Much attention has recently been focused on the issuance of new regulations—the final regulations regarding stock-based compensation and proposed new regulations governing services—there has been no lack of important developments in the IRS's advance pricing agreement (APA) programme.
Matthew Frank, formerly a partner at the Washington law firm Caplin & Drysdale, was appointed as the programme's fifth director in August. Mindy Piatoff, a branch chief in the programme, had served as acting director since the resignation of former director Sean Foley in late 2002.
Frank has indicated that the programme will have high expectations regarding the content of APA submissions. He referred to the submission as functionally equivalent to the prosecution's case in chief (Frank's background includes a stint as an assistant US attorney). It seems clear that the programme will expect submissions to raise, discuss in depth, and propose a resolution for all material issues; it will no longer be sufficient to simply put issues in play.
The trend of close cooperation between the APA programme and the technical transfer pricing branches in the office of the Associate Chief Counsel (International) seems likely to continue. Attorneys from Branch 5 continue to play a significant role in the processing of global-dealing APAs. Sources familiar with the process indicate that APA programme personnel were involved in the drafting of the recently released proposed regulations on services transactions.
In remarks at the International Tax Review – KPMG Transfer Pricing Forum in New York on September 23, Associate Chief Counsel (International) Hal Hicks stated that the long-awaited successor to Revenue Procedure 96-53, the principal guidance document for the APA programme, might appear within a month.
The programme has released caseload statistics for the quarter ended June 30. Fourteen cases were completed during the quarter, down from 15 in the same quarter of 2002. Sixteen new cases were received, 10 bilateral and 6 unilateral. The programme's current inventory consists of 191 cases, over 76% of which are bilateral.
Paul Burns (pbburns@kpmg.com), Costa Mesa
