Tax Dispute Resolution Quarterly

Tax Dispute 

Resolution 

Quarterly 

Global tax disputes benchmarking survey 

–– 

Compensation and benefits issues 

–– 

FBAR reporting: Changes are in the wind 

–– 

Envisioning LB&I’s ‘Future State’ 

–– 

A conversation with new MTC director 

–– 

Country-by-country reporting 

Spring 2016 

kpmg.com

Global tax disputes 

benchmarking survey 

KPMG is pleased to invite you to participate in our inaugural 

Global Tax Benchmarking Survey, which has been designed to 

gather specific key data about the tax dispute departments of 

multinational organizations around the world. 

In the survey, question #4 serves as a “screening question” 

to identify participants whose responsibilities cover the 

management or resolution of disputes. From this question, 

respondents who are only responsible for disputes will be 

taken directly to those questions, and not included in the wider 

survey; a respondent who is responsible both for tax overall and 

for disputes would complete both the broader survey and the 

disputes-specific survey. 

The survey focuses on tax dispute departments’ range of 

responsibilities and duties and the ways in which tax leaders are 

responding (and expecting to respond) to the changing demands 

on disputes departments as controversy increases in a post- 

BEPS world. 

Who should take part in the survey? 

–– 

Global Head of Controversy/Equivalent, Chief Controversy 

Officer/Equivalent 

–– 

Disputes tax leaders and other equivalent tax leaders of 

multinational organizations that oversee tax disputes in their 

organization. 

Why participate in this survey? 

For industry leaders responsible for tax dispute management 

and resolution, taking part in this survey is an opportunity to 

reflect on their current state, and to gain exclusive access to key 

benchmarking data when the study is complete. 

We ask that you respond--we anticipate that it should take no 

more than 20 minutes to complete-- by July 15. 

To complete the survey, please click here. 

© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated 

with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 568452

Contents 

Spotlight on compensation and benefits services 

Private equity funds liable for unfunded pension liability 

Application of SECA to service LLCs and LLPs 

Incentive stock options—Navigating compliance requirements 

Golden parachutes 

IRS practice & procedure 


JCT ‘Bluebook’ description of partnership audit reforms 

Tax implications of new financial accounting revenue recognition standard 

LB&I updates Publication 5125 and Internal Revenue Manual 

Applying sec.1032 to share-based awards for international employees 

Tax enforcement trends 


Foreign currency options—Section 1256 contracts or not? 

New law creates new risks for partnership investments 

 



State & local tax 

A conversation with Greg Matson—Executive director of Multistate Tax Commission 

Retroactive tax legislation—Considering both sides of the sword 


Global Tax Disputes Update—March 2016 

Proposed guidance on charging penalty determinations for export violations 

Puerto Rico publishes draft and transitional rules for new VAT regime 

OECD & BEPS 

Implementation considerations for country-by-country reporting by U.S. multinationals 

2x4 approach to country-by-country reporting 

Post-BEPS world of permanent establishment 



Spotlight on compensation and 

benefits services 

Private equity funds liable for unfunded pension liability 

In a recent federal district court decision, two private equity funds 

that owned a bankrupt company were treated as being in a single 

deemed partnership engaged in a trade or business that had 

common control of the bankrupt company for purposes of imputing 

liability for unfunded pension obligations (Read more...) 


The tax regime of the Self Employment Contributions Act (SECA) 

applies to net income derived from self-employment—including 

by partners in partnerships and limited liability partnerships (LLPs), 

members in limited liability companies (LLCs), and sole proprietors 

(Read more...) 

Incentive stock options—Navigating compliance 

requirements 

Startup companies, especially in the high tech industry, frequently 

grant incentive stock options to employees (Read more...) 


How much will a severance plan really cost? In a change-in-control 

context, potential payments made to executives can be very 

expensive—in more ways than the obvious (Read more...) 

Spotlight on compensation and benefits 

services 

In attracting and motivating highly skilled, efficient employees, 

compensation and benefits packages can set one employer 

above the rest. Compensation and benefits are a vital area for any 

company and an important consideration for every employee. 

