Internal Revenue Bulletin: 2004-15
April 12, 2004
The APA Records will consist of:
1. All documents listed below for inclusion in the Annual Report, as well as all documents, notes, work papers, records, or other writings that support the information provided in such documents.
2. [Insert here other records as required.]
The Annual Report will include a cover sheet and a table of contents. The cover sheet will specify:
the Parties to the APA;
the APA Term (defined in section 3 of this APA);
the APA’s effective date (defined in section 14 of this APA);
whether the APA is a renewal, and if so the term of the prior APA;
whether the APA has been amended, and if so the amendment’s effective date;
any information needed to distinguish the APA at issue from any other APAs involving the same parties;
any changes to the Taxpayer notice information in section 13 of this APA.
The table of contents and the Annual Report will be organized as listed below. Taxpayer must include the following items in its Annual Report for each APA Year.
1. Statements that fully identify, describe, analyze, and explain:
a. All material differences between any of Taxpayer’s business operations (including functions, risks, markets, contractual terms, economic conditions, property or services, and assets employed) during the APA Year and the description of the business operations contained in the APA Request. If there have been no material differences, the Annual Report will include a statement to that effect.
b. All material changes in Taxpayer’s accounting methods and classifications, and methods of estimation, from those described or used in Taxpayer’s request for this APA. If there have been no such material changes, the Annual Report will include a statement to that effect.
c. Any failure to meet any critical assumption. If there have been no failures, the Annual Report will include a statement to that effect.
d. Any change to any entity classification for federal income tax purposes (including any change that causes an entity to be disregarded for federal income tax purposes) of any Worldwide Group member that is a party to the Covered Transactions or is otherwise relevant to the TPM.
e. Any changes to Taxpayer’s financial accounting methods that were made to conform to U.S. GAAP changes and that affect the Covered Transactions.
f. The amount, reason for, and financial analysis of any compensating adjustments under paragraph 5(f)(ii) of this APA for the APA Year, including but not limited to:
the amounts paid or received by each affected entity;
the character (such as capital, ordinary, income, expense) and country source of the funds transferred, and the specific affected line item(s) of any affected U.S. Return; and
the date(s) and means by which the payments are or will be made.
g. The amounts, description, reason for, and financial analysis of any book-tax differences relevant to the TPM for the APA Year, as reflected on Schedule M-1 of the U.S. Return for the APA Year.
2. The Financial Statements, and any necessary account detail to show compliance with the TPM, with a copy of the independent certified public accountant’s opinion required by paragraph 5(d) of this APA.
3. A financial analysis that reflects Taxpayer’s TPM calculations for the APA Year. The calculations must reconcile with and reference the Financial Statements in sufficient account detail to allow the IRS to determine whether Taxpayer has complied with the TPM.
4. An organizational chart for the Worldwide Group, revised annually to reflect all ownership or structural changes of entities that are parties to the Covered Transactions or are otherwise relevant to the TPM.
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