4.60.1. Exchange of Information

(1) Strict U.S. disclosure laws about returns, return information, and other sensitive tax data govern the exchange of such information with foreign tax officials under international exchange agreements. Procedural and legal authority for the exchange of information with foreign jurisdictions under international exchange agreements is founded primarily on:

1. IRS Delegation Order 4-12, Authority to Act as "Competent Authority" or "Taxation Authority" Under Certain International Agreements, Authorize the Disclosure of Tax Information Under Mutual Legal Assistance Treaties, and Disclose Certain Tax Convention Information, located in IRM 1.2.2.5.11(which delegates exclusive U.S. authority to exchange tax-related information under international exchange agreements to certain persons within the office of the delegated U.S. Competent Authority, the Commissioner, LB&I);

2. IRC 6103 (which governs the disclosure and confidentiality of returns and return information in general);

3. IRC 6105 (which governs the disclosure and confidentiality of information exchanged under international exchange agreements); and

4. Disclosure or secrecy provisions of the relevant international exchange agreement.

(2) Consistent with IRC 6103 and IRC 6105 and Delegation Order 4-12 (as revised), no IRS employee may contact, provide any information to, request any information from, or receive any information from a foreign tax official under an international exchange agreement unless authorized in Delegation Order 4-12 (as revised). This restriction applies to any information provided, requested, or received under an international exchange agreement, including, but not limited to:

1. Returns and return information as defined under IRC 6103(b);

2. IRS program plans or policy initiatives, investigative techniques, draft published guidance, emerging issues, or enforcement strategies;

3. Tolerances or grace periods relevant to IRS compliance or other procedures;

4. IRS formulas used to select tax returns for examination (including Discriminant Index Function (DIF) scores) and related information;

5. Reports prepared by IRS employees on technical or legal issues;

6. Summaries of conferences or meetings held between tax administrations;

7. IRS training materials; and

8. Publicly available information from LexisNexis, Westlaw, https://www.irs.gov, or other sources.

(3) Strict disclosure restrictions extend to the treatment of information received from a foreign jurisdiction under an international exchange agreement via the U.S. Competent Authority. Any IRS office in possession of such information must first contact the EOI Program for approval to disclose the information to any person outside the Internal Revenue Service, including to other U.S. government agencies where such disclosure is not expressly provided in the use and disclosure provisions of the international exchange agreement. Moreover, if any IRS office in possession of information originally received from foreign tax officials under an international exchange agreement is requested to disclose any such information and/or wishes to consult the foreign officials prior to releasing such information in response to court orders, subpoenas, or Freedom of Information Act (FOIA) requests in the U.S., that office must consult the EOI Program, which will in turn consult with the foreign tax officials as appropriate. Finally, if any IRS office discovers or suspects that an unauthorized disclosure of information received from foreign tax officials under an international exchange agreement may have occurred, that office must immediately notify the EOI Program.

(4) Information received by the U.S. Competent Authority from foreign tax officials pursuant to an international exchange agreement is to be used and safeguarded by the IRS in accordance with the disclosure and confidentiality provisions of the relevant agreement and IRC 6103 (in the case of returns and return information) and IRC 6105. To caution against unauthorized disclosures, EOI personnel within the office of the delegated U.S. Competent Authority (the Commissioner, LB&I) include the following text on all information provided or received pursuant to an international exchange agreement: This information is furnished under the provisions of an international exchange agreement with a foreign government. Its use and disclosure must be governed by the provisions of that agreement.

(5) Per IRC 6103(p)(3), Exchange of Information personnel must account for disclosures of returns and return information to third parties, including to foreign Competent Authorities, other than those parties exempt under IRC 6103(p)(3)(A). This disclosure is recorded by the completion and processing of IRS Form 5466-B, Multiple Records of Disclosure. For more information about Form 5466-B, see IRM 11.3.37, Recordkeeping and Accounting for Disclosures.

(6) Questions about disclosure rules applicable to information secured under international exchange agreement provisions should be directed to the EOI Program ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(1) As described above, all exchanges of tax-related information pursuant to international exchange agreements are subject to strict considerations of disclosure and confidentiality, including confidentiality attached to trade and other business secrets. International exchange agreements frequently include language limiting the exchange of trade secrets, such as "are not obligated to be exchanged" or "will not be exchanged". International exchange agreements generally refer to such materials as any trade, business, industrial, commercial, or professional secret or trade process.

(2) In general, information may be considered a trade or other business secret protected from disclosure to a foreign Competent Authority if disclosure would cause substantial harm to the taxpayer’s competitive position. Information related to transfer pricing may not necessarily be protected from disclosure.

(3) If a foreign request for information is resisted by a U.S. record holder on the grounds that it constitutes trade secret information which may not be disclosed, the record holder must provide a comprehensive explanation of the legal and/or factual grounds for the record holder’s objections to the EOI analyst assigned to the foreign request. The U.S. Competent Authority will then consider the record holder's explanation and determine whether the information should be disclosed to the foreign Competent Authority.

(4) If any information is redacted for non-disclosure to the foreign Competent Authority per the determination of the U.S. Competent Authority, an explanation of the reason(s) for redaction will generally be provided to the foreign Competent Authority.

(1) The procedures described in this subsection are to be followed by all employees in the EOI Program and JITSIC assigned to process U.S.-initiated specific requests for information.

(2) Within 30 calendar days after the EOI office’s receipt of a request that has been approved by an appropriate management official (generally, first-level management) in the requesting IRS office, complete the following actions:

1. Create and maintain a case for the request in the EOI Inventory Management System (IMS). On each date any action is taken on the request, including the receipt or issuance of correspondence, the holding of meetings or phone calls, and the completion of research, all related actions and documents must be contemporaneously recorded in and uploaded to the IMS case (for example, in the IMS Comments and Documents screens; depending on the action, the IMS Request Details, Contacts, Work Stages, Information, and/or other screens may also require input). All records received or produced by the EOI office at any time during the processing of the request, whether as paper or in an electronic format, must be scanned (for paper records) and uploaded to the IMS case. Limited exceptions to this rule may be made on a case-by-case basis with the approval of EOI management (for example, when paper records are extremely voluminous).

2. If any paper documents (including paper correspondence and records and any associated mailing envelopes bearing postal stamps or other shipping marks) or other physical media (including CD-ROMs and other portable electronic storage devices) are received by the EOI office at any time during the processing of the request, create and maintain a physical folder for the exchange to contain these paper documents and physical media, including any passwords necessary to access the physical media. This folder must be clearly marked with the IMS Request Number, IMS Request Name, and relevant foreign jurisdiction name, and all paper documents and physical media must be marked with the date of receipt in the EOI office. If no paper documents or physical media pertinent to the request are received by the EOI office, no physical folder should be created or maintained for the request. Moreover, no documents or media originally received or produced solely in electronic format should be printed for inclusion in a physical folder.

3. Review the request and applicable international exchange agreement to determine whether the request is accurate and meets applicable standards, as described in IRM 4.60.1.2.1, United States-Initiated Specific Requests for Information, and verify through IDRS research the entities and periods under IRS examination or investigation.

4. Acknowledge receipt of the request to the requesting IRS office via email. This acknowledgment must identify the request by the assigned IMS Request Number. Also, if the request does not meet the standards referenced above, consult the requesting IRS office to obtain any additional information needed.

(3) Within 30 calendar days after the EOI office’s receipt of the request, and after the request has been determined to be valid and complete, prepare and submit in IMS the following documentation to EOI management for review, approval, and signature:

1. A cover letter to the foreign Competent Authority on LB&I Commissioner letterhead.

2. An attachment describing the specific information requested. To produce the attachment, the original requesting IRS office document should be edited for issuance to the foreign Competent Authority. As necessary, remove information not required by or disclosable to the foreign Competent Authority from the original request, such as the requesting IRS office location, contact name and phone number; references to other jurisdictions; U.S. TINs; or details of a related IRS examination, investigation, or administrative procedure not directly pertinent to the request.

3. Every page of the cover letter and attachment must include the following text: This information is furnished under the provisions of an international exchange agreement with a foreign government. Its use and disclosure must be governed by the provisions of that agreement.

4. Associated background information, including any relevant correspondence and research, and if directed by EOI management, an IRS Form 13839-A, Note to Reviewer For a Signature Package, or equivalent.

(4) Within 30 calendar days after the EOI office’s receipt of the request, and after securing managerial approval and signature of the above documentation, issue the cover letter and attachment to the foreign Competent Authority. In some cases, the EOI Program Manager will issue the cover letter and attachment to the foreign Competent Authority. If the information being requested of the foreign Competent Authority is "routine," an EOI frontline manager may review, sign, and issue the cover letter and attachment to the foreign Competent Authority, as authorized by Delegation Order 4-12 (as revised). Information deemed "routine" may include addresses of individuals and basic bank account information; other "routine" information may be identified by the EOI Program Manager.

(5) Every 90 calendar days after issuance of the request to the foreign Competent Authority, request a status update from the foreign Competent Authority, and provide a corresponding update to the requesting IRS office. If any clarifications or additional information about the request are sought by the foreign Competent Authority, review the communication from the foreign Competent Authority, and consult separately as appropriate with the requesting IRS office, EOI management, and the foreign Competent Authority to resolve the issues.

(6) Within 15 calendar days after the EOI office’s receipt of a response from the foreign Competent Authority, review the response for completeness. This review should ensure all relevant information has been received to fulfill the request and identify any received information that is not relevant to fulfill the request (for example, foreign tax authority employee contact information, unrelated party information, etc.) and that should therefore not be included in the response to the requesting IRS office.

1. If the foreign response is incomplete: Prepare and provide (if possible) a partial response to the requesting IRS office as detailed below, and contact the foreign Competent Authority to acknowledge receipt of the foreign response, determine when any remaining information will be provided, and request any clarifications necessary.

2. If the foreign response is complete: Prepare and provide a final response to the requesting IRS office as detailed below, and contact the foreign Competent Authority to acknowledge receipt of the foreign response.

(7) Within 15 calendar days after the EOI office’s receipt of the foreign response, and after the response has been reviewed for completeness, prepare and submit in IMS the following documentation to EOI management for review, approval, and signature:

1. A cover memorandum to the requesting IRS office on LB&I letterhead.

2. An attachment(s) providing the specific information requested and received from the foreign Competent Authority. The foreign Competent Authority cover letter is not to be included in this attachment(s); exceptions to this procedure must be approved by the EOI Program Manager, and if such an exception is approved, at a minimum, all personally identifiable information pertaining to any foreign Competent Authority officials and offices must be redacted from the cover letter. If the attachment(s) transmits a partial response, note the measures planned to obtain any remaining information. If the attachment(s) transmits a final response that does not substantively fulfill all inquiries, include an explanation as to why the requested information was not provided by the foreign Competent Authority, and the efforts made to obtain it.

