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
4.75.25.1 EO Examinations Closing Agreement Overview
4.75.25.2 Glossary of Terms
4.75.25.3 Supplemental Guidance
4.75.25.4 Authority
4.75.25.5 Finality of Closing Agreements
4.75.25.6 Application of Closing Agreements
4.75.25.7 Multiple Closing Agreements
4.75.25.8 Role of Area Counsel
4.75.25.9 Team Examination Program (TEP) Cases
4.75.25.10 EO Examinations Closing Agreement Coordinators
4.75.25.11 Recognition of Exempt Status
4.75.25.12 Development Prior to Considering A Closing Agreement
4.75.25.13 Taxpayer Request to Enter into A Closing Agreement
4.75.25.14 Drafting Closing Agreements
4.75.25.15 Approval of Draft Closing Agreement
4.75.25.16 Final Approval Signatures
4.75.25.17 Approval and Execution of Closing Agreement
4.75.25.18 Tax Assessments
4.75.25.19 Closing Agreement Package
4.75.25.20 Coordinator Follow-up Responsibilities
4.75.25.21 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.
