Internal Revenue Manual - 4.75.25 Exempt Organization Examinations Closing Agreements

Part 4. Examining Process
Chapter 75. Exempt Organizations Examination Procedures
Section 25. Exempt Organization Examinations Closing Agreements

4.75.25.1 (10-01-2002)
EO Examinations Closing Agreement Overview

The guidelines set forth in this chapter apply to any EO closing agreement originating under the jurisdiction of the Director, EO Examinations in EO examination cases and in voluntary taxpayer-initiated (Walk-in) requests.
Generally, the Area Office will consider closing agreements.
Other offices will forward requests for closing agreements to the appropriate Area Office for consideration, unless the Director, EO has identified the issue for EO:RA:T handling, or the circumstances otherwise suggest the EO:RA:T should consider the request.
In any event, EO:RA:T will notify the Manager, EO Examinations Planning and Programs (T:EO:E:PR:P) of a potential closing agreement to avoid the possibility of the Area Office initiating an examination of the taxpayer.
The guidelines in this chapter concerning interpretation and application of IRC § 7121 are advisory only and should not be cited or relied upon as authority in disposing of issues.
This chapter is a guide to assess the import and impact of IRC § 7121 and to help reach uniform results in those areas not expressly covered by regulations and court decisions.
Closing agreements are not intended to circumvent Chapter 42, Private Foundations and Certain Other Tax Exempt Organizations provisions; the IRC §§ 4911, 4912, 4955, 4958 excise taxes; or the Abatement of First and Second Tier Taxes in Certain Cases, as provided in Subchapter E of Chapter 42.
EO personnel will use closing agreements judiciously to resolve EO exemption and tax issues under EO jurisdiction, in general examination program cases and coordinated examination program cases, and in voluntary taxpayer-initiated (Walk-in) requests.
1. Use closing agreements only to resolve matters that cannot be resolved through normal compliance processing procedures and to encourage future voluntary compliance.
2. A closing agreement is not appropriate when a taxpayer has engaged in flagrant or continuous acts compelling revocation or imposition of tax, unless the Service can reasonably assure future compliance.
3. Examiners should not use closing agreements in a manner that infringes on the settlement authority of Appeals, nor merely to allow a taxpayer to reduce the amount of a tax or penalty.
The Service will strive to bring a taxpayer subject to a closing agreement into full retroactive compliance.
1. The Service generally expects payment of 100 percent of the tax liabilities, interest, and penalties for all open tax years.
2. The Service will base any assessments under a closing agreement on the taxpayer's actual tax liability. However, the Service may characterize the assessment as made "in lieu of" taxes for purposes of making the payment nonrefundable, creditable, etc. If entering into a closing agreement in lieu of revocation, the examiner must consider the potential tax liability if the organization were revoked, as an assessment in lieu of tax. Under no circumstances, will the Service impose an assessment under a closing agreement as a "sanction " against the taxpayer as a penalty for noncompliance.
3. Under no circumstances, will the Service impose an assessment under a closing agreement, as a "sanction" against the taxpayer as a penalty for noncompliance
4. If the taxpayer is unable to pay the total amount due, the closing agreement may provide for a payment installment agreement.
5. The taxpayer must either pay the total amount due the government or enter into a payment installment agreement at the time the taxpayer or taxpayer's authorized representative signs and returns the closing agreement to the Service for approval.
A taxpayer under examination may request a closing agreement. See IRM 4.75.25.13 for taxpayer requirements.
Any taxpayer having issues that might result in revocation or taxation, may voluntarily (Walk-in) contact the Area Office to resolve outstanding issues by way of a closing agreement.
1. Section 8.01 of Rev. Proc. 68-16, 1968-1 C.B. 770 provides that a closing agreement may be accepted with respect to a taxpayer not under examination. However, the Service must be furnished sufficient facts and documentation. (and may make sufficient examination or inquiry) to warrant acceptance of the agreement.
2. EO personnel may discuss a closing agreement with an anonymous taxpayer; however, discussions may not proceed beyond the draft closing agreement stage without identification of the taxpayer.
3. The taxpayer will provide a description of the non-compliant activities and the items listed in IRM 4.75.24.13.
4. The Service may consider more favorably a taxpayer voluntarily approaching the Service to resolve outstanding issues and agreeing to future voluntary compliance
The guidelines set forth in this chapter apply to any taxpayer-initiated request to enter into a closing agreement. The Service is not required to negotiate a closing agreement during these discussions.
To ensure taxpayer confidence, the EO Closing Agreement process must be fair, impartial, objective, and consistent.
This document incorporates the changes enacted under the IRS Restructuring and Reform Act of 1998 (RRA'98).

4.75.25.2 (10-01-2002)
Glossary of Terms

Examiner - EO Specialist, EO Agent, Revenue Agent, Tax Auditor, Tax Law Specialist in EO Examinations.
Delegate - individual(s) to whom the authority to enter into and approve a closing agreement is redelegated.
Manager - Group Manager or Team Examination Program (TEP) Case Manager.
Coordinator - EO Examinations Nationwide Closing Agreement Coordinator.
Taxpayer - any entity or individual for which Exempt Organizations has examination responsibility.
EO:RA:T - EO Rulings & Agreements EO Technical.
Area Counsel - The Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) Area Division Counsel.
TEP - Team Examination Program, formerly CEP - Coordinated Examination Program. See IRM 4.45.

4.75.25.3 (10-01-2002)
Supplemental Guidance

IRM 8.13.1 and Revenue Procedure 68-16 provide procedures regarding closing agreements. These procedures are instructive for resolving matters not specifically covered in this chapter.

4.75.25.4 (10-01-2002)
Authority

Under IRC § 7121, the Commissioner may enter into and approve a written closing agreement with any person relating to the liability of such person in respect of any internal revenue tax for any taxable period ending prior or subsequent to the date of such agreement.
Treas. Reg. § 301.7121-1(a) further provides the Service may enter in a closing agreement in any case in which:
1. There appears to be an advantage in having the case permanently and conclusively closed, or
2. The taxpayer demonstrates good and sufficient reasons for desiring a closing agreement, and
3. The Commissioner determines the United States will sustain no disadvantage through consummation of such an agreement.

