Publication 597 |
2001 Tax Year |
Competent Authority Assistance
Under Article XXVI, a U.S. citizen or resident may request
assistance from the U.S. competent authority when the actions of
Canada, the United States, or both, potentially result in double
taxation or taxation contrary to the treaty. The U.S. competent
authority may then consult with the Canadian competent authority to
determine if the double taxation or denial of treaty benefits in
question can be avoided.
It is important that your request for competent authority
assistance be made as soon as you have been notified by either Canada
or the United States of proposed adjustments that would result in
denial of treaty benefits or in double taxation. This is so that
implementation of any agreement reached by the competent authorities
is not barred by administrative, legal, or procedural barriers.
Revenue Procedure 96-13 explains the information that you should
include with your request for competent authority assistance.
The request should be addressed to:
Assistant Commissioner (International),
Attn: Tax Treaty Division,
Internal Revenue Service,
P.O. Box 23598,
Washington, D.C. 20026-3598.
In addition to a timely request for assistance, you should take the
following measures:
- File a timely protective claim for credit or refund of U.S.
taxes on Form 1040X, Form 1120X, or amended Form 1041, whichever is
appropriate. This will, among other things, give you the benefit of a
foreign tax credit in case you do not qualify for the treaty benefit
in question. For figuring this credit, attach either Form 1116 or Form
1118, as appropriate. Attach your protective claim to your request for
competent authority assistance.
- Take appropriate action under Canadian procedures to avoid
the lapse or termination of your right of appeal under Canadian income
tax law.
Corporate reorganizations.
Article XIII(8) permits requests to be made to the competent
authority to defer the recognition of profit, gain, or income on
property alienated in a corporate or other organization,
reorganization, or similar transaction. These requests should follow
the procedures outlined in Revenue Procedures 96-13 and
98-21.
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