Abstract
Taxpayers can generally claim treaty benefits in some contexts, while using domestic law in other contexts, in each case choosing to apply the treaty or domestic law, whichever is more favorable. Yet the Treasury Department has asserted that a duty of consistency exists in some circumstances, most notably in determining the profits attributable to a U.S. permanent establishment. Nonetheless, the Treasury has not itself been consistent in articulating this duty of consistency. In the current U.S. Model Income Tax Convention and the treaties with Belgium and Germany, the Technical Explanations require the taxpayer to take an all-or-nothing approach to the use of the treaty for business profits. Other treaties purport to apply a more flexible approach. The Article explains why the more flexible approach is better suited to treaty norms and seeks to articulate the proper scope of the consistency requirement. The Article also explores a variety of applications of treaty consistency outside the branch profits context, including cases where items of income, or entities, are treated differently for treaty purposes than under domestic law.