Mutual agreement procedures exist to settle issues where there is inconsistent tax treatment between the IRS and the taxing authorities of the following possessions.
- American Samoa.
- The Commonwealth of Puerto Rico.
- The Commonwealth of the Northern Mariana Islands.
- The U.S. Virgin Islands.
These issues usually involve allocations of income, deductions, credits, or allowances between related persons; determinations of residency; and determinations of the source of income and related expenses.
The tax coordination agreements contain provisions allowing the competent authorities of the United States and the relevant possession to resolve, by mutual agreement, inconsistent tax treatment by the two jurisdictions.
Send your written request for assistance under this procedure to:
Deputy Commissioner, International (LMSB)
Attn: Tax Treaty Division
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224-0002
Nonresident aliens generally must present their initial request for assistance to the relevant possession tax agency.taxmap/pubs/p570-018.htm#en_us_publink1000221430
Your request for competent authority assistance must be in the form of a letter addressed to the Deputy Commissioner, International. The request must contain a statement that competent authority assistance is requested under the mutual agreement procedure with the possession and must include all the facts and circumstances relating to your particular case. You (or a person having authority to sign your federal return) must sign and date the request.
To avoid unnecessary delays, make sure you include all of the following information.
- A reference to the specific coordination agreement and the provision(s) under which your request is made.
- Your name, address, social security number, and possession tax identification number (if any).
- The name, address, social security number, and possession identification number (if any) of all related persons involved in the matter.
- If applicable, a description of the control and business relationships between you and all relevant related persons for the year(s) in issue, including any changes in such relationships to the date of filing the request.
- A brief description of the issues for which you request competent authority assistance, including a brief description of the relevant transactions, activities, or other circumstances involved in the issues raised and the basis for the adjustment, if any.
- The years and amounts involved with respect to the issue.
- The IRS office that has made or is proposing to make the adjustment or, if known, the IRS office with examination jurisdiction over your return.
- An explanation of the nature of the relief sought or the action requested in the United States or in the possession with respect to the issues raised.
- A statement whether the period of limitations for the years for which relief is sought has expired in the United States or in the possession.
- A statement of relevant U.S. and possession judicial or administrative proceedings that involve you and all relevant related persons.
- To the extent known by you, a statement of relevant possession judicial or public administrative proceedings that do not involve you or related persons, but involve the same issue for which competent authority assistance is requested.
- A statement whether you or a related person is entitled to any possession tax incentive or subsidy program benefits for the year or years in question.
- If bona fide residence in a possession is at issue, a statement of all facts and circumstances supporting such residence.
- A copy of any relevant correspondence received from the possession tax agency and copies of any briefs, protests, and other relevant material submitted to the possession tax agency.
- A copy of the possession tax returns for the year or years in question.
- A statement whether your federal tax return for the year or years in question was examined or is being examined. This also applies to the tax return(s) of any relevant related person.
- A statement whether a credit for a possession tax paid was claimed on your federal tax return for the tax year or years in question. If a credit was claimed, state whether the credit was claimed for all or part of the possession tax paid or accrued with respect to the particular item that is the subject of your request for assistance.
- If applicable, powers of attorney with respect to you.
- If the jurisdiction of an issue is with an Appeals office, a summary of prior discussions of the issue with that office and contact information regarding the Appeals officer handling the issue; also, if appropriate, a statement whether you are requesting the Simultaneous Appeals procedure. See section 8 of Revenue Procedure 2006-23, on page 900 of Internal Revenue Bulletin 2006-20, available at www.irs.gov/irb/2006-20_IRB/ar12.html.
- If this request is to serve as a protective claim, in a separate section include the statement and information required by Revenue Procedure 2006-23, section 9.02.
- On a separate document, a statement that you consent to the disclosure to the possession tax agency (with the name of the possession specifically stated) and that possession tax agency's staff, of any or all of the items of information set forth or enclosed in the request for U.S. competent authority assistance within the limits contained in the coordination agreement under which you are seeking relief.
- A penalties of perjury statement in the following form:
Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the facts presented in support of the request for competent authority assistance are true, correct, and complete.
The declaration must be signed by the person or persons on whose behalf the request is being made.
For additional information about requesting competent authority assistance, see Revenue Procedure 2006-23.taxmap/pubs/p570-018.htm#en_us_publink1000221431
In addition to the tax assistance request, if you seek a credit or refund of any overpayment of U.S. tax paid on the income in question, you should file a claim on Form 1040X, Amended U.S. Individual Income Tax Return. Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Attach a copy of the request to the form.
Also, you should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax.
See Revenue Procedure 2006-23, section 9, for complete information.