Competent Authority: Filing, MAP Process, and Arbitration Backstop

When a tax treaty is supposed to prevent two countries from taxing the same income and one or both countries tax it anyway, the U.S. competent authority is who resolves the problem. The office sits inside the IRS Large Business and International Division and negotiates directly with its foreign counterpart under the Mutual Agreement Procedure (MAP) written into every U.S. tax treaty. For competent authority tax treaty disputes, MAP is the primary non-judicial path to relief, because a U.S. court cannot order a foreign government to give back tax it has already collected.¹

When You Can File and by When

If you are a U.S. resident for purposes of a tax treaty, you can request competent authority assistance whenever you believe actions by the United States, a treaty partner, or both cause or will cause taxation inconsistent with the treaty.² You do not have to wait for double taxation to actually occur. A foreign audit notice or a proposed adjustment is enough to file.

The standard deadline is three years from the first notification of the action that produces the treaty-inconsistent taxation.³ “First notification” is normally the specific assessment or liability notice you received, not a general change in law or the filing of a return. For withholding taxes, the clock usually runs from when the income was paid, unless you can show you only later learned of the withholding. Missing the deadline can permanently foreclose MAP relief.

Protective Refund Claims

The domestic statute of limitations on refunds can expire while you are still preparing your MAP request or while the negotiation drags on. To keep the refund window open, file a protective claim under Section 11 of Revenue Procedure 2015-40.² You can fold the protective claim into your MAP filing or send it as a separate letter titled “Protective Claim Pursuant to Section 11 of Rev. Proc. 2015-40.” The claim must identify the tax year, describe the grounds for the potential refund, explain the contingencies that make the claim uncertain, and carry a signed declaration under penalties of perjury.¹ If you file separately, send an annual follow-up letter after each tax year confirming the claim should remain active. Skipping the annual notification can undo the protection.

What Your Request Must Contain

Revenue Procedure 2015-40 sets out the fields the IRS treats as necessary for a request to be “perfected.” An incomplete package will delay the case or draw an outright rejection.¹ At a minimum, include:

Your full legal name, address, and Taxpayer Identification Number, plus the same for any foreign entity involved.
The tax years affected and the dollar amount of the adjustment at issue.
A factual narrative explaining the transaction or arrangement and how the double taxation arose or will arise.
A treaty analysis identifying the specific articles at issue and why one or both countries have violated them.
Copies of foreign tax assessments, domestic audit reports such as Form 4549, and correspondence with foreign tax authorities.
A completed Form 2848 if you are represented.
A list of any administrative or judicial proceedings pending on the same issues.
A statement on whether the assessment or refund period is close to expiring in either country.
A signed declaration under penalties of perjury.

For transfer pricing cases, add financial statements, organizational charts, intercompany agreements, and documentation of how prices were set. The competent authority needs the economic substance of the transactions to negotiate credibly with the other side, and transparency about tax already paid in both countries strengthens the case.

Where the Request Goes

Two IRS teams handle MAP work. Transfer pricing and income allocation matters go to the Advance Pricing and Mutual Agreement (APMA) program. Residency, permanent establishment, withholding rate, and other treaty interpretation issues go to the Treaty Assistance and Interpretation Team (TAIT). Submit two printed copies and one electronic copy.¹

Pre-Filing Conferences

You can ask for a pre-filing conference before submitting the formal request. These are optional in most cases but mandatory if your position is “taxpayer-initiated,” meaning you are seeking to change how income is allocated rather than responding to a government audit.¹ To request one, send a pre-filing memorandum identifying the taxpayer, laying out the factual and legal basis, describing any interactions with the foreign tax authority, and proposing at least three meeting dates (each at least two weeks out). Named submissions are preferred, though anonymous ones are accepted. Nothing said during the conference binds the IRS, but it can flag fundamental problems with your position before you invest in a full filing.

What Happens After You File

After receiving the request, the IRS reviews it for treaty scope and documentation. If accepted, the office notifies you and opens contact with the foreign competent authority. From that point on the process becomes a government-to-government negotiation. You generally do not participate directly, though the IRS may return for additional facts or updated financials.

Negotiations proceed through position papers, each side laying out its legal and factual analysis. Globally, transfer pricing cases average roughly 31 months to close, and other MAP cases average about 24 months.⁴ The OECD’s BEPS Action 14 minimum standard commits participating countries to an average 24-month resolution target, though complex transfer pricing disputes routinely exceed it.⁵ Expect long stretches with no news between status updates.

Collection Is Suspended on the MAP Issues

Once the U.S. competent authority accepts your request, the IRS examination team must suspend assessment and collection on the specific issues covered by the MAP case.⁶ The suspension is limited to the MAP issues. If your audit involved other matters, collection continues on those. If the competent authority later returns jurisdiction over an issue to the exam team, collection can resume.

How MAP Interacts With Appeals and Litigation

The two tracks generally do not run at the same time on the same issues. If you started with IRS Appeals, you can still switch to MAP, but only if you file the request within 60 days of your opening conference with Appeals, properly sever the competent authority issue from your Appeals protest, and have not already used an alternative dispute resolution program or executed a closing agreement on the issue.¹ Once the competent authority accepts the case, it takes exclusive jurisdiction over the covered issues. Non-treaty issues can remain with Appeals.