Potential tax and related pitfalls, however, can make it difficult for 

employers to cover all of the bases in designing and maintaining 

attractive compensation and benefits programs. 

The Compensation and Benefits Services group in KPMG LLP’s 

Washington National Tax practice is both capable and experienced. 

Its services include payroll, withholding and W-2 reporting; fringe 

benefits; qualified and nonqualified deferred compensation plans; 

partnership compensation issues; employee benefit plans; human 

resources assistance; deal advisory; compensation consulting; and 

even encompass the cross-border implications of compensation 

and benefits. Compensation and Benefits Services can provide plan 

reviews and suggestions, do golden parachute calculations, assist 

with Affordable Care Act planning and compliance, and assist with preand 

post-transfer of expatriates, among other services. 

For more information about the many services offered by KPMG’s 

Compensation and Benefits Services, please see the brochure. 



Private equity funds liable for unfunded 

pension liability 

By Jeanne Sullivan, Karen Field, and Deborah Fields, Washington 

National Tax 

In a recent federal district court decision, two private equity funds that owned 

a bankrupt company were treated as being in a single deemed partnership 

engaged in a trade or business that had common control of the bankrupt 

company for purposes of imputing liability for unfunded pension obligations. 

At a minimum, the case potentially affects the exposure of a fund for pension 

obligations of a portfolio company. Moreover, the court’s analysis in the case 

could be invoked by others, such as the IRS or the courts, to disregard a 

taxpayer’s organizational formalities and create deemed partnerships that could 

result in unanticipated tax consequences beyond the funding of pension plan 

liabilities. An April KPMG report discusses how, unless modified on appeal, 

the decision may affect future structuring and due diligence for private equity 

investments. 


By Jeanne Sullivan, Karen Field, and Kelli Cacciotti, Washington National 

Tax, and Danchai Mekadenaumporn, Global Mobility Services 

The tax regime of the Self Employment Contributions Act (SECA) applies to net 

income derived from self-employment—including by partners in partnerships 

and limited liability partnerships (LLPs), members in limited liability companies 

(LLCs), and sole proprietors. An entity may not realize that LLC or LLP members 

are subject to SECA. In the professions of health, law, consulting, accounting, 

and other specialized fields, individuals may be subject to SECA if they are 

members of a “service partnership” that is an LLC or LLP—even if they only 

occasionally provide services to the entity. 

This May 2016 KPMG LLP report reviews the guidance in this area and provides 

examples for distinguishing when certain service partnership members may be 

exempt from SECA. 

Incentive stock options—Navigating compliance 

requirements 

By Gary Cvach and Terri Stecher, Washington National Tax 

Startup companies, especially in the high tech industry, frequently grant 

incentive stock options to employees. In recent years, companies have 

modified their incentive stock option plans due to intense competition 

for employees. This May 2016 KPMG LLP article discusses two common 

changes—early exercises and extensions of exercise periods—and the tax 

ramifications of these changes. 




By Compensation and Benefits Services, Washington 


How much will a severance plan really cost? In a change-in-control 

context, potential payments made to executives can be very 

expensive—in more ways than the obvious. Parachute payments, 

defined by the Code 1 and associated regulations to be any 

payment made upon a change in control other than “reasonable 

compensation,” can have a hefty associated tax penalty. 

If an executive’s change-in-control compensation package falls afoul 

of section 280G, not only is that executive subject to a 20-percent 

excise tax, but the company will lose the associated deduction for 

that compensation. 

What’s more, the payments subject to the golden parachute excise 

tax may be far more extensive than expected. The regulations 

sweep in not just lump-sum amounts paid to executives upon a 

change in control but also continuation of benefits, equity cash-outs, 

accelerated vesting of equity awards, and more. Conversely, the 

potential exceptions to what may count as a parachute payment can 

create situations in which similar-seeming equity awards may be 

assigned different values in a calculation. Thus, golden parachute 

calculations have the potential to be a minefield for employers and 

executives alike. 

1 Unless otherwise indicated, references to “section” or “sections” are to the Internal 

Revenue Code of 1986 (the Code) or to the applicable U.S. Treasury Department 

regulations (the regulations). 



