Dispute Prevention and Resolution for Large Business and International Taxpayers

 

Would you like to take steps to prevent a dispute or do you disagree with a decision made by the IRS? Our agency offers several options for taxpayers to resolve issues. The best option for your issue or case will depend on whether you or your business have filed the return in question and whether it is currently under audit.

Consult the information below to help you select the best option. Note that the options described below may not be available for all taxpayers, and that the descriptions are tailored for taxpayers under the jurisdiction of the IRS Large Business and International (LB&I) division, meaning those business taxpayers with assets of $10 million or more. The timeframes for resolution will vary significantly (and could range from weeks to years) depending on your situation.

Pre-filing or Pre-Audit Resolution Types

Consider if…
Prior to filing a tax return, you want the Office of Chief Counsel (Chief Counsel) to determine the tax treatment of your specific situation. The issue(s) cannot be under audit or in litigation and must not be clearly or adequately addressed by statute, regulations, court decisions or authority published in the Internal Revenue Bulletin.

User Fee
The current user fee is $30,000, payable in advance, refundable only if the Associate Chief Counsel Office declines to issue a ruling. User fees may change and are generally published each January in the first revenue procedure of the year.  All the user fees described in this chart must be paid electronically at www.pay.gov.

Certain letter ruling requests have lower fees, including those for accounting periods and methods changes and requests for extensions of time for regulatory elections that do not meet the requirements of § 301.9100-2.  In addition, certain extensions of time for other regulatory elections are addressed in various guidance, which generally do not have a user fee.

Learn More
Rev. Proc. 2020-1 (information on requesting a PLR).

How to request a PLR

Rev. Proc 2020-29 PDF, temporary allowance of electronic submission of PLRs

Consider if…
Prior to filing a tax return, you want an IRS Director (not Chief Counsel) to determine the tax treatment of your specific situation and provide you with a written determination to attach to your filed return. The letter represents an agreement on treatment of the transaction but has less authority and finality than a private letter ruling.  The letter applies the principles and precedents previously announced by the IRS to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in a statute, a tax treaty, the regulations, a conclusion in a revenue ruling, or an opinion or court decision that represents the position of the IRS.

User Fee
Currently $275 for a letter from a director. Exceptions, refunds and other user fee information is discussed in Rev. Proc. 2020-1, Part III, Section 15

Learn More
Rev. Proc. 2020-1 (information on requesting a determination letter)

Internal Revenue Bulletin 2020-1 (information on requesting a determination letter)

Rev. Proc 2020-29 PDF, temporary allowance of electronic submission of determination letters

Consider if…
Prior to filing a tax return, you seek an agreement on issues likely to be disputed in post-filing audits. PFAs are for factual issues that fall under well-settled principles of tax law, and which can be resolved by the return filing date plus extensions. The PFA can be in the form of a closing agreement for the year of application or a non-statutory agreement (a binding contract with the IRS that is subject to any future legislative enactment) for up to four future years. Taxpayers should attach the agreement to the tax return when filed. Either party (IRS or taxpayer) may withdraw from the agreement.

User Fee
Currently $181,500 for taxpayers selected to participate. Each separate and distinct issue will require a separate user fee. The orientation meeting or first substantive meeting to discuss the PFA will not take place until after the fee is received.

Learn More
Rev. Proc. 2016-30 PDF.

Requests must be made to the LB&I Team Manager for taxpayers currently under examination and to the PFA Program Manager in Washington, D.C. for those not currently under examination. There are other exclusions and requirements (as those for international issues) on the PFA webpage on IRS.gov.

Consider if…
Prior to filing a return, you seek tax certainty and the avoidance of a transfer pricing dispute with the IRS and one or more treaty partner administrations by securing an agreement on a transfer pricing methodology. In an APA, the IRS and one or more foreign tax administrations come to an agreement with the taxpayer on: (1) the factual nature of the inter-company transaction to which the APA applies; (2) an appropriate transfer pricing method (“TPM”) to be applied to any allocation of income, deductions credits or allowances among two or more controlled organizations; and (3) an expected range of results from applying the TPM to the transactions. This program is designed to promptly and fairly resolve APA requests based on principled and cooperative negotiations between the IRS, treaty partner tax administrations, and the taxpayer.

User Fee
$113,500 for most requests; $54,000 for an APA renewal request (in cases where the subject matter is substantially the same as in a previous APA request by the taxpayer); $23,000 to amend a current unilateral, bilateral or multilateral APA, including coverage of additional issues, material changes to a proposed covered method, and any other material additions or changes to the terms and conditions of the APA.

Learn More
Rev. Proc. 2015-41 PDF

Advance Pricing and Mutual Agreement Program webpage on IRS.gov

Consider if…
You are a large corporate taxpayer seeking tax certainty through real-time resolution tools and techniques employed before filing. In CAP, the IRS and the taxpayer work together to achieve tax compliance by resolving issues prior to the filing of the tax return.  The assurance provided is mutual and can substantially shorten the length of the post-filing examination. The IRS and the taxpayer enjoy resources and time savings using the process. Note that CAP is not suitable or available for every large corporate taxpayer, and applications are only accepted during open periods that the IRS determines. Visit the site linked in the last column to the right for more details.

User Fee
There is no user fee for CAP.

Learn More
CAP webpage on IRS.gov

CAP Frequently Asked Questions

Consider if…
You are affected by a burdensome tax issue with uncertain tax treatment, and the issue affects a significant number of business taxpayers. The uncertainty of the issue results in frequent, often repetitive examinations. You and others (in your industry or even across industry lines) would benefit from having a team of IRS professionals review the issue and provide guidance. The IRS would benefit from studying the facts and industry practices to determine proper tax treatment.

User Fee
There is no user fee for an IIR. The program  helps taxpayers and the IRS avoid the financial and time costs of having issues resolved on a case-by-case basis during tax examinations.

Learn More
Request an IIR by preparing written documents and submitting them by email IIR@irs.gov. Before doing so, read this IIR fact sheet and general IIR information on irs.gov.

Post-Filing Issue and Case Resolution Types

Consider if...

Prior to or following the filing of a return or other interaction with the IRS, you seek tax certainty or advice regarding taxation results under a U.S. tax treaty.
 
In MAP, through its role as U.S. Competent Authority, the IRS can adjust tax results where a taxpayer is denied treaty benefits or faces double taxation. MAP proceedings can address most U.S. or foreign-initiated actions (examinations, adjustments, withholding).
 
The IRS aims in its MAP proceedings to meet U.S. tax treaty obligations, prevent fiscal evasion, and provide taxpayers broad assistance in avoiding double tax. Taxpayers can contact IRS MAP officials for informal and non-binding advice and may withdraw a formal MAP request after it is submitted. Prior agreements and ongoing procedures with the IRS or a foreign tax authority may preclude or limit access to MAP.
 
MAP filing procedures and requirements depend on the nature of the underlying transaction. Special rules apply for requests regarding limitation of benefit provisions, pension plans and if an applicable treaty requires arbitration for an unresolved issue.

User Fee
There is no current user fee for a MAP proceeding except for requests regarding limitation of benefits (LOB).
 
The user fee for a LOB request is $37,500.  LOB user fees should not be submitted until the taxpayer seeking the LOB ruling is notified by IRS that the request has been accepted.
 
User fees may change and are generally published each January in the first revenue procedure of the year.  Payments must be made through the www.pay.gov website.

Learn More
Rev. Proc. 2015-40 PDF
Competent Authority Home Page
Overview of the Map Process

Consider if…
During a MAP procedure, you wish to avoid similar or related issues and disputes in subsequent years.
 
To extend the coverage of a MAP agreement, you can request that the proceeding is paired with an ACAP.
 
Under ACAP, you may request that a MAP resolution for a specified taxable period be extended to cover subsequent taxable periods for which the entity has filed tax returns.
 
An ACAP request can be made with an initial MAP request or in a separate written submission. If the ACAP is filed after an initial MAP request, it must be submitted before the IRS has made certain determinations in the original proceeding.

User Fee
No additional fee.

Learn More
Section 4.01(2), Rev. Proc. 2015-40 PDF

Consider if…
You are a large corporate taxpayer under audit and would like assurance that resolved issues in the current audit cycle will be extended to all years for which returns have been filed. An AIR agreement is a closing agreement between the IRS and taxpayers under the Large Corporate Compliance program related to one of more specific issues arising from an audit for taxable periods ending prior to the date of the agreement.

User Fee
There is no user fee for an AIR agreement.

Learn More
Requests for AIR agreements are made through and subject to the discretion of the LB&I Team Manager over your open case.

Learn more in the Internal Revenue Manual section for AIR agreements.

Consider if…
You received a letter from the IRS explaining your right to appeal the agency’s decision; you do not agree with the decision because you think it is incorrect or that the IRS misunderstood the facts; and you refuse to sign the agreement form. The IRS Independent Office of Appeals is a quasi-judicial forum with a mission to resolve IRS tax controversies without litigation, on a basis that is fair and impartial to both the government and the taxpayer, and in a manner that will enhance voluntary compliance and your confidence in the tax system. A traditional appeal may be best for you if the items on this What to Expect from Appeals webpage are in in line with your expectations, and the other Appeals options listed below are not appropriate or applicable to your case.

User Fee
There is no user fee to initiate a traditional appeal.

Learn More
Independent Office of Appeals webpage on IRS.gov

Consider if…
You have an unresolved issue or disagree with an IRS decision or action (on a case where an IRS agent has completed their work and made a determination), and you wish to have an Appeals officer trained in mediation techniques work fairly and impartially with you and the IRS agent assigned to your case. During FTS, your case remains under the jurisdiction of the IRS rather than the IRS Independent Office of Appeals.

This option is good for taxpayers who want to resolve disputes ­at the earliest stage of the audit, don’t have many disputed issues, and have provided information to the IRS agent to support the taxpayer’s position. With a target resolution of within 120 days, Fast Track is faster than a traditional appeal. The trained Appeals mediator will facilitate settlement discussions and may offer settlement proposals. The program is voluntary, and you will not be unduly persuaded to accept a proposed agreement. You will still have the right to request a traditional Appeal if you do not accept the outcome of the Fast Track Settlement.

User Fee
There is no user fee associated with Fast Track options. Using this program may result in lower overall costs to resolve your issues, in additional to faster case resolution.

Learn More
Fast Track Settlement Program webpage on IRS.gov

See the “Large Business or businesses with international interests” section under “Which Fast Track Program may be right for you…”

Publication 4539, Fast Track Settlement: A Process for Prompt Resolution of Large Business and International Tax Issue PDF

Consider if…
Your case is under examination or in collection with a key issue that the IRS agent or collection officer has fully developed. You disagree with the issue and are seeking resolution as the IRS continues to develop the other issues in your case. You expect that having Appeals review the issue before the examination or collection case is complete will help you and the IRS resolve the other issues in the case.

User Fee
There is no user fee associated with Early Referral to Appeals. Using this program may result in lower overall costs to resolve your issues, in addition to faster case resolution.

Learn More
Revenue Procedure 99-28 PDF describes the process for early referral for cases in Examination and Collection.

Requests must be submitted in writing by the taxpayer to the case or group manager, who will approve or deny the request.

Consider if…
You have been audited by the IRS Compliance division and have requested a traditional appeal.  RAP is a voluntary process designed to be completed in one conference that allows an Appeals Team Case Leader or Appeals officer to convert the pre-conference meeting with you and, the IRS agent, and Appeals into a working conference where the Appeals Team Case Leader or Appeals officer uses mediation techniques to resolve your unagreed issue. You will still have the right to continue the traditional appeal if the issues are not resolved during the working conference.

User Fee
There is no user fee associated with RAP. Using this program may result in lower overall costs to resolve your issues, in addition to faster case resolution.

Learn More
RAP in the Internal Revenue Manual.

Consider if…
You have gone through a traditional appeal but disagree with the proposed settlement offered by the Appeals officer.  PAM is a voluntary process that uses the services of an Appeals mediator or mediators, as neutral third parties, to help you and Appeals reach a negotiated settlement. PAM may not be available for all taxpayers.  For example, if you entered Fast Track, you could not enter into PAM.

User Fee
There is no user fee associated with PAM.  Using this program may result in lower overall costs to resolve your issues, such as avoiding having to go to court.

Learn More
Revenue Procedure 2014-63

PAM on IRS.gov