3. Every page of the cover memorandum and attachment(s) must include the following text: This information is furnished under the provisions of an international exchange agreement with a foreign government. Its use and disclosure must be governed by the provisions of that agreement. Information originally received from the foreign Competent Authority in paper format may be either scanned and electronically stamped with the above text for electronic issuance to the requesting IRS office, with the original paper records then maintained in the EOI request physical folder; or manually stamped with the above text, scanned, and uploaded to the IMS case, with the original stamped paper records prepared for postal issuance to the requesting IRS office, and the IMS case clearly updated with the date and issuance details for any such paper mailing.

4. Associated background information, including any relevant correspondence and research, and if directed by EOI management, an IRS Form 13839-A, Note to Reviewer For a Signature Package, or equivalent.

(8) Within 15 calendar days after the EOI office’s receipt of the foreign response, and after securing managerial approval and signature of the above documentation, issue the cover memorandum and attachment(s) to the requesting IRS office.

(9) Within 7 calendar days after issuance of a final response to the requesting IRS office, submit the IMS case to EOI management for closure, ensuring all required IMS information is input fully and accurately, and submit the physical case folder (if present) to the location directed by EOI management for closure and archival.

(10) If the requesting IRS office indicates any requested information is contemplated to be used in connection with the application of Report of Foreign Bank and Financial Accounts (FBAR) penalties or for purposes other than tax purposes, consult with EOI management to ensure the request is processed appropriately.

(11) If the requesting IRS office withdraws a request for information before the EOI office’s receipt of the foreign Competent Authority’s final response, prepare, issue, and maintain a copy of a withdrawal letter to the foreign Competent Authority to promptly advise the foreign Competent Authority that their assistance is no longer required. This withdrawal letter must first be signed by the EOI Program Manager. After this letter is issued to the foreign Competent Authority, submit the IMS case to EOI management for closure as described above.

(1) The procedures described in this subsection are to be followed by all employees in the EOI Program and JITSIC assigned to process foreign-initiated specific requests for information.

(2) Within 30 calendar days after the EOI office’s receipt of the request, complete the following actions:

1. Create and maintain a case for the request in the EOI Inventory Management System (IMS). On each date any action is taken on the request, including the receipt or issuance of correspondence, the holding of meetings or phone calls, and the completion of research, all related actions and documents must be contemporaneously recorded in and uploaded to the IMS case (for example, in the IMS Comments and Documents screens; depending on the action, the IMS Request Details, Contacts, Work Stages, Information, and/or other screens may also require input). All records received or produced by the EOI office at any time during the processing of the request, whether as paper or in an electronic format, must be scanned (for paper records) and uploaded to the IMS case. Limited exceptions to this rule may be made on a case-by-case basis with the approval of EOI management (for example, when paper records are extremely voluminous).

2. If any paper documents (including paper correspondence and records and any associated mailing envelopes bearing postal stamps or other shipping marks) or other physical media (including CD-ROMs and other portable electronic storage devices) are received by the EOI office at any time during the processing of the request, create and maintain a physical folder for the exchange to contain these paper documents and physical media, including any passwords necessary to access the physical media. This folder must be clearly marked with the IMS Request Number, IMS Request Name, and relevant foreign jurisdiction name, and all paper documents and physical media must be marked with the date of receipt in the EOI office. If no paper documents or physical media pertinent to the request are received by the EOI office, no physical folder should be created or maintained for the request. Moreover, no documents or media originally received or produced solely in electronic format should be printed for inclusion in a physical folder.

3. Review the request and applicable international exchange agreement to determine whether the request is accurate and meets applicable standards, as described in IRM 4.60.1.2.2, Foreign-Initiated Specific Requests for Information.

4. Acknowledge receipt of the request to the correct current foreign Competent Authority contact, preferably via email. This acknowledgment must identify the request by the assigned IMS Request Number and Foreign Request Reference. Also, if the request does not meet the standards referenced above, consult the foreign Competent Authority to clarify the request, if possible. In some cases, after attempting to clarify the request in consultation with the foreign Competent Authority, the IRS will not be able to provide certain requested information. For example, the IRS sometimes cannot provide information because it is not in the possession or control of an individual or entity within the jurisdiction of the U.S., or because the request does not meet the requirements of the applicable international exchange agreement. In such cases, and with the approval of EOI management, the EOI analyst must inform the foreign Competent Authority at the earliest opportunity of the grounds for not being able to provide the requested information.

(3) Within 30 calendar days after the EOI office’s receipt of the request, and after the request has been determined to be valid and complete, first confirm through IDRS research whether any identified individual or entity in possession or control of the requested information (i.e., a U.S. record holder) is under IRS civil examination or criminal investigation, then determine who should gather the requested information: the assigned EOI analyst, other IRS civil personnel, or IRS Criminal Investigation personnel, pursuant to the following rules, and subject to the discretion of EOI management for each request:

1. Requests that solicit information available in public record databases or internally accessible IRS sources (for example, IDRS, Accurint, the internet, etc.), or information obtainable through correspondence where there is no IRS civil examination or criminal investigation open for the U.S. record holder, should be processed by the assigned EOI analyst. The EOI analyst should immediately employ electronic research, issue or serve Information Document Requests (IDRs) and/or administrative summonses, and/or use other means as warranted to secure this information. See also IRM 4.60.1.2.2.4, Foreign-Initiated Specific Requests for Information – Procedures for Cases Involving Summonses, for requests requiring the service of an administrative summons.

2. Requests for which there is an IRS civil examination or criminal investigation open for the U.S. record holder, the information must be obtained in person, or specialized topical knowledge is required, may be referred to the appropriate IRS office for assistance. Applicable procedures for requests involving IRS civil personnel or Criminal Investigation assistance are detailed in IRM 4.60.1.2.2.3, Foreign-Initiated Specific Requests for Information – Procedures for Cases Involving IRS Civil or Criminal Investigation Assistance.

(4) Within 90 calendar days after the EOI office’s receipt of the foreign request, if feasible, provide a full and complete response to the foreign Competent Authority through the approval and signature of EOI management as described below. If this is not possible, within 90 calendar days after the EOI office’s receipt of the request, provide a partial response (if possible) or a status update (if no partial response is yet possible) to the foreign Competent Authority; subsequent regular status updates must be provided to the foreign Competent Authority every 90 calendar days until a final response is provided.

(5) If an IDR or administrative summons must be issued or served to obtain any information, first, conduct research (using IDRS, Accurint, etc.) to ensure the correct individual or entity name and address are identified for receipt of the IDR or administrative summons. Then, follow the guidelines below to prepare and issue or serve the IDR or administrative summons:

1. Any IDR or administrative summons should not disclose details of the foreign partner’s examination or investigation beyond those necessary for the recipient of the IDR or administrative summons to obtain and provide the requested information; the Competent Authority letter and associated request for information received from the foreign Competent Authority should not be included with the IDR or administrative summons issued to the U.S. record holder or referred to an assisting IRS office.

2. If an IDR or administrative summons includes attachments (for example, documents explicitly approved by the foreign Competent Authority for disclosure to the recipient of the IDR or administrative summons, certification forms for the recipient’s completion, etc.), all attachments must include the following text: This information is furnished under the provisions of an international exchange agreement with a foreign government. Its use and disclosure must be governed by the provisions of that agreement.

3. The IDR or administrative summons should be issued or served either by the assigned EOI analyst or by an assisting IRS office (as identified according to the guidelines provided above and in IRM 4.60.1.2.2.3, Foreign-Initiated Specific Requests for Information – Procedures for Cases Involving IRS Civil or Criminal Investigation Assistance), as follows:

For	Then
IDRs and administrative summonses issued or served directly by the EOI analyst	Once any response deadline provided in the IDR or summons has expired, review the requested information if already provided, or determine subsequent steps necessary to obtain the requested information if not already provided.
IDRs, administrative summonses, and other assistance being processed or provided by another IRS office on the EOI analyst's behalf	Every 60 calendar days after referral of the assistance request to the IRS office (or more frequently, depending on specific response deadlines provided in the IDR, summons, or other assistance request), request a status update from the IRS office.

(6) Within 15 calendar days after obtaining the requested information, review the information for completeness. This review should ensure all relevant information has been obtained to fulfill the request, and identify any obtained information that is not relevant to fulfill the request (for example, U.S. TINs, IRS employee contact information, unrelated party information, etc.) and that should therefore not be included in the response to the foreign Competent Authority.

(7) Within 15 calendar days after obtaining the requested information, and after the information has been reviewed for completeness, prepare and submit in IMS the following documentation to EOI management for review, approval, and signature:

1. A cover letter to the foreign Competent Authority on LB&I Commissioner letterhead.

2. Attachment(s) providing the specific information requested. If the attachment(s) transmits a partial response, note the measures planned to obtain any remaining information. If the attachment(s) transmits a final response that does not substantively fulfill all inquiries, include an explanation as to why the requested information was not provided, and the efforts made to obtain it.

3. Every page of the cover letter and attachment(s) must include the following text: This information is furnished under the provisions of an international exchange agreement with a foreign government. Its use and disclosure must be governed by the provisions of that agreement. Information originally obtained in paper format may be either scanned and electronically stamped with the above text for electronic issuance to the foreign Competent Authority (if the jurisdiction accepts electronic responses), with the original paper records then maintained in the EOI request physical folder; or manually stamped with the above text, scanned, and uploaded to the IMS case, with the original stamped paper records prepared for postal issuance to the foreign Competent Authority, and the IMS case clearly updated with the date and issuance details for any such paper mailing.

4. Associated background information, including any relevant correspondence and research, and if directed by EOI management, an IRS Form 13839-A, Note to Reviewer For a Signature Package, or equivalent.

(8) Within 15 calendar days after obtaining the requested information, and after securing managerial approval and signature of the above documentation, issue the cover letter and attachment(s) to the foreign Competent Authority. In some cases, the EOI Program Manager will issue the cover letter and attachment(s) to the foreign Competent Authority. If the information being provided to the foreign Competent Authority is "routine," an EOI frontline manager may review, sign, and issue the cover letter and attachment(s) to the foreign Competent Authority, as authorized by Delegation Order 4-12 (as revised). Information deemed "routine" may include addresses of individuals and basic bank account information; other "routine" information may be identified by the EOI Program Manager.

(9) Within 7 calendar days after issuance of a final response to the foreign Competent Authority, submit the IMS case to EOI management for closure, ensuring all required IMS information is input fully and accurately, and submit the physical case folder (if present) to the location directed by EOI management for closure and archival.

(10) If the foreign Competent Authority indicates any requested information is contemplated to be used for purposes other than tax purposes, consult with EOI management to ensure the request is processed appropriately.