IRS practice & procedure 


Given the global trend in tax transparency and the U.S. government’s heightened 

enforcement thrusts against unreported foreign earnings, the requirement to annually 

report foreign financial accounts on FinCEN Form 114, Report of Foreign Bank and 

Financial Accounts (FBAR), has become an area of increased focus. (Read more...) 

JCT ‘Bluebook’ description of partnership audit reforms 

In mid-March, the staff of the Joint Committee on Taxation (JCT) released its General 

Explanation of Tax Legislation Enacted in 2015 (JCS-1-16)—known as the “Bluebook,” 

which contains considerable additional information about the partnership audit reform 

law and clarifies some issues about which questions have been raised (as well as other 

provisions enacted last year) (Read more...) 

LB&I updates Publication 5125 and Internal Revenue Manual 

The IRS recently revised Publication 5125 to provide guidance on changes to the 

Large Business and International (LB&I) examination process resulting from the recent 

restructuring of LB&I (Read more...) 

Applying sec.1032 to share-based awards for international employees. 

Multinational employers often grant employees of foreign subsidiaries share-based 

awards—stock options, restricted stock, and other equity-type awards—that are 

satisfied with stock of the U.S. parent corporation (Read more...) 




By Steven Friedman and Timothy McCormally, Washington National Tax 

Given the global trend in tax transparency and the U.S. government’s heightened 

enforcement thrusts against unreported foreign earnings, the requirement to 

annually report foreign financial accounts on FinCEN Form 114, Report of Foreign 

Bank and Financial Accounts (FBAR), has become an area of increased focus. 

Electronic filing is now the order of the day, with many companies not only filing 

the entity’s FBAR but those of its officers and employees who have signature or 

other authority over these foreign accounts. 

This April KPMG LLP article alerts taxpayers to the upcoming filing deadline 

for calendar year 2015 FBAR reports, with special focus on the current limited 

exceptions to the annual filing requirements, the possible relief from penalties for 

previous failures to file, and the reporting changes made or being proposed for 

future FBAR filings. 

JCT ‘Bluebook’ description of partnership 

audit reforms 

By Federal Legislative and Regulatory Services, Washington National Tax 

In mid-March, the staff of the Joint Committee on Taxation (JCT) released its 

General Explanation of Tax Legislation Enacted in 2015 (JCS-1-16)—known as 

the “Bluebook,” which contains considerable additional information about the 

partnership audit reform law and clarifies some issues about which questions 

have been raised (as well as other provisions enacted last year). Although the 

Bluebook does not constitute official legislative history, the IRS and Treasury 

Department can be expected to look to the Bluebook as they draft regulations 

and other administrative guidance implementing the new regime. 

The Bluebook includes technical explanations of tax legislation enacted last 

year, including the partnership audit reform provisions that were enacted in 

November 2015 as part of the Bipartisan Budget Act of 2015 and amended 

by the Consolidated Appropriations Act in December 2015. This KPMG LLP 

report provides some background information regarding the new partnership 

audit reform rules and then offers preliminary observations on the Bluebook’s 

explanation of the partnership audit provisions. 

Tax implications of new financial accounting 

revenue recognition standard 

The adoption of the new revenue recognition standard by the Financial 

Accounting Standards Board is fast approaching. Changes in the amount 

and timing of revenue recognition could have substantial tax consequences, 

affecting an organization’s tax data, processes, controls and tax compliance, 

planning, and reporting. 

In this May 3 TaxWatch webcast, professionals from KPMG LLP’s Audit 

Quality and Professional Practice group and Washington National Tax 

practice presented a CFO Financial Forum covering: 

–– 

A brief overview and background of the new revenue standard 

–– 

An overview of income recognition rules for tax 

–– 

A big picture review of the tax effects of adopting the new financial 

accounting standard 

–– 

Specific tax considerations associated with changes in revenue 

recognition. 