4.75.25.4.1 (10-01-2002)
Commissioner's Delegation Order No. 97

Delegation Order 97, as revised, delegates to the Director, Exempt Organizations, the authority to enter into and approve a written agreement with any person relating to the internal revenue tax liability of such person (or of the person or estate for whom he or she acts) for a taxable period or periods ended prior to the date of agreement and related specific items affecting other taxable periods. This does not include the authority to set aside any closing agreement.
Commissioner, TEGE Delegation Order 11 (rev 1), Section 2.01, provides that: "For matters within the jurisdiction of the Director, Exempt Organizations, the authority [described in paragraph 13 of Delegation Order 97] may be exercised by the Director, EO Examinations and the Director, EO Rulings and Agreements."
Commissioner, TEGE Delegation Order 11 (rev 1), Section 3 provides the authority in Section 2.02, may be redelegated to the extent permitted in Delegation Order 97, paragraph (14).
Delegation Order 97, as revised, delegates authority in cases under their jurisdiction docketed in the United States Tax Court and in other Tax Court cases, upon the request of Chief Counsel or his/her delegate, to enter into and approve a written agreement with any person relating to the internal revenue tax liability of such person (or of the person or estate for whom he or she acts), but only in respect to related specific items affecting other taxable periods. This does not include the authority to set aside any closing agreement.
1. Paragraph (18) delegates this authority to the Tax Exempt/Government Entities Division Commissioner.
2. Paragraph (19) states this authority may not be redelegated.

4.75.25.4.2 (10-01-2002)
Delegation Order No. 248

Delegation order 248 delegates to EP/EO Group Managers the authority in employment tax cases under their jurisdiction to accept a Classification Settlement Program offer and to execute the pro forma closing agreement, regardless of the amount of liability sought to be compromised.

Note:

D.O. 248 (rev. 1) also delegates this authority to TEGE Group Managers.
The authority delegated in this Order may not be redelegated.
The authority contained in this Order supplements the authority contained in Delegation Order 97 (as revised).

4.75.25.4.3 (10-01-2002)
Joint Committee Cases

In cases subject to Joint Committee jurisdiction, which involve a closing agreement, the agreement will be signed by or for the taxpayer but not by the approving Service official, the Director, EO Examinations. It will be submitted as part of the original Joint Committee letter. However, the report or transmittal should contain a statement indicating tentative approval of the closing agreement by the Director, EO Examinations. If the Joint Committee approves the proposed closing, the Director, EO Examinations will sign the closing agreement.

4.75.25.5 (10-01-2002)
Finality of Closing Agreements

Once the Service approves an agreement, it is final and conclusive. The Service cannot reopen the closing agreement as to the matters agreed upon or modified. The Service may not annul, modify, set aside, or disregard the closing agreement (or any legal action in accordance with it) in any suit, action, or proceeding unless there is a showing of fraud, malfeasance, or misrepresentation of material fact.
The Commissioner may set aside agreements made under IRC § 7121(b) upon a showing of fraud or malfeasance, or misrepresentation of a material fact. The Commissioner's authority in this respect has not been delegated; therefore, the Commissioner must approve any such actions.

Note:

The Service does not treat simple unintentional errors as fraud, malfeasance, or misrepresentation that allow reopening of an agreement. See Policy Statement P-4-3, on reopening.
The burden of proof in establishing the disqualifying factor falls upon the party seeking to set the agreement aside. See Holmes & Janes, Inc. 30 B.T.A. 74, and Thomas J. Ingram, 32 B.B.T. 1063.
1. Where EO believes there is fraud, malfeasance, or misrepresentation, it must conduct an examination of the taxpayer to prove a disqualifying factor.
2. EO must retain sufficient documentation to ensure compliance with the closing agreement requirements.
Existence of any disqualifying element is subject to review by a court.
The Service must base the term " fraud" , as applied under IRC § 7121(b), upon evidence showing intent to evade the payment of tax, which the taxpayer believed to be liable, as distinguished from mistake, inadvertence, reliance on incorrect technical advice, honest difference of opinion, negligence, or carelessness. See IRM 25.1, Fraud.

Note:

Evidence of fraud not related to the issues constituting the basis for the closing agreement will probably be insufficient to sustain setting aside a closing agreement, unless the fraud goes to the agreement itself as in John Kehoe , 34 B.T.A. 59.
The term "malfeasance" imports violation of a public trust or guilt with respect to some form of official act.
The term "misrepresentation" when used as a basis for setting aside a closing agreement connotes intentional deceit. It does not refer to a mere mistake of fact or law, whether unilateral or mutual, no matter how material. In the Ingram case, the then Board of Tax Appeals stated: "Obviously the use of the word misrepresentation denotes something more deliberate or more conscious than a mere error or mistake. Otherwise, the entire rationale of a closing agreement would be lost. Congress intended that innocent mistakes be buried in a closing agreement. This still leaves an ample field for protection against an agreement founded in trickery or deception."
Failure to complete prospective actions or satisfy the terms of the agreement may cause the agreement to be set aside.
Setting aside of a closing agreement, even though deemed justified, is not mandatory. If it is in the best interests of the Government to refrain from setting aside the agreement, it may do so.
Any request to set aside a closing agreement must be submitted to the Commissioner, TEGE. The request should include a recommendation and the reasons therefor.

4.75.25.6 (10-01-2002)
Application of Closing Agreements

The Service may consider closing agreements:
1. Either in conjunction with or in lieu of revocation of tax-exempt status, or
2. To resolve specific tax issues giving rise to unrelated business taxable income, employment tax, excise tax, filing penalties, and other taxes.

4.75.25.7 (10-01-2002)
Multiple Closing Agreements

The Service may enter in closing agreements on a case while the examination continues. Examples are:
1. Employment taxes where a Classification Settlement Program offer is accepted,
2. Issues identified on effectively controlled entities in a TEP case,
3. Employee plan issues identified by an EP Examiner in a TEP case, or
4. Multiple tax or qualification issues identified in TEP cases.
Note:

Multiple closing agreements on any one return requiring more than one assessment to the return will be manually assessed as a partial agreement.

4.75.25.8 (10-01-2002)
Role of Area Counsel

Before initiating closing agreement negotiations with the taxpayer or authorized representative, the examiner or Manager will contact Area Counsel about the use of a closing agreement, validity of the issues, and proposed range of corrective actions. See IRM 4.75.25.13.1.
The team approach on TEP cases will continue.
After the examiner and taxpayer or representative have completed negotiations and agreed upon a draft closing agreement, the Area Manager will send Area Counsel the case file containing all relevant information constituting the basis for the agreement and the draft closing agreement for concurrence. See IRM 4.75.25.15 for additional details.See IRM 4.75.25.15. Turnaround time will be on a case by case basis. The Area Manager may request an Area Counsel on-site review.