(11) If the foreign Competent Authority withdraws a request for information before the EOI office’s issuance of a final response, promptly advise any assisting IRS personnel in writing that their assistance is no longer required, then submit the IMS case to EOI management for closure as described above.

(12) If information identified through processing a request for information appears potentially relevant for IRS domestic tax compliance purposes, consult with EOI management to confirm whether a referral to an appropriate IRS office is warranted.

(1) The procedures described in this subsection are to be followed by all employees in the EOI Program and JITSIC in cases where a U.S. party in possession or control of information required to fulfill a foreign-initiated specific request for information wishes to designate a power of attorney in reference to the request.

(2) All general instructions for the processing of IRS Form 2848, Power of Attorney and Declaration of Representative, apply to powers of attorney processed by the EOI office. However, three fields included in Form 2848, Section 3, "Acts Authorized," may be completed as follows for powers of attorney related to EOI requests:

1. In the "Description of Matter" field, the exchange of information procedure should be noted (for example, "Exchange of Information").

2. In the "Tax Form Number" field, the number(s) of the IRS form(s) related to the requested information referenced by the power of attorney should be noted (for example, "1040," "1120," etc.), or if no such specific form applies, the phrase "Not Applicable" should be entered. A general reference such as "All" should not be used in any case.

3. In the "Year(s) or Period(s)" field, the specific periods covered by the request should be noted.

(3) Completed Forms 2848 related to EOI requests should generally be sent to the International Centralized Authorization File (CAF) Unit for processing. However, Forms 2848 cannot be processed by the CAF Unit for taxpayers lacking U.S. TINs.

(1) The procedures described in this subsection are to be followed by IRS civil or Criminal Investigation personnel assisting the EOI Program or JITSIC with specific requests for information initiated by foreign Competent Authorities.

(2) IRS civil or Criminal Investigation personnel assisting with a foreign request for information may not directly contact any foreign tax official about the request or any other matter. All contacts with foreign Competent Authorities are to be coordinated by the EOI analyst assigned to the request. For more information about authorized IRS contacts with foreign tax officials, see IRM 4.60.1.1.2, Authority.

(3) If the assigned EOI analyst determines that IRS civil or Criminal Investigation assistance would be effective in fulfilling a foreign-initiated specific request for information, the EOI analyst identifies the appropriate IRS office to assist with the request, as follows:

1. If the specific request involves a U.S. individual or entity in possession or control of the requested information that is under IRS civil examination, the request for assistance is referred to the manager of the group conducting the examination.

2. If the specific request involves a U.S. individual or entity in possession or control of the requested information that is under IRS criminal investigation, the request for assistance is referred to the Deputy Director, Criminal Investigation, International Operations (CI:IO). In order to evaluate whether further action is appropriate, the assigned EOI analyst, in consultation with EOI management, should provide CI:IO with sufficient information in an initial assistance request that will facilitate the steps that CI:IO might need to take. Based on the information provided by the EOI analyst, CI:IO together with the respective field office will decide whether to make contact with the individual or entity to obtain the requested information. CI:IO will notify the EOI analyst of their decision within 14 days. The EOI analyst may then provide the complete referral package to CI:IO as warranted.

3. If the specific request involves information that must be obtained in person or requires specialized topical knowledge, the EOI analyst will consult with EOI management to identify the appropriate IRS office to assist with the request.

(4) The EOI analyst then provides the following documentation to the identified assisting IRS office:

1. A cover memorandum identifying the referral for assistance as related to a request from a foreign tax authority, and providing instructions for securing and providing the requested information.

2. An Information Document Request (IDR) and/or administrative summons prepared by the EOI analyst for issuance or service by the civil or Criminal Investigation office to the U.S. individual or entity in possession or control of the requested information. See also IRM 4.60.1.2.2.4, Foreign-Initiated Specific Requests for Information – Procedures for Cases Involving Summonses, for requests requiring the service of an administrative summons.

3. Additional documentation or instructions pertinent to the request, as necessary.

(5) Upon receipt of the above documentation via the internal routing procedures established by each division, the IRS civil or Criminal Investigation manager designated to assist with the request confirms receipt with the EOI analyst, and provides the contact information for the IRS personnel assigned to the request.

(6) The assisting IRS office must not alter the content of any document prepared by the EOI office for issuance to a U.S. individual or entity without the EOI analyst’s explicit approval. Some information requested in an IDR prepared by the EOI office for issuance to a U.S. individual or entity may already be in the possession of the assisting IRS office. In such cases, the assisting IRS office should consult with the EOI analyst to ensure any such information is not requested in the IDR.

(7) The assisting IRS office should obtain the requested information within 60 calendar days from the date of the EOI memorandum, or sooner, depending on applicable response deadlines. If this timeframe is not met, the EOI analyst will request a status update and the estimated date of completion from the assisting IRS office.

(8) Once the information is secured, the assisting IRS office forwards the information to the EOI analyst through IRS civil or Criminal Investigation management. If the assisting IRS office believes any of the secured information should not be disclosed to the foreign tax authority, the specific rationale for not disclosing the information must be provided to the EOI analyst.

(9) A foreign-initiated request for information does not require the existence or initiation of an IRS examination, and does not constitute an IRS examination. Therefore, each IDR prepared by the EOI office for issuance to a U.S. individual or entity in connection with a foreign request includes the text: This request for information is being made pursuant to the Exchange of Information article of a United States (tax treaty, TIEA, etc.). This request does not constitute an IRS examination. However, if an IRS examination is contemplated as a result of the request, the assisting IRS office must advise the EOI analyst of this action.

(1) All general procedures described in IRM 25.5.3, Summons Procedures, apply to summonses prepared by the EOI office. The below subsections describe only those additional procedures and considerations unique to summonses relating to EOI requests.

(2) Upon receiving an EOI request from a foreign partner, the EOI analyst assigned to the request will determine whether the request falls within the EOI provisions of the applicable international exchange agreement, and whether the service of a summons for the requested information satisfies the four "Powell" requirements (for more information about these requirements, see IRM 25.5, Summons).

(3) If the request is determined to be valid under the terms of the applicable international exchange agreement, the EOI analyst will first attempt to obtain the information requested through informal means without using a summons, for example, from internally accessible sources or by issuing an Information Document Request, except where informal means are not feasible (see, for example, IRM 25.5.1.3.1, Documents from Financial Institutions in the Tenth Circuit).

(4) If the information must be requested from a bank or other financial institution, the EOI analyst will prepare an administrative summons. See IRM 25.5.1.3.1, Documents from Financial Institutions in the Tenth Circuit, and IRM 25.5.1.3.2, Documents from Financial Institutions Located in Circuits Other than the Tenth Circuit.

(5) If the information must be requested from a party other than a bank or other financial institution, the EOI analyst will determine whether to work the case personally or seek assistance from other IRS personnel. The EOI analyst, or other IRS personnel assisting in the case, will generally attempt first to obtain the information without using an administrative summons. If the information requested in this manner is not voluntarily provided, and the information cannot be obtained elsewhere, the EOI analyst will prepare an administrative summons.

(6) An EOI request may ask that the taxpayer not be notified of the request. The exceptions to notification found in IRC 7609(g) are applicable in this context. If the incoming request indicates that there is reasonable cause to believe the giving of notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information by other persons through intimidation, bribery, or collusion, or to flee to avoid prosecution, testifying, or production of records, the EOI Program may seek an ex parte court order with the assistance of Associate Chief Counsel (International), Branch 7 (ACCI-Br7). In all such cases, the EOI analyst must consult with EOI management and ACCI-Br7 to ensure the request is processed appropriately. See also Chief Counsel Directives Manual (CCDM) 34.6.3.6.6, Tax Treaty and TIEA Summonses.

(7) At times, IRS Counsel (primarily, ACCI Br-7) must assist in reviewing the EOI request. For additional information about IRS Counsel’s involvement in the EOI summons process, including summons preparation, proceedings to quash, and enforcement, see below.

(1) The EOI Program occasionally receives requests to provide federally certified documents to a foreign Competent Authority. If the foreign Competent Authority must present the documents for entry into evidence as part of a proceeding in a court of law in the foreign jurisdiction, one of two certification procedures may be warranted:

1. An "apostille" under the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents as signed on October 5, 1961 (Hague Convention - if the requesting foreign jurisdiction is a signatory to that convention); or

2. An authentication letter of "full faith and credit."

(2) When a foreign Competent Authority requests certification of documents, the receiving EOI analyst must first determine if the request is appropriate. Many requests for certification come into the EOI Program through Criminal Investigation. In some cases, particularly if the documentation was obtained through a foreign-initiated specific exchange of information request, the EOI Program Manager may receive the request for certification directly. In any case, the EOI analyst should seek the opinion of Associate Chief Counsel (International), Branch 7 (ACCI-Br7) on the appropriateness of the request. Often, a simpler procedure other than an apostille or authentication letter of "full faith and credit," such as an IRS certification of authenticity of records, may be sufficient.

(3) In general, document certifications (including, but not limited to, seals, ribbons, and other markings) must not be altered, damaged, or removed from certified documents. Such actions may invalidate the certification.

(4) Because time is usually of the essence in completing requests for certifications, EOI analysts should assign high priority to any certification request received. Applicable apostille and authentication letter of "full faith and credit" processing procedures are detailed in the paragraphs below.

(5) First, the assigned EOI analyst must review the foreign request and obtain approval to proceed with certification from the Commissioner, LB&I as the delegated U.S. Competent Authority or their delegate under Delegation Order 4-12 (as revised). Specifically, the EOI analyst must complete the following steps:

1. Review the foreign-initiated certification case carefully, and verify the information requested is required for submission as evidence in a foreign court proceeding. If the request does not stipulate this requirement or the intended use is unclear, contact the foreign Competent Authority for clarification.

   Note: If the request has been received under an MLAT, obtain ACCI-Br7 approval. Normally, MLATs specifically state the types of certification necessary. For more information, see IRM 4.60.1.7, Mutual Legal Assistance Treaty (MLAT) Program.

2. Once certification has been determined appropriate, prepare a certification request approval package for the signature of the U.S. Competent Authority or their delegate under Delegation Order 4-12 (as revised). This package should contain a memorandum summarizing the background of the request, any case-specific letters requiring the U.S. Competent Authority's signature, and a completed Treasury Department Form TD F 10-01.7, Notice of Certification. Form TD F 10-01.7 should be completed electronically, and should include the following in the "description" area: a copy of the letter from the foreign partner requesting the certification, a list/description of every document included in the certification package in the order it appears in the certification package, and a copy of Delegation Order 4-12 (as revised). Additional instructions for completing the form are found in Treasury Directive 25-01, Authentication of Department of the Treasury Documents, which is located on the Treasury Department’s website.

