General questions A1. What is Country-by-Country (CbC) reporting? A2. Where can I find additional guidance and resources on Country-by-Country (CbC) reporting? Data format and structure B1. Does the IRS intend to follow the Organisation for Economic Cooperation and Development (OECD) schema as part of electronically filing Form 8975? B2. Can I file Form 8975 on paper? B3. Where can I find Form 8975 XML schema? Exchange of information C1. How will the IRS use Country-by-Country (CbC) data? C2. Which tax jurisdictions does the IRS have competent authority arrangements (CAAs) with for the automatic exchange of CbC reports? C3. When will the U.S. exchange Country-by-Country (CbC) reports with other tax jurisdictions with which the U.S. has a double taxation treaty or tax information exchange agreement in force and a competent authority arrangement operative? C4. How do I report instances (or suspicions) of unauthorized disclosure or misuse of information exchanged with a double taxation treaty/tax information exchange agreement partner? Reporting requirements D1. When can I file Form 8975? D2. If a U.S. MNE group filed Form 8975 and Schedule A (Form 8975), is it required to mail a copy of page 1 of Form 8975 to the mailbox in Ogden? D3. How many Schedules A (Form 8975 should a U.S MNE file? D4. Organization for Economic Cooperation and Development (OECD) guidance provides for transitional filing options for multinational enterprise (MNE) groups having an ultimate parent entity in a tax jurisdiction that requires Country-by-Country (CbC) reports for periods that begin after January 1, 2016, or "parent surrogate filing." Is the United States allowing for this transitional filing? D5. If a taxpayer has already filed its income tax return for the 2016 tax year, but wants to file a Form 8975 for that period (an early reporting period), what should the taxpayer do? D6. If a U.S. MNE group is a specified national security contractor, as defined in Notice 2018-31, what information should this U.S. MNE provide on Form 8975 and Schedule A (Form 8975)? D7. If a U.S. MNE group is a specified national security contractor and has already filed Form 8975 and Schedules A (Form 8975) for prior reporting periods, will this information be exchanged in June 2018? D8. If a U.S. multinational enterprise (MNE) needs to modify or correct a submitted Form 8975, can the U.S. MNE provide only amended information? D9. How are U.S limited liability companies (LLCs) reported on Form 8975? D10. How should the information of a U.S. limited partnership (LP) or limited liability company (LLC) that has not elected to be treated as a corporation for federal tax purposes and is the ultimate parent entity of a U.S. MNE group be reported on Form 8975 and Schedule A (Form 8975)? D11. Under the CbC reporting framework provided by the OECD, under what circumstances would the foreign subsidiaries of a U.S. MNE group be subject to a local filing requirement in a foreign tax jurisdiction? D12. If there is more than one constituent entity in a jurisdiction, should the financial information in Part 1 of Schedule A (Form 8975) be reported as an aggregate of the constituent entity information or consist of consolidated data that eliminates intra-jurisdiction transactions between constituent entities in that jurisdiction? The OECD Guidance on the Implementation of Country-by-Country Reporting indicates that, in certain circumstances, jurisdictions may allow MNE groups to provide consolidated data in CbC reports. D13. Treas. Reg. § 301.7701-3(c) allows a business entity that is an eligible entity to be classified for federal tax purposes other than its default classification (partnership, disregarded entity, or corporation) under Treas. Reg. § 301.7701-3(b) by making an election ("check-the-box election"). Does a check-the-box election have any effect when reporting constituent entities on the CbC report? Comment on country-by-country reporting If you have additional comments about Country-by-Country Reporting compliance, please send your comments to our email address. NOTE: Do not provide any personal identification information such as your name, taxpayer identification number, address, or telephone number. General questions A1. What is country-by-country (CbC) reporting? CbC reporting is part of Action 13 of the Organisation for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting Action Plan, which is intended to promote greater transparency for tax administrations by providing them with relevant and reliable information to conduct high-level transfer pricing risk assessments. To accomplish this, a competent authority will automatically exchange CbC reports prepared by multinational enterprise (MNE) groups with a reporting entity in its jurisdiction with partner jurisdiction competent authorities in all jurisdictions in which the MNE