LB&I updates Publication 5125 and Internal 

Revenue Manual 

By Adam Silva and William Olver, Tax Controversy Services 

The IRS recently revised Publication 5125 to provide guidance on changes to 

the Large Business and International (LB&I) examination process resulting from 

the recent restructuring of LB&I. In March 2016, the IRS began updating the 

controlling sections of the Internal Revenue Manual to reflect and detail these 

changes to the examination process, which will reportedly “go live” in May. 

This April 2016 KPMG article highlights the material changes to Publication 5125 

and chapter 4.46, LB&I Examination Process, of the manual. 



Applying sec.1032 to share-based awards for 

international employees 

By Andrew Gewirtz, Global Mobility Services, and John Crucs, 

International Tax 

Multinational employers often grant employees of foreign subsidiaries sharebased 

awards—stock options, restricted stock, and other equity-type awards— 

that are satisfied with stock of the U.S. parent corporation. This article in the 

May/June 2016 issue of Corporate Taxation explores some tax complications 

associated with the granting of share-based awards to international employees. 

Pre-filing agreement fee doubles in June and 

quadruples in 2017 

On May 4, the IRS released a revenue procedure updating the rules and 

procedures for taxpayers seeking an IRS examination and resolution of 

specific issues relating to tax returns before filing the returns. Available 

only to taxpayers under the jurisdiction of the IRS Large Business and 

International division, pre-filing agreements or PFAs have been a popular 

and successful tool for the IRS and taxpayers alike. The program improves 

the quality of tax compliance and provides the taxpayer early certainty while 

reducing costs and other burdens related to tax administration. 

Rev. Proc. 2016-30 increases the user fee from $50,000 to: 

–– 

$134,300 for requests submitted after June 2, 2016 

–– 

$218,600 for requests submitted after December 31, 2016 

The new procedure also expands the scope of a PFA to include issues 

related to changes in methods of accounting requested under the automatic 

change procedures. 

Tax and accounting issues in debt 

restructurings and reorganization 

Changes in market conditions and economic uncertainty can cause any 

business to face financial challenges. These challenges may require an 

organization to reform its capital structure and even seek bankruptcy protection. 

Understanding the potential tax and accounting consequences of these 

decisions is critical to the organization’s future success and long-term stability. 

Senior professionals from the Tax Restructuring, Washington National Tax, 

and Accounting Advisory practices of KPMG LLP focused on significant tax and 

accounting issues in debt restructurings during an April 27 webcast. Among 

issues addressed are planning for cancellation of indebtedness income and net 

operating loss preservation, unique issues for partnership debt restructuring, 

worthless stock deductions, and accounting for troubled debt and debt 

extinguished in bankruptcy. 



Tax enforcement trends 


In this March 16, 2016, Tax Notes article, Mike Dolan argues that even 

though the new design for the IRS Large Business and International 

(LB&I) Division may give the agency more control over its resources, 

it may leave taxpayers with fewer options for remediating errors, 

securing certainty, and obtaining penalty relief (Read more...) 

Foreign currency options—Section 1256 contracts or not? 

A federal appellate court treated certain over-the-counter foreign 

currency options as section 1256 contracts (Read more...) 

New law creates new risks for partnership investments 

Legislation in November 2015 fundamentally changed the landscape 

of resolving tax disputes involving partnerships. (Read more...) 




By Michael P. Dolan, National Director of IRS Policies and Disputes 


In this March 16, 2016, Tax Notes article, Dolan argues that even though the 

new design for the IRS Large Business and International (LB&I) Division may 

give the agency more control over its resources, it may leave taxpayers 

with fewer options for remediating errors, securing certainty, and obtaining 

penalty relief. 

Foreign currency options—Section 1256 

contracts or not? 

By Jon Zelnik, Michael Bauer, and Ivan Thomann, Washington 


In Wright v. Commissioner, the U.S. Court of Appeals for the Sixth Circuit 

held that certain over-the-counter foreign currency options are subject to the 

mark-to-market rules of section 1256. The decision is based solely on the 

court’s plain reading of the relevant statutory language; the court rejected 

consideration of relevant legislative history and tax policy. Given that the court’s 

decision is contrary to several Tax Court decisions and the published position 

of the IRS, it creates uncertainty in an area previously considered settled. This 

April KPMG LLP report reviews the case and explains how the decision conflicts 

with earlier Tax Court decisions and IRS published guidance. 