(6) Once the U.S. Competent Authority or their delegate under Delegation Order 4-12 (as revised) has signed the above package, the EOI analyst must obtain the Seal of the Department of the Treasury on all documents to be certified. The Deputy Assistant Secretary for Privacy and Records, Director, Office of Treasury Records is responsible for affixing this seal. Specifically, the EOI analyst must complete the following steps (detailed procedures are also found in Treasury Directive 25-01, Authentication of Department of the Treasury Documents):

1. Make an EOI file copy of all documents to be certified.

2. Assemble the package for the Treasury Department by placing Form TD F 10-01.7 on top of all documents listed in Part A, also punching holes in the package for a two-prong document clip. Original documents are preferred to be included in the package to be certified; if the documents to be certified are not originals, the EOI analyst must explain why.

3. Schedule an appointment for completion of the Treasury seal process by sending an email to RecordsManagement@treasury.gov requesting a date and time for assistance.

4. At the scheduled time, deliver the certification package in person ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Treasury personnel will inspect the documentation and place the ribbon and seal through the documentation with a tamper-proof permanent fixture.

(7) Once the Seal of the Department of the Treasury has been affixed to all documents to be certified, the EOI analyst must obtain either the apostille certificate or the authentication letter of "full faith and credit" from the Department of State. Specifically, the EOI analyst must complete the following steps (detailed information is also available on the State Department’s website using the search term "authentication services"):

1. Deliver the documents to be certified in person to the State Department Office of Authentications. The Office of Authentications offers direct support to federal agencies; no prior appointment is necessary. Identify yourself as a government employee on official government business, and show your agency identification at the door to gain entry. No fee is charged for certifying documents to be used for official business.

2. Complete State Department Form DS-4194, Request for Authentications Service. This form may be completed on the State Department’s website, https://www.state.gov/, or at the computer terminal at the Office of Authentications.

3. Present the completed Form DS-4194, together with the documents to be certified, at the Office of Authentications window. State Department personnel will return the documentation with either an apostille certificate or an authentication letter of "full faith and credit," as appropriate.

(8) Once all documents have been certified per the above procedures, the EOI analyst will issue the certified documents to the foreign Competent Authority under an appropriate cover letter, signed by the U.S. Competent Authority or their delegate under Delegation Order 4-12 (as revised). The EOI analyst will also make EOI file copies of all documentation.

(1) If a foreign Competent Authority indicates that a "certified true copy" of a U.S. tax return is required, the return must be separately certified as a true copy. It is not normally sufficient in such cases to provide an existing copy of the relevant return, because an appropriate IRS employee must be able to attest that the "certified true copy" has not in any way been altered.

(2) The EOI office will obtain the original return (in the form of an electronic record if the return was filed electronically, or via request to the IRS Campus if the return was filed on paper) and make as many copies of the return as necessary. The EOI office will then complete an appropriate certification of the authenticity of the copy(ies).

(3) Once all return copies have been certified per the above procedures, the EOI analyst assigned to the request will issue the certified return copies to the foreign Competent Authority under an appropriate cover letter, signed by the U.S. Competent Authority or their delegate under Delegation Order 4-12 (as revised). The EOI analyst will also make EOI file copies of all documentation, and return any original returns (if the original returns were filed on paper and requested from the IRS Campus per the above procedures) to the appropriate IRS Campus or other source. IRS Form 3210 must be used to track delivery and confirm receipt by the IRS Campus.

(4) The IRS Privacy, Governmental Liaison and Disclosure business unit’s Disclosure office may issue testimony authorizations that are required before an IRS employee may testify in a foreign judicial proceeding. See IRM 11.3.35.12, Testimony Considerations.

(1) In cooperation with the United States Attorney’s Office, IRS Criminal Investigation may request information from a foreign partner relative to an ongoing U.S. grand jury investigation. The procedures described in this subsection are to be followed by employees within the office of the Commissioner, LB&I assigned to United States-initiated specific requests for information related to U.S. grand jury investigations.

(2) Disclosure of grand jury information, including to the extent necessary to solicit the information needed from a foreign Competent Authority, requires the approval of a U.S. federal prosecutor working in an official capacity on a U.S. federal criminal case (which may include the U.S. Attorney General, U.S. Assistant Attorney General, U.S. Attorney, Assistant U.S. Attorney, or U.S. Department of Justice Tax Attorney). Therefore, the Criminal Investigation Special Agent assigned to the investigation must solicit federal prosecutor approval prior to making the request, and the EOI analyst assigned to the request will confirm the existence of this approval prior to issuing the request to the foreign Competent Authority.

(3) Foreign Competent Authorities may have different information gathering restrictions depending on whether a case is currently being criminally investigated, or has already been referred to a prosecutor for criminal indictment. Such restrictions may include an inability to provide any information whatsoever under an international exchange agreement, or an inability to develop information not already in possession of the foreign partner. The EOI analyst should consult with EOI management when an issue arises about restrictions on securing information requested for a U.S. grand jury investigation from a foreign partner.

(4) The name of each person with access to the grand jury-related request and material must be included on the Grand Jury Access List maintained by Criminal Investigation to signify each person’s awareness of grand jury secrecy provisions. The EOI analyst must return the original completed Grand Jury Access List to Criminal Investigation along with the final response from the foreign partner and retain a copy of the list with the closed EOI case. For more information, see IRM 9.5.2.4.1 , Grand Jury Access List.

(5) Information received in response to the request may be used only to support charges related to taxes covered by the applicable international exchange agreement. Moreover, the use and disclosure of grand jury information must be consistent with the applicable international exchange agreement, IRC 6103 , and Rule 6(e) of the Federal Rules of Criminal Procedure.

(1) Information from a U.S. grand jury may be furnished to a requesting Competent Authority for tax administration purposes only under a Rule 6(e) court order obtained through coordination with the U.S. Department of Justice. Before such an order may be obtained, the foreign partner will be required to show a particularized need for the information that is sought preliminarily to, or in connection with, a judicial proceeding. As noted above, any EOI analyst assigned to a specific request involving U.S. grand jury information must consult with the EOI Program Manager.

(1) Pursuant to Model 1 IGAs, HCTAs agree to report annually to the IRS specified information about the U.S. accounts maintained by all relevant FFIs located in their jurisdictions. HCTAs must create an account with the International Data Exchange Service (IDES) to securely transmit FATCA data to the IRS.

(2) HCTAs must transmit the specified information, relating to the previous tax year, by September 30th.

(3) Most FFIs located in a Model 1 IGA jurisdiction must register with the IRS and obtain a Global Intermediary Identification Number (GIIN).

(4) FFIs must identify U.S. accounts in accordance with the due diligence rules contained in Annex I of the IGA and report the specified information about the U.S. accounts to their HCTA.

(5) The information to be obtained and exchanged incudes the account holder’s name, address, and U.S. TIN; the account number; the name and GIIN of the FFI; the account balance or value; and certain interest, dividends, and other income generated by the assets held in the account.

(6) FFIs may also be required to withhold 30 percent of any "U.S. Source Withholdable Payment" (as defined in the IGA) to any Nonparticipating Financial Institution.

(1) The Model 1A IGA provides for reciprocal information exchange between the U.S. Competent Authority and the HCTA.

(2) Prior to exchanging information with an HCTA, the AEOI Program will confirm that several required conditions have been met. The obligation to exchange information does not commence until all of the following conditions are met:

1. The foreign partner provides written notification that its internal procedures have been completed for the IGA’s entry into force.

2. The U.S. Competent Authority and the foreign partner have executed a Competent Authority Arrangement to implement the IGA provisions.

3. All data safeguards and infrastructure elements have been evaluated and each Competent Authority has provided written notification to the other Competent Authority that it is satisfied that the jurisdiction of the other Competent Authority has in place the appropriate safeguards.

4. The HCTA has confirmed registration on IDES to exchange information and provide notices pursuant to the IGA.

5. The jurisdiction is included in the current list published by the Department of the Treasury and the IRS (commonly referred to as the "bank deposit interest" or "BDI" list) identifying the jurisdictions with which it has been determined appropriate to have an automatic exchange relationship with respect to the information collected under 26 CFR 1.6049-4(b)(5) and 26 CFR 1.6049-8(a). See Revenue Procedure 2017-46.

(1) Pursuant to Model 2 IGAs, all relevant FFIs located in the partner jurisdiction must report specified information about their U.S. accounts directly to the IRS. Such FFIs must create an account with IDES and obtain a GIIN to securely transmit FATCA data to the IRS. FFIs must agree to comply with the terms of the FFI agreement, which includes due diligence, reporting, and withholding requirements.

(2) Generally, reporting Model 2 FFIs must transmit the specified information, relating to the previous calendar year, by March 15th (Switzerland and Chile must file by January 31st).

(3) Reporting Model 2 FFIs also report to the IRS aggregate information with respect to holders of preexisting accounts who do not consent to have their account information reported, on the basis of which the IRS may make a "group request" (Competent Authority Request (CAR)) to the HCTA for more specific account information. For more information on such requests, see IRM 4.60.1.10.2.3, Aggregate Account Information and Competent Authority Requests (CARs).

(4) FFIs may also be required to withhold 30 percent of any "U.S. Source Withholdable Payment" (as defined in the IGA) to any Nonparticipating Financial Institution.

(1) An FFI located in a jurisdiction that is not treated as having in effect an IGA, to avoid being withheld upon under Chapter 4, must register and agree to comply with the terms of an FFI agreement and obtain a GIIN, unless it is able to qualify as a certified deemed-compliant FFI or exempt beneficial owner.

(2) The FFI agreement (Revenue Procedure 2014-38, as amended) provides guidance on the FATCA requirements for participating FFIs and reporting Model 2 FFIs. This agreement sets forth the FFI’s due diligence, withholding, information reporting, tax return filing, and other obligations as a participating FFI.

(3) Under IRC 1471(c) and 26 CFR 1.1471-4(d), a participating FFI is required to report to the IRS annually certain specific payee information with respect to U.S. accounts that it maintains. A participating FFI is also required to report certain aggregate account information with respect to specified Chapter 4 reporting pools (as described in 26 CFR 1.1471-4(d)(6)(i)) of its recalcitrant account holders.

(4) In the future, the AEOI Program may make group requests to foreign non-IGA jurisdictions with which the United States has a tax treaty or tax information exchange agreement for more specific account information.

(1) The IRS transmits notifications to acknowledge the status of received files and records of account report data from FFIs, NFFEs, and HCTAs. The notifications can be either acknowledgements that files and records have been successfully received and processed, or error messages from the IRS to the filer (sender) indicating the type of error encountered.

