Transfer Pricing in the USA
The IRS has made it clear that Transfer Pricing is a priority. Check the link here - https://www.mooresrowland.tax/2019/05/captive-services-provider-campaign.html
What do we mean by Transfer Pricing?
Why do Governments care?
Therefore it is a hot topic globally including jurisdictions in which we have many clients such as -
To better explain the global push for Transfer Pricing rules and compliance, we need to refer to recent OECD initiatives. It is encapsulated in BEPS which stands for Base Erosion and Profit Shifting which includes a 15 point action plan -
Transfer Pricing falls under Action 13 -
But let's return to the USA. Section 482 of the Internal Revenue Code 1986 provides the statutory basis for regulating transfer pricing. Treasury Regulation Section 1.482-1(b) states that “in determining the true taxable income of a controlled taxpayer, the standard to be applied in every case is that of a taxpayer dealing at arm's length with an uncontrolled taxpayer.”
As I said at the beginning, it's a priority for the IRS and recent transfer pricing cases decided by the US Tax Court include:
Appeals are pending in Medtronic, Amazon and Altera. In addition, high-profile cases involving Coca Cola and Microsoft are pending in the courts.
Are there any industry-specific transfer pricing regulations?
No, although there are proposed regulations that apply to ‘global dealing’ operations of financial products (ie, derivative products and foreign exchange transactions) in which one of the related parties or offices is a dealer in the security or financial instrument being traded (Proposed Treasury Regulation Section 1.482-8).
What transactions are subject to transfer pricing rules?
Virtually all transactions are subject to the US transfer pricing rules, including:
How are ‘related/associated parties’ legally defined for transfer pricing purposes?
Clients frequently use "nominee" structures to circumvent certain rules. It is a practice that we always advise against -
Tax rules anticipate this so it is useless as a tool to avoid legal responsibilities.
The statute and regulations refer to commonly owned or ‘controlled’ entities and commonly ‘controlled’ transactions. Treasury Regulation Section 1.482-1(i)(4) includes the following definition for ‘controlled’:
“Controlled includes any kind of control, direct or indirect, whether legally enforceable or not, and however exercisable or exercised, including control resulting from the actions of two or more taxpayers acting in concert or with a common goal or purpose. It is the reality of the control that is decisive, not its form or the mode of its exercise. A presumption of control arises if income or deductions have been arbitrarily shifted.”
Are any safe harbours available?
A few limited safe harbours are available for controlled borrowing and controlled service transactions.
Treasury Regulation Section 1.482-2(a)(1) provides for an ‘interest free’ period for intercompany trade accounts arising as a result of certain controlled transfers of tangible property or the provision of services. There is also a safe harbour for interest on certain loans that fall within 100% to 130% of the ‘applicable federal funds rate’, which is a government borrowing rate that fluctuates periodically.
Finally, there are a set of complex rules for a simplified cost-only charge for controlled service transactions. These rules are set out in Treasury Regulation Section 1.482-9(b). Services eligible to be charged at cost include services that the Internal Revenue Service (IRS) designates in a revenue procedure (eg, Revenue Procedure 2007-13, (2007-1 CB 295) which lists 101 categories of specified covered services). The listed services would generally be considered general and administrative services for accounting purposes.
Which government bodies regulate transfer pricing and what is the extent of their powers?
The US Treasury is responsible for issuing regulations that govern transfer pricing. The IRS administers the transfer pricing rules through administrative guidance and an active field examination programme. The IRS Office of Chief Counsel provides legal advice and guidance, including rulings to taxpayers and IRS officials, and represents the IRS in transfer pricing litigation before the Tax Court.
Adjustments made by IRS agents to increase US taxable income are subject to administrative appeal within the IRS and review by the Tax Court through litigation.
Which international transfer pricing agreements has your jurisdiction signed?
The United States has entered into approximately 40 income tax conventions with other countries. These conventions contain an associated enterprises article, which incorporates the arm’s-length standard for commonly controlled transactions and recognises the rights of signatory countries to adjust transactions between commonly controlled enterprises when those transactions do not produce arm’s-length results.
To what extent does your jurisdiction follow the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines?
