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Transfer Pricing Operations TEI-LB&I Liaison Meeting May 14, 2012

Transfer Pricing Operations TEI-LB&I Liaison Meeting May 14, 2012. LB&I International Function Overview. Commissioner Large Business & International. EOI Program. Treaty Unit. JITSIC. Michael Danilack, Deputy Commissioner (International) Doug O’Donnell, Assistant Deputy Comm’r (Int’l).

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Transfer Pricing Operations TEI-LB&I Liaison Meeting May 14, 2012

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  1. Transfer Pricing OperationsTEI-LB&I Liaison MeetingMay 14, 2012

  2. LB&I International Function Overview Commissioner Large Business & International EOI Program Treaty Unit JITSIC Michael Danilack, Deputy Commissioner (International) Doug O’Donnell, Assistant Deputy Comm’r (Int’l) Foreign Posts Service-wide Strategy Sam Maruca, Director, Transfer Pricing Operations Carol Poindexter, Acting Director, International Business Compliance (IBC) Rosemary Sereti, Director, International Individual Compliance (IIC) 2

  3. LB&I International Function Transfer Pricing Operations Deputy Commissioner International Senior Tax Advisor Director, Transfer Pricing Operations Senior Econ Advisor EA Operations Special Project Deps. EA Technical Director APMA Deputies IPN Manager Transfer Pricing Practice TTM Central 12 Mgrs. TTM East TTM West 2 Mgrs. 2 Mgrs. 2 Mgrs.

  4. TPO – A Single Practice • TPO will operate as a single, unified practice • Two program segments: • Advance Pricing and Mutual Agreement (APMA) • Transfer Pricing Practice (TPP) • APMA - external focus; TPP - internal focus • But nearly complete substantive overlap • One knowledge base • Income shifting IPNs • Sharing information, experience and skills

  5. TPO – A Single Practice • Why a single practice? • Necessity of global perspective in treaty cases • Ensure cases steered to proper forum • Demand for two-way, end-to-end visibility • Need to share experience/expertise to ensure optimal case selection and development • Common understanding of MNE behaviors and planning strategies - CONTEXT • Common skills, common training

  6. TPO – A Single Practice • Steps to achieving an efficient, integrated practice that produces quality positions • Recruit the best • Ensure that managers are experts, equipped to provide substantive review and mentoring • Provide training in case development and negotiation, especially oral/written presentation • Communication and collaboration through IPNs and in day-to-day work

  7. TPO – A Single Practice • Steps to achieving an efficient, integrated practice that produces quality positions (cont’d) • Build knowledge base, including searchable skills inventories and case databases (KTK basis) • Joint meetings and training sessions • Coordination with LB&I units, especially IBC, IIC and Field Specialists • Coordination with TAIT

  8. APMA – Special Considerations • APMA’s immediate focus is external (resolving issues with treaty partners) but must be informed by understanding of broader context • Inbound/outbound • Taxpayer’s overall tax position and planning objectives • Collateral proceedings (such as domestic audits) • Sourcing issues and their significance • Where is matter best resolved? • So APMA practitioner needs broad perspective

  9. APMA – Special Considerations • Skill-building • Legacy APA personnel have strong case development skills; legacy CA personnel have strong negotiation skills • Individuals have specific industry/taxpayer experience • We need to leverage off one another’s strengths • Heightened importance of presentation • Arbitration

  10. TPP – Special Considerations • On-going activities • Pilot cases • Pre-2009 cost share buy-in triage project • Build-out • Re-engineering risk assessment/audit process • Coordination with PAIR • Assessment of UTP filings • “Roadmap” – building on QEP • Dialogue with Appeals • Coordination with APMA

  11. TPO – The Way Forward • Earlier and more proactive participation by APMA in field audits of treaty cases • Concentration by TPP on tax haven activity and recalcitrant taxpayers • Closer collaboration with IBC and field operation in general • Creative solutions – “expanded” APAs, joint audits, multilateral collaboration among jurisdictions, increased dialogue among CAs

  12. TPO – The Way Forward • Substantive areas of strategic importance - TPP • Continued attention to outbound IP migration – new cost-sharing regulations • High-value services • Middle market MNEs • Financial sector • Inbound activity • Commitment to enhancing transfer pricing administration globally • FTA Guidelines

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