(2) ICMM generates notifications from the IRS to filers, and such notifications are issued at the file or record level. All notification data is prepared in XML format, using notification schemas developed by the IRS.

(3) ICMM will attempt to download and process FATCA files in two stages, file-level processing and record-level processing.

1. File-level processing error notifications, which consist of notifications N1 - N4.3, refer to transmission download, file decryption, file decompression, digital signature check, threat scanning, virus scanning, schema validation, and specific schema field value validation errors. If a file failed at any of these stages, ICMM sends a file-level processing error notification to the sender.

2. Once a file passes all interim file processing checks (decryption, decompression, threat detections, virus scan, etc.), a valid file notification (NVF), or N5 notification, is transmitted to the filer. An N5 notification indicates the file passed validation and informs the filer whether there are record-level errors that require further action. These record-level errors generally include data or formatting errors, for example, TIN not populated.

(4) A FATCA transmission file may consist of one or many FATCA records (IRS Form 8966). ICMM generates one N5 notification for each FATCA transmission. The N5 notification will contain details of the errors, if any. The notification requests correction of these errors within 120 days.

(5) Notifications to the filer are sent through ICMM within 15 days of successful receipt of a file. Filers must download a notification within 7 days or the notification will be deleted by the IDES platform.

(6) To support the implementation of the IGAs, the AEOI Program monitors error notifications sent electronically to Model 1 IGA HCTAs to ensure accurate and timely corrections of minor and administrative errors.

(1) FFIs registered with the IRS are issued a GIIN and will appear on the Foreign Financial Institution list (FFI list).

(2) As set forth in the FATCA CAAs, the U.S. Competent Authority intends to annually provide the information necessary to identify each registered FFI in its jurisdiction on the FFI list.

(3) The FFI registration information includes the names of registered FFIs, GIINs, responsible officers, and contact information.

(4) The information is self-reported by the FFIs through the FATCA registration portal during the registration process.

(1) Model 2 FFIs that are prohibited under the laws of the jurisdiction of residence from reporting a preexisting U.S. account as required by FATCA must request consent from the account holder to report such account. If consent is not provided, the Model 2 FFI must report to the IRS aggregate information for all non-consenting account holders (pooled reporting). This pooled reporting requirement extends to nonparticipating financial institutions for 2015 and 2016.

(2) The U.S. Competent Authority may request additional information from the HCTA with respect to the unidentified accounts underlying the pooled reporting. Such requests will take the form of Competent Authority Requests (CARs). CARs are "group requests" relating to an ascertainable group or class of persons which do not specifically identify any individual taxpayer(s). Pursuant to a CAR, the HCTA is expected to obtain and exchange the information the reporting FFI would have reported to the IRS had the FFI obtained consent from the account holder.

(3) In response to a CAR, the HCTA will transmit to the IRS the requested information in the same format in which the information would have been reported if it had been reported directly to the IRS by the FFI.

(4) The HCTA must provide the requested information within a defined period, within either 6 or 8 months of the receipt of the group request, as prescribed in the applicable IGA. If there will be a delay in the exchange of the requested information, the HCTA must notify the U.S. Competent Authority as soon as possible.

(5) If the requested information is not exchanged within the prescribed time, the reporting Model 2 FFI must treat the account as held by a recalcitrant account holder, and must withhold tax where required by U.S. Treasury Regulations. The FFI must continue such treatment until the HCTA exchanges the requested information with the U.S. Competent Authority.

(6) Prior to making a CAR, the AEOI Program confirms the following conditions:

1. The foreign partner’s IGA has entered into force; and

2. The underlying agreement authorizing the U.S. Competent Authority to make group requests, i.e., a tax treaty or TIEA, has entered into force. If there is no such underlying exchange agreement, the IGA will authorize the exchange of information per such group requests.

(1) All requests initiated by IRS personnel for access to FATCA data must be in writing. Each request must provide sufficient background information about the examination, investigation or other tax administrative procedure to ensure the relevance of the request to the examination, investigation, or procedure and the nature of the information being requested.

(2) A request is initiated by emailing the AEOI Program Manager or the general AEOI mailbox ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(3) The requester should complete a FATCA Information Request Form and attach the form to the request email.

(1) The IRS, in coordination with its foreign partners, is currently developing a global standard for the secure electronic transmission of country-by-country reports. This IRM subsection will be updated accordingly as this standard is adopted.

(1) IRS personnel may access traditional automatic data by completing the web-based orientation, "Automatic Exchange of Information Data Security & Governance Orientation."

(2) Once the IRS employee certifies completion of the orientation, a Business Entitlement Access Request System (BEARS) application must be submitted to request access to the "Easy Search" traditional AEOI database. Detailed instructions will be provided at the end of the orientation.

(3) After the BEARS application has been approved, the database administrator will send an email to the IRS employee with instructions for accessing the traditional AEOI database.

(1) The Exchange of Information (EOI) article under the relevant international exchange agreement (as described in IRM 4.60.1.1, Program Scope and Objectives) with a foreign government provides the legal framework for exchanging information with foreign partners involved in a Joint Audit.

(2) With respect to double taxation issues, the relevant international exchange agreement should also contain a MAP article.

(3) IRM 4.60.1.1.3, Roles and Responsibilities, discusses the role of the U.S. Competent Authority in the EOI process. Under Delegation Order 4-12 (as revised), JITSIC and APMA are delegated authority to transmit and request information in accordance with the exchange of information provisions of international exchange agreements, and the Director of APMA is authorized to sign on behalf of the Commissioner, LB&I (the U.S. Competent Authority) with respect to matters arising under international exchange agreements including signing mutual and other agreements on behalf of the Competent Authority. Also under Delegation Order 4-12 (as revised), IRS officials and personnel within JITSIC and APMA are delegated authority to disclose information to a foreign Competent Authority in accordance with the exchange of information provisions of international exchange agreements, to the extent necessary to perform their official duties. Accordingly, where the Joint Audit includes a transfer pricing issue, a JITSIC or APMA representative should be present during all Joint Audit discussions with the tax administration of a foreign partner.

(4) The role of the Competent Authority in Joint Audits includes:

1. Exchanging relevant information as authorized by applicable international exchange agreements;

2. Facilitating discussions between tax administrations (i.e., organizing conference calls, meetings, etc.);

3. Determining what information can be exchanged and discussed between the tax administrations pursuant to the legal framework of the relevant international exchange agreement; and

4. In certain cases where APMA is involved as the Competent Authority, resolving potential MAPs or APAs.

(5) The U.S. Competent Authority will initiate discussions with the foreign Competent Authority in order to facilitate the proposal of a Joint Audit.

(1) The objectives of a Joint Audit include:

1. Reducing audit timeframes for international issues having tax implications in multiple jurisdictions, particularly by eliminating double tax issues or reducing the MAP process time by incorporating the MAP discussions into the examination process for earlier resolution;

2. Gaining a global understanding of the taxpayer’s operations and tax positions;

3. Enhancing the factual development of an audit through the sharing of relevant tax information between Joint Audit Parties; and

4. Ensuring the correct amount of tax is assessed on international business transactions.

(2) The benefits of a Joint Audit may include:

1. Reducing the taxpayer’s burden and expenditures for administrative resources by consolidating responses to multiple audits with common factual issues;

2. Potentially eliminating or accelerating the MAP process, by involving the Competent Authorities in the examination where the potential exists for double taxation, thus eliminating or reducing the timeframe for MAP resolution;

3. Providing certainty for taxpayers through a reduced audit timeframe;

4. Gaining a more global perspective of the legal differences in tax legislation;

5. Developing enhanced relationships between national revenue bodies and taxpayers;

6. Harnessing the strengths and expertise of a global audit team; and

7. Effectively managing tax issues in real time.

(1) It is important to ensure the Joint Audit is properly structured by the Joint Audit Team. In general, the steps to be followed in the Joint Audit process include:

1. Risk analysis;

2. Audit planning;

3. Jointly requesting and gathering audit information;

4. Conducting audit work; and

5. Conclusion and resolution.

(2) Following the risk assessment and acceptance of cross-border cases proposed for a Joint Audit, the Joint Audit Team will develop and agree on a Joint Audit Examination Plan. Consistent with the Joint Audit Examination Plan, the Joint Audit Parties should allocate adequate resources to staff the Joint Audit Team and work the Joint Audit Issues. Sufficient consideration in the Joint Audit Examination Plan should be given to each Joint Audit Party’s estimated closing date, and to the completion of the Joint Audit within the statute of limitations (including extensions). An orientation meeting about the Joint Audit process may be conducted by the Joint Audit Parties, as deemed necessary, to familiarize the Joint Audit Team members with the steps of the Joint Audit process.

(3) Principles of collaboration and communication are critical to the success of a Joint Audit. Throughout the Joint Audit, the members of the Joint Audit Team should have continuous contact with one another to update each other on steps taken, progress achieved, and the occurrence of significant events to ensure that the Joint Audit is progressing according to the agreed upon time schedule.

(4) The efficient flow of information is vital for a successful Joint Audit. Information should be exchanged, in accordance with international exchange agreements, through a variety of means (e-mail, face-to-face, and via teleconference) as agreed at the Joint Audit Planning Meeting, provided that all means of transmitting such information must be secure. It is advisable to strive for routine dialogue between the Joint Audit Team members in order to exchange information more efficiently and to prevent misunderstandings.

(5) Throughout the Joint Audit process, it may be beneficial to have all Joint Audit Parties present for discussions related to the Joint Audit Issues and activities. Joint Audit meetings can be in-person, via telephone conference calls, or via video conferencing. These meetings and discussions can be administrative, presentational, or in a Q&A format to address Joint Audit Issues and activities.

(6) Meetings with the taxpayer should be scheduled as deemed necessary. It is important to keep open channels of communication with the taxpayer throughout the Joint Audit process. The Joint Audit Team should keep the taxpayer informed of the audit status throughout the process and input from the taxpayer on the Joint Audit Issues should be encouraged. In conducting a Joint Audit, consult with the taxpayer and its representatives and seek their cooperation during the Joint Audit process. However, taxpayer cooperation and participation are not required, and the absence of such should not preclude the Joint Audit process.

(7) If more than two Joint Audit Parties will participate in a Joint Audit, there may be disclosure restrictions with respect to the flows or exchanges of information to be conducted during the Joint Audit process. Any such restrictions may vary significantly from case to case, depending on the particular participating jurisdictions and the treaties or other exchange agreements involved. In such multilateral Joint Audits, the potential applicable disclosure restrictions should be identified as part of the risk assessment. See IRM 4.60.1.11.2.1(5).

(1) When the audit team identifies significant cross-border audit issues and determines a Joint Audit could be beneficial, the audit team should notify its case manager.