4.75.25.9 (10-01-2002)
Team Examination Program (TEP) Cases

The procedures contained herein also apply to TEP examinations. If the examiner considers a closing agreement during the course of a TEP examination, the Manager should contact the Coordinator to ensure the consistent treatment of similar issues.
The Case Manager will continue with the team approach on TEP cases with Area Counsel.

4.75.25.10 (10-01-2002)
EO Examinations Closing Agreement Coordinators

The Coordinator will be a senior employee at the review staff level who is fully experienced in dealing with EO issues.
If EO designates more than one Coordinator, one will be the primary contact for communications with other offices.

4.75.25.10.1 (10-01-2002)
Communication Among EO:RA:T, Coordinator and Area Offices

EO:RA:T must contact the Coordinator and Manager, EO Examination Planning and Programs on any closing agreement it is considering, e.g., along with an underlying technical advice or private letter ruling. EO:RA:T may, however, leave the ultimate decision on a closing agreement to the discretion of the Area Office.
The Area Manager should generally consider including EO:RA:T in the closing agreement negotiation process. In the following instances, however, before beginning negotiations, the Coordinator must coordinate with EO:RA:T when considering a closing agreement:
1. Issues requiring Technical Advice as set forth in IRM 7.1,
2. Form 1254 Suspense Issues,
3. Cases involving exempt status issues of local taxpayers, representative of a class of taxpayers and/or when closing agreements may have broad ramifications beyond the immediate case,
4. Any case specifically reserved for EO:RA:T handling in the Law Enforcement Manual,
5. Any case involving requests on issues in which EO:RA:T has announced a position and invited taxpayers to submit a request for closing agreement,
6. IRC § 4958 excess benefit transaction cases, and
7. Inurement cases where there is violation of the inurement prohibition of paragraphs (3) or (4) of IRC § 501(c).
When required to contact EO:RA:T on a potential closing agreement, the Coordinator will informally contact EO:RA:T to discuss the terms under consideration. The Coordinator may subsequently submit a formal technical assistance or pre-closing agreement coordination request to EO:RA:T on a "react" basis.
Under the "react" procedure, EO:RA:T will react within two weeks. The form of the submission may vary from case-to-case. In some cases, the Coordinator may transmit by FAX. The Coordinator will submit to EO:RA:T:
1. A statement of facts,
2. An explanation of the issues,
3. A schedule showing issue(s), tax related to each issue and the computation of the tax,
4. A statement indicating proposed range of corrective action(s) and reason(s) for and advantage(s) of a closing agreement,
5. An explanation of why a closing agreement is appropriate, and
6. Upon request, the case file.
If EO:RA:T agrees a closing agreement is appropriate, it will coordinate with and return the package to the Coordinator, who will coordinate with the Director, EO Examinations or delegate for approval to begin negotiations.

4.75.25.10.2 (10-01-2002)
Coordinator Responsibilities

Support the fair, impartial, objective, and consistent use of closing agreements for the treatment of similar issues. Thus, the Coordinator will retain a copy of all approved closing agreements.
Provide guidance regarding the closing agreement process to tax exempt organizations seeking a closing agreement.
Provide Managers and/or examiners advice whenever they are considering a closing agreement to ensure consistency of treatment for similar issues.
Review requests to begin closing agreement negotiations and draft closing agreements for accuracy, completeness and consistency before submitting them to the Director, EO Examinations.
Assist with negotiation strategies and actual negotiation.
Contact Area Counsel and/or EO:RA:T See IRM 4.75.25.10.1. concerning legal or technical issues, or the possibility of litigation.
Consider any alterations or erasures to material provisions of the closing agreement throughout the approval process and coordinate with the Director, EO Examinations.
Review and track closing agreements through signature process and provide backup file and information as needed.
Assist with collecting, processing and forwarding payments received under the agreement. See IRM 4.75.25.16.3.
Follow up to ensure the taxpayer completes all prospective actions including installment payments, if any, within the time frame(s) established in the closing agreement. See IRM 4.75.25.20.
Coordinate responses to requests for closing agreement information with Public Affairs and the Disclosure Officer.
Prepare quarterly closing agreement reports. See IRM 4.75.25.21.

4.75.25.11 (10-01-2002)
Recognition of Exempt Status

A closing agreement may not confer recognition of tax-exempt status. The closing agreement may only state the Service has recognized the taxpayer as exempt as of a given date.
As in any EO case, the basis for recognition of tax-exemption must be contained in the public inspection file available under IRC § 6104. Thus, in a case in which the Service revokes or modifies the exempt status, whether or not as part of the closing agreement, the taxpayer must file a completed Form 1023 or 1024 with the examiner. The Form 1023 or 1024 must include supporting documents and other specific or additional information the Service requires during technical review to determine qualification for exemption. In such instances, the Service will not impose a user fee.
The Area Manager will coordinate with the Manager, EO Determinations (Cincinnati) to process the application for recognition of exemption filed in compliance with the closing agreement.
1. The examining Area Office will process the application for the prospective exemption, and
2. Issue a determination letter recognizing tax-exempt status including the effective date of such exempt status.

4.75.25.12 (10-01-2002)
Development Prior to Considering A Closing Agreement

Before considering a closing agreement, the examiner must:
1. Assess the legal aspects of the case and determine the Service's position,
2. Discuss the Service's position on the issue(s) with the taxpayer,
3. Understand the taxpayer's position on the issue(s),
4. Determine the affect adverse action(s) would have on the public interest,
5. Determine whether organizational and/or operational deficiencies can be corrected, and
6. Determine the government will sustain no disadvantage(s) by entering into a closing agreement.

4.75.25.13 (10-01-2002)
Taxpayer Request to Enter into A Closing Agreement

Any taxpayer may request to enter into a closing agreement. The taxpayer will:
1. Explain why a closing agreement is appropriate,
2. Describe the advantage(s) to the taxpayer and indicate how the government will sustain no disadvantage(s) because of a closing agreement,
3. Provide a detailed description of the method proposed for correcting the non-compliant activities,
4. Describe each step of the correction method in narrative form. The description must include specific information to support the suggested correction method,
5. Explain how the taxpayer will achieve future compliance, and
6. Describe proposed methodology to calculate any tax, interest and penalty.
The Service is not required to negotiate a closing agreement during these discussions.

4.75.25.13.1 (10-01-2002)
Approval to Negotiate Closing Agreement

The Director, EO Examinations or delegate must approve the initiation of all closing agreement negotiations.
If the examiner identifies an issue during the examination for which a closing agreement appears appropriate or receives a "Walk in" request, the examiner and Manager will discuss the case or use the team process on a TEP case. The Manager may consult the Coordinator at this time.
If Manager does not agree a closing agreement is appropriate, the examiner will proceed with proposed revocation and/or other appropriate action(s).
If Manager agrees a closing agreement may be appropriate, the Manager will discuss the case with the Area Manager and Coordinator.

