Notice 98-65: Small Business Taxpayer Advance Pricing Agreements.pdf

The Service is adopting special procedures for small business taxpayers ("SBTs") to obtain Advance Pricing Agreements ("APAs"). The SBT procedures aim to reduce the § 482 compliance burden and make the APA Program more accessible to SBTs. A small business taxpayer is defined as any U.S. taxpayer with total gross income of $200 million or less. The SBT procedures seek to address the SBT's need for compliance certainty at a cost reasonable relative to the size and complexity of the transactions involved. The Service will consider the application of the special procedures to transactions involving intangibles on a case-by-case basis. The initial term of an SBT APA can generally range from three to five years. The Service will work diligently with treaty partners to effectuate bilateral APAs. The APA Program appreciates suggestions to make the APA process more efficient, but internal procedures are not addressed in this Notice. The Service instituted the APA Program to assist taxpayers in complying with I.R.C. § 482. The Service has concluded over 160 APAs with U.S. taxpayers, mostly large business taxpayers. The SBT procedures are designed to address the SBT's need for compliance certainty at a cost reasonable relative to the size and complexity of the transactions involved. The Service has indicated a desire to alleviate the § 482 compliance burden for SBTs. The Service has established additional incentives for SBTs to seek APAs, including simplified procedures and a reduced user fee. The APA Program has successfully applied the SBT procedures to various transactions, including those involving start-up companies and new lines of business for existing companies. The Service will consider rollback requests in an SBT APA context generally, and more specifically, in situations where a rollback year in a bilateral SBT APA request is under the jurisdiction of Appeals and the simultaneous Appeals and competent authority procedure is applicable.