1. Decide Whether a Unilateral APA Fits the Transaction
A unilateral APA addresses covered issues between the taxpayer and the IRS without a mutual agreement with a foreign tax administration. Start by asking whether that scope fits the company’s controlled transactions and cross-border tax exposure.
Define the Transactions That Need Certainty
Focus on the related-party transactions and issues the company wants the APA to cover. Business functions, economics, contracts, and financial records help shape the proposed covered method.
- Map the entities and proposed covered transactions.
- Identify relevant functions, assets, and risks.
- Review related Transfer Pricing issues.
Compare Unilateral and Bilateral Coverage
A unilateral APA does not result from a mutual agreement with a foreign tax administration. If the same transactions create material exposure abroad, weigh that limit before choosing the APA route.
- Identify the countries involved in transaction flows.
- Check whether an applicable tax treaty is relevant.
- Consider foreign adjustment and double-taxation risk.
2. Build the APA Request Around the Business Facts
Rev. Proc. 2015-41 governs APA requests to APMA. The submission should connect the proposed covered issues and method to the way the business operates rather than read like a stand-alone tax form.
Develop the Functional and Economic Analysis
Intercompany contracts matter, but they do not tell the whole story. The analysis should explain the functions performed, assets used, risks assumed, and financial results relevant to the proposed method.
- Organize intercompany agreements and financial data.
- Document the functional analysis for covered issues.
- Test the proposed method and supporting economics.
Assemble the Required APA Materials
A complete request must follow the applicable submission requirements. Rev. Proc. 2015-41 requires a draft APA, and the model APA instructions require a redline against the current model.
- Prepare required exhibits and supporting material.
- Keep factual statements consistent across the submission.
- Coordinate related Transfer Pricing Compliance work.
3. Manage APMA Review with a Consistent Record
Submitting the request starts substantive review. APMA may seek more facts while evaluating the covered issues and method, so the working file should stay accurate as business facts develop.
Keep Supplemental Responses Consistent
Follow-up questions may address transaction facts, financial results, economic analysis, or assumptions behind the method. New answers should fit the existing record or explain why the facts changed.
- Track information requests and responses.
- Reconcile financial data before submitting it.
- Explain material changes to earlier facts.
Watch Critical Assumptions during Review
Critical assumptions concern facts whose continued existence may affect the APA. A material change deserves attention during review instead of waiting until the agreement is complete.
- Monitor facts underlying critical assumptions.
- Flag material operational developments.
- Keep tax, finance, and business teams on one record.
4. Budget for Federal APA Work and Separate State Tax Issues
An APA requires a federal user fee and substantial preparation. Companies should also keep state tax analysis separate because an IRS agreement does not settle obligations imposed under state law.
| APA Request Type | 2026 IRS User Fee |
|---|---|
| Original APA | $121,600 |
| Renewal APA | $65,900 |
| Small Case APA | $57,500 |
| APA Amendment | $24,600 |
Original APA
- 2026 IRS User Fee$121,600
Renewal APA
- 2026 IRS User Fee$65,900
Small Case APA
- 2026 IRS User Fee$57,500
APA Amendment
- 2026 IRS User Fee$24,600
Plan Beyond the Government Fee
The fee is only one part of the project. Economic work, financial data, legal review, and coordination among tax and business personnel can require time and resources.
- Assign responsibility for financial data.
- Budget for economic and legal analysis.
- Reserve resources for follow-up submissions.
Keep State Tax Analysis on Its Own Track
For corporations subject to Tax Law Article 9-A, state franchise-tax and combined-reporting consequences may require separate review. The federal APA should not be treated as a state tax agreement.
- Identify state positions affected by the transactions.
- Review relevant State and Local Tax issues.
- Keep overlapping factual records consistent.
5. Turn the Executed APA into a Compliance Process
Once the APA is executed, the work moves from negotiation to administration. The taxpayer must apply the agreement to covered issues and keep records showing compliance with its terms.
Apply the Covered Method in Practice
The tax team should turn the APA into working instructions for finance and business personnel. Pricing calculations and any required adjustments should follow the executed agreement.
- Apply the covered method as agreed.
- Coordinate required pricing adjustments.
- Preserve supporting calculations and records.
Prepare Annual Reports and Monitor Changes
Rev. Proc. 2015-41 requires an annual report for each APA year. The company should also watch for material changes that could affect critical assumptions or other terms.
- Maintain the annual APA compliance record.
- Track facts affecting critical assumptions.
- Plan early when renewal may be appropriate.
6. Frequently Asked Questions
Does a unilateral APA protect against a foreign transfer pricing adjustment?
Not by itself. A unilateral APA does not result from a mutual agreement with a foreign tax administration. A foreign authority may take a different position on the same transaction.
Can a company seek a unilateral APA when the foreign country is not a U.S. treaty partner?
Yes, in principle. IRS guidance states that an APA involving a non-treaty country can proceed as a unilateral APA, subject to the applicable APA requirements.
Can an existing APA be renewed?
Yes. Rev. Proc. 2015-41 provides procedures for renewal requests. Changes to the business, covered issues, method, or facts may affect the terms of a proposed renewal.
Does an executed APA eliminate transfer pricing compliance work?
No. The taxpayer must apply the APA and provide required annual reports. Records should support the covered method, required adjustments, and relevant critical assumptions.
7. Prepare the Unilateral APA Around the Actual Transactions
A unilateral APA should reflect the transactions, economic analysis, business functions, and compliance plan the company can support. SJKP’s attorneys can review the request structure and coordinate legal issues with tax and economic teams. An advance pricing agreement APA attorney in Manhattan can help assess the proposed filing before substantial resources are committed.
01 Sep, 2026
