Tax Information Exchange Agreement and Supplementary Notes (1987)
This Treaty was signed on December 10, 1987 in American Samoa and on January 7, 1988 in the United States. The Treaty entered into force on January 1, 1998.
TAX IMPLEMENTATION AGREEMENT BETWEEN THE UNITED STATES OF AMERICA AND AMERICAN SAMOA
The Government of the United States of America and the American Samoa Government desiring to conclude an Agreement (hereinafter referred to as the “Agreement”) for the exchange of information and mutual assistance with respect to taxes in order to prevent the evasion or avoidance of United States or American Samoa taxes have agreed as follows:
Article 1. Scope of Agreement
This Agreement is intended to provide for mutual assistance in tax matters, including exchanges of information, for purposes of administering the tax laws of the respective Governments and especially to prevent avoidance or evasion of the Governments’ respective fiscal laws. This Agreement is the implementing agreement described in sections 1271 and 1277 of the Tax Reform Act of 1986, Pub. Law 99-514. The provisions of this Agreement are subject to provisions of the statutes, regulations, and published procedures of the Contracting Governments.
Upon entry into force, this Agreement replaces any and all prior tax coordination agreements and implementing agreements between the respective Governments.
Article 2. Taxes Covered
1. This Agreement shall apply to the following taxes imposed by or on behalf of a Contracting Government:
a) in the case of the United States of America, all taxes imposed by the Code, and
b) in the case of American Samoa, all taxes imposed by the Code as it applies in American Samoa (with modifications adopted by American Samoa) and all local income taxes imposed by American Samoa as authorized by the Tax Reform Act of 1986.
2. This Agreement shall apply also to any identical or substantially similar taxes imposed after the date of signature of the Agreement in addition to or in place of the existing taxes. The competent authority of each Government shall notify the other of significant changes in laws which may affect the obligations of that Government pursuant to this Agreement.
3. This Agreement shall not apply to the extent that an action or proceeding concerning taxes covered by this Agreement is barred by the applicant Government’s statute of limitations.
Article 3. Definitions
1. In this Agreement, unless otherwise defined:
a) The term “Code” shall mean the Internal Revenue Code of 1986, as amended, and any predecessor or successor statutes.
b) The term “competent authority” means:
(i) in the case of the United States of America, the Secretary of the Treasury or his delegate, and
(ii) in the case of American Samoa, the Treasurer or his delegate.
c) The term “Contracting Government” means the United States or American Samoa as the context requires.
d) The term “non-American Samoa source income” means income for which the source (under source rules set forth in the Code or promulgated consistently with the Code by the Internal Revenue Service) is not American Samoa.
e) The term “person” includes an individual and a partnership, corporation, company, trust, estate, association or other legal entity.
f) The term “tax” means any tax to which the Agreement applies.
g) The term “taxpayer” means:
(i) in the case of the United States, any person subject to the provisions of the Code, and
(ii) in the case of American Samoa, any person subject to the provisions of the Code as it applies in American Samoa (including modifications adopted by American Samoa) or any local income tax laws imposed by American Samoa.
h) For purposes of determining the geographical area in respect of which jurisdiction to compel production of information under this Agreement may be exercised, the term “United States” means the United States of America, including Puerto Rico, Guam, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, and any other United States possession or territory and the territorial waters thereof, but not including American Samoa.
i) For purposes of determining the geographical area in respect of which jurisdiction to compel production of information under this Agreement may be exercised, the term “American Samoa” means the territorial domain, lands and waters of the islands of Tutuila and Manua, the cession of which were accepted, ratified, and confirmed as of April 10, 1900 and July 16, 1904, and Swains Island and Rose Island.
2. Any term not defined in this Agreement, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 5, shall have the meaning which it has under the laws of the Contracting Governments relating to the taxes which are the subject of this Agreement.
Article 4. Exchange of Information
1. The competent authorities of the Contracting Governments shall exchange information to administer and enforce the domestic laws of the Contracting Governments concerning taxes covered by this Agreement. Information shall be exchanged to fulfill the purposes of this Agreement without regard to whether the information relates to, or is held by, a taxpayer of a Contracting Government. Procedures for exchange of information are set forth in Appendix A, Limitations on Disclosure of Tax Information, which is incorporated by reference and made a part of this Agreement.