Although there are differences in the wording of the OECD Transfer Pricing Guidelines and the US transfer pricing regulations, the US Treasury and the IRS consider that the regulations and the OECD guidelines are materially the same. To the extent that the US regulations and the OECD guidelines differ, the Office of Chief Counsel has advised IRS personnel that:
Transfer pricing methods
Which transfer pricing methods are used in your jurisdiction and what are the pros and cons of each method?
In general, US transfer pricing regulations recognise:
Transactional transfer pricing methods include the comparable uncontrolled price (CUP) method, which applies only to controlled transfers of tangible property (Treasury Regulation Section 1.482-3(b)(1)). Methods similar to the CUP method apply to:
The US regulations also authorise the use of the resale price method under Treasury Regulation Section 1.482-3(b)(2) and the cost plus method under Section 1.482-3(b)(3). Methods similar to resale price and cost plus also apply to service transactions (the gross services margin method under Treasury Regulation Section 1.482-9(a)(3) and the cost of services plus method under Section 1.482-9(a)(4)).
Profits-based transfer pricing methods recognised by the US regulations include:
The CPM is the most common transfer pricing method used by Internal Revenue Service (IRS) economists, taxpayers and taxpayers’ advisers. The CPM is applied using publicly available data that can be readily accessed and relaxed standards of comparability. Application of the CPM through database screening techniques, statistical data narrowing techniques (ie, the interquartile range) and multi-year averaging is well understood by both IRS economists and taxpayers’ advisers. The drawback to using the CPM is that it is a ‘rough justice’ method which produces industry average type results that may not reflect unique circumstances facing a specific taxpayer, such as losses caused by a precipitous drop in turnover.
Preferred methods and restrictions
Is there a hierarchy of preferred methods? Are there explicit limits or restrictions on certain methods?
No, instead the so-called ‘best method’ criteria under Treasury Regulation Section 1.482-1(c) is applied to select a transfer pricing method. The regulations require consideration of the following criteria to determine the best transfer pricing method:
What rules, standards and best practices should be considered when undertaking a comparability analysis?
The US transfer pricing regulations contain a set of general rules for analysing comparability, as well as rules that are specific to certain kinds of transactions or transfer pricing methods.
The general comparability criteria under Treasury Regulation Section 1.482-1(d) take into account the comparability of:
The regulations also take into account special circumstances, including:
In general, a more relaxed set of comparability criteria applies to the use of the comparable profits method, which requires only the generalised comparability of functions, assets and risks (Treasury Regulation Section 1.482-5(c)). More strict comparability criteria apply to the use of:
In addition, strict comparability criteria apply to using the profit split methods (Treasury Regulation Section 1.482-6 (c)).
It is good practice to consider whether the controlled transactions being analysed are routine in nature or have unusual characteristics. In general, routine distribution, manufacturing or service activities can be analysed using the CPM with a cursory functional and comparability analysis. High-value transactions – especially licences of valuable intangible property or the provision of high-value added services (or both) – should be analysed with a rigorous functional analysis, taking into account all of the general comparability criteria set out above, and the specific comparability criteria required by the transfer pricing method chosen for the analysis.
Are there any special considerations or issues specific to your jurisdiction that associated parties should bear in mind when selecting transfer pricing methods?
There are two classic types of transfer pricing case that require special considerations when selecting or applying transfer pricing methods in the United States.
The first classic case is recurring losses or low profits incurred by a foreign-controlled US entity marketing and distributing products on behalf of a foreign-related party. The second classic case is where high profits are earned by a foreign affiliate of a US entity in a low-tax jurisdiction when the foreign affiliate is a licensee of intangible property licensed from the United States, including cases where the foreign affiliate participates in a cost-sharing arrangement with a US entity.
In the classic foreign controlled distribution case, IRS economists typically apply the CPM to impute a normal operating profit (generally 2% or higher) – even in cases where there are consolidated losses on the products being sold. Taxpayers need to be aware of these IRS practices and be prepared to document and explain why losses or low profits are due to arm’s-length market forces and not improper transfer pricing.
In the second type of classic transfer pricing case, IRS economists are generally reluctant to agree to use the CUT method as a basis for evaluating royalty rates. Instead, IRS economists typically apply the CPM to treat the foreign affiliate as a contract manufacturer or routine distributor, which has the effect of limiting any upside profit potential from the licence transaction. Accordingly, taxpayers using the CUT method must be prepared to discuss and justify why it, and not the CPM, is the best transfer pricing method.