group operates, provided that a legal instrument allowing for the automatic exchange of information (e.g., double taxation convention (DTC) or tax information exchange agreement (TIEA)) is in force and a competent authority arrangement (CAA) for the exchange of CbC reports is operative with such second-mentioned jurisdictions. Per Treasury Regulations §1.6038-4 (TD 9773), the ultimate parent entity of a U.S. MNE Group with $850 million or more of revenue in the relevant preceding annual reporting period will file Form 8975 and Schedules A (i.e., the "CbC report") with their annual income tax return. Return to top A2. Where can I find additional guidance and resources on country-by-country (CbC) reporting? The IRS CbC website includes a CbC reporting guidance page that contains links to the final CbC Treasury Regulations, Rev. Proc. 2017-23 on filing for early reporting periods, model competent authority arrangements, CbC reporting jurisdiction status table, OECD guidance, and forms and instructions. Return to top Data format and structure B1. Does the IRS intend to follow the Organisation for Economic Cooperation and Development (OECD) schema as part of electronically filing Form 8975? U.S. taxpayers that file their returns electronically should use an IRS-approved Extensible Markup Language (XML) schema that is compatible with the Modernized e-File (MeF) system to file Form 8975 and Schedules A. The MeF schemas and business rules are now available through the Registered User Portal and your e-Services mailbox. When the IRS conducts international exchanges with partner jurisdictions under a treaty or Tax Information Exchange Agreement and a Competent Authority Arrangement, the IRS will use the approved OECD Country-by-Country (CbC) XML schema. Return to top B2. Can I file Form 8975 on paper? Paper returns are accepted; however, in order to ensure the timely automatic exchange of the CbC reports, U.S. ultimate parent entities are encouraged to file their returns electronically. If an income tax return is filed electronically using MeF, then Form 8975 and Schedules A must be attached electronically in the correct XML format. Form 8975 cannot be filed as a standalone tax form. Please note that Portable Document Format (PDF) and binary attachments to electronic filings will not be accepted. If a taxpayer is filing a paper return, the IRS requests that they also mail a copy of page 1 of Form 8975 to Ogden. See the Instructions for Form 8975 and Schedule A (Form 8975) for further information. Return to top B3. Where can I find Form 8975 XML schema? Form 8975 Modernized e-File schemas and business rules are available upon request through the Registered User Portal and your e-Services mailbox. This mailbox is part of the Secure Object Repository (SOR). Users will access their mailbox in their existing e-Services account to pick up the schema and business rules packages. Find additional information and instructions for accessing the SOR mailbox. Return to top Exchange of information C1. How will the IRS use country-by-country (CbC) data? The CbC data will be used by the IRS in conjunction with other taxpayer data for high-level assessment of transfer pricing, and other Base Erosion and Profit Shifting (BEPS) tax risks, and for economic and statistical analysis. The assessments and analyses will be done in accordance with the Organisation for Economic Cooperation and Development (OECD) guidance on the appropriate use of information contained in CbC reports PDF and in accordance with our double taxation convention (DTC) and tax information exchange agreement (TIEA) obligations and competent authority arrangement (CAA) commitments. Return to top C2. Which tax jurisdictions does the IRS have competent authority arrangements (CAAs) with for the automatic exchange of CbC reports? The U.S. Competent Authority is committed to entering into CAAs for the exchange of CbC reports with those jurisdictions within the Inclusive Framework that have a legal instrument allowing for the automatic exchange of information with the United States and that the United States has determined have both appropriate safeguards to ensure that the information received remains confidential and is used solely for tax purposes and the infrastructure for an effective exchange relationship. The U.S. Competent Authority is negotiating with its DTC and TIEA partners CbC CAAs on a bilateral basis. For a list of the CbC reporting CAAs that have been signed, see the CbC reporting jurisdiction status table. Return to top C3. When will the U.S. exchange country-by-country (CbC) reports with other tax jurisdictions with which the U.S. has a double taxation treaty or tax information exchange agreement in force and a competent authority arrangement operative? Consistent with the OECD guidance, the U.S. intends to begin exchanging CbC reports