2. The competent authorities of the Contracting Governments shall automatically transmit information to each other for the purposes referred to in paragraph 1. The competent authorities shall determine the items of information to be exchanged pursuant to this paragraph and the procedures to be used to exchange such items of information.
a) It is intended that the United States shall routinely supply to American Samoa the following information, to the extent available and subject to the tolerances and criteria to be agreed upon by the competent authorities:
(i) copies of reports of individual, partnership, corporate, and employment audit changes (with associated reports of experts) that disclose information relevant to American Samoa;
(ii) copies of Forms 5335 (Income Subject to Withholding under Chapter 3, Internal Revenue Code, as reported on Form 1042S, and any successor or comparable forms) that disclose information relevant to American Samoa;
(iii) copies of Schedule K-1 of Form 1065 (U.S. Partnership Return of Income) and audit results, when the partnership return is examined and it appears the examination will affect returns of American Samoa taxpayers;
(iv) copies of responses to Forms 4901, 4902, and 4903, Requests for Information About Tax Forms, where such reply indicates that the taxpayer has filed a return with American Samoa;
(v) copies of Forms 1099 and all other information returns where the recipient of income is an American Samoa resident or lists an American Samoa address or the income is from American Samoa sources;
(vi) copies of the W-2 combined wage reporting tape summarizing Forms W-2AS (American Samoa Wage and Tax Statement) and Forms W-3SS (Transmittal of Wage and Tax Statements) filed with the Social Security Administration by employers in American Samoa, which tape is provided annually to the Internal Revenue Service by the Social Security Administration; and
(vii) copies of Forms 8279 (Election to be Treated as a FSC or as a Small FSC) that indicate creation or organization of any Foreign Sales Corporation (as defined in Section 922 of the Code) in American Samoa.
b) It is intended that American Samoa shall routinely supply to the United States the following information, to the extent available and subject to the tolerances and criteria to be agreed upon by the competent authorities:,
(i) copies of reports of individual, partnership, corporate, and employment audit changes (with associated reports of experts) that disclose information relevant to the United States;
(ii) information about any taxpayer who (1) is a citizen of the United States or has been a resident alien of the United States; (2) files an income tax return with American Samoa that discloses non-American Samoa source income; and (3) claims for the first time to be an American Samoa resident;
(iii) all corporate information about ownership interests in any Foreign Sales Corporation (as defined in section 922 of the Code) established in American Samoa; and
(iv) such information about corporations electing application of section 936 of the Code as may be agreed upon by the competent authorities.
c) The competent authorities of the Contracting Governments may agree to expand or limit the information to be routinely exchanged.
3. In the event American Samoa institutes a system of rebates, subsidies or reductions of tax on non- American Samoa source income, American Samoa will inform the United States, and the competent authorities will adopt and implement a program for exchange of information about such rebates, subsidies or reductions of tax and ownership interests of corporations receiving such rebates, subsidies or reductions of tax.
4. The competent authority of a Contracting Government shall spontaneously transmit to the competent authority of the other Government information which has come to the attention of the first-mentioned Government and which is likely to be relevant to, and bear significantly on, administration and enforcement of the domestic laws concerning taxes of the second-mentioned Government. The competent authorities shall determine the information to be exchanged pursuant to this paragraph and take such measures and implement such procedures as are necessary to ensure that the information is forwarded to the competent authority of the other Government.
5. The competent authority of the requested Government shall endeavor to provide information upon request by the competent authority of the applicant Government for the administration and enforcement of the domestic laws of the Contracting Governments concerning taxes. If the information available in the tax files of the requested Government is not sufficient to enable compliance with the request, that Government shall take the necessary measures to provide the applicant Government with the information requested. If information is requested by a Contracting Government in accordance with this Article, the other Contracting Government shall obtain the information to which the request relates in the same manner (including issuance and enforcement of administrative summonses) and to the same extent as if the tax of the first-mentioned Government were the tax of that other Government and were being imposed by that other Government. Notwithstanding the foregoing, the United States may exercise its rights under section 7602 et seq. of the Code to obtain information in American Samoa without resorting to the procedures set forth in this Agreement. However, in the event the United States so exercises its rights within the territory of American Samoa, it shall notify the competent authority of American Samoa prior to taking action or as soon as practicable, unless the competent authorities agree to limit notification with respect to certain classes of cases.
6. The provisions of the preceding paragraphs shall not be construed so as to impose on a Contracting Government the obligation:
a) to supply particular items of information which are not obtainable under the laws of that Government or of the other Contracting Government;
b) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process;
c) to supply information, the disclosure of which would be contrary to public policy; or
d) to disclose information if such disclosure would identify a confidential informant or seriously impair a civil or criminal tax investigation.
7. Any information received by a Contracting Government shall be subject to Appendix A, Limitations on Disclosure of Tax Information.
Article 5. Mutual Agreement Procedure and Costs
1. The competent authorities of the Contracting Governments shall implement a program to carry out the purposes of this Agreement. In particular, the competent authorities of the Contracting Governments may amend Appendix A, by mutual agreement, as they deem necessary within the limitations of this Agreement and the Code.
2. The competent authorities of the Contracting Governments shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement and may communicate directly for this purpose. In particular, the competent authorities may agree to the common meaning of a term and may determine when costs are extraordinary for purposes of this Article.