Documentation and reporting
Rules and procedures
What rules and procedures govern the preparation and filing of transfer pricing documentation (including submission deadlines or timeframes)?
In the United States, the preparation of transfer pricing documentation is not affirmatively required by law or regulation. Instead, ‘contemporaneous’ transfer pricing documentation is prepared to avoid penalties after a transfer pricing adjustment proposed by the Internal Revenue Service (IRS) is sustained.
The transfer pricing penalty provisions under Internal Revenue Code Sections 6662(e) and 6662(h) are triggered when taxpayers fail to reasonably comply with the documentation requirements. The documentation requirements state that taxpayers must be able to demonstrate that their related-party pricing was arm’s length. The amount of the penalty is directly correlated to the taxpayer’s divergence from what is determined to be the arm’s-length price.
Transfer pricing penalties may be avoided if the following requirements under Treasury Regulation Section 1.6662-6(d) are met:
What content requirements apply to transfer pricing documentation? Are master-file/local-file and country-by-country reporting required?
A master file report is not specifically required. However, the 10 principal documents required for a US transfer pricing report will meet most requirements for a master file report.
A country-by-country report that meets the Organisation for Economic Cooperation and Development base erosion and profit sharing standards is required for tax years beginning after June 30 2016 (Treasury Regulation Section 1.6038-4.) The report is filed with the US income tax return on Form 8975 and the schedules included with the form. Pursuant to Revenue Procedure 2017-23, 2017-7 IRB 917, the IRS will accept Forms 8975 filed for tax years beginning before July 1 2016 (for calendar year 2016 taxpayers).
The following 10 categories of ‘principal documents’ are required by the US transfer pricing regulations:
What are the penalties for non-compliance with documentation and reporting requirements?
Penalties are avoided if the taxpayer had reasonable cause to believe, at the time that the tax return was filed, that the transfer pricing positions reflected on the US income tax return produced arm’s-length results. The transfer pricing penalty provisions under Internal Revenue Code Sections 6662(e) and 6662(h) are triggered when taxpayers fail to reasonably comply with the documentation requirements. The documentation requirements state that taxpayers must be able to demonstrate that their related-party pricing was arm’s length.
Under Internal Revenue Code Section 6662(e), a 20% penalty applies for substantial valuation misstatements. Namely:
No penalty applies unless the portion of the underpayment for the taxable year attributable to substantial valuation misstatements exceeds $10,000 for most corporations.
Under Section 6662(h) a higher penalty of 40% applies to gross valuation misstatements. This penalty applies:
Penalties are avoided if the taxpayer had reasonable cause to believe at the time that the tax return was filed that the transfer pricing positions reflected on the US income tax return produced arm’s-length results through the reasonable application of authorised transfer pricing methods. The methods and application of methods chosen by the taxpayer are reasonable if they provided the most reliable measure of an arm’s-length result. Under Treasury Regulation Section 1.6662-6(d), reasonableness is determined based on all of the facts and circumstances, regardless of whether the method selected is specified in the relevant regulations or an unspecified method.
Treasury Regulation Section 1.6662-6(d) requires taxpayers to maintain sufficient documentation to establish that they reasonably concluded that the transfer pricing method that they selected and applied provides the most accurate measure of an arm’s-length result under the so-called ‘best method’ rule. The documentation must be self-contained and complete, and should be concise in giving the reader an adequate understanding of, and rationale for, the company’s transfer pricing practices. The documentation must be made contemporaneously and must be completed and in existence when the company files the relevant federal income tax return.
Transfer pricing documentation generally needs to be provided to the IRS within 30 days of a request being made.
What best practices should be considered when compiling and maintaining transfer pricing documentation (eg, in terms of risk assessment and audits)?
There are two classic types of transfer pricing case that require special considerations when a taxpayer compiles transfer pricing documentation in the United States. The first classic case is recurring losses or low profits incurred by a foreign-controlled US entity marketing and distributing products on behalf of a foreign-related party. The second classic case is one where high profits are earned by a foreign affiliate of a US entity in a low-tax jurisdiction when the foreign affiliate is a licensee of intangible property licensed from the United States, including cases where the foreign affiliate participates in a cost-sharing arrangement with the US entity.
