| Course | AC566 Tax Research and Intro to International Taxation |
|---|---|
| Unit | Unit 9 |
| Paper type | Treaty analysis |
| Length | About 780 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Accounting |
| Updated | October 2026 |
Free sample paper for AC566 Unit 9
She Negotiates, Head Office Signs: A Unit 9 Treaty Analysis of a Dependent Agent Permanent Establishment
[Student Name]
Purdue University Global
AC566: Tax Research and Intro to International Taxation
Unit 9 Treaty Analysis
[Instructor Name]
[Date]
The company, its director, the composite treaty and every figure are composite; the model conventions, statute and textbook cited are real; this is coursework, not tax advice.
Facts
A manufacturer of food-packaging machinery, based in a country that has a tax treaty in force with the United States, employs a sales director who lives in Chicago. She spends about 210 days a year in the United States, works from a home office the company reimburses at $1,200 a month, and visits customers across the Midwest. Last year she negotiated $4,200,000 of sales to US customers: price, delivery, payment terms and installation. Every contract was sent to head office for signature, and none was changed there. The company has no other US office, employees or inventory.
The Article
Under a treaty, a foreign company's business profits are taxable in the United States only if attributable to a permanent establishment there (Gross income of foreign corporations, 26 U.S.C. § 882, 2018). The composite treaty's Article 5 follows the older wording of the model conventions. A permanent establishment includes a fixed place of business through which the enterprise's business is wholly or partly carried on. Even without a fixed place, a person acting on the enterprise's behalf who habitually exercises in the source country an authority to conclude contracts in the enterprise's name creates a permanent establishment, unless the person is an independent agent acting in the ordinary course of business (U.S. Department of the Treasury, 2016).
The Strain: Dependent Agent
The director is plainly a dependent agent: she is the company's employee. The question is whether she habitually exercises authority to conclude contracts. Formally she does not; head office signs. But she negotiates every term, and head office has never changed one. Under the older wording, many courts and tax authorities have read "authority to conclude" literally: if the agent cannot bind the company and contracts are signed elsewhere, the clause is not met. Others look at substance and ask whether the signature is a formality.
The 2017 update to the OECD model was written for exactly this pattern. It extends the clause to a person who habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise (OECD, 2017). On these facts, that newer wording would almost certainly create a permanent establishment. The composite treaty, however, has not been amended and uses the older wording. Under it, the stronger reading is that she does not create a dependent agent permanent establishment, though the substance argument gives the IRS a position it could press.
The director's role is the textbook case the 2017 wording was written to catch, so the company's protection rests on a treaty that has not been updated, and a renegotiation or an aggressive reading of the old clause could change the answer without any change in what she does.
The Separate Risk: The Home Office
A home office can be a fixed place of business of the employer if it is at the enterprise's disposal and used regularly for its business. The company reimburses the space, she uses it daily for company work, and the company has no other US premises for her. Some authorities treat a reimbursed, required home office as at the employer's disposal. If so, the company has a fixed place permanent establishment regardless of the agency question.
Facts That Would Change the Answer
If the director signed even a few contracts herself, or if head office routinely approved her deals within minutes without review, the dependent agent clause would be met even under the older wording. If she worked from a coworking space the company did not pay for, the fixed place risk would largely disappear.
Conclusion
Under the treaty's older wording, the dependent agent clause probably does not apply. The home office presents a real risk of a fixed place permanent establishment.
Consequences and Recommendations
If a permanent establishment exists, profits attributable to the US sales activity would be taxable in the United States, with a US return required, and the company would face branch profits tax. Even if the company concludes there is no permanent establishment, it should file a treaty-based return position disclosure to protect against penalties. Practical steps would reduce the risk: stop reimbursing the home office or provide a shared workspace not at the company's disposal, and document head office's genuine review of contracts (Sawyers & Gill, 2021).
References
Gross income of foreign corporations, 26 U.S.C. § 882 (2018).
OECD. (2017). Model tax convention on income and on capital: Condensed version 2017. OECD Publishing. https://doi.org/10.1787/mtc_cond-2017-en
Sawyers, R. B., & Gill, S. L. (2021). Federal tax research (12th ed.). Cengage.
