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October 15, 2021

US IRS representatives say MAP and APMA cases are more difficult because of high adjustments, express concern about unilateral relief

The large adjustments involved in mutual agreement procedures (MAP) cases is making those cases hard to handle through the dispute resolution process, a director at the IRS Large Business and International Division said.1

In a separate webcast, the director of the Advance Pricing and Mutual Agreement Program (APMA) “expressed concern that agreeing to unilateral relief offered by a [US] treaty partner jurisdiction may become an obstacle to receiving full relief from double taxation.”2

APMA is the program within the IRS charged with trying to eliminate double taxation typically caused by transfer pricing adjustments on intercompany cross-border transactions made by the tax authority in one of the jurisdictions. APMA also evaluates, negotiates and executes Advance Pricing Agreements (APAs) with taxpayers.

More MAP and APMA cases involve large sums

Jennifer Best, Director (Treaty and Transfer Pricing Operations), IRS Large Business and International Division, said 10 September 2021, at the annual Pacific Rim Tax Conference that APMA currently has some MAP cases involving adjustments of over $1 billion.3 “The increasing frequency, scale, and complexity of large U.S. MAP cases have made case resolution more difficult,” Best said. Similarly, APMA is seeing APA requests that cover intercompany cross-border transactions exceeding $1 billion, she said. APAs generally take three to four years to complete, with those involving larger amounts taking more time, she added.

Best said that the mandatory binding arbitration provisions in some US bilateral tax treaties have helped make the process more efficient.4 “We have had some MAP cases go to arbitration. But it’s still a relatively small number, especially relative to our inventory, which we think is a good sign that it does help bring the two competent authorities together to reach a resolution,” Best said.5

In addition, Best said the process is becoming more efficient by requiring transfer pricing examination teams to consult with APMA officials before proposing an adjustment, which helps prevent cases that should not have come into MAP.6

Unilateral relief is not enough

John Hughes, APMA Director, said 21 September 2021, on a webcast sponsored by the Tax Executives Institute, that “accepting unilateral relief may constitute a failure to exhaust all available remedies, therefore jeopardizing the creditability of taxes paid in the treaty partner jurisdiction.”7

Hughes said that US competent authority representatives are seeing more programs designed to encourage taxpayers to accept unilateral relief from double taxation, according to the article. Hughes said US competent authorities may not see an appropriate arm’s-length outcome from these unilateral agreements.


The IRS has noted that APMA is seeing more MAP and APA cases with large amounts at stake. While perhaps not novel, the IRS’s comment that MAP cases with large tax adjustments take longer and are more difficult to resolve is a sober reminder to taxpayers to proactively prepare a robust transfer pricing analysis and to document that analysis. It will be interesting to observe whether the increased amounts at stake will eventually lead to an increase in the number of cases arbitrated. Alternatively, to avoid or mitigate against a potentially long post-return-filing controversy, taxpayers may consider seeking an APA. However, a unilateral APA should likely not be the first choice. Such unilateral relief may not consider competing considerations in a case involving two or more jurisdictions; thus, a unilateral APA may leave a taxpayer open to controversy in one jurisdiction without access to the MAP process.


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

Ernst & Young LLP (United States), International Tax and Transaction Services – Transfer Pricing, Washington DC

Ernst & Young LLP (United States), International Tax and Transaction Services – Transfer Pricing, San Jose



  1. Ryan Finley, Rising Stakes Make MAP Cases Harder for IRS to Resolve, Tax Notes Today (14 September 2021).
  2. Ryan Finley, APMA Director Warns Taxpayers Against Unilateral Relief, Tax Notes Today (22 September 2021).
  3. Finley, 14 September 2021.
  4. The US has mandatory arbitration in its treaties with Germany (June 1, 2006), Belgium (27 November 2006), Canada (21 September 2007), France (13 January 2009), Switzerland (23 September 2009), Spain (14 January 2013) and Japan (24 January 2013).
  5. The first income tax treaties with mandatory arbitration provisions that were ratified in 2006 required the IRS to report back to the Senate after the IRS arbitrates 10 cases.
  6. APMA traditionally has had approximately four times more foreign-initiated adjustments than US-initiated adjustments in its inventory.
  7. Finley, 22 September 2021.

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