The US Internal Revenue Service (IRS) Large Business and International (LB&I) division released memorandum LB&I-04-0425-0005 on 22 April 2025, which reissues interim guidance LB&I-04-0423-0006 on 25 April 2023.

This (LB&I-04-0423-0006) provides guidance to employees of the Treaty and Transfer Pricing Operations (TTPO) practice area in the Large Business and International Division (LB&I) with respect to requests from taxpayers for an APA with the IRS.

LB&I’s Advance Pricing and Mutual Agreement (APMA) APA programme provides a voluntary process whereby the IRS and taxpayers may resolve transfer pricing issues in a principled and cooperative manner on a prospective basis. APAs are one of several tools available to the IRS to address transfer pricing compliance and certainty.

Although APAs are a popular choice among taxpayers for achieving (usually) bilateral advance certainty about the appropriate arm’s length results for covered intercompany transactions, there are other treatment streams that also should be considered.

This guidance provides instructions to LB&I employees for implementing the required review of taxpayer advance pricing agreement (APA) prefiling memoranda and APA requests, including APA renewal requests, before a determination can be made whether the APA request will be accepted into the Advance Pricing and Mutual Agreement (APMA) programme.

The review process included in this guidance is not intended to affect the proper analysis of compliance with the transfer pricing regulations; it is designed to produce the best result and support the best and highest use of transfer pricing resources for taxpayers and tax administrations. This guidance also is not intended to limit or decrease the number of APA requests accepted by APMA. Rather, its goal is to improve the quality and timeliness of APMA’s APA programme by providing an early mechanism for identifying potential roadblocks to successfully concluding a proposed APA and opportunities for other paths to certainty.

Under this guidance, APMA will provide optional pre-submission review to taxpayers that wish to submit prefiling memoranda before submitting a formal APA request. In this pre-submission review, APMA will give a preliminary opinion whether the APA workstream is well suited to successfully achieve certainty for the proposed covered transactions and whether an alternative workstream is recommended for the taxpayer to consider. The intent is to provide taxpayers with this information in advance of their undertaking to draft and submit a formal APA request. After receiving an APA request, APMA will undertake a formal review of the request to determine whether to accept the request in full or in part. In both pre- and post-submission reviews, APMA will consider the facts and circumstances underlying the request based on several criteria, none of which is dispositive.

The relevant considerations in this memorandum are consistent with considerations that must be undertaken in deciding whether to engage in joint or multilateral audits. The required consultations complement our requirement that transfer pricing examiners consult with APMA and the consultations undertaken to decide whether to participate in joint or multilateral audits. Moreover, this process ensures the collaboration of all our transfer pricing experts and fosters our larger programme of mindful transfer pricing compliance and service to taxpayers.

The guidance will be incorporated into section 4.60.3 of the IRS Internal Revenue Memorandum (IRM) on or before 22 October 2025.