Initial analyses of inversions and debt‐equity 

regulations 

The Treasury Department and IRS on April 4, 2016 released final and 

temporary regulations addressing certain “inversions”—the generic term 

for a domestic corporation’s adoption of a foreign-parented corporate 

structure—and certain post-inversion restructuring transactions. At the same 

time, the Treasury and IRS released proposed regulations under section 385 

regarding the treatment of certain related-party corporate interests as debt 

or equity for U.S. federal income tax purposes. These debt-equity regulations 

are potentially much broader in scope than the inversion rules, affecting 

myriad varieties of related-party financing. 

Read two April 2016 reports prepared by KPMG: 

–– 

Initial analysis of regulations addressing inversions 

–– 

New proposed debt-equity regulations 



New law creates new risks for partnership 

investments 

By Carol Kulish Harvey, Deborah Fields, and Harve Lewis, Washington 


Legislation in November 2015 fundamentally changed the landscape for resolving 

tax disputes involving partnerships. The Bipartisan Budget Act of 2015 upends 

the so-called TEFRA rules, which have been in place for more than 30 years. 

Under the new rules, the IRS will be able to impose liability at the partnership 

level if it determines, after an audit, that tax was paid on too little income—unless 

the partnership is eligible to elect, and properly elects, to be subject to a different 

set of rules. As a result, the IRS’s adjustment of partnership income in a prior year 

ultimately could burden the partnership’s assets and current owners. 

A March article in KPMG LLP’s Board Perspective Series addresses the 

implications of this new law for companies with partnership investments. 

Companies that own interests in or lend to partnerships may want to start 

thinking now about how to manage risks posed by the new law. 

Section 385 regulations: Transforming the 

world of cross-border corporate income tax? 

In April, the Treasury Department and IRS proposed regulations under 

section 385 on the treatment of certain related-party corporate interests 

as debt or equity for U.S. federal income tax purposes. Although issued as 

part of Treasury’s effort to discourage corporate inversions, the proposed 

regulations may have their greatest affect outside of the inverted company 

context. For example, if finalized, the regulations could potentially effect the 

treatment of intercompany debt issued among certain corporate groups, 

resulting in the recharacterization of certain debt instruments as preferred 

equity for U.S. tax purposes. 

Watch the replay of KPMG LLP’s webcast on the proposed regulations. 

Professionals from the firm’s Washington National Tax practice discussed 

the regs’ potential, significant impact on corporate taxation of intercompany 

debt. Topics include documentation requirements, distributions of debt 

instruments and similar transactions, treatment of consolidated groups and 

questions submitted by numerous viewers. 

Assessing the validity of regulations after Altera 

Last year’s Altera Corp. v. Commissioner decision overturned the portion of 

section 482 regulations requiring related-party participants in a cost-sharing 

arrangement (CSA) to share stock-based compensation costs. In addition 

to potential affecting transfer pricing for taxpayers with CSAs, the U.S. Tax 

Court case may portend changes to how tax regulations are developed and 

promulgated in the future. 

During this April webcast, KPMG LLP professionals discussed the potential 

impact of Altera on taxpayers’ ability to challenge IRS regulations, the 

history of disputes under the CSA regulations concerning stock-based 

compensation costs, and the broader implications of Altera for transfer 

pricing issues. 



State & local tax 

A conversation with Greg Matson—Executive director of 

Multistate 

 

Tax Commission 

The Multistate Tax Commission marks its 49th anniversary this 

July. (Read more...) 

Retroactive tax legislation—Considering both sides of 

the 

 

sword 

A handful of recent cases illustrate the potential for unfairness 

borne by taxpayers when a state retroactively imposes a tax or 

removes a tax benefit (Read more...) 



A conversation with Greg Matson—Executive director of 

Multistate Tax Commission 

By Shirley Sicilian, National Director for State and Local Tax Controversy 

The Multistate Tax Commission (MTC or the Commission) marks its 49th anniversary this July. Over the 

years, the Commission has served as a forum for states to come together and work through the important 

state tax issues of the day. The issues, and the Commission members who discuss them, are always 

changing. But one thing that has been relatively stable is the executive director. Since the MTC began in 

1967, there have been only five executive directors. Greg Matson is the fifth, and is just getting started in 

his new role. 