(2) After the case manager agrees the case should be considered for Joint Audit, the audit team should prepare a Joint Audit Referral. The Joint Audit Referral should comprise the following:

1. A detailed description of the relevant taxpayer, audit timeline, and cross-border audit issues,

2. A brief statement explaining how the proposed case meets the objectives of the Joint Audit Program (see IRM 4.60.1.11.1.2), and

3. Any organizational charts, transactional flow charts, or other supplemental information that might aid in evaluation of the proposed case.

(3) The audit team should submit the Joint Audit Referral to a JITSIC Senior Revenue Agent or the APMA Director where the case includes a transfer pricing issue.

(4) Taxpayers can request a Joint Audit to resolve issues of double taxation between tax administrations and be engaged in the process from the beginning of the examination. A taxpayer-initiated request for Joint Audit should be discussed with the Team Manager or Team Coordinator responsible for the IRS examination. If the case manager agrees the case should be considered for Joint Audit, a Joint Audit Referral, as described above, should be completed and submitted to a JITSIC Senior Revenue Agent. In the case of a taxpayer-initiated request for a Joint Audit involving a transfer pricing issue, the TPP Manager should complete and submit the Joint Audit Referral to the APMA Director. Where a taxpayer requests a Joint Audit through APMA, the relevant APMA Team Leader should prepare the Joint Audit Referral to be submitted to the APMA Director.

(5) Risk Assessment: In evaluating the Joint Audit Referral, JITSIC or TTPO will coordinate with relevant subject matter practice areas to consider the facts and circumstances of the referral, including the following:

1. Whether the applicable international exchange agreement provides for the requisite exchange of information between the tax administrations;

2. Whether the proposed audit issue(s) rise to a level of significance that justifies the use of resources necessary to engage in and complete a Joint Audit;

3. Whether there is a high probability that by engaging with our international exchange agreement partner(s), the audit process will be significantly enhanced; and

4. Whether there is a potential for a Joint Audit to impact prior and future tax year or period compliance.

5. In the case of a proposed multilateral Joint Audit, the extent to which disclosure restrictions may constrain communications among the parties. See IRM 4.60.1.11.1.3(7).

(6) Transfer Pricing Risk Assessment: Where the proposed Joint Audit has been referred to the APMA Director, APMA should coordinate discussions among appropriate TTPO personnel and consider the following:

1. The recommendation of the TPRA, based on a detailed risk assessment of the relevant issues described in the Joint Audit Referral, which should consider materiality of the transactions.

2. The recommendation of the TPP, which should consider availability of resources to perform the proposed Joint Audit, TPP’s experience with the issues, potential benefits from factual developments, any level of overlap for the proposed Joint Audit years and the status of U.S. statute of limitations; and

3. The recommendation of APMA, which should consider any difficulty presented if the case enters MAP inventory, the relationship with the relevant treaty partner’s Competent Authority office, and whether the U.S. entity has an APA in place with any other member(s) of its multinational group.

(7) Based on the risk assessment performed by the relevant subject matter practice area, the appropriate practice area director should determine whether to proceed with the Joint Audit. A JITSIC Senior Revenue Agent or APMA representative should document considerations made during the Risk Assessment and the decision whether to proceed with the Joint Audit in the taxpayer’s file. If a decision is made to proceed with the Joint Audit, a U.S. Joint Audit Coordinator (JAC) should be appointed by the JITSIC Team Manager or APMA Director.

(8) The audit team will prepare the Joint Audit Proposal. The Joint Audit Proposal should include a description of the taxpayer, relevant transactional and organizational information, audit timeline, and issues described in the Joint Audit Referral. The JAC will transmit the Joint Audit Proposal to the foreign Competent Authority with a formal invitation letter requesting a Joint Audit. All such exchanges of information must be in accordance with the applicable international exchange agreement.

(9) Joint Audit Proposal Meeting: It is the U.S. audit team’s responsibility to facilitate a discussion of the proposed Joint Audit in a formal meeting (via conference call, using video technology, face-to-face, etc.) with the respective foreign Competent Authority(s). In general, the Joint Audit Proposal Meeting should cover the information included in the Joint Audit Proposal. The agenda for the Joint Audit Proposal Meeting should include an overview from each jurisdiction of the taxpayer’s background, audit history, organization structure, and specific details to include the following:

1. Taxpayer name;

2. Years or periods to examine (including the potential for rollback to open years or an APA to cover continuing issues in further years);

3. Proposed audit issues (contemplated to be the Joint Audit Issues) to examine;

4. Timeframes for the examination; and

5. Risk analysis prepared by the audit team describing the areas of cross-border tax risk.

(10) In general, the Joint Audit Proposal Meeting should be scheduled to allow time for the foreign Competent Authority to provide, in advance, reciprocal information and feedback on the Joint Audit Proposal. A timeframe should be established as an outcome of the Joint Audit Proposal Meeting for a decision to be made on the acceptance or rejection of the Joint Audit Proposal. It is the sole decision of the foreign tax administration to accept or reject participation in a proposed Joint Audit of a taxpayer.

(11) Foreign Partner Accepts: If the foreign tax administration accepts a Joint Audit of a U.S. taxpayer, the U.S. JAC should notify the case manager in order to assure appropriate audit personnel are assigned to the Joint Audit Team as described in IRM 4.60.1.11.3. The U.S. JAC should also begin preparing for the Joint Audit Planning Meeting. The output of the Joint Audit Planning Meeting among all the participating Competent Authorities will be an agreed Joint Audit Examination Plan. For more information about the Joint Audit Planning Meeting and the Joint Audit Examination Plan, see IRM 4.60.1.11.4, Planning a Joint Audit.

(12) Foreign Partner Rejects: If the foreign partner declines to participate in a proposed Joint Audit of a taxpayer, consideration should be given to conducting a Joint Collaboration (described in IRM 4.60.1.11.8.5) with the tax administration of the foreign partner. The audit team should continue to work the audit issue and utilize the exchange of information process with the foreign Competent Authority to request information relevant to the examination that is not available domestically; for more information, see IRM 4.60.1.2.1, United States-Initiated Specific Requests for Information. The U.S. JAC should ensure documentation of the foreign partner’s decision to decline participation in the Joint Audit and the reason(s), if given, for doing so are stored in the taxpayer’s file.

(1) A foreign tax administration can propose a Joint Audit of a U.S. taxpayer through the U.S. Competent Authority. Joint Audit Proposals that include a transfer pricing issue should be referred to the APMA Director. All other proposals should be referred to the JITSIC Team Manager.

(2) The Risk Assessment for considering a foreign-initiated Joint Audit Proposal should be similar to that described in IRM 4.60.1.11.2.1(5) through (7).

(3) If the taxpayer which is the subject of the proposed Joint Audit is not under examination in the United States, JITSIC or APMA may request that the foreign Competent Authority lead a Joint Audit Proposal Meeting (see IRM 4.60.1.11.2.1(9)) or provide specific facts or other documentary evidence, such as a Transfer Pricing Report and risk analysis, to demonstrate potential U.S. tax risk.

(4) It is the sole decision of the IRS to accept or reject participation in a Joint Audit proposed by a foreign Competent Authority.

(5) If after the Risk Assessment, a decision is made to not participate in a Joint Audit, the JAC will contact the foreign Competent Authority to decline the invitation. However, consideration may be given to conducting a Joint Collaboration as described in IRM 4.60.1.11.8.5. If a decision is made to proceed with a Joint Audit, the JAC will contact the foreign Competent Authority to accept the Joint Audit invitation. The U.S. JAC should also contact the appropriate audit case manager to assign audit personnel to the Joint Audit Team as described in IRM 4.60.1.11.3.

(6) An agreement to conduct a Joint Audit should be formalized in a Joint Audit Examination Plan signed by the responsible examination Program Manager for the IRS.

(1) The Joint Audit Issues will determine the skills and expertise required by the Joint Audit Team members. All Joint Audit Team members should have good communication skills, both verbal and written, and a good understanding of the global business of the taxpayer under audit. The audit team manager will be instrumental in allocating resources necessary to staff the Joint Audit Team with the necessary members to work the issues selected.

(2) IRS policy requires one person from APMA to be assigned to the Joint Audit Team. In the event the Joint Audit Issues relate to matters other than transfer pricing and profit attribution, the U.S. Competent Authority may use other personnel.

(3) If the Joint Audit Issues involve Transfer Pricing under IRC 482, consider some of the following skills and expertise:

1. Transfer Pricing: The Joint Audit Team should include TPP personnel with expertise relevant to the type of the transactions, and a thorough understanding of IRC 482 and the Treasury Regulations thereunder.

2. Economist: Considering the size, complexity and risk analysis of the Joint Audit Issues, the Joint Audit Team may include an Economist familiar with the issues being examined and able to analyze the various transfer pricing methodologies and evaluate Transfer Pricing studies.

(1) Every Joint Audit Team must include an IRS employee assigned to JITSIC or APMA who is authorized to disclose information pursuant to Delegation Order 4-12 (as revised) under the provisions of international exchange agreements, whether a JITSIC Senior Revenue Agent or an APMA representative. This would typically be the JAC.

(1) The Joint Audit Planning Meeting establishes the framework for the operations of the Joint Audit. The primary goal of the Joint Audit Planning Meeting will be to discuss and develop a Joint Audit Examination Plan.

(2) The Joint Audit Planning Meeting should be coordinated by the JAC of the tax administration proposing the Joint Audit. The JAC should extend an invitation to the participating foreign tax administration(s) and include a proposed Agenda and a draft Joint Audit Examination Plan. A member of the Joint Audit Team will record the minutes of the Joint Audit Planning Meeting. The JAC will exchange the minutes between Competent Authorities for review.

(3) The Joint Audit Planning Meeting should include a discussion of the following:

1. Introduction to the individuals who will be part of the Joint Audit Team;

2. Review of the legal framework for discussions between tax administrations, including the rules relating to confidentiality and the exchange of information under international exchange agreements;

3. Background on the taxpayer;

4. Overview of the taxpayer’s organizational structure;

5. Review of relevant internal and external information available;

6. Discussion of the relevant tax compliance risk and potential Joint Audit Issues;

7. Discussion of various audit techniques;

8. Agreement on the audit timeline; and

9. Finalization of the Joint Audit Examination Plan.

(4) The Joint Audit process should not only include steps and processes for examining the specific Joint Audit Issues, but should also outline administrative processes for the Joint Audit including:

1. Status meetings;

2. Coordinated issuance of Information Document Requests;

3. Exchanging information; and

4. Escalation procedures for dispute resolution should the Joint Audit Team reach an impasse.

(5) Administratively, the Joint Audit process should provide a practical approach for sharing the workload, addressing processes and procedures, and creating an environment for consensus of an efficient and effective resolution.