In the classic foreign-controlled distribution case, IRS economists typically apply comparable profits method (CPM) to impute a normal operating profit (generally 2% or higher) – even in cases where there are consolidated losses on the products being sold. Therefore, taxpayers need to be aware of IRS practices and be prepared to document and explain why low profits of losses are due to arm’s-length market forces and not improper transfer pricing.
In the second type of classic transfer pricing case, taxpayers may rely on licence transactions that their company has with third parties as a comparable uncontrolled transaction (CUT) to apply the CUT method to determine the arm’s length consideration for a licensed intangible. In many cases, IRS economists apply the CPM to treat the foreign affiliate as a contract manufacturer or routine distributor, which has the effect of limiting any upside profit potential from the licence transaction. Accordingly, taxpayers using the CUT method need to be prepared to discuss and justify why the CUT method and not the CPM is the best transfer pricing method.
Finally, it is good practice to establish a process during the tax year for periodically reviewing the results of material intercompany transactions to determine whether the results of the transactions are producing reasonable (ie, arm’s-length) results. If the results are unreasonable, consideration should be given to adjusting the results of the transaction to produce arm’s-length results.
Advance pricing agreements
Availability and eligibility
Are advance pricing agreements with the tax authorities in your jurisdiction possible? If so, what form do they typically take (eg, unilateral, bilateral or multilateral) and what enterprises and transactions can they cover?
Yes, advance pricing agreements (APAs) are available. APAs may be unilateral, bilateral or multilateral. US APA procedures are set out in Revenue Procedure 2015-41, 2015-35 IRB 263 (August 31 2015).
APAs can cover any type of transaction that is subject to the US transfer pricing rules, as well as income allocations attributable to US permanent establishments. There is no limit on the types of entity that can apply for an APA. Details of the types of taxpayer that apply for APAs, the types of transaction covered, the transfer pricing methods agreed and other details can be found in the APA report filed by the Internal Revenue Service (IRS) each year (see IRS Announcement and Report Concerning Advance Pricing Agreements, March 27 2017).
Rules and procedures
What rules and procedures apply to advance pricing agreements?
The US APA rules and procedures are set out in Revenue Procedure 2015-41, 2015-35 IRB 263 (August 31, 2015).
The essential processes for obtaining an APA generally include:
How long does it typically take to conclude an advance pricing agreement?
The general time to complete an APA is three to four years.
What is the typical duration of an advance pricing agreement?
APAs generally cover five tax years, although longer or shorter APAs are possible. The IRS generally tries to have at least three prospective APA tax years when it begins APA negotiations with a treaty partner. APAs may also be used to resolve transfer pricing issues in years before the APA term begins. The retroactive application of an APA is known as an APA ‘rollback’ and pre-APA tax years are referred to as APA ‘rollback years’.
What fees apply to requests for advance pricing agreements?
Section 3 of the Appendix to Revenue Procedure 2015-41 provides for two levels of fees for initial APA requests, depending on the combined gross income of the taxpayer and all commonly controlled foreign and US parties for their most recently completed 12-month fiscal year. The standard user fee for an initial APA request is $60,000. The fee for APA renewal requests is generally $35,000.
A taxpayer may file an unlimited number of initial APA requests within a single 60-day period for a single fee, provided there are no more than two competent authorities. If there are more than two competent authorities involved, $30,000 must be paid for each request.
The user fee for each initial or renewal small business APA request is generally $30,000. Transactions will qualify for this reduced fee if:
The reduced fee also applies to any taxpayer that has an annual gross income of less than $500 million after taking into consideration the income of its commonly controlled affiliates.
Are there any special considerations or issues specific to your jurisdiction that parties should bear in mind when seeking to conclude an advance pricing agreement (including any particular advantages and disadvantages)?
At the heart of an APA is the agreement among the tax authorities to give effect to the approved transfer pricing method (TPM). A TPM will generally provide for a range of arm’s-length results, rather than a single result. Generally speaking, the majority of US APAs use the comparable profits method (CPM) as the TPM. Less frequently, an APA will use one of the traditional transfer pricing methods recognised by most Organisation for Economic Cooperation and Development member countries – such as a comparable uncontrolled price, a resale price or cost-plus methods – or certain other methods (eg, reasonable profit-split) that have gained some acceptance as a fourth method.
