which the return is assigned shall protect the limitation period in cases examined by the competent authority. Original copies of tax returns should not be sent to the appropriate U.S. agency. The tax treaty must be notified immediately if a taxpayer does not extend the limitation period. It is important to mention that jurisdictions should try to resolve MAP cases within an average of 24 months, although it is important to note that it is precisely transfer pricing cases that usually take the most time and where agreements are more difficult to conclude, mainly due to their complexity. .