(1) Joint Audit Issues are the potential tax issues agreed upon by participating tax administrations that will be examined by the Joint Audit Team to determine tax compliance in one or more jurisdictions.

(2) Joint Audit Parties should work together to identify the Joint Audit Issues to be examined as part of the Joint Audit. Joint Audit Parties should identify and discuss the audit years open, or able to be open, to compare the ability to jointly audit the issues identified. This step will enable participants to set expectations on contributions that each jurisdiction will be able to make.

(3) Appropriate timeframes should be established for the participating tax administrations to identify the Joint Audit Issues. The Joint Audit Issues must be material, relevant to one or more Joint Audit Parties, and/or the subject of a potential request for MAP assistance.

(4) Where a Joint Audit is precipitated by an International Compliance Assurance Programme (ICAP) risk assessment outcome, the ICAP issues should be included as Joint Audit Issues in the Joint Audit Examination Plan. In such case, the information and factual development already accomplished and exchanged through the ICAP process should serve as the basis for an efficient and potentially expedited Joint Audit Examination Plan timeline.

(5) The Joint Audit Issues should be mutually agreed upon by all Joint Audit Parties, specifically articulated as Joint Audit Issues, and included in the Joint Audit Examination Plan. It is recommended that only two or three primary Joint Audit Issues be selected. It should be feasible to complete the examination of the Joint Audit Issues during the agreed upon timeframes for the Joint Audit.

(6) Since one of the objectives of a Joint Audit is to reduce taxpayer burden and reduce the timeline for resolution of tax issues, all potential MAP issues should be included in the Joint Audit Examination Plan as Joint Audit Issues; however, the potential MAP issues can be secondary issues.

(1) General agreement to the Joint Audit framework and the Joint Audit Issue(s) of a specific taxpayer audit is formalized in a Joint Audit Examination Plan. For U.S.-initiated Joint Audits, the IRS Joint Audit Team Leader is primarily responsible for preparing, drafting and reviewing the Joint Audit Examination Plan and facilitating its approval.

(2) At a minimum, items to include in the Joint Audit Examination Plan are:

1. Background;

2. Joint Audit objectives;

3. Scope;

4. Timeline;

5. Communication and exchange of information process;

6. Listing of Joint Audit Team members and their roles;

7. Operational risk and mitigation strategies;

8. Escalation procedures; and

9. Agreement to make modifications (variations), as needed.

(3) Input from the Joint Audit Team on the Joint Audit Examination Plan is critical to the Joint Audit process. A draft Joint Audit Examination Plan should be prepared by the proposing tax administration. Once exchanged, a joint discussion should be held to provide comments and revisions. Emphasis should be placed on integrating the Joint Audit Examination Plan with the LB&I Examination Plan particularly as to resources and timeframes.

(4) The Joint Audit Examination Plan should be entered into (i.e., signed) by the Joint Audit Parties. It is the responsibility of the JAC of each Joint Audit Party to secure approval of the Joint Audit Examination Plan. The Joint Audit Examination Plan must be approved and signed by the responsible examination Program Manager for the IRS, and an equivalent level of signature by the foreign Joint Audit Party. In the case of a Joint Audit involving a transfer pricing issue, the Joint Audit Examination Plan should be approved and signed by the appropriate TPP Territory Manager. The JACs should oversee adherence to the Joint Audit Examination Plan, paying particular attention to the timeline. Any extensions to the timeline should be documented.

(5) The Joint Audit Examination Plan is an agreement between the Joint Audit Parties. The taxpayer(s) are not party to the Joint Audit Examination Plan. The Joint Audit Examination Plan may be shared with the taxpayer, but taxpayer concurrence with the Joint Audit Examination Plan is not required. Either Joint Audit Party can withdraw from the Joint Audit Examination Plan and the Joint Audit process at any time.

(1) The JACs are responsible for keeping open lines of communication between the Joint Audit Parties and distributing information relevant to the Joint Audit.

(1) During the course of the Joint Audit, signed agreements must be reached between the Joint Audit Parties as to the:

1. Joint Audit Examination Plan, as described in IRM 4.60.1.11.4.3; and

2. Joint statement of proposed adjustments or joint position papers, as described in IRM 4.60.1.11.7.1(5).

(2) Throughout the Joint Audit process, each tax administration should timely exchange information relevant to the Joint Audit Issues through their respective Competent Authorities in accordance with the applicable international exchange agreement.

(1) Stages of issue development should include determining the facts, applying the law to those facts, and understanding the various tax implications of the issue. The Joint Audit Team should use the IDR process and collaborate in conducting joint meetings with the taxpayer when necessary to develop the facts. Every effort should be made to resolve any factual differences with the taxpayer. Regularly scheduled meetings should be held by the Joint Audit Team to ensure that open communication and reassessment continues throughout the execution phase. The IRS Joint Audit Team Leader should determine who should participate in the respective meetings and interviews throughout the Joint Audit execution phase. Exchanges of information relevant to the Joint Audit Issues by the Joint Audit Parties should be conducted in accordance with the applicable international exchange agreement and as allowed under Delegation Order 4-12 (as revised). Where the Joint Audit includes a transfer pricing issue, the IRS Joint Audit Team Leader is required to provide the TPP and APMA directors with a briefing on case development at least once during the execution phase (and as often as necessary) to ensure they are in agreement with the U.S. approach and position on the relevant issues. Where the Joint Audit includes a non-transfer pricing issue, the IRS Joint Audit Team Leader is required to provide the relevant subject matter Director of Field Operations and the Exchange and Offshore Strategy Director with a briefing on case development at least once during the execution phase to ensure they are in agreement with the U.S. approach and position on the relevant issues.

(1) The Joint Audit Team should jointly request and gather audit information.

(2) Although the Joint Audit Parties may request information from their respective taxpayer at any time in accordance with each jurisdiction’s domestic laws and applicable international exchange agreement, it is expected that the Joint Audit Parties will consult and collaborate with each other before requesting information necessary to develop the Joint Audit Issue(s) from their respective taxpayers. The Joint Audit Parties, however, are not precluded from making other information requests and may do so at their discretion. The Joint Audit Parties may exchange, through the JACs, information received from their taxpayers spontaneously or in response to a specific request, in accordance with the applicable international exchange agreement. It is suggested that the Joint Audit Parties share with one another the relevant responses received from their respective taxpayers immediately upon receiving such information. The Joint Audit Team should request their respective taxpayers to voluntarily share responses to any Information Document Request (IDR) with the Joint Audit Parties simultaneously.

(3) Information request procedures should adhere to each jurisdiction’s domestic procedures and laws and applicable international exchange agreement. Discussions about IDR response times should be held with members of the foreign Joint Audit Team.

(4) It is expected that the information requests or IDRs prepared by the Joint Audit Team will be delivered to and discussed with each respective taxpayer concurrently. The Joint Audit Parties should inform one another upon issuing an information request. The Joint Audit Parties should inform one another through the JACs upon receiving responses to an information request or IDR. Any delays in a taxpayer’s response should be communicated between the Joint Audit Parties through the JACs. Exchange of the information received should occur as soon as feasible in accordance with the applicable international exchange agreement.

(1) It is expected that the Joint Audit Parties will consult and collaborate with each other before requesting interviews of taxpayer personnel. To the extent permitted under the applicable international exchange agreement, the Joint Audit Parties are expected to jointly participate in interviews of personnel. The Joint Audit Parties will arrange interviews at the taxpayer’s physical location or at the tax administration’s local office. To the extent permitted, the hosting Joint Audit Party should invite the other Joint Audit Party to participate at the designated interview location. To the extent permitted, each Joint Audit Party should have the opportunity to ask questions and follow-up questions to permit each to gather the facts necessary to complete the Joint Audit Issue.

(2) Coordination with the LB&I International Travel Office should be performed as soon as it is determined international travel will be performed or international travelers will be visiting the United States. Refer to IRM 1.32.5, International Travel Office Procedures, for applicable travel procedures.

(1) It is recommended that the lines of communication with the Joint Audit Parties be kept open through regularly scheduled status meetings. The Joint Audit Party proposing a Joint Audit should host the initial meeting, whether by videoconference or call, with hosting responsibilities alternating among the other Joint Audit Parties thereafter. JITSIC and APMA officials and employees authorized to exchange information under international exchange agreements should attend all Joint Audit meetings and conference calls. Prior to hosting a joint meeting, an agreed agenda should be prepared by the hosting Joint Audit Party.

(2) The hosting Joint Audit Party is required to take minutes during Joint Audit meetings and document action items resulting from the meetings. The JACs will facilitate exchange of the minutes with the Joint Audit Party(ies). Each Joint Audit Party should review the meeting minutes to cross-check and finalize the minutes of the meeting. Since there may be differences in methods and procedures in each jurisdiction, it is necessary to clarify and conclude in writing in the minutes all discussions agreed upon at a meeting.

(3) It is also recommended that regular Joint Audit status meetings be held with the U.S. taxpayer and foreign taxpayer. Significant issues creating delays should be discussed between Joint Audit Team members.

(4) Items to consider when participating in a meeting with a Joint Audit Party include:

1. Protocol for discussions;

2. Nexus to the transaction; and

3. Information to be shared must be in accordance with the applicable international exchange agreement.

(1) The IRS recognizes that the ability to efficiently communicate and share information with the foreign Joint Audit Party(ies) is critical to the success of the Joint Audit. Each Joint Audit Party should adhere to obligations under the applicable international exchange agreement and Delegation Order 4-12 (as revised). It is imperative that the Joint Audit process protects the taxpayer’s information from unauthorized disclosure and use.

(2) Throughout the Joint Audit process, the audit team from each jurisdiction should timely exchange information relevant to the Joint Audit Issues through their respective JACs, in accordance with the applicable international exchange agreement. The process of handling exchanges should be discussed and agreed upon between the Joint Audit Team members. To the extent permitted by the applicable exchange agreement, documents that are relevant to the Joint Audit Issues should be exchanged spontaneously by each Joint Audit Party in order to avoid delays in the Joint Audit process. If a document in the IRS’s possession is discussed during a conference call, and it is foreseeably relevant to the foreign Joint Audit Party, the IRS JAC should exchange the document spontaneously with the foreign Joint Audit Party (rather than wait for a specific request), in accordance with the applicable international exchange agreement. The same practice is expected from the foreign Joint Audit Party.

(3) In communicating and exchanging information, the IRS should adhere to the following exchange procedures:

1. Information disclosed must be in accordance with the applicable international exchange agreement and must be made by an authorized official or employee assigned to JITSIC or APMA, as applicable, to address compliance or non-compliance issues relevant to the Joint Audit Issue(s) (including the formulation of the Joint Audit Issue(s)).