The TPM of an APA is not limited to the CPM or traditional methods, however, as a general rule, the CPM is used as a starting point or frame of reference for the vast majority of US APA negotiations.
The acceptance by the tax authorities of the taxpayer’s TPM or the defined range of results is the ultimate goal for the taxpayer seeking the APA. The agreement not only assures the taxpayer that there will be no adjustment in the event that the TPM is followed and the results are within the specified range, but also relieves the taxpayer of the onus resulting from a detailed audit inquiring into the appropriateness of a particular TPM or the results thereunder.
A pioneering aspect of the APA is the provision that allows for voluntary (previously called ‘compensating’) transfer adjustments or what Revenue Procedure 2015-41 refers to as an ‘APA primary adjustment’. This provision applies when the results of applying the TPM are outside the range of results specified in the APA.
Finally, the APA will specify the period to which it applies. Historically, an APA was applicable for three to five taxable years. The existing IRS preference expressed in Revenue Procedure 2015-41 is that an APA term is generally five years, in the absence of a compelling reason for a shorter term. In many cases, due to delays in negotiating the agreement, an APA will be executed for longer than five years. Further, under certain circumstances, the principles of the APA may be applied by the IRS to all of the taxpayer’s open years (ie, a so-called ‘rollback’), even though the APA itself is prospective.
Review and adjustments
Review and audit
What rules, standards and procedures govern the tax authorities’ review of companies’ compliance with transfer pricing rules? Where does the burden of proof lie in terms of compliance?
No special rules, standards or procedures apply to the review of transfer pricing issues.
The burden of proof in a transfer pricing tax examination or in litigation rests with the taxpayer, unless the Internal Revenue Service (IRS) alleges fraud, in which case the burden of proving fraudulent conduct lies with the IRS. The taxpayer has the following two-fold burden of proof in transfer pricing cases:
When a taxpayer meets the threshold burden of proof (ie, arbitrary or capricious), but not the second burden of proof (ie, proving the arm’s-length result), the court reviewing the transfer pricing dispute has the authority to determine the arm’s-length result independently.
In practice, most courts litigating transfer pricing cases have found the IRS proposed adjustment to be arbitrary, capricious and unreasonable, but have generally not agreed with the taxpayer’s determination of the arm’s-length result. For example, see Medtronic Inc v Comm’r (TC Memo 2016-112) and Amazon.com, Inc v Comm’r (148 TC No 8, 2017).
Do any rules or procedures govern the conduct of transfer pricing audits by the tax authorities?
No special statutory or regulatory rules govern the conduct of transfer pricing examinations. The IRS set up a special group within the National Office to coordinate and in some cases lead major transfer pricing examinations. This group is referred to as Transfer Pricing Operations (TPO).
In 2014 the TPO published a transfer pricing audit roadmap, which provides a suggested timeline and framework for transfer pricing examinations. The roadmap outlines IRS examination best practice procedures for identifying, examining and resolving transfer pricing issues.
The IRS has also established a quality examination process, which is a systematic approach for engaging and involving large business and international division taxpayers in the tax examination process – from the earliest planning stages through to resolution of all issues and completion of the case. The IRS publication Achieving Quality Examinations through Effective Planning, Execution and Resolution, outlines the large business and international division examination process from start to finish.
What penalties may be imposed for non-compliance with transfer pricing rules?
In the United States, contemporaneous transfer pricing documentation is prepared to avoid the imposition of penalties after a transfer pricing adjustment proposed by the IRS is sustained. Penalties are avoided if the taxpayer had reasonable cause to believe at the time the tax return was filed that the transfer pricing positions that reflected on the US income tax return produced arm’s-length results. The transfer pricing penalty provisions under Internal Revenue Code Sections 6662(e) and 6662(h) are triggered when taxpayers fail to reasonably comply with the documentation requirements. The documentation requirements state that taxpayers must be able to demonstrate that their related-party pricing was arm’s length. The amount of the penalty is directly correlated to the taxpayer’s divergence from what is determined to be the arm’s-length price.
Under Internal Revenue Code Section 6662(e), a 20% penalty applies for substantial valuation misstatements. Namely:
There is no penalty unless the portion of the underpayment for the taxable year attributable to substantial valuation misstatements exceeds $10,000 for most corporations.