with such tax jurisdictions no later than June 2018. Return to top C4. How do I report instances (or suspicions) of unauthorized disclosure or misuse of information exchanged with a double taxation treaty/tax information exchange agreement partner? The IRS CbC website contains guidance for reporting instances (or suspicions) of unauthorized disclosure or misuse of information exchanged under an international agreement. When reporting such instances, you should not include information that could identify a taxpayer, such as a taxpayer identification number, social security number, or individual taxpayer identification number. Return to top Reporting requirements D1. When can I file Form 8975? Form 8975 and Schedules A can now be filed for a reporting period with the income tax return for the taxable year of the ultimate parent entity of the U.S. multinational enterprise group with or within which the reporting period ends. Form 8975 and Schedule A are now available on IRS.gov. Return to top D2. If a U.S. MNE group filed Form 8975 and Schedule A (Form 8975), is it required to mail a copy of page 1 of Form 8975 to the mailbox in Ogden? Only U.S MNE's filing on paper should mail a copy of only page 1 of Form 8975 to Ogden to notify the IRS that you have filed Form 8975 and Schedules A (Form 8975) with a paper return. See the instructions for Form 8975 and Schedule A (Form 8975) for further guidance. Return to top D3. How many Schedules A (Form 8975) should a U.S MNE file? U.S. MNE's filing Form 8975 and Schedule A (Form 8975) should file a separate Schedule A (Form 8975) for each tax jurisdiction where the MNE group operates and list all of the constituent entities resident in the tax jurisdiction. When submitting Form 8975 and Schedules A (Form 8975), filers must attach at least two Schedules A (Form 8975) to the Form 8975. At least one Schedule A should be for the United States. A U.S. MNE group with only fiscally transparent United States business entities would not provide a Schedule A for the United States but would provide a Schedule A for "stateless" entities. Filers who do not submit either a U.S. or stateless Schedule A (Form 8975) will receive a letter notifying them that an amended return must be filed to ensure their complete and accurate information is exchanged. See the instructions for Form 8975 and Schedule A (Form 8975) for further guidance. Return to top D4. Organization for Economic Cooperation and Development (OECD) guidance provides for transitional filing options for multinational enterprise (MNE) groups having an ultimate parent entity in a tax jurisdiction that requires Country-by-Country (CbC) reports for periods that begin after January 1, 2016, or "parent surrogate filing." Is the United States allowing for this transitional filing? Yes. Revenue Procedure 2017-23 allows for U.S. ultimate parent entities to file a Form 8975 and Schedules A with the IRS for periods beginning after January 1, 2016, and prior to the required reporting period in Treasury Regulations §1.6038-4 (TD 9773). If the ultimate parent entity of a U.S. MNE group files with the IRS for an early reporting period and provided that the other conditions of the OECD guidance on parent surrogate filing are met (such as proper notifications by the U.S. MNE group to foreign jurisdictions), then the U.S. MNE group should not be subject to a local filing requirement in a foreign jurisdiction. Return to top D5. If a taxpayer has already filed its income tax return for the 2016 tax year, but wants to file a Form 8975 for that period (an early reporting period), what should the taxpayer do? An ultimate parent entity that files (or has filed) an income tax return for a taxable year without a Form 8975 attached and that wishes to file a Form 8975 for an early reporting period must follow the procedures for filing an amended income tax return and attach Form 8975 and Schedules A to the amended return. As described in Revenue Procedure 2017-23, those doing so for an early reporting period must do so within twelve months of the close of the taxable year that includes the early reporting period. For more information review Revenue Procedure 2017-23 PDF. Return to top D6. If a U.S. MNE group is a specified national security contractor, as defined in Notice 2018-31, what information should this U.S. MNE provide on Form 8975 and Schedule A (Form 8975)? A U.S. MNE group is a "specified national security contractor" if more than 50 percent of the U.S. MNE group's annual revenue, as determined in accordance with U.S. generally accepted accounting principles, in the preceding reporting period is attributable to contracts with the Department of Defense or U.S. government intelligence or security agencies. As provided in Notice 2018-31, U.S. MNE groups that have a Form 8975 filing obligation under §1.6038-4 and are specified