| ADVANCE PRICING AGREEMENT
between [Insert Taxpayer’s Name]
and THE INTERNAL REVENUE SERVICE |
| |
|
| PARTIES |
| The Parties to this Advance Pricing Agreement (APA) are
the Internal Revenue Service (IRS) and [Insert Taxpayer’s
Name], EIN .
|
| RECITALS |
| [Insert Taxpayer Name] is the common
parent of an affiliated group filing consolidated U.S. tax returns (collectively
referred to as “Taxpayer”), and is entering into this APA on behalf
of itself and other members of its consolidated group.
|
| Taxpayer’s principal place of business is [City,
State]. [Insert general description of taxpayer and
other relevant parties].
|
| This APA contains the Parties’ agreement on the
best method for determining arm’s-length prices of the Covered Transactions
under I.R.C. section 482, any applicable tax treaties, and the Treasury Regulations.
|
| {If renewal, add} [Taxpayer and IRS
previously entered into an APA covering taxable years ending to , executed
on .]
|
| AGREEMENT |
| The Parties agree as follows: |
| 1. Covered Transactions.
This APA applies to the Covered Transactions, as defined in Appendix A.
|
| 2. Transfer Pricing Method.
Appendix A sets forth the Transfer Pricing Method (TPM) for the Covered Transactions.
|
| 3. Term. This
APA applies to Taxpayer’s taxable years ending through (APA Term).
|
| 4. Operation.
|
| a. Revenue Procedure 2006-9 governs the
interpretation, legal effect, and administration of this APA.
|
| b. Nonfactual oral and written representations,
within the meaning of sections 10.04 and 10.05 of Revenue Procedure 2006-9
(including any proposals to use particular TPMs), made in conjunction with
the APA Request constitute statements made in compromise negotiations within
the meaning of Rule 408 of the Federal Rules of Evidence.
|
| 5. Compliance.
|
| a. Taxpayer must report its taxable income
in an amount that is consistent with Appendix A and all other requirements
of this APA on its timely filed U.S. Return. However, if Taxpayer’s
timely filed U.S. Return for an APA Year is filed prior to, or no later than
60 days after, the effective date of this APA, then Taxpayer must report its
taxable income for that APA Year in an amount that is consistent with Appendix
A and all other requirements of this APA either on the original U.S. Return
or on an amended U.S. Return filed no later than 120 days after the effective
date of this APA, or through such other means as may be specified herein.
|
| b. {Insert when U.S. Group or
Foreign Group contains more than one member.} [This APA addresses
the arm’s-length nature of prices charged or received in the aggregate
between Taxpayer and Foreign Participants with respect to the Covered Transactions.
Except as explicitly provided, this APA does not address and does not bind
the IRS with respect to prices charged or received, or the relative amounts
of income or loss realized, by particular legal entities that are members
of U.S. Group or that are members of Foreign Group.]
|
| c. For each taxable year covered by this
APA (APA Year), if Taxpayer complies with the terms and conditions of this
APA, then the IRS will not make or propose any allocation or adjustment under
I.R.C. section 482 to the amounts charged in the aggregate between Taxpayer
and Foreign Participant[s] with respect to the Covered Transactions.
|
d. If Taxpayer does not comply with the
terms and conditions of this APA, then the IRS may:
-
enforce the terms and conditions of this APA and make or propose allocations
or adjustments under I.R.C. section 482 consistent with this APA;
-
cancel or revoke this APA under section 11.06 of Revenue Procedure 2006-9;
or
-
revise this APA, if the Parties agree.
|
| e. Taxpayer must timely file an Annual
Report (an original and four copies) for each APA Year in accordance with
Appendix C and section 11.01 of Revenue Procedure 2006-9. Taxpayer must file
the Annual Report for all APA Years through the APA Year ending [insert year]
by [insert date]. Taxpayer must file the Annual Report for each subsequent
APA Year by [insert month and day] immediately following the close of that
APA Year. (If any date falls on a weekend or holiday, the Annual Report shall
be due on the next date that is not a weekend or holiday.) The IRS may request
additional information reasonably necessary to clarify or complete the Annual
Report. Taxpayer will provide such requested information within 30 days.
Additional time may be allowed for good cause.
|
| f. The IRS will determine whether Taxpayer
has complied with this APA based on Taxpayer’s U.S. Returns, Financial
Statements, and other APA Records, for the APA Term and any other year necessary
to verify compliance. For Taxpayer to comply with this APA, an independent
certified public accountant must {use the following or an alternative} render
an opinion that Taxpayer’s Financial Statements present fairly, in all
material respects, Taxpayer’s financial position under U.S. GAAP.
|
| g. In accordance with section 11.04 of
Revenue Procedure 2006-9, Taxpayer will (1) maintain its APA Records, and
(2) make them available to the IRS in connection with an examination under
section 11.03. Compliance with this subparagraph constitutes compliance with
the record-maintenance provisions of I.R.C. sections 6038A and 6038C for the
Covered Transactions for any taxable year during the APA Term.
|
| h. The True Taxable Income within the
meaning of Treasury Regulations sections 1.482-1(a)(1) and (i)(9) of a member
of an affiliated group filing a U.S. consolidated return will be determined
under the I.R.C. section 1502 Treasury Regulations.
|
| i. {Optional for US Parent Signatories} To
the extent that Taxpayer’s compliance with this APA depends on certain
acts of Foreign Group members, Taxpayer will ensure that each Foreign Group
member will perform such acts.
|
| 6. Critical Assumptions. This APA’s
critical assumptions, within the meaning of Revenue Procedure 2006-9, section
4.05, appear in Appendix B. If any critical assumption has not been met,
then Revenue Procedure 2006-9, section 11.06, governs.
|
| 7. Disclosure. This APA, and any
background information related to this APA or the APA Request, are: (1) considered
“return information” under I.R.C. section 6103(b)(2)(C); and (2)
not subject to public inspection as a “written determination”
under I.R.C. section 6110(b)(1). Section 521(b) of Pub. L. 106-170 provides
that the Secretary of the Treasury must prepare a report for public disclosure
that includes certain specifically designated information concerning all APAs,
including this APA, in a form that does not reveal taxpayers’ identities,
trade secrets, and proprietary or confidential business or financial information.
|
| 8. Disputes. If a dispute arises
concerning the interpretation of this APA, the Parties will seek a resolution
by the IRS Associate Chief Counsel (International) to the extent reasonably
practicable, before seeking alternative remedies.
|
| 9. Materiality. In this APA the terms
“material” and “materially” will be interpreted consistently
with the definition of “material facts” in Revenue Procedure 2006-9,
section 11.06(4).
|
| 10. Section Captions. This APA’s
section captions, which appear in italics, are for convenience
and reference only. The captions do not affect in any way the interpretation
or application of this APA.
|
| 11. Terms and Definitions. Unless
otherwise specified, terms in the plural include the singular and vice versa.
Appendix D contains definitions for capitalized terms not elsewhere defined
in this APA.
|
| 12. Entire Agreement and Severability.
This APA is the complete statement of the Parties’ agreement. The
Parties will sever, delete, or reform any invalid or unenforceable provision
in this APA to approximate the Parties’ intent as nearly as possible.
|
| 13. Successor in Interest. This
APA binds, and inures to the benefit of, any successor in interest to Taxpayer.
|
| 14. Notice. Any
notices required by this APA or Revenue Procedure 2006-9 must be in writing.
Taxpayer will send notices to the IRS at the address and in the manner set
forth in Revenue Procedure 2006-9, section 4.11. The IRS will send notices
to:
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