Note:

Coordinator participates to ensure the fair, impartial, objective, and consistent use of closing agreements for the treatment of similar issues.
If Area Manager does not agree a closing agreement is appropriate after discussing the case with the Manager, the examiner will propose revocation and/or other appropriate action(s).
If Area Manager agrees a closing agreement may be appropriate, the examiner will complete and attach to the top of the file the EO Closing Agreement Approval Cover Sheet displayed in See Exhibit 4.75.25-1. The examiner or Manager will contact Area Counsel, through informal discussion(s). The Manager and/or examiner will fully document discussions with Area Counsel in the file.

Note:

The Manager may submit a formal memorandum, accompanied by the relevant information, about the use of a closing agreement, validity of the issues, and the proposed range of corrective action(s). When appropriate, depending on the complexity of the case, the Manager may request Area Counsel to make an on-site visit to review the case.
If Area Counsel does not concur a closing agreement is appropriate, it will discuss the case with the Area Manager, Group Manager, and Coordinator. The Area Manager will decide whether to proceed with a closing agreement or to propose revocation and/or other adverse action(s).
If Area Counsel concurs a closing agreement is appropriate, the Manager, and Area Counsel will initial and date the cover sheet. As the closing agreement moves through the system, approving officials will initial and date the cover sheet and leave it attached to the top of the file. The cover sheet can be transmitted by Fax.
The examiner will prepare and send to the Area Manager, a memorandum addressed to the Director, EO Examinations, requesting approval to begin negotiations. The memorandum will provide approval and disapproval lines for the Director, EO Examinations or delegate. The memorandum will state the facts, explain the issues, and include a schedule to:
1. Identify each issue,
2. Reflect the computation of tax related to each issue, if applicable,
3. Propose a range of tax and explain how the range was determined,
4. Propose a range of corrective action(s),
5. Provide an explanation if no penalties and/or interest is proposed,
6. Set forth reason(s) for and advantage(s) of a closing agreement, and,
7. Indicate how the government will sustain no disadvantage because of a closing agreement.
The Manager will forward the undated memorandum, documentation of Area Counsel's response and the case file to the Area Manager. For the closing agreement approval process the case file will include:
1. Copy of returns,
2. The examiner's case chronology,
3. Form 5772 and Forms 5773 explaining the issue, and
4. Correspondence with the taxpayer.
  
  Note:
  
  Generally, it is not necessary to forward the entire case file.
The Area Manager will initial and date the cover sheet, explain the basis for the decision to pursue the closing agreement where Counsel does not concur, and send the package to the Coordinator. The Coordinator will review the file and forward to the Director, EO Examinations or delegate within ten workdays unless a criterion in IRM 4.75.25.10.1(2) applies, in which case the Coordinator will contact EO:RA:T.

Note:

If Coordinator has any concerns about the terms of the closing agreement, the Coordinator will contact the examiner and/or Manager and very clearly set forth the reason(s) and suggest alternatives. The Coordinator will brief the Director, EO Examinations, as necessary.
Within 20 workdays of receipt of the file from the Coordinator, the Director, EO Examinations or delegate will review and discuss the request with the Coordinator.
If Director, EO Examinations or delegate does not agree that a closing agreement is appropriate, the Director's office will arrange a conference call with the Coordinator, Area Manager, and Group Manager. The Director, EO Examinations or delegate will decide whether to proceed with the closing agreement or to propose revocation and/or other adverse action(s).
After discussing the case, the Director, EO Examinations or delegate will return the file through the Coordinator to the Manager to either begin negotiations, or proceed with the proposed revocation and/or other adverse actions.

4.75.25.13.2 (10-01-2002)
Negotiating Closing Agreement

Upon receipt of the Director, EO Examinations or delegate's approval, the Manager as the lead negotiator along with the examiner (and Coordinator, if requested) may offer the taxpayer the opportunity to enter into negotiations for a closing agreement. The lead negotiator will advise the taxpayer:
1. A closing agreement is an attempt to fashion an evenhanded resolution of the differences and the Service is under no obligation to continue the process if the parties cannot reach an agreement; and
2. The taxpayer does not waive any rights under the appeals procedure should the parties fail to reach an agreement.
The Manager may request Area Counsel's involvement in developing negotiation strategies and actual negotiation with the taxpayer since discussions during negotiations may effect future litigation.
The Manager and examiner will negotiate the terms of the closing agreement with the taxpayer or the taxpayer's authorized representative.

Note:

Where an attorney, accountant, or other representative represents the taxpayer, the representative's power of attorney authorizes the execution of closing agreements unless the taxpayer expressly excludes the performance of such acts.
If the examiner and taxpayer make material changes during negotiations in either the amount of the tax liability or the correction required, the examiner will document the file and contact the Coordinator, who will coordinate with the Director, EO Examinations.
After the Service and taxpayer or representative complete negotiations for the specific terms of the closing agreement, the examiner will:
1. Prepare a draft closing agreement and share it with the taxpayer for concurrence,
2. Ensure the taxpayer understands the draft closing agreement is subject to the Director, EO Examination's approval.
If the Service and taxpayer or representative are unable to complete negotiations for the terms of a closing agreement, the examiner will proceed with revocation or other appropriate action.
The Service will assess interest and penalties, in addition to the tax liability determined under the closing agreement, unless the closing agreement text specifically states the Service will not assess interest and/or penalties. The examiner will clearly document the file to explain the reason for not asserting applicable penalties and/or interest.

4.75.25.13.3 (10-01-2002)
Workpapers

Regardless of whether or not the case results in a closing agreement, the workpapers or other administrative file should reflect:
1. Negotiations with the taxpayer or representative,
2. Terms offered if the negotiations are not successful,
3. Involvement of Area Counsel, and
4. The reason a closing agreement is or is not in the best interest of the government.
If the Service and taxpayer are unable to complete negotiations for the terms of a closing agreement, the examiner will send the Coordinator a copy of the information in (1) above.