During the Commission’s March 2016 meetings in Salt Lake City, Shirley Sicilian had an opportunity to sit 

down with Greg to discuss his vision for the Commission and his perspective on current multistate tax 

issues, as well as numerous personal reflections. The May 2016 issue of the Journal of Multistate Taxation 

and Incentives includes the interview exploring his vision for the Commission and perspective on current 

multistate tax issues as well as how taxpayers can effectively interact with the MTC. 

Retroactive tax legislation—Considering both sides of the sword 

By Shirley Sicilian, National Director for State and Local Tax Controversy 

A handful of recent cases illustrate the potential for unfairness borne by taxpayers when a state retroactively 

imposes a tax or removes a tax benefit. The main job of the Constitution’s Due Process Clause is to preserve 

“fundamental fairness” in the application of law. These recent cases explore the limits of retroactive tax laws 

under the due process and other provisions of the U.S. and state constitutions. 

This article in the March/April 2016 issue of the Journal of Multistate Taxation and Incentives illustrates how 

retroactive tax legislation can be beneficial to taxpayers. Proposals for creating hard-and-fast limitations on 

retroactive tax legislation should guard against throwing the baby out with the bathwater. 

State controversy and 

dispute resolution program 

During a March webcast, professionals from 

KPMG LLP’s State and Local Tax practice and 

the Tax Dispute Resolution Network addressed 

the state implications of new federal partnership 

audit procedures, the most recent Direct 

Marketing Association decision, what is at stake 

in classifying property, and the flow-through of 

federal transfer pricing adjustments. 





The March 2016 edition of KPMG LLP’s quarterly Global Tax 

Disputes Update inventories the latest tax controversy news from 

around the world (Read more...) 

Proposed guidance on charging penalty determinations 

for export violations 

Guidance proposed by the U.S. Department of Commerce, Bureau 

of Industry and Security regarding export violations is intended 

to increase predictability and transparency in the administrative 

penalty process (Read more...) 

Puerto Rico publishes draft and transitional rules for new 

VAT regime 

The Treasury Department of the Commonwealth of Puerto Rico 

in February 2016 published over 300 pages of draft regulations for 

implementing a value-added tax system to replace its sales and use 

tax (Read more...) 



2016 webcast series 

Around the world with KPMG’s 

Global Tax Dispute Resolution & 

Controversy Network 

Upcoming webcasts from this series: 

New developments in Nigeria, South Africa and Turkey 

19 July 2016, 12-1pm EDT/5pm WAT (Nigeria)/6pm SAST 

(South Africa)/7pm EEST (Turkey) Please register here for 

this webcast. 

New developments in Ireland, Luxembourg and 

Switzerland October 2016, date and time to be confirmed. 

Past webcasts from this series: 

New developments in Argentina, Brazil and Mexico 

13 April 2016, Watch the webcast replay. Download the 

presentation. 

New developments in Canada, the United Kingdom and 

the United States 23 February 2016, Watch the webcast 

replay. Download the presentation 

Views on VAT: Puerto Rico update 

Puerto Rican and Global Indirect Tax professionals in this 

March 2016 webcast discussed the draft value-added tax 

(VAT) regulations issued in February 2016 and their delayed 

implementation to allow affected businesses to prepare for 

the new VAT. 


KPMG LLP’s quarterly Global Tax Disputes Update inventories the latest tax controversy news 

from around the world. In the March 2016 edition, you will find briefings on key news, events, and 

thought leadership submitted by Global Tax Dispute Resolution & Controversy professionals in 

KPMG International member firms worldwide. 

