Yes, an MNE that is currently under IRS examination is eligible to participate in ICAP (International Compliance Assurance Program). The fact that a U.S. MNE is under IRS examination does not necessarily preclude ICAP participation, though an ongoing IRS examination will be a relevant factor in the IRS's decision-making process, including the tax years and issues under examination.
The IRS determines whether it will act as a lead tax administration for a U.S. MNE on a case-by-case basis. Factors considered include the scope, materiality, and complexity of the MNE group’s covered transactions, the MNE group’s history of transparent and cooperative engagement with the IRS, the MNE group’s examination history with respect to transfer pricing and permanent establishment issues, and the anticipated availability of IRS resources necessary to perform the risk assessment.
If the IRS concludes that it is willing to serve as the lead tax administration, it will coordinate with the MNE group to make the selection documentation package available to all tax administrations participating in ICAP where the MNE group has a constituent entity based on the most recent Country-by-Country (CbC) report. The IRS will also host multilateral selection stage meetings with the potential relevant tax administrations to discuss the MNE group’s suitability for ICAP and the proposed scope of the risk assessment.
In summary, while being under IRS examination does not automatically disqualify an MNE from participating in ICAP, it is a factor that will be considered in the overall suitability evaluation.
Sources:
IRM Part 4. Examining Process. Chapter 60. International Procedures. Section 1. Exchange of Information
IRM Part 4. Examining Process. Chapter 46. LB&I Examination Process. Section 3. Planning the Examination
IRM Part 4. Examining Process. Chapter 60. International Procedures. Section 11. International Compliance Assurance Program