4.75.25.14 (10-01-2002)
Drafting Closing Agreements

The examiner will state each matter clearly as to reasonably lead to only one interpretation. Although the material in the file may adequately explain the intent of the agreement, the agreement must speak for itself and will be the primary basis of future action. Avoid using subjective terms, such as substantial, reasonable, due diligence. The closing agreement should be very objective and easily enforceable.
The closing agreement will include all essential information. For example, state to whom the issue pertains and avoid ambiguity. Use statutory terms where applicable.
The Service expects the taxpayer to be in compliance in both exemption and tax issues before executing the agreement.
It is generally not appropriate to require the taxpayer to make changes after execution of the agreement. The examiner will keep concurrent and prospective actions to a minimum.
If the agreement requires amendment or revision of organizational documents (e.g., revision of bylaws), secure the amendment and describe the changes in the agreement.
The closing agreement must state completely and explicitly the conditions the taxpayer either has completed or must complete to achieve compliance. The agreement will explicitly describe the actions the taxpayer must take concurrent with and/or after the agreement upon which the Service is relying in entering into the agreement.
The agreement. must specify:
1. The amount of tax, interest and penalties owed,
2. The exact dates by which the taxpayer must take any required actions,
3. The date and manner in which the taxpayer is to report to the Service completion of required actions, and
4. The consequences if the taxpayer does not comply as agreed, e.g., revocation of exempt status.
Tax, interest and penalty amounts will be the only dollar amounts in a closing agreement.
Include the following information in the closing agreement:
1. The names, addresses and TINs of all parties to the agreement,
2. The relevant facts, including the proposed adverse action by the Service,
3. A statement instructing the taxpayer to remit the total amount due by certified check(s), cashier's check(s), or similar instrument payable to the United States Treasury when taxpayer and/or authorized representative, signs and returns the agreement for approval,
4. The agreed upon affect of the closing agreement on subsequent periods,
5. A statement advising the payment to the government is not deductible for Federal tax purposes,
6. A statement of treatment the Service accords the taxpayer,
7. A statement advising the agreement is limited to Internal Revenue Code matters and does not extend to other Federal or state law,
8. A statement advising that an exempt taxpayer cannot contest the liability in any court, and
9. A statement advising the taxpayer of the finality of the closing agreement.
In accordance with Section 3468 of RRA 1998, the closing agreement should not contain any release, by the taxpayer, of any right of action against the Service or its employees for civil rights violations, other non-tax actions, or any other action taken in connection with the federal internal revenue laws, which may be available to the taxpayer unless:
1. The taxpayer knowingly and voluntarily waives this right;
2. An IRS employee or officer makes the request in person and the taxpayer's attorney or representative is present; or
3. The Service makes the request in writing to the taxpayer's attorney or representative.
To the extent, such a release is the subject of discussion, the examiner must contact the Coordinator who will discuss the matter with EO:RA:T. If EO:RA:T determines the waiver request is appropriate, the examiner must include in the file, signed and dated, documentation from the taxpayer or the taxpayer's representative, and complete notes on Form 5464, Case Chronology Record, evidencing the process used to obtain any waiver subject to this provision.

4.75.25.14.1 (10-01-2002)
Closing Agreement Format

The agreement should begin with a standard caption at the top, which states the nature of the document. The names of all parties to the closing agreement should be accurately set forth at the beginning of the agreement and in the signature thereto. The taxpayer identifying number should be shown at the beginning of the document.
The identification of the parties is followed by one or more "WHEREAS" clauses, which serve to introduce the subject matter of the agreement and state the premises upon which it is based. The "WHEREAS" clauses are the informative and explanatory elements. These clauses should reflect as accurately as possible those facts germane to the determinations that follow.
The agreement will separate the actual matters agreed upon from the introduction and precede with the caption " NOW, THEREFORE, IT IS HEREBY DETERMINED AND AGREED," usually followed by the qualification "for Federal tax purposes that" and:
1. List the items agreed upon in separately numbered determination clauses logically grouped for clarity.
2. Draft each clause with the view that it is a continuation of the "HEREBY DETERMINED" statement.
The THEREFORE clauses should match the WHEREAS clauses. The THEREFORE clauses set forth the resolution of the WHEREAS clauses.
Where the closing agreement (exclusive of attachments) consists of more than one page:
1. Number each page at the bottom "Page __ of ___" ; and
2. On the top of each page after the first, state the following: "Closing Agreement with (Name of Taxpayer)."
Where there are several parties involved in the agreement, follow the instructions contained in paragraph four of section 6.04 of Revenue Procedure 68-16.
Exhibit 4.75.25-2 contains an illustration of the closing agreement format as to final determination covering specific matters.

4.75.25.14.2 (10-01-2002)
Public Disclosure Requirements

The Service should not require a taxpayer to remain silent as a term of any closing agreement. There may, however, be limited instances in which it is in the government's interest to allow the Service to respond to inquiries or inaccuracies regarding the case.
There may be instances in which the Service has a bona fide objective to make known the circumstances surrounding the examination and the closing agreement.
If the Service determines such a provision is in the best interests of the government, it may request the taxpayer to make the agreement public in its totality, or issue a public statement summarizing the content of the closing agreement and any other relevant facts.
If the taxpayer agrees to issue a news release or other public disclosure of the agreement, the closing agreement should prescribe the conditions and manner for public disclosure of any or all of its terms as follows:
1. Include the text of the news release or other text as agreed upon by the parties; and
2. Specify the release conditions, including the date and time of issuance, and the parties to whom it will be sent.
Area Counsel and Disclosure must concur in instances in which the Service uses any public disclosure or disclosure waiver provisions in a closing agreement. Counsel must also approve the public statement and privacy matters, closing agreement language, and any consent authorizing the Service to disclose tax information.
The closing agreement should address the consequences if the taxpayer fails to issue the public statement. For example, the agreement might provide if the taxpayer fails to make the agreed upon public statement, the Service in its discretion would do so.
The Area Manager will send the Area public affairs office and Director, CE&O the public disclosure or disclosure waiver provisions set forth in a closing agreement plus the consent, if applicable, authorizing the Service to disclose information.

4.75.25.14.3 (10-01-2002)
Payment of Closing Agreement Liability

The taxpayer must make full payment of the liability upon signing the agreement. Where the taxpayer is unable to make full payment, the closing agreement must include a payment schedule including allocation of any interest to be paid. The taxpayer must execute a payment installment agreement enumerating the payment schedule. The closing agreement should specify the consequences if the taxpayer fails to make a payment.
IRM 5.14 provides that multi-functional installment agreement authority is limited to certain types of accounts with an aggregate unpaid balance of assessments less than or equal to $100,000.
If the liability is greater than $25,000, consult with Area Counsel about the use of an installment agreement.