Proposed guidance on charging penalty determinations 

for export violations 

By Luis A. Abad, Washington National Tax; and Amanda K. Spikes and Donald C. Hok of 

Trade and Customs Services 

Guidance proposed by the U.S. Department of Commerce, Bureau of Industry and Security 

regarding export violations is intended to increase predictability and transparency in the 

administrative penalty process. An article in the April 2016 issue of Bloomberg BNA’s Indirect 

Taxes reviews the proposed rules and explains why, if the rules are finalized, exporters will have 

clearer direction on the benefits, or critical risk mitigating elements, of voluntary self-disclosures 

and export compliance programs. 

Puerto Rico publishes draft and transitional rules for new VAT 

regime 

By Leah Durner, Philippe Stephanny, and Guetzaida Garcia Nunez, Washington National Tax 

The Treasury Department of the Commonwealth of Puerto Rico in February 2016 published 

over 300 pages of draft regulations for implementing a value-added tax (VAT) system to replace 

its sales and use tax. An article in the April 30, 2016 edition of Bloomberg BNA’s Tax Planning 

International Indirect Taxes discusses how the draft VAT regulations aim to explain and 

provide examples, largely based on the already existing sales and use tax rules, with respect to 

definitions that apply for VAT purposes. 

In April 2016, Puerto Rico’s Treasury Department provided transitional rules for introducing the VAT 

on June 1, 2016 in an administrative determination (AD 16-07). 



OECD & BEPS 

Country by country, step by step: Implementation 

considerations for country-by-country reporting by U.S. 

multinationals 

While the Organisation for Economic Co-operation and 

Development’s (OECD) project to combat tax base erosion and profit 

shifting (BEPS) had an ambitious agenda, the verdict on whether it 

will meet all its objectives remains uncertain (Read more...) 


Many multinational enterprise groups are already working to 

implement new annual reporting requirements—country-by-country 

(CbyC) reporting (Read more...) 


In this May 2 article in Tax Notes International, the author 

discusses how the Organisation for Economic Co-operation and 

Development’s final base erosion and profit-shifting report on 

action 7 (artificial avoidance of permanent establishment status) 

(Read more...) 



Country by country, step by step: 

Implementation considerations for country-bycountry 

reporting by U.S. multinationals 

By Thomas Herr, Raj Bodapati, and Rui Che, Economic and Valuation 

Services 

While the Organisation for Economic Co-operation and Development’s (OECD) 

project to combat tax base erosion and profit shifting (BEPS) had an ambitious 

agenda, the verdict on whether it will meet all its objectives remains uncertain. 

However, one very tangible impact for large multinational enterprises is clear: 

The requirement to file annual country-by-country reports. 

The authors of an article in the April 14 edition of Tax Management Transfer 

Pricing Report outline considerations for U.S. multinationals preparing to embark 

on country-by-country reporting as set forth in the final recommendations under 

the OECD’s project to combat BEPS, focusing on establishing a process for 

preparing the report, as well as analysis of the data necessary to ensure overall 

consistency in transfer pricing and other tax positions. 


By Kim Majure, Washington National Tax, and Steven Penning, 

International Tax 

Many multinational enterprise groups are already working to implement 

new annual reporting requirements—country-by-country (CbyC) reporting— 

promulgated the U.S. Treasury Department. Proposed regulations that would 

require certain taxpayers with annual revenue of $850 million or more to file this 

report are expected to be finalized later in 2016. The proposed U.S. regulations 

were developed in response to the guidelines issued by the Organisation for 

Economic Co-operation and Development as part of its base erosion and profit 

shifting initiative. 

An April 27, 2016 KPMG LLP report organizes the considerations for developing a 

practical approach to CbyC reporting into two main areas—tax data management 

and tax data and analytics—each with four steps. 


By Kevin Cunningham, Washington National Tax 

In this May 2 article in Tax Notes International, the author discusses how 

the Organisation for Economic Co-operation and Development’s final base 

erosion and profit-shifting report on action 7 (artificial avoidance of permanent 

establishment status) would change the definition of permanent establishment 

and the effect that change could have on multinational enterprises. 