U.S. Department of the Treasury. (2016). United States model income tax convention. U.S. Department of the Treasury.
The Purdue Global AC566 Unit 9 instructions
The ninth AC566 unit asks you to analyze a treaty provision as applied to specific facts. Set out the facts that matter under the article. Quote or closely paraphrase the treaty's operative language and explain why it matters, including how business profits are taxed only through a permanent establishment. Identify where the facts strain the wording, and present both readings with the authority or practice behind each. Compare the treaty's text with newer model language if that would change the result, and explain whether the newer language applies. Consider other ways the same article could be met, such as a fixed place of business. State your conclusion, the consequences if a permanent establishment exists, the facts that would change the answer and practical steps to reduce risk. Draw on section 882, the 2016 US model, the 2017 OECD model and the research text, all in APA 7.
How this AC566 Unit 9 example is built
The sample's facts give the director's 210 days, the $1,200 monthly home office reimbursement and $4,200,000 of negotiated sales signed abroad without change. The article section explains the permanent establishment threshold and the older dependent agent wording. The strain section weighs literal and substance readings of authority to conclude contracts and shows that the 2017 OECD wording on playing the principal role would apply. The highlighted sentence explains why the conclusion is fragile. A separate section finds a real fixed place risk in the reimbursed home office. Facts that would change the answer, the conclusion, and consequences including treaty-position disclosure and practical steps close the analysis.
Reading the AC566 Unit 9 grading rubric
Treaty analyses in AC566 earn points for close reading of the article and careful application to the facts. Graders check that the operative language is stated accurately and that the strain between text and facts is identified precisely. The rubric rewards presenting both readings fairly, distinguishing the treaty's wording from newer model language and explaining whether the newer language applies. Identifying additional routes to a permanent establishment, such as a home office at the enterprise's disposal, shows thoroughness. Consequences, disclosure requirements and practical steps demonstrate judgment. Analyses that apply the 2017 wording to an unamended treaty, or ignore the home office, lose credit. APA 7 references to both model conventions complete the work.
AC566 Unit 9 help from the desk
Common Unit 9 problems start with applying the newest model language as though every treaty had adopted it. Others read authority to conclude contracts only literally, without acknowledging the substance argument. The home office is overlooked, though it can create a fixed place permanent establishment on its own. Consequences stop at a sentence, missing branch profits tax and filing obligations. Facts that would change the answer are not identified. If your section's treaty article or facts differ, such as a construction site or an independent agent, a writer can read the clause against your case.
Get an AC566 Unit 9 example written to your instructions
The Unit 9 fact pattern, the treaty or model article assigned, any commentary the prompt names and your rubric are the starting point. The analysis moves from domestic law to the article, tests each clause against the facts, states a confidence level and sets out the consequences. It is finished in 24-48h, with the first sample at no cost. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC566 Unit 9 questions, answered
Why read commentary if the treaty text is clear?
Because the text is not clear on these facts; authority to conclude contracts could mean the power to sign or the power to settle the terms. Commentary on the model convention is a widely used interpretive aid, and the pre-2017 version addressed exactly this pattern. The example cites it as guidance rather than law and says the conclusion would be weaker if a court declined to follow it.
Does the 2017 wording apply to this treaty?
Not automatically. A treaty's text changes only when the two countries amend it or adopt a multilateral instrument covering it, and the United States did not sign the multilateral instrument. The example treats the composite treaty as keeping the older wording and uses the newer standard only to show how the same facts would be read under it.
What if the director were an independent agent?
Then Article 5 would generally exclude her, provided she acts in the ordinary course of her own business and is legally and economically independent. An employee on salary who works for one company cannot meet that test, and so the example dismisses the carve-out in a paragraph. A prompt recasting her as a commission agent with several principals would require a fuller analysis.
Where can I find a free AC566 Unit 9 sample paper?
This page holds a full AC566 Unit 9 treaty analysis of a composite foreign company's Chicago sales director under Article 5, with the dependent agent question, a home office risk and APA 7 references.
Why might the reimbursed home office create a permanent establishment?
A home office can count as a fixed place of business of the employer if it is at the company's disposal and used regularly for its business. The company pays for it and she uses it daily for company work.