2. When the IRS references tax information of a person other than the taxpayer whose tax liability is at issue in the Joint Audit, the information must directly relate to a transactional relationship between the third person and the taxpayer, which transactional relationship directly affects the resolution of the Joint Audit Issue(s).

3. Taxpayer information may only be shared between the designated JACs under the applicable international exchange agreement, and should be marked as exchanged information with the appropriate stamp.

(4) The U.S. JAC has the responsibility for making sure the information exchanged by the IRS is in accordance with the applicable international exchange agreement.

(5) The U.S. Competent Authority will need input from the IRS audit team, particularly, as to sensitive information, trade secrets, competitive advantage, foreign partner use of the information, and the potential tax impact in the foreign jurisdiction.

(6) Specific information requested by a foreign Joint Audit Party should be provided by the IRS Joint Audit Team to the U.S. JAC, as allowed by the applicable international exchange agreement and Delegation Order 4-12 (as revised). Once the information request is received, the authorized JITSIC or APMA officer or employee will make a decision about the foreseeable relevance of the information requested to the foreign Joint Audit Party. If the information is not considered foreseeably relevant, the U.S. JAC, acting as U.S. Competent Authority, and in consultation with reviewers in the U.S. Competent Authority, will seek clarification from the foreign Joint Audit Party to determine whether foreseeable relevance has been established.

(1) IRS Form 5466-B, Multiple Record of Disclosure, should be filed by the U.S. JAC for each U.S. taxpayer for which returns and/or return information (as defined under IRC 6103) has been disclosed to a foreign Competent Authority under the applicable international exchange agreement(s). IRM 11.3.37, Recordkeeping and Accounting for Disclosures, provides the procedures for filing Form 5466-B.

(1) The IRS members of the Joint Audit Team should document the facts, law, and conclusion with respect to any proposed Joint Audit adjustments. Appropriate levels of review and approval (by Counsel, Transfer Pricing Subject Matter Expert, Economist, or management official) should be sought, if required.

(2) Each Joint Audit Party should provide the other(s) with a copy of the relevant portions of their statement of proposed adjustments, in accordance with the applicable international exchange agreement.

(3) The JACs should schedule a call or Joint Audit Team meeting to have each jurisdiction present its proposed adjustments with respect to the Joint Audit Issues. This Joint Audit Team meeting or call is a prerequisite to the Joint Audit closing conference with the taxpayer.

(4) It is recommended the IRS members of the Joint Audit Team hold an internal pre-call prior to the call with the foreign Joint Audit Team to discuss the position paper which will describe the resolution of the IRS audit. The pre-call should be performed to:

1. Discuss the completed position paper(s), ensuring the IRS Joint Audit Team has secured the necessary management and Counsel approvals,

2. Receive input from the APMA personnel with respect to the proposed results, and

3. Prepare for discussing the issues with the foreign Joint Audit Team.

(5) The Joint Audit Team should hold a joint meeting to discuss the proposed adjustments. The primary purpose of this meeting is to decide jointly on the appropriate course of action pertaining to the resolution of the Joint Audit Issues. The Joint Audit meeting scheduled to discuss the proposed adjustments should conclude with a mutual understanding between the Joint Audit Parties (or a conclusion that an understanding is not possible) as to the recommended course of action, which should be memorialized in a joint statement of proposed adjustments or joint position papers.

(6) The final resolution of the Joint Audit Issues should be exchanged as position papers between the Joint Audit Parties. The U.S. Joint Audit position paper should be approved by the APMA Director where a transfer pricing issue is involved.

(1) The purpose of the Joint Audit closing conference is for the Joint Audit Parties to each present their proposed adjustments to their respective taxpayer(s). The conference should include all parties: the IRS members of the Joint Audit Team, the foreign members of the Joint Audit Team, and the taxpayer(s) from each jurisdiction, if possible. During the conference, the Joint Audit Parties should present their positions on the Joint Audit Issue(s) relative to their respective taxpayer(s). Each Joint Audit Party should address taxpayer questions accordingly.

(2) A written response from the taxpayer addressing each jurisdiction’s proposed adjustments (similar to a Protest Letter) should be solicited. The IRS should request the taxpayer’s declaration of agreement or disagreement with each proposed adjustment.

(1) If the Joint Audit Parties and taxpayer agree to the proposed adjustments, the Joint Audit Parties will exchange final letters signed and dated by their respective Competent Authority similar to those exchanged to conclude MAP cases. See Section 9.04 of Revenue Procedure 2015-40, Procedures for Requesting Competent Authority Assistance under Tax Treaties (or its successor), and IRM 4.60.3.2, Competent Authority and the Mutual Agreement Procedure (MAP).

(2) During the course of a Joint Audit, APMA personnel on the Joint Audit Team will determine the best course of action in efforts to avoid double taxation. If the taxpayer does not agree with the proposed Joint Audit adjustments, Appeals and MAP are alternate processes which may be pursued by the U.S. taxpayer and, in certain cases, may be conducted simultaneously. The Joint Audit does not alter the taxpayer’s rights on these processes. Such a case should be flagged for Appeals as a "Joint Audit Examination with (insert name of foreign jurisdiction)." If an Appeals settlement cannot be reached, the U.S. taxpayer has the option of litigating the Joint Audit Issue(s). If the taxpayer initiates a MAP proceeding, Revenue Procedure 2015-40, Procedures for Requesting Competent Authority Assistance under Tax Treaties, Section 6.04(2), or its successor, provides for the coordination between Appeals and APMA on MAP issues. If a MAP resolution cannot be reached, APMA may utilize arbitration where available under the applicable international exchange agreement.

(1) At the completion of a Joint Audit, all IRS members of the Joint Audit Team should participate in a Joint Audit critique. It is recommended that the foreign members of the Joint Audit Team also be invited to participate in the Joint Audit critique. The Joint Audit Team should note significant items of success as well as significant items of concern identified throughout the Joint Audit process. The Joint Audit Team should consider, when possible, involving the taxpayer in the Joint Audit critique. The results of the Joint Audit critique should be documented and provided to the Withholding Exchange and International Individual Compliance (WEIIC) Director or TPPO Director where the proposed Joint Audit involved transfer pricing issues.

(1) A multilateral international exchange agreement or multiple bilateral international exchange agreements may also provide the framework for the joint examination of taxpayers’ cross-border transactions. Consideration should be given as to whether a multilateral Joint Audit would be beneficial.

(2) A multilateral Joint Audit is an audit in which three or more Joint Audit Parties join together to form a single audit team to examine an issue or issues of one or more related taxpayers with cross-border activities involving related taxpayers in the respective jurisdictions. The Parties to a multilateral Joint Audit will employ procedures consistent with those generally applicable to Joint Audits under IRM 4.60.1.11. The basis for cooperation can be found in the network of bilateral and multilateral international exchange agreements (as defined in IRM 4.60.1.1, Program Scope and Objectives) which provide for mutual assistance in tax matters.

(3) In initiating a multilateral Joint Audit, potential disclosure restrictions on communications among the Joint Audit Parties should be considered. See IRM 4.60.1.11.1.3(7) and IRM 4.60.1.11.2.1(5).

(1) Joint Audits are not simultaneous examinations. There are distinctions between the two programs. A Joint Audit involves two or more jurisdictions joining together to form a single audit team to examine a transaction(s) of related taxpayers (for example, affiliated companies) with cross-border activities, in which the Joint Audit Parties attempt to reach a joint resolution on the Joint Audit Issues; a Joint Audit includes the involvement of IRS APMA personnel to address double taxation issues. In contrast, a simultaneous examination, which is coordinated by the EOI Program, is an arrangement between two or more tax administrations to examine simultaneously, each in its own jurisdiction, the tax affairs of two or more taxpayers in which the tax administrations have a common or related interest, with a view to exchanging under the applicable international exchange agreement(s) any relevant information obtained. For more information, see IRM 4.60.1.4, Simultaneous Examination Program (SEP).

(1) If an agreement between the Joint Audit Parties on the Joint Audit Issues has been reached, APMA will consider, given the facts of the issues examined, the possibility of pursuing an Advanced Pricing Agreement (APA). The Joint Audit Parties, having advised their respective taxpayers in writing of the position on each of the Joint Audit Issues, should recommend to their respective taxpayers the APA opportunities.

(2) The taxpayer may request consideration of a bilateral APA under Revenue Procedure 2015-41, Procedures for Advance Pricing Agreements, or its successor. If this occurs, the IRS Joint Audit Team APMA member should organize the parties to investigate and pursue the APA process, including:

1. Organizing a pre-filing conference(s),

2. Notifying the applicable foreign Competent Authority(ies), and

3. Receiving, evaluating, and developing a position about, and pursuing conclusion of an agreement covering, the issues and methods arising out of the Joint Audit that would be appropriate to cover in an APA, utilizing facts developed during the Joint Audit and obtaining other information in accordance with the applicable international exchange agreement.

(1) Joint Audit findings may be used as a basis for relief from double taxation.

(2) The U.S. Competent Authority endeavors to resolve double taxation under the MAP articles of international exchange agreements. Revenue Procedure 2015-40, Procedures for Requesting Competent Authority Assistance under Tax Treaties, or its successor, sets forth the procedures that taxpayers should follow to request assistance under international exchange agreements.

(3) During a Joint Audit, consideration should be given to resolving all open tax years, including applying the Joint Audit resolution(s) to open MAP cases, if applicable.

(1) If a Joint Audit is not appropriate, consideration should be given to conducting a joint collaboration with the foreign partner.

(2) A joint collaboration comprises specific exchange(s) of information with the foreign partner conducted on the basis of discussions between the U.S. and foreign audit teams facilitated by JITSIC or APMA where the case includes a transfer pricing issue. Formal approval of such a collaboration under Joint Audit procedures is not required, as the information is exchanged according to the international exchange agreements in place and by officials or employees assigned to JITSIC or APMA pursuant to Delegation Order 4-12 (as revised). For more information, see IRM 4.60.1.2, Specific Exchange of Information (EOIR) Program.

(3) JITSIC or APMA will include in the initial specific exchange request a request to engage in a joint collaboration with the foreign partner. If the foreign partner agrees to the joint collaboration, JITSIC or APMA will coordinate discussions between the U.S. and foreign audit teams. The discussions should include the IRS examination manager and specialist managers.

1. JITSIC or APMA will facilitate the discussions. The JITSIC Senior Revenue Agent or APMA will act as the U.S. Competent Authority for the discussions.

2. The audit team must be involved to discuss the tax issues, and the information requested and/or exchanged.

3. Multiple joint discussions and specific exchanges of information may occur throughout the collaboration.

(4) If there are discussions that could result in an agreement between the participating jurisdictions on the tax treatment in each jurisdiction, the appropriate IRS Practice Areas should be included in the discussion (WEIIC, CBA, TTPO).