International 

Tax Controversy 

Services 

State and Local 

Controversy 

Services 

Transfer 

Pricing Dispute 


Services 

Tax 

Controversy 

Services 

Complex 

Interest 

Services 

Employment 

Tax/Independent 

Contractor 

Review 

Services 

E-Data Analysis 

and Document 

Management 

Services 

Washington 

National Tax, 

Practice, Procedure 

and Administration 

Other KPMG TDR Network Services 

• Research Credit and Section 199 Defense Assistance 

• Valuation Defense Assistance 

• Global Tax Controversy and Dispute Resolution 

• Global Mobility Services 

• Post Transaction Integration Assistance 

• Trade & Customs 

• Tax Transparency Services 

KPMG 

Tax Dispute Resolution (TDR) 

Network 





Contacts 

Tax Dispute Resolution – 

National Leader 

Sharon D. Katz-Pearlman 

skatzpearlman@kpmg.com 

Business Unit Leaders East 

Mid-South and Chesapeake 

Michael P. Dolan 

mpdolan@kpmg.com 

New England 

Thomas D. Greenway 

tgreenaway@kpmg.com 

Business Unit Leaders West 

Gateway West/North 

Heartland 

Jeffrey S. Luechtefeld 

jluechtefeld@kpmg.com 

Chicago Metro/Mid‐America 

Kathleen C. Schlenzig 

kschlenzig@kpmg.com 

Dallas/Denver 

Victoria J. Sherlock 

vsherlock@kpmg.com 

Contributors 

Luis Abad 

labad@kpmg.com 

Michael Bauer 

michaelbauer@kpmg.com 

Raj Bodapati 

rbodapati@kpmg.com 

Kelli Cacciotti 

kellicacciotti@kpmg.com 

Rui Che 

rche@kpmg.com 

Steven Friedman 

smfriedman@kpmg.com 

Guetzaida Garcia Nunez 

ggarcianunez@kpmg.com 

Andrew Gewirtz 

agewirtz@kpmg.com 

Caralee B. Hall 

leebhall@kpmg.com 

Carol Kulish Harvey 

ckulish@kpmg.com 

William Olver 

wolver@kpmg.com 

Steven Penning 

spenning@kpmg.com 

Shirley Sicilian 

ssicilian@kpmg.com 

Adam Silva 

adamcsilva@kpmg.com 

Amanda Spikes 

aspikes@kpmg.com 

New York Metro/Short Hills 

Sharon D. Katz-Pearlman 

skatzpearlman@kpmg.com 

Pennsylvania/Short Hills 

William H. Stoddard III 

wstoddard@kpmg.com 

Pacific Northwest 

Erin M. Collins 

emcollins@kpmg.com 

David R. Unger 

dunger@kpmg.com 

Bay Area 

Paul Webb 

pwebb@kpmg.com 

John Crucs 

jcrucs@kpmg.com 

Kevin Cunningham 

kmcunningham@kpmg.com 

Gary Cvach 

gcvach@kpmg.com 

Michael P. Dolan 

mpdolan@kpmg.com 

Thomas Herr 

therr@kpmg.com 

Donald Hok 

dhok@kpmg.com 

Harve M. Lewis 

harvelewis@kpmg.com 

Danchai Mekadenaumporn 

dmekadenaumporn@kpmg.com 

Terri Stecher 

tstecher@kpmg.com 

Philippe Stephanny 

philippestephanny@kpmg.com 

Jeanne Sullivan 

jsullivan@kpmg.com 

Ivan Thomann 

ithomann@kpmg.com 

KPMG LLP’s Tax Dispute Resolution Services 

KPMG’s Tax Dispute Resolution Services network helps 

companies prevent, prepare for, and respond to challenges by 

the varying tax authorities. The network is a national team of tax 

professionals, who assist companies in identifying, managing, and 

mitigating potential tax risks and exposures. 

Leah Durner 

ldurner@kpmg.com 

kpmg.com/socialmedia 

Karen Field 

kfield@kpmg.com 

Deborah Fields 

dafields@kpmg.com 

Kimberly Tan Majure 

kmajure@kpmg.com 

Sarah McGahan 

smcgahan@kpmg.com 

Timothy McCormally 

tmccormally@kpmg.com 

Jon Zelnik 

jzelnik@kpmg.com 

kpmg.com/app

Tax Dispute Resolution Quarterly

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