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Closing Agreements
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Closing Agreements

Tax-exempt organizations may want to enter into a closing agreement to resolve tax liability issues with finality.

Generally, an exempt organization may initiate a closing agreement by sending a letter to the appropriate area office. The letter must contain the following information:

Why a closing agreement is appropriate

The advantages to the organization and how the government will sustain no disadvantages

A detailed description of the method proposed for correcting non-compliant activities

A narrative description of the correction method, providing specific information to support the suggested method

How the taxpayer will achieve future compliance

Proposed methodology to calculate any tax, interest, and penalty, for the tax period(s)

Additional information EO Examinations Closing Agreement Overview Glossary of Terms Supplemental Guidance Authority Finality of Closing Agreements Application of Closing Agreements Multiple Closing Agreements Role of Area Counsel Team Examination Program (TEP) Cases EO Examinations Closing Agreement Coordinators Recognition of Exempt Status Development Prior to Considering A Closing Agreement Taxpayer Request to Enter into A Closing Agreement Drafting Closing Agreements Approval of Draft Closing Agreement Final Approval Signatures Approval and Execution of Closing Agreement Tax Assessments Closing Agreement Package Coordinator Follow-up Responsibilities Monitoring Reports

Exhibit 4.75.25-1 EO Closing Agreement Approval Cover Sheet

Exhibit 4.75.25-2 Sample Closing Agreement as To Final Determination

Exhibit 4.75.25-3 Certification by Receiving And Reviewing Officials

Exhibit 4.75.25-4 Cover Memorandum – Payment to Service Center

Exhibit 4.75.25-5 Transmittal Memorandum to Director, EO Examinations

Exhibit 4.75.25-6 Transmittal Letter to Taxpayer

Exhibit 4.75.25-7 Transmittal Letter to Taxpayer’s Representative

Exhibit 4.75.25-8 Disclosure Statements

Exhibit 4.75.25-9 Follow-up Action Memorandum to Closing Agreement Coordinator

Exhibit 4.75.25-10 EO Closing Agreement Quarterly Report

Internal Revenue Manual 4.75.25, Exempt Organizations Examination Procedures, Exempt Organizations Closing Agreements

Internal Revenue Code section 7121

Treasury Regulations § 301.7121-1

DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.