national security contractors may meet their obligation in the following manner: Complete Form 8975 with a statement at the beginning of Part II, Additional Information, that the U.S. MNE group is specified national security contractor as defined in Notice 2018-31; Complete one Schedule A (Form 8975) for the Tax Jurisdiction of the United States with aggregated financial and employee information for the entire U.S. MNE group in Part I, Tax Jurisdiction Information, and only the ultimate parent entity's information in Part II, Constituent Entity Information; and Complete one Schedule A (Form 8975) for the Tax Jurisdiction "Stateless" with zeroes in Part I, Tax Jurisdiction Information, and only the ultimate parent entity's information in Part II, Constituent Entity Information. No other Schedule A (Form 8975) or additional information is required. No other Schedule A (Form 8975) or additional information is required. Return to top D7. If a U.S. MNE group is a specified national security contractor and has already filed Form 8975 and Schedules A (Form 8975) for prior reporting periods, will this information be exchanged in June 2018? Yes, the original Form 8975 and Schedules A will be automatically exchanged in June 2018, unless the specified national security contractor files an amended Form 8975 and Schedules A (Form 8975) in accordance with Notice 2018-31. Specified national security contractors may file an amended tax return (following the instructions for filing of amended tax returns) and attach an amended Form 8975 and Schedules A (Form 8975) in the manner outlined in the previous question with the amended report checkbox on Form 8975 marked. Those that cannot electronically file their amended returns should also mail a copy of page 1 of their amended Form 8975 to Ogden as provided in the Instructions for Form 8975 and Schedule A (Form 8975) under the heading "Where to File." In order to ensure originally filed CbC reports are not automatically exchanged, specified national security contractors that are filing amended Form 8975 and Schedules A (Form 8975) to supersede an already-filed Form 8975 and Schedules A (Form 8975) should do so by April 20, 2018, if filing an amended Federal income tax return on paper, or by May 25, 2018, if filing electronically. Return to top D8. If a U.S. multinational enterprise (MNE) needs to modify or correct a submitted Form 8975, can the U.S. MNE provide only the amended information? No. If a U.S. MNE files Form 8975 and Schedules A (Form 8975) that the MNE later determines should be amended, the MNE must file an amended Form 8975 and all Schedules A (Form 8975), including any that have not been amended, with its amended tax return. The U.S. MNE should use the amended return instructions for the return with which Form 8975 and Schedules A were originally filed and check the amended report checkbox at the top of Form 8975. Note that the amended return (with the amended Form 8975 and all Schedules A) must be filed using the same method (electronically or by paper) as the original submission. In other words, if the U.S. MNE is required to e-file an original return and need to file an amended or superseding return, the amended return must also be e-filed. Note that for the paper filer, it must also submit page 1 of Form 8975 to Ogden. Return to top D9. How are U.S limited liability companies (LLCs) reported on Form 8975? Generally, U.S. LLCs that do not elect to be treated as corporations for federal income tax purposes are treated as "stateless," and their financial and employee information should be provided on a Schedule A (Form 8975) for stateless entities. However, a U.S. LLC that does not elect to be treated as a corporation for federal income tax purposes and is wholly and directly owned by a business entity that is organized and has its tax jurisdiction of residence in the United States will be considered to be a U.S. business entity that has its tax jurisdiction of residence in the United States. If such a U.S. LLC, in turn, wholly and directly owns another U.S. LLC, the other U.S. LLC will also be considered to be a U.S. business entity that has its tax jurisdiction of residence in the United States. Thus, a U.S. LLC that meets the above criteria to be treated as having its tax jurisdiction of residence in the United States will be listed as a Constituent Entity on the Schedule A (Form 8975) for the United States, and its financial and employee information should be aggregated with other U.S. Constituent Entities of the U.S. MNE group, rather than being reflected on the Schedule A for stateless entities. Return to top D10. How should the information of a U.S. limited partnership (LP) or limited liability company (LLC) that has not elected to be treated as a corporation for federal tax purposes and is the ultimate parent entity of a U.S. MNE group