Advance Pricing Agreement Strategy

Unilateral APAs It is possible, however, that a taxpayer can negotiate a unilateral APA in which only the taxpayer and the IRS participate. In this case, both parties are only negotiating an appropriate TPM for U.S. tax purposes. Where the taxable person is involved in a dispute with a foreign tax authority concerning the transactions covered, he or she may remedy the dispute by requesting the competent authority of the United States to initiate a mutual agreement procedure. This obviously presupposes the entry into force of an income tax agreement applicable abroad. There are many benefits to getting an APA. APAS provides security for transfer pricing issues that might otherwise lead to long and lengthy litigation with the IRS or foreign tax authorities. APAs can offer a particularly cost-effective solution by offering a high level of security for several tax years.