Litigation is treated more strictly. The U.S. competent authority will generally not accept or continue working on issues designated for litigation or pending in federal court.⁷ A narrow exception exists after a final court determination: you can file a MAP request solely to seek correlative relief from the foreign competent authority based on that decision. During MAP, the IRS may ask you to join motions to sever treaty issues from litigation or to stay court proceedings.

Grounds the IRS Uses to Decline

The competent authority is not obligated to accept every case. Revenue Procedure 2015-40 lists the main grounds for declining or halting work on an accepted case:¹

Procedural deficiencies you failed to correct after being given a reasonable chance.
Ineligibility because you are not a resident of either treaty country.
Prejudicial conduct, such as agreeing to a foreign audit adjustment without first consulting the U.S. competent authority, entering into a unilateral advance pricing agreement when a bilateral one was feasible, or refusing to extend the statute of limitations when asked.
Withholding information you could have provided during the original audit and then presenting it as new evidence during MAP.
Pursuing domestic remedies in a way that conflicts with the MAP process.

Cooperation matters. Settling with the foreign tax authority before consulting the U.S. side is one of the most common ways taxpayers accidentally sink their own case, because once the foreign adjustment is locked in, the U.S. side has little leverage left.

Outcome: Accept or Reject

If the two competent authorities reach a resolution, the U.S. side sends you a formal letter with the terms. The result is a negotiated compromise, so it may not match what you originally asked for. Accepting typically means waiving your right to further challenge those specific tax years and issues in court; the IRS then processes any refunds or adjustments, and the foreign authority does the same. Once accepted, the outcome is binding on both governments for the covered years, so neither country can unilaterally change the tax treatment later.

You can reject the agreement and pursue domestic remedies, but rejection can create complications, particularly with foreign tax credits. In practice, rejection is rare because MAP is usually the most efficient path out of double taxation.

Extending the Result to Later Years

If the same issue recurs in later tax years for which you have already filed returns, you can ask that the resolution be extended through the Accelerated Competent Authority Procedure (ACAP). You can raise ACAP in the initial MAP filing or submit it separately before a tentative resolution is reached.¹ ACAP saves the time and cost of filing separate requests for each recurring year. The trade-off is that you must agree to allow the IRS to inspect the ACAP-year books without the usual limits on repeat examinations. If your MAP request is already on file, contact your assigned competent authority representative for the current format and timing.

Mandatory Binding Arbitration as a Backstop

Some U.S. treaties include a mandatory binding arbitration clause that engages when MAP negotiations stall. As of early 2026, the United States has arbitration provisions in its treaties with Belgium, Canada, France, Germany, Japan, Spain, and Switzerland.⁸ If the competent authorities cannot reach a complete agreement within the specified period, typically two years, the unresolved issues become eligible for arbitration.⁹ If you accept the arbitrators’ decision, it binds both tax authorities. For treaties without an arbitration clause, no external mechanism forces a resolution; the competent authorities are committed to a good-faith effort but not to reaching agreement.

Costs and Form 8833 Disclosure

A standard competent authority request carries no user fee. The IRS charges a fee only for requests seeking discretionary relief under a treaty’s Limitation on Benefits provision, which under Revenue Procedure 2015-40 is $37,000.¹ Your real spend goes to the professional fees involved in preparing the request and supporting the negotiation over what can be a multi-year timeline.

Separate from MAP, anyone taking a position on a U.S. return that a treaty overrides domestic tax law must disclose that position, generally on Form 8833.¹⁰ Failure to disclose triggers a penalty of $1,000 per failure, or $10,000 for a C corporation, on top of other penalties and interest, subject to a reasonable-cause waiver.¹¹ Several common situations are exempt from the disclosure requirement, including personal services income, pensions, social security benefits, and student or teacher income.¹² If your MAP request rests on a treaty benefit the IRS denied, confirming that you properly disclosed the position on the original return removes one predictable obstacle from the case.

1
Internal Revenue Service. Revenue Procedure 2015-40
2
Internal Revenue Service. Competent Authority Assistance
3
OECD. Manual on Effective Mutual Agreement Procedures (2026 Edition)
4
OECD. 2024 Mutual Agreement Procedure Statistics
5
OECD. BEPS Action 14 on More Effective Dispute Resolution – Peer Review Documents
6
Internal Revenue Service. IRM 4.60.2 Mutual Agreement Procedures and Report Guidelines
7
Internal Revenue Service. IRM 4.60.3 Tax Treaty Related Matters
8
Internal Revenue Service. Mandatory Tax Treaty Arbitration
9
Internal Revenue Service. Overview of the MAP Process
10
Office of the Law Revision Counsel. 26 USC 6114 – Treaty-Based Return Positions
11
Office of the Law Revision Counsel. 26 USC 6712 – Failure to Disclose Treaty-Based Return Positions
12
Internal Revenue Service. Form 8833, Treaty-Based Return Position Disclosure