Parent entities of U.S. multinational enterprise (MNE) groups with $850 million or more of revenue in a previous annual reporting period file Form 8975, Country-by-Country Report. Form 8975 is used to report a U.S. MNE group’s income, taxes paid, and other indicators of economic activity on a country-by-country basis.

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Form 8975 Country-by-Country Report Filing Rules

• Must be filed for the U.S. MNE group’s first reporting period in the tax year that starts on or after June 30, 2016.
• Must be filed with the income tax return of the parent entity in which the reporting period ends and cannot be filed as a stand-alone return.
• Can be filed for reporting periods that begin before the first required reporting period. (For more information go to Revenue Procedure 2017-23)
• Form 8975 and its schedules can be filed in the Modernized e-File (MeF) XML schema format.
• Parent entities not permitted to file returns electronically must file Form 8975 with their paper income tax return.

International Exchange of Country-by-Country Report

• The IRS will exchange Form 8975 information automatically with tax authorities with which the United States enters into a bilateral Competent Authority Arrangement. However, a U.S. MNE group’s information will only be exchanged with those countries in which the U.S. MNE group reports doing business.
• Exchanged information is confidential and protected pursuant to the applicable legal instrument permitting exchange.
• Find out how to report concerns over potential disclosure or misuse of information exchanged under an international agreement.

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Revenue Procedure 2017-23

SECTION 1. PURPOSE AND SCOPE
This revenue procedure describes the process for filing Form 8975, Country-by-Country Report, and accompanying Schedules A, Tax Jurisdiction and Constituent Entity Information (collectively, Form 8975), by ultimate parent entities of U.S. multinational enterprise (MNE) groups for reporting periods beginning on or after January 1, 2016, but before the applicability date of §1.6038-4 (early reporting periods).

SECTION 2. BACKGROUND
.01 On June 30, 2016, the Department of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS) published in the Federal Register final
regulations (T.D. 9773) (CbC reporting regulations) that require certain U.S. business entities that are the ultimate parent entity of a U.S. MNE group to file Form 8975 annually with the IRS. See §1.6038-4. Form 8975 requires the ultimate parent entity of a U.S. MNE group to report information, on a country-by-country basis, related to the group’s income and taxes paid, together with certain indicators of the location of the group’s economic activity. The CbC reporting regulations apply to reporting periods of ultimate parent entities of U.S. MNE groups that begin on or after the first day of the first taxable year of the ultimate parent entity that begins on or after June 30, 2016.
.02 Some jurisdictions have adopted country-by-country (CbC) reporting
requirements for annual accounting periods beginning on or after January 1, 2016, that would require a constituent entity resident in the jurisdiction to report CbC information if the constituent entity is part of an MNE group with an ultimate parent entity resident in a jurisdiction that does not have a CbC reporting requirement (including pursuant to parent surrogate filing) for the same annual accounting period (local CbC filing). Consequently, constituent entities of a U.S. MNE group may be subject to local CbC filing for early reporting periods, unless the ultimate parent entity files a Form 8975, or reports CbC information to another jurisdiction that accepts surrogate filing, for such
early reporting period. The preamble to the CbC reporting regulations indicated that the Treasury Department and the IRS would provide a procedure for ultimate parent entities of U.S. MNE groups to file Form 8975 for early reporting periods.

SECTION 3. FILING PROCEDURE
.01 Beginning on September 1, 2017, Form 8975 may be filed for an early reporting period with the income tax return or other return as provided in the Instructions to Form 8975 for the taxable year of the ultimate parent entity of the U.S. MNE group with or within which the early reporting period ends. In order to file Form 8975 for an early reporting period, an ultimate parent entity that files (or has filed) an income tax return for a taxable year that includes an early reporting period without a Form 8975 attached must follow the procedures for filing an amended income tax return and attach Form 8975 to the amended return within twelve months of the close of the taxable year that includes the early reporting period. Filing an amended income tax return solely to attach Form 8975 in accordance with this revenue procedure will have no effect on the
statute of limitations for the income tax return.
.02 In order to ensure timely automatic exchange of the information on a Form
8975 for an early reporting period, ultimate parent entities that are able to file their returns electronically are encouraged to file their returns and the Forms 8975 electronically. An ultimate parent entity that files its return electronically must file the Form 8975 through the IRS Modernized e-File system in Extensible Markup Language (XML) format, not as a binary attachment (such as a PDF file). The IRS intends to provide specific electronic filing information on Form 8975 to the software industry in early 2017 so that developers will be able to make Form 8975 available in their software ahead of the September 1, 2017, implementation date. For filers of Form 8975 that are not eligible to use Modernized e-File to file their income tax return, a paper version of Form 8975 will be made available in advance of the September 1, 2017, implementation date.

