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The IRS's Advance Pricing and Mutual Agreement (APMA) programme, announced the release of a Functional Cost Diagnostic Model (FCD Model) developed in connection with several prior and pending Bilateral Advance Pricing Agreements (APAs) and Competent Authority/Mutual Agreement Procedure (MAP) cases.

The FCD Model is an excel-based tool for collecting and running taxpayer financial data through a residual profit split method (RPSM) model.

APMA has emphasised that a request to complete the FCD Model does not indicate APMA has reached any conclusion regarding a best method selection in individual cases. However, the FCD Model reflects APMA's view that a diagnostic evaluation of taxpayer data under a systematic RPSM model is appropriate in cases where APMA believes that two or more parties may be making significant value-added contributions to the relevant business operations. Taxpayers required to complete the FCD Model may face numerous factual and economic questions that must be considered and addressed in the course of interactions with APMA.