The subjects initiate the APA collection procedure by submitting an APP application to the APMA program, which meets the substantive requirements of the 2015-41 collection procedure. The APA application should normally be filed until the taxpayer files his or her income tax return for the first tax year of the APA. However, a policyholder may obtain a 120-day extension to file an APA application by paying the applicable user fee (see below). Bilateral and multilateral APA applications must be filed with the relevant foreign tax authority within 60 days of the application date of the APP application. The APP application contains, among other substantive and procedural requirements, a comprehensive functional and factual analysis and proposals for one or more covered transactions, transfer pricing methods (and economic analyses in support of these methods), critical assumptions and a concept of APP. APA usage fees increased to $113,500 as of January 1, 2019. Renewal AAS and some APAs for small businesses are subject to reduced preferential rates. The time required to obtain an APA can vary considerably depending on a number of factors, including the complexity of transactions and problems, the workload of APMA staff assigned to the case and, in bilateral cases, the contractual relationship between the IRS and the affected foreign tax authority. According to statistics published in the IRS announcement and report on the 2018 Advance Price Agreements, the average completion time for APAs concluded in 2018 was 33.4 months for unilateral AAPs and 45.6 months for bilateral APAs. The United States established the world`s first official APA program in 1991.
The current program is called the Advance Pricing and Mutual Agreement (APMA). Unilateral, bilateral and multilateral APAs are available. However, the APMA program may require a specific justification for ceasing a unilateral APA on transactions with a contractor for which a bilateral or multilateral APA would be available. Bilateral and multilateral APAs are generally bilateral or multilateral, i.e. they also enter into agreements between the subject and one or more foreign tax administrations under the control of the Mutual Agreement Procedure (POP) under the tax treaties.  The subject benefits from such agreements, since he is assured that income from covered transactions is not subject to double taxation on the part of the IRS and the relevant foreign tax authorities.