The second penalty under Section 6662(h) is a 40% penalty for gross valuation misstatement. This penalty may apply instead of the 20% substantial valuation penalty if either of the following situations apply:
Penalties are avoided if the taxpayer had reasonable cause to believe at the time that the tax return was filed that the transfer pricing positions reflected on the US income tax return produced arm’s-length results through reasonable application of authorised transfer pricing methods. The methods and application of methods chosen based on the taxpayer are reasonable if they provided the most reliable measure of an arm’s-length result. Under Treasury Regulation Section 1.6662-6(d), reasonableness is determined by all of the facts and circumstances, regardless of whether the method selected is a method that is specified in the relevant regulations or an unspecified method.
What rules and restrictions govern transfer pricing adjustments by the tax authorities?
In general, are no restrictions specifically govern transfer pricing examinations or adjustments.
How can parties challenge adjustment decisions by the tax authorities?
In the United States, in the absence of unusual circumstances (referred to as ‘jeopardy assessments’), the IRS must follow deficiency procedures before assessing a disputed income tax adjustment, including an income tax adjustment attributable to transfer pricing. Taxpayers may challenge proposed adjustments before the assessment of the disputed tax through:
Taxpayers may also challenge IRS adjustments after an assessment of the disputed tax through refund litigation in the US District Court of the US Court of Federal Claims.
Appeal rights are set out in IRS Publication 5, Your Appeal Rights and How To Prepare a Protest If You Don’t Agree.
Mutual agreement procedures
What mutual agreement procedures are available to avoid double taxation arising from transfer pricing adjustments? What rules and restrictions apply?
The United States has entered into approximately 40 income tax conventions treaties. US income tax treaties all contain an article that provides mutual agreement procedures to resolve potential economic double taxation caused by transfer pricing adjustments made by one of the parties to the treaty.
A complex set of US procedural requirements apply to requesting mutual agreement procedure relief, which are outlined in Revenue Procedure 2015-40, IRB 2015-35.
What legislative and regulatory initiatives has the government taken to combat tax avoidance in your jurisdiction?
Combatting tax avoidance is a constantly evolving process in the United States. Recent regulatory actions include the Section 385 regulations (Treasury Regulation Section 1-385-2), which were issued in final and temporary form. These regulations are designed to curb inversion transactions in which US multinationals acquire a foreign company and then enter into a series of transactions to have the newly acquired foreign company become the parent of the multinational group, with the tax of the US group being reduced through deductible interest payments. The Section 385 regulations are intended to reduce the tax advantages of inversion transactions. In July 2017 the US Treasury announced that the effective date of these regulations will be delayed until 2019.
To what extent does your jurisdiction follow the OECD Action Plan on Base Erosion and Profit Shifting?
A majority of the Organisation for Economic Cooperation and Development Base Erosion Profit Shifting Action Plan action items have been part of US law, regulations or Internal Revenue Service administrative practice for many years.
For example, the government adopted controlled foreign corporation anti-avoidance provisions (Action Item 3) in the early 1960s, and these provisions have been revised through both legislative and regulatory changes over the years. Similarly, Internal Revenue Code Section 163(j) has been in force for many years to limit deductible interest payments made by US subsidiaries to foreign affiliates (Action Item 4). In addition, the government enacted extensive transfer pricing penalty and documentation rules in the early 1990s. These rules were updated in 2016 to require the filing of country-by-country reports (Treasury Regulation Section 1.6038-4).
As a matter of tax policy, since the late 1980s the government has included the limitation of benefits provisions (Action Item 6) as part of the US Model Income Tax Convention used to negotiate income tax treaties. Recent US tax treaties have also included provisions for mandatory arbitration of unresolved mutual agreement procedure and advance pricing agreement cases (Action Item 14).
Is there a legal distinction between aggressive tax planning and tax avoidance?
There is no distinction between aggressive tax planning and tax avoidance. However, different penalties apply to taxpayers and tax advisers depending on whether:
What penalties are imposed for non-compliance with anti-avoidance provisions?
Civil and criminal penalties can apply for non-compliance with anti-avoidance provisions, depending on the nature of the non-compliance. Internal Revenue Code Section 6662 imposes 20% and 40% penalties for certain transfer pricing-related adjustments, while Section 6662A imposes 20% and 30% accuracy penalties on defined classes of abusive listed transaction tax avoidance transactions.