4.75.25.15 (10-01-2002)
Approval of Draft Closing Agreement

Area Counsel, Coordinator, and Director, EO Examinations or delegate must approve the draft closing agreement negotiated with and agreed upon by the taxpayer or taxpayer's representative.
After the examiner and taxpayer or taxpayer's representative have agreed upon a draft closing agreement, the Manager will send to Area Counsel through the Area Manager the following:
1. The draft closing agreement,
2. Memorandum requesting Counsel's concurrence,
  
  Note:
  
  The memorandum will contain a computation of the tax or an explanation as to how the examiner determined the tax liability. The memorandum will also contain an explanation or justification if the agreement does not assess penalties and/or interest.
3. The case file, and
4. The disk with the closing agreement in Microsoft Word.
Alternatively, the Area Manager may ask Area Counsel to conduct an on-site review.
Area Counsel will review the draft closing agreement and prepare a memorandum advising whether or not it concurs with the draft closing agreement.
1. If Counsel does not concur with the closing agreement or some aspect of the closing agreement, it will very clearly set forth the legal deficiencies, suggest possible alternatives, and return the file to the examiner for necessary action with a copy of the memorandum to the Area Manager.
2. If in concurrence with the closing agreement, Counsel will initial the EO Cover Sheet and forward the file to the Coordinator.
Within ten workdays of receipt, the Coordinator will review the draft closing agreement for accuracy and consistency, initial the cover sheet upon approval and forward the file to the Director, EO Examinations.
Within 20 workdays, the Director, EO Examinations or delegate will review the draft closing agreement and return the approved or disapproved draft and the case file to the Area Manager, with a copy of the draft closing agreement to the Coordinator. If disapproving, the Director, EO Examinations or delegate will discuss the case with the Coordinator and the Area Manager.

4.75.25.16 (10-01-2002)
Final Approval Signatures

Upon receipt of the file and draft closing agreement approved by the Director, EO, Examinations or delegate, the examiner will prepare an original, duplicate, and triplicate closing agreement and send to the taxpayer for signature.

In the upper right corner of the first page, the examiner will type the following:

ON THE:	TYPE:
Original	Original
Duplicate	DUPLICATE (Taxpayer's Copy)
Triplicate	TRIPLICATE (Administrative File Copy)

At this time, the examiner will solicit payment of the closing agreement liability. If more than one taxpayer is involved, the examiner will solicit separate checks. This should ensure the Service properly posts the payments and should prevent erroneous refunds.
Closing agreements are always signed by or on behalf of taxpayers before the Service signatory authorized under D.O. 97, as revised, signs.
The taxpayer must sign and date the original, duplicate and triplicate copies of the closing agreement.
1. Examiner will enter the organization's legal name and taxpayer identifying number (TIN) on the signature page. The signature, title of an authorized officer or officers or authorized representative and date signed, will follow this.
2. Where an authorized representative signs an agreement for a taxpayer, examiner will attach the executed power of attorney to the original of the agreement.
The Service considers an agreement tendered with the taxpayer's signature to be the taxpayer's offer to enter into a closing agreement.
Once the taxpayer signs the closing agreement, the Service may not make additional changes or additions to the agreement.
1. The taxpayer or authorized representative must initial and date any additions or corrections made to the closing agreement.
2. If the taxpayer or authorized representative substitutes a new page, he must initial and date the bottom of the page.
3. If the taxpayer and/or representative make any alterations or erasures to material provisions, examiner will determine whether the closing agreement is still appropriate.
4. If, based on the taxpayer's changes, examiner considers the agreement no longer appropriate, he will proceed with proposed revocation and/or other adverse action and notify the Coordinator. If there is any doubt, the examiner will contact the Coordinator.
5. If a revised closing agreement is appropriate, the examiner will redraft and have the taxpayer resign the closing agreement. The examiner will forward to the Coordinator the original closing agreement containing the alterations or erasures to material provisions, along with a redraft original, duplicate and triplicate closing agreement signed by the taxpayer. The examiner will include a memorandum to the Coordinator explaining why the government will sustain no disadvantages by entering into the redrafted closing agreement. The Coordinator will coordinate with Director, EO Examinations.
The closing agreement is entered into and approved when the signatory executes the agreement on behalf of the Service.

4.75.25.16.1 (10-01-2002)
Signing Of Returns and Other Documents

IRC § 6061 provides, except as otherwise provided by IRC §§ 6062 and 6063, any return, statement, or other document required to be made under any provision of the internal revenue laws or regulations, shall be signed in accordance with forms or regulations prescribed by the Secretary. The regulations do not provide for facsimile signatures on a closing agreement. Similarly, name stamps are not acceptable.
If the number of taxpayer parties to the agreement or geographic location problems make signature by each party on all copies of the agreement impracticable or inconvenient, consult with Area Counsel.

4.75.25.16.2 (10-01-2002)
Examiner's Responsibilities after Taxpayer Signature

Ensure the closing agreement is in proper order, sign and date the reverse of the last page of the original as Receiving Officer. See Exhibit 4.75.25-3.
Forward signed original, duplicate and triplicate copies of the closing agreement to the Coordinator, a copy of Form 3244-A, Payment Posting Voucher, showing proof of payment and, if applicable, a memorandum to the Coordinator describing any taxpayer changes or alterations to the closing agreement.
Attach power-of-attorney and any other documentation, as applicable. See IRM 4.75.25.16.3.
Process payment(s), if any.

4.75.25.16.3 (10-01-2002)
Examiner's Responsibility for Processing Payment

Taxpayers must make remittances by certified check(s), cashier's check(s), or similar instrument payable to the United States Treasury.
Upon receipt of remittance without a return, the examiner will prepare a Closing Agreement remittance package consisting of cover memorandum to Ogden Submission Processing Center or Cincinnati Submission Processing Center, Form 3244-A, Remittance (check), and Form 3210, Document Transmittal.
1. For BMF accounts, forward the remittance package via traceable overnight service to the Ogden Submission Processing Center. See IRM 4.75.25.16.3(2)-(6) below for instructions to prepare remittance package.
2. For NMF accounts, forward the remittance package via traceable overnight to Cincinnati Submission Processing Center.
Examiner will prepare Form 3244-A, Payment Posting Voucher - Examination. Examiner will enter:
1. The payment as Transaction Code 640 for taxable returns and TC 690 for non-taxable returns, e.g., Form 990 ;
2. In Remarks: Advance Payment on EO Closing Agreement and TC 640 Advance Payment of Deficiency for taxable returns or TC 690 "Designated Payment of Penalty," for non-taxable returns);
3. Zero in Transaction Data Code 570, Additional liability pending; and
4. An "N" after the TIN for Non-Master File (NMF) accounts.
Examiner will prepare a cover memorandum to Ogden Submission Processing Center for BMF accounts or to Cincinnati Submission Processing Center for NMF accounts. See Exhibit 4.75.25-4.
Examiner will prepare Form 3210, Document Transmittal. Under Document Identification contents enter:
1. Cover Memorandum - Director, Ogden Submission Processing Center,
2. Taxpayer's name and TIN,
3. MFT and Tax period, and
4. Remittance, check number and amount.
Address Form 3210 to:

