Notice 2023-36, 2023-2024 Priority Guidance Plan Submission

Abstract

This lengthy submission includes recommendations in a number of international tax areas for regulation changes, improvements, and modernization. It includes for a number of areas suggested regulatory language that could be considered.

Much of the submission concerns sourcing and effectively connected income rules. It also covers the existence of unanticipated partnerships among an MNC's group members that conduct joint business activities. Regarding subpart F, it makes suggestions concerning the manufacturing branch rule. Finally, it includes suggestions regarding the manner in which tax treaties should or should not apply to certain hybrid entities and how cost sharing agreements should be administered under Rev Proc 2015-41. It also encourages the application by the IRS of section 482 "commensurate with income" periodic adjustments to appropriate taxpayer profit-shifting structures.

Keywords: ECI, Effectively Connected Income, Tax Treaties, Source of Income, Transfer Pricing, §482, Partnership, Check-the-Box, Entity Classification Rules, Subpart F, Branch Rule, CSA, cost sharing agreement, section 482

JEL Classification: H21, H25, K34, E62