3. Unless the competent authorities of the Contracting Governments otherwise agree, ordinary costs incurred in providing assistance shall be borne by the requested Government and extraordinary costs incurred in providing assistance shall be borne by the applicant Government. The competent authorities of the Contracting Governments may agree not to charge each other for the costs of reproduction of information routinely exchanged.
Article 6. Mutual Agreement Procedure on Potential Double Taxation
1. When by reason of inconsistent positions taken by the Contracting Governments, a taxpayer is or would be subject to inconsistent tax treatment by the two jurisdictions, the competent authorities of the Contracting Governments shall endeavor to agree upon the facts and circumstances necessary to achieve consistent application of the tax laws of the respective Governments. In particular, but not by way of limitation, the competent authorities of the Contracting Governments may consult together to endeavor to agree:
a) To the same allocation of income under section 482 of the Code;
b) To the same determination of residency of a particular taxpayer; or
c) To the same determination of the source of particular items of income.
Article 7. Other Applications of Agreement
1. The Contracting Governments agree that when they have knowledge that a taxpayer has changed residence from one taxing jurisdiction to the other and seeks to change methods of accounting (or to make an initial election), no such change or election shall be permitted until the competent authorities have consulted and determined that such change or election will not lead to the evasion or avoidance of taxes imposed by either of the Contracting Governments. This paragraph includes initial adoption of an accounting method or an election inconsistent with a method or election previously utilized in the other jurisdiction by the taxpayer.
2. The Contracting Governments agree that an American Samoa corporation owned or controlled directly or indirectly by a person whose beneficial ownership is undisclosed (such as through bearer shares) shall be treated as owned or controlled to that extent by a foreign person for purposes of the respective Governments’ tax laws.
3. The Contracting Governments agree that for purposes of determining whether a person qualifies as a bona fide resident of American Samoa under section 931 of the Code the definition to be used shall be the definition contained in the then-applicable regulations promulgated by the United States.
4. The Contracting Governments agree that the United States may use its regulatory authority over sourcing rules under section 931(d)(2) and 7654(e) of the Code to determine that certain income is U.S.- source income.
5. Any taxpayer information disclosed to the United States shall become “taxpayer return information” as defined by section 6103(b)(3) of the Code and may be redisclosed only in accordance with provisions of the Code or an applicable treaty.
6. Subject to the restrictions and other provisions of this Agreement and the availability of enforcement resources, the competent authorities will develop a cooperative return selection and examination program with the objective of avoiding unnecessary duplication of examination coverage.
7. Subject to the restrictions and other provisions of this Agreement, the Contracting Governments will develop a simultaneous examination program for both civil and criminal investigations.
8. To the extent permitted by law and subject to the availability of enforcement resources, the United States will assist in collecting taxes, together with interest and additions to tax, owed to American Samoa by American Samoa taxpayers present in the United States. The competent authorities will discuss appropriate procedures for facilitating such collections. Any taxes collected shall be remitted to American Samoa, less the reasonable expenses incurred in collection.
9. In addition to the exchange of tax and other information, the competent authorities will, to the extent feasible, extend to each other assistance in other tax administration matters. This may include such activities as taxpayer assistance, stocking tax forms for the public, training of personnel, preparing special statistical studies and compilations of data, lending of skilled personnel for limited periods, conducting public education programs with regard to tax law changes made by the Tax Reform Act of 1986 and subsequent legislative revisions, and development and improvement of tax administration systems and procedures, as well as such other activities as may improve tax administration.
Article 8. Entry Into Force
For purposes of section 1271(a) of the Tax Reform Act of 1986, Pub. Law 99-514, to the extent applicable, this Agreement shall be effective as of January 1, 1987, but for all other purposes this Agreement shall enter into force on January 1, 1988.
Article 9. Amendment and Termination
1. This Agreement may be modified or amended by mutual consent of the Contracting Governments.
2. This Agreement shall remain in force until terminated by one of the Contracting Governments. Either Contracting Government may terminate the Agreement at any time after the Agreement enters into force provided that at least 6 months’ prior notice of termination has been given.
3. Any unauthorized use or disclosure of Federal returns or Federal return information as defined by section 6103(b)(1) and (2) of the Code furnished pursuant to this Agreement or inadequate procedures for safeguarding the confidentiality of such returns and return information, constitutes grounds for immediate termination of this Agreement and the exchange of information thereunder, subject to the rights of administrative appeal as provided by regulations prescribed by section 6103(p)(7) of the Code.
DONE by the Government of American Samoa at Utulei, in duplicate, this 10th day of December, 1987.
FOR THE AMERICAN SAMOA GOVERNMENT
A. P. Lutali,
Governor of American Samoa.
Tauanu-u F. Liaiagi,
Treasurer, American Samoa Government.
DONE by the Government of the United States of America at Washington, D.C. in duplicate, this 7th day of January, 1988.
FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA
O. Donaldson Chapoton,
Assistant Secretary (Tax Policy) Department of Treasury.