SC/DO Teller
MS 1999
1160 W. 1200 S.
Ogden, Utah 84201-0027
For NMF accounts address Form 3210 to:

SC/DO Teller
MS 1999
201 West Rivercenter Blvd.
Covington, KY 41011

4.75.25.17 (10-01-2002)
Approval and Execution of Closing Agreement

Upon receipt of original, duplicate and triplicate closing agreement, the Coordinator will:
1. Ensure the closing agreement is in proper order, sign and date the reverse of the last page of the original as Reviewing Officer. See Exhibit 4.75.25-3.
2. Initial Cover Sheet,
3. Prepare memorandum to Director, EO Examinations or delegate. See Exhibit 4.75.25-5.
4. Forward taxpayer signed original, duplicate and triplicate closing agreement, power-of-attorney, if filed, and case file to Director, EO Examinations.
Director EO Examinations or delegate will sign and date original, duplicate and triplicate closing agreements, initial and date cover sheet, and return signed agreements with case file to Coordinator unless it is a Joint Committee case.
If a Joint Committee case, the agreement will be submitted as part of the original Joint Committee letter. However, the report or transmittal should contain a statement indicating tentative approval of the closing agreement by the Director, EO Examinations. If the Joint Committee approves the proposed closing, the Director, EO Examinations signs the closing agreement.

4.75.25.17.1 (10-01-2002)
Coordinator's Responsibilities for Processing after Service Signs

Upon receipt, of the signed closing agreement, Coordinator will:
1. Mail the DUPLICATE [Taxpayer's copy] closing agreement to the taxpayer ( See Exhibit 4.75.25-6.) and, if authorized, a copy to the taxpayer's representative. See Exhibit 4.75.25-7.
2. Attach a conformed copy of the transmittal letter to the TRIPLICATE [Administrative File Copy] agreement.
3. Return the ORIGINAL and TRIPLICATE closing agreement to the examiner.
4. Retain a copy of approved closing agreement.

4.75.25.17.2 (10-01-2002)
Examiner's Responsibilities for Processing after Service Signs

Upon receipt of file from the Coordinator, the examiner will attach the original to the taxpayer's most recent return in the file covering the year to which the agreement pertains.
The examiner must provide instructions regarding disclosure on all returns in the case file disclosable under IRC § 6104(a) or (b) for the years to which the agreement pertains. The instructions will indicate that the closing agreement is not disclosable and the return must be sanitized of any closing agreement information. The examiner must also identify the return to which the closing agreement is attached. Thus, the examiner will:
1. Attach to the front of the disclosable return to which the closing agreement is attached, a separate Form 3198 containing the statement in Exhibit 4.75.25-8 Item A, and
2. Attach to the front of the disclosable return(s) to which the agreement is not attached, a separate Form 3198 containing the statement contained in Exhibit 4.75.25-8 Item B.
The examiner must provide instructions on the non-disclosable return to which the agreement is attached that the closing agreement is not disclosable. The examiner most also identify on the related non-disclosable returns, the non-disclosable return to which the closing agreement is attached and indicate it is non-disclosable. The examiner will:
1. Attach to the front of the non-disclosable return to which the closing agreement is attached, a separate Form 3198 containing the statement contained in Exhibit 4.75.25-8 Item C, and
2. Attach to the front of the non-disclosable return(s) to which the closing agreement is not attached, a separate Form 3198 containing the statement contained in Exhibit 4.75.25-8 Item D.
.
Examiner will retain the executed TRIPLICATE of the agreement, copy of the report transmittal (if none, pertinent workpaper pages), and the report of examination in the Administrative File.

4.75.25.18 (10-01-2002)
Tax Assessments

The Service must assess the taxpayer's liability pertaining to a closing agreement when closing the case. The Service will not delay assessment of the liability pending payment.
EO Examinations Special Support, ESS, will assess the liability pertaining to a closing agreement on the return to which the liability applies.
If the taxpayer has not filed a required tax return, the examiner will secure the return and any payment due from the taxpayer.
If the taxpayer files a delinquent tax return or fails to file a delinquent tax return, but executes an agreement (i.e., signs a Form 870, 2504, or 4549) to an examiner's report prepared as a substitute for the tax return, the agreed report constitutes a return under IRC § 6020(a). Follow the "Non-Fraud Delinquency Procedures" in IRM 4.75.22.

4.75.25.18.1 (10-01-2002)
Assessment Authority and Information

The executed closing agreement and Form 4549-A, Income Tax Examination Changes, signed by the examiner, provides ESS with the authority and information to make the assessment.
The examiner will enter the amount of the closing agreement liability in the Penalties section of the Form 4549-A.

4.75.25.18.2 (10-01-2002)
Taxable Return Assessment - Master File Returns

ESS will use Form 5599 to:
1. Assess additional tax on taxable Business Master File (BMF) return(s) timely filed.
2. Assess tax on BMF substitute for return(s) after substitute return has posted to Master File as TC 150.
3. Record additional tax on taxable Non-Master File return(s) for statistical purposes only. ESS will prepare Form 2859, Request of Quick or Prompt Assessment, to assess the additional tax. (See IRM 4.4).
4. Close the case off AIMS.
Examiner will prepare Form 5599 as follows:
1. Item 07 - Hold Code, enter 2;
2. Item 12 - Tax Liability Adjustment, enter in pencil TC 300 and the amount of tax and/or penalties agreed to in the EO closing agreement.
3. Item 13 - Disposal Code, enter 12, closing agreement;
4. Item 414 - Delinquent Return Amount, enter any tax shown on a delinquent taxable return filed as a result of the closing agreement to reflect the tax assessed for statistical purposes. For delinquent returns, do not enter the assessment amount in item 12.
  
  Note:
  
  If the statute expiration is imminent, enter TC 300 with a (-0-) amount and enter amount of tax and/or penalties to be assessed in Item 35 - Manual Assessment Amount.