be reported on Form 8975 and Schedule A (Form 8975)? A U.S. LP or LLC is a U.S. business entity because it is organized in the United States, and thus may be the ultimate parent entity of a U.S. MNE group. However, a U.S. LP or LLC ultimate parent entity that has not elected to be treated as a corporation for federal tax purposes will be considered a stateless entity for all other purposes of the country-by-country report. Thus, the financial data of the U.S. LP or LLC ultimate parent entity should be aggregated with the information of any other stateless constituent entities of the U.S. MNE group and reported on a Schedule A (Form 8975) for stateless entities. The Additional Information sections on the Form 8975 and/or Schedule A (Form 8975) for stateless entities may be used to provide any additional information regarding the U.S. LP or LLC that the ultimate parent entity considers useful for understanding the information on the report. Return to top D11. Under the CbC reporting framework provided by the OECD, under what circumstances would the foreign subsidiaries of a U.S. MNE group be subject to a local filing requirement in a foreign tax jurisdiction? Based on the OECD model legislation for CbC reporting, a U.S. MNE group's foreign subsidiaries cannot be subject to a local filing requirement in a foreign tax jurisdiction unless the United States has a legal instrument allowing for the automatic exchange of information with the foreign jurisdiction but has not entered into a competent authority arrangement (CAA) to provide for the automatic exchange of CbC reports by the end of 12 months following the end of the fiscal reporting year of the U.S. MNE group or unless there has been a "systemic failure" on the part of the United States. A systemic failure occurs when there is a CAA in place, but a jurisdiction (in this case, the United States) has suspended automatic exchange for reasons other than those that are in accordance with the terms of the CAA or otherwise persistently fails to automatically exchange CbC reports. Furthermore, the foreign jurisdiction cannot require local filing if it does not meet the standards of confidentiality, consistency, and appropriate use, as described in the OECD guidance. If a U.S. MNE group determines that it is not required to file a Form 8975 because, for instance, it does not meet the reporting threshold under Treasury Regulations §1.6038-4 (TD 9773), a foreign jurisdiction cannot require that a local subsidiary of the U.S. MNE group file a CbC report merely because the U.S. MNE group exceeds the revenue threshold in the foreign jurisdiction. Return to top D12. If there is more than one constituent entity in a jurisdiction, should the financial information in part 1 of Schedule A (Form 8975) be reported as an aggregate of the constituent entity information or consist of consolidated data that eliminates intra-jurisdiction transactions between constituent entities in that jurisdiction? The OECD Guidance on the Implementation of Country-by-Country reporting indicates that, in certain circumstances, jurisdictions may allow MNE groups to provide consolidated data in CbC reports. Treas. Reg. § 1.6038-4 requires U.S. MNE groups to provide aggregated data on the CbC report. Note, however, that revenue does not include payments received from other constituent entities in the MNE group that are treated as dividends in the payor's tax jurisdiction of residence. Additionally, distributions and remittances from constituent entities in the MNE group that are partnerships, other fiscally transparent entities, or permanent establishments are not considered revenue of the recipient-owner. Return to top D13. Treas. Reg. Section 301.7701-3(c) allows a business entity that is an eligible entity to be classified for federal tax purposes other than its default classification (partnership, disregarded entity, or corporation) under Treas. Reg. Section 301.7701-3(b) by making an election ("check-the-box election"). Does a check-the-box election have any effect when reporting constituent entities on the CbC report? With respect to foreign eligible entities, a check-the-box election does not affect the tax jurisdiction of residence of the foreign entity; thus, the election has no impact on the reporting of foreign entities on the CbC report. With respect to domestic eligible entities, a disregarded entity or partnership that, as a result of a check-the-box election, is classified as a corporation for federal tax purposes will have the United States as its tax jurisdiction of residence. Return to top CbC reporting topics Country-by-Country reporting U.S. MNEs Guidance and resources Related Form 8975 PDF Form 8975 (Schedule A) PDF Form 8975 instructions PDF Jurisdiction status table Report unauthorized use Newsletter Subscribe to the Country-by-Country Reporting newsletter
