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The Internal Revenue Service (IRS) has updated its Pre-Filing Agreement (PFA) program, focusing on large businesses and international taxpayers. The program, which supports advance pricing agreements (APAs), aims to provide taxpayers with greater clarity regarding transfer pricing and related tax matters before filings are finalized.
The updated process introduces a two-stage screening for APA submissions. Initially, taxpayers participate in a consultation phase, followed by a full submission review. Both stages help the IRS evaluate whether an APA is the most appropriate path or if alternative procedures, such as the Industry Compliance Assurance Program (ICAP) or a traditional audit, may better address the issue.
This screening is designed to be completed within eight weeks, providing timely feedback to taxpayers and helping them understand the most suitable approach for resolving transfer pricing concerns. By engaging early in the process, taxpayers can better manage compliance efforts and reduce potential uncertainty.
The IRS’s decision to implement this dual-phase screening reflects ongoing efforts to manage resources efficiently within its Large Business & International (LB&I) division. The program updates align with broader IRS initiatives aimed at balancing enforcement activities with providing certainty to taxpayers.
Overall, the revised PFA program offers a more structured approach to advance pricing agreements, helping large and multinational businesses navigate complex tax environments with clearer guidance from the IRS.
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