4.75.25.18.3 (10-01-2002)
Taxable Return Assessments - Non-Master File Returns

ESS will use manual processing only for non-master file (NMF) and imminent statute expiration cases, or when there are problems with posting the return (TC 150).
ESS will manually process any closing agreement on Form 990-BL and Form 4720(A) under IRC §§ 4912(b), 4941(a), 4944(a)(2), 4945(a)(2), 4955(a)(2), or 4958 for initial taxes on self-dealers, organization managers, foundation managers and disqualified persons. Refer to IRM 21.7.7 for discussion of processing Form 4720-A.
For these returns considered Non-Master File, an "N" must follow the TIN on Form 2859 and Form 5599.
ESS will prepare and use Form 2859 to make an assessment to Non-Master File.

4.75.25.18.4 (10-01-2002)
Non-Taxable Return (Information Return) Assessments

The closing agreement could impose an assessment against a non-taxable exempt organization information return (e.g. Form 990, Return of Organization Exempt from Income Tax) under examination controlled on AIMS.
Use Form 5599 to assess the liability against a non-taxable exempt organization information return controlled on AIMS.
To assess the liability and close a non-taxable return account off AIMS, the examiner will prepare Form 5599 as follows:
1. Item 07 - Hold Code, enter 2;
2. Item 12 - Tax Liability Adjustment, enter TC 300 (-0-)
3. Item 13 - Disposal Code, enter 12;
4. Item 15 - Credit and Tax Computation Adjustment enter Reference Number 689 and amount.
ESS will use Form 2859, Request of Quick or Prompt Assessment, to make a manual assessment when the statute is imminent, or to input a Transaction Code (TC) 150 (-0-) to allow the closing agreement assessment when there are problems with posting a return TC 150 (-0-).

4.75.25.18.5 (10-01-2002)
Tax Assessment for a Return Not on AIMS - "Walk-in " Request

Generally, if the closing agreement involves a Walk-in request, the case will not be on AIMS because the return is not under examination. In such cases, the taxpayer should pay the tax when filing delinquent returns, if applicable.
For non-taxable assessments, ESS will use Form 8485, Assessment Adjustment Case Record, to assess the liability against a return not established on AIMS.
ESS will prepare Form 8485, Assessment Adjustment Case Record (See IRM 4.4, AIMS Procedures).
Terminal Operator will input Form 8485 and send original Form 8485 to the Service Center.
ESS will retain a copy of Form 8485 until the assessment posts to Master File.

4.75.25.19 (10-01-2002)
Closing Agreement Package

After the Coordinator returns original and triplicate closing agreement, the examiner will prepare a closing agreement package to assess the tax, if applicable, and close the case. The closing agreement package will contain:

Closing agreement,
Form 4549-A.
Form 5599 for closing agreement return and
Form 3198 (Special Handling Notice) attached to front of package. The examiner will enter appropriate instructions on Form 3198 as follows:

If ...	Then ...
No assessment.	Enter "EO Closing Agreement with No Tax Assessment - close off AIMS."
An assessment is to be made on a taxable return and statute is not imminent.	Enter "EO Closing Agreement with Tax Assessment. Assess tax using Form 5599."
An assessment is to be made on a taxable return and statute is imminent.	Enter "EO Closing Agreement with Tax Assessment. Statute expires (insert date). Prepare Form 2859, Request of Prompt or Quick Assessment."
An assessment is to be made on a non-taxable return and statute is not imminent.	Enter "EO Closing Agreement with Tax Assessment on Non-Taxable Return. Assess tax using Form 5599."
An assessment is to be made on a non-taxable return and statute is Imminent.	Enter "EO Closing Agreement with Tax Assessment on a Non-Taxable Return. Statute expires (insert date). Prepare Form 2859, Request of Prompt or Quick Assessment."
An assessment is to be made on a NMF Return [i.e., Form 990 - BL or Form 4720 under IRC §§ 4912(a), 4944(a)(2), 4945(a)(2), or 4958(a)].	Enter "EO Closing Agreement with Tax Assessment on NMF Return - Prepare Form 2859, Request of Prompt or Quick Assessment to assess tax. "
An assessment is to be made on a taxable return not established on AIMS - Walk-in Closing Agreement.	Enter "Walk-in Taxpayer Closing Agreement - Taxable Return not established on Aims. Prepare Form 8485, Assessment Adjustment Case Record. "
An assessment is to be made on a non-taxable return not established on AIMS - Walk-in Closing Agreement.	Enter "Walk-in Taxpayer Closing Agreement - Non-Taxable Return not established on Aims. Prepare Form 8485, Assessment Adjustment Case Record. "
Note: Examiner should include on Form 3198 instructions to ESS to not assess penalties and/or interest if the closing agreement provides for non-assessment.

The examiner will prepare a memorandum to the Coordinator, if the closing agreement requires any future actions requiring follow-up. See Exhibit 4.75.25-9. The memorandum will:
1. Clearly and explicitly describe future actions required,
2. Set forth a reporting schedule,
3. State the consequences if taxpayer fails to comply, and
4. Provide any other pertinent information.
The examiner will send the closing agreement package, the case file, and administrative file to ESS for additional processing and to close off AIMS as BMF/NMF account(s).

4.75.25.19.1 (10-01-2002)
Examiner's Responsibility for Protecting Statute

Examiners must conduct examination of information/tax returns in a timely manner to ensure the case is closed prior to the expiration of the statute of limitations.

Note:

Examiner will protect the statute of limitations on the returns of all affected parties. Coordinate with W&I, SBSE, or LMSB, as needed, to extend the statute for individuals and taxable entities not under EO jurisdiction.
If the closing agreement contains executory provisions involving future years or if there is an installment agreement, the examiner must extend the statute of limitations. In such cases, the examiner will secure Form 872, Consent to Extend Time to Assess Tax, before the taxpayer executes the Closing Agreement. Refer to IRM 25.6, Statute of Limitations.

4.75.25.20 (10-01-2002)
Coordinator Follow-up Responsibilities

The Coordinator will establish controls to ensure the government against loss in the event the taxpayer failures to comply with all the terms of the closing agreement. The Coordinator will:
1. Create a control file to facilitate follow-up as necessary.
2. Use follow-up action memorandum, copy of closing agreement, and any other applicable data to ensure the taxpayer is complying with the closing agreement. If the closing agreement requires the taxpayer to submit annual reports, copy of a certified audit or other information requiring a technical review, the Coordinator will send the information to the appropriate Area Manager for review.
3. Timely initiate actions such as correspondence, telephone contact, or preparation of Form 5666, when the taxpayer has not provided evidence and/or documents to establish it has complied with any prospective actions set forth in the closing agreement. It is incumbent upon the Coordinator to ensure the taxpayer completes all prospective actions within the period established in the closing agreement.
4. Refer to the Area Manager any taxpayer not in compliance with all prospective actions set forth in the closing agreement.