Part 32. Published Guidance and Other Guidance to Taxpayers
Single Closing Agreement — Specific. Popular For Tax Pros. See Delegation Order
The taxpayer should be instructed to date and sign the original, duplicate, and triplicate of the closing agreement and to follow the procedures set forth below:. If a taxpayer is a corporation, the corporate name should be entered on the agreement, followed by the signature and title of an authorized officer, or officers, or by the signature of an authorized representative.
Affixing of the corporate seal is not required. While corporate resolutions authorizing execution of closing agreements are no longer required with such agreement, if they are submitted they must be reviewed to ascertain whether they are consistent with the action being taken. If an agreement is to be signed by a trustee on behalf of a trust or by an administrator or executor on behalf of an estate, there should be attached to the original of the agreement an attested copy of the letters testamentary, court order, or other instrument vesting such person with authority so to act, together with a recent affidavit to the effect that such authority remains in full force and effect.
If an agreement for a taxpayer is signed by an authorized representative for the taxpayer, there should be attached to the original of the agreement a properly executed power of attorney specifically authorizing the representative to enter into an agreement in the matter on behalf of the taxpayer.
If a "Mass Closing Agreement" is involved, the original, duplicate, and triplicate of the agreement will be dated and signed by the taxpayer designated to sign for the group. The taxