US IRS official says enhanced IRS pre-filing process will provide taxpayers with a more robust view of APA suitability

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EY Global

24 Mar 2023
Subject Tax Alert
Categories Transfer Pricing
Jurisdictions United States
  • In an online panel discussion on 7 March 2023, a US Internal Revenue Service (IRS) official stated that the IRS intends to implement an enhanced APA pre-filing process that will allow taxpayers to obtain the Advance Pricing and Mutual Agreement (APMA) Program's preliminary views about the most efficient process for managing a taxpayer's transfer pricing uncertainty, including the suitability of requesting an Advance Pricing Agreement (APA).

  • The official also indicated that the IRS intends to be more selective regarding the APA requests admitted into the program without targeting a reduction in inventory.

  • As a result, taxpayers currently considering an APA may want to apply to the program before the proposed changes take effect.

Jennifer Best, Acting Deputy Commissioner of the US Internal Revenue Service (IRS)'s Large Business and International (LB&I) Division, said that the IRS plans to implement a new process for taxpayers considering applying for an Advance Pricing Agreement (APA). Under this new process, the IRS and taxpayer will engage early on so the IRS can provide feedback to the taxpayer on whether the proposed transactions to be covered in an APA would be best resolved in the APA program or some other process, such as the International Compliance Assurance Programme (ICAP).1

Best said that the new process is not intended to limit the number of APAs that the IRS accepts but is instead an attempt to channel transfer pricing cases, depending on the facts and circumstances, into the most efficient and effective dispute resolution process for the benefit of both the IRS and taxpayers.2 Ms. Best's comments follow earlier comments by Nicole Welch, LB&I Acting Director of Treaty and Transfer Pricing Operations, during an American Bar Association panel on 10 February 2023, disclosing that the IRS was considering a more tailored approach to resolving transfer pricing matters.

The new APA pre-filing process is expected to be outlined in an update to the existing APA Revenue Procedure 2015-41. Specifically, Best stated that the IRS will release details "setting forth a process which I hope will be well received, because it will include early engagement with the taxpayer as part of this process to communicate what our thoughts are on whether the proposed APA will achieve the certainty goals."3 As an example, Best noted that ICAP could provide "more comprehensive certainty and assurance for a taxpayer" than an APA in certain cases.4 (See EY Tax Alert, US Acting IRS Commissioner affirms continued participation in ICAP, dated 9 January 2023, for more information on ICAP).


The new APA pre-filing process represents a continuing effort by the IRS to manage its transfer pricing caseload more efficiently and effectively. To that end, the IRS appears to be interested in enhancing the current APA pre-filing process to consider more holistically whether issues in a particular proposed APA would be better handled in an alternative process. This suggests that the APMA Program may be expanding the current list of mandatory pre-filing topics and promising to commit more time and resources to APA pre-filing conferences than has generally been the case to date. It also likely will require closer and earlier coordination between the APMA Program, LB&I Treaty and Transfer Pricing Operations, and IRS Exam about the merits of new matters and how best to process them.

The new process may benefit taxpayers, given that APAs are a significant investment in both time and resources for both taxpayers and the IRS (and US treaty partners). Hopefully, the cases that APMA admits under the new process or steers into an alternative process, such as ICAP (see EY Tax Alert, USTR announces next steps in statutory four-year review of China 301 tariffs, dated 20 October 2022) or joint audits,5 will lead to quicker and more successful resolutions depending on the issues presented and other facts and circumstances. Without details about the new process, however, it is hard to predict whether the new process will reduce the chances that the APMA Program will accept a taxpayer's APA request. As such, taxpayers currently considering an APA may want to apply to the program before the proposed changes take effect.


For additional information with respect to this Alert, please contact the following:

National Tax Department, International Tax and Transactions Services, Transfer Pricing
  • Ryan J. Kelly, Americas ITTS Tax Controversy Leader

  • Hiro Furuya

  • Ameet Kapoor

  • Carlos M. Mallo

  • Marla McClure

  • Donna McComber

  • Mike McDonald

  • Tom Ralph

  • Craig Sharon

  • Kent Stackhouse

  • Thomas A. Vidano

  • Heather Gorman

  • Giulia Di Stefano

  • Carolina Figueroa

  • Mitch Gibson

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.

  • Show article references#Hide article references

    1. Isabel Gottlieb, IRS Planning Changes to Advance Pricing Agreement Process, Daily Tax Report (March 7, 2023).

    2. Id.

    3. Id.

    4. Id.

    5. Kristen A. Parillo, IRS Refining its Transfer Pricing Approach, Tax Notes Today (June 24, 2022).