On the Frontier of Procedural Innovation: Advance Pricing Agreements and the Struggle to Allocate Income for Cross Border Taxation

From the introduction: The past decade has been a tumultuous and energized period in the study of administrative law and regulatory regimes. Debate continues over both positive and normative theories of the administrative state, as well as over the appropriate directions of innovation and reinvention. Among legislators and the public, the tax system and the Internal Revenue Service have been targets for criticism. This paper outlines a receQt procedural innovation in the tax area, the Advance Pricing Agreement Program ( APA program), and evaluates its success. Such a case study can play a significant role in linking procedural innovation to the broader issues of administrative law theory and regulatory reform. For example, a working model such as the APA program, built on flexibility and creativity, may support administrative theories advocating discretion, flexibility, and experimentation. Conversely, some interest group theories of regulation (e.g., public choice theory), can prompt critical examination of reforms like APAs that exhibit limited openness to scrutiny. The APA program is an ideal candidate for such analysis because it incorporates multiple factors germane to other fields including cross border transactions, intergovernmental relations, high information costs for regulation, and serious risks to all parties from\u27 uncertainty. Ultimately, detailed understandings of innovations in administrative systems are essential to developing and challenging positive and normative theories of administrative law-and to designing concrete applications of administrative law policy