SECTION 4. APPLICABILITY DATE
This revenue procedure applies to reporting periods of ultimate parent entities of U.S. MNE groups beginning on or after January 1, 2016, and before the applicability date of §1.6038-4.

SECTION 5. DRAFTING INFORMATION
The principal author of this revenue procedure is Melinda E. Harvey of the Office
of Associate Chief Counsel (International). For further information regarding this
revenue procedure contact Melinda E. Harvey at (202) 317-6934 (not a toll free call).

Reporting Unauthorized Disclosure or Use of Tax Information Exchanged Under an International Agreement

The United States has entered into a number of agreements with other countries that govern the exchange of information for tax purposes. These international agreements include bilateral double tax conventions, tax information exchange agreements (TIEAs), intergovernmental agreements (IGAs) to implement the Foreign Account Tax Compliance Act (FATCA), and the Convention on Mutual Administrative Assistance in Tax Matters. Depending on the agreement’s terms, the United States may exchange information on request, automatically or spontaneously. (Automatic exchange of information is the principal form of exchange contemplated under the provisions of the IGAs implementing FATCA and for Country-by-Country Reporting.)

Information exchange provisions based on Article 26 of the U.S. Model Income Tax Convention and included in most U.S. tax treaties and TIEAs, and in FATCA IGAs with jurisdictions with which the United States does not have a bilateral or multilateral treaty or TIEA, require exchanged information to be kept confidential. Information exchanged may only be disclosed to and used by courts, administrative bodies and others involved in and for the purposes of assessment, collection, or administration, enforcement or prosecution, or determination of appeals concerning the taxes covered by the agreement. With very limited exceptions, tax administrations cannot disclose exchanged information to persons or agencies not authorized under the information exchange agreement or use such information for non-tax purposes. Information exchanged with respect to Country-by-Country Reporting can be used by tax administrations for assessing high-level transfer pricing risks, base erosion and profit shifting related risks, and, where appropriate, for economic and statistical analysis; but the information may not be used as a substitute for a detailed transfer pricing analysis of individual transactions and prices based on a full functional analysis and a full comparability analysis.

The United States takes the confidentiality of its taxpayers’ data very seriously and protects it through U.S. domestic law as well as international agreements. Internal Revenue Code section 6103 provides for the confidentiality of taxpayer data, including taxpayer data that is exchanged under an international agreement. Civil liability and criminal penalties may be imposed under the Code for unauthorized disclosure of taxpayer data. Additionally, Code section 6105 reinforces international agreements in providing for the confidentiality of data exchanged under international agreements. If the United States determines that a tax jurisdiction is not in compliance with the confidentiality requirements and appropriate use restrictions under the applicable information exchange agreement, the United States may suspend information exchange with the tax jurisdiction.

The United States encourages anyone who is aware of a suspected unauthorized disclosure or use of information exchanged under an international agreement to which the United States is a party to notify the office of Treaty Administration within the IRS Large Business and International Division by sending a description of the incident to the Exchange of Information Disclosure mailbox. The subject line of the email should indicate “Report of Suspected Unauthorized Disclosure or Use of Exchanged Information.”

The email description should include all relevant information, including, but not limited to:

• Name and contact information (including telephone number and email address) of the individual submitting the information, so that the IRS may contact you to clarify details or make further inquiries, and
• Details about the incident, to the extent known.

Do not include any information that could identify a taxpayer, including any taxpayer identification number (e.g., Social Security number, individual taxpayer identification number).

All alleged unauthorized disclosures or use of information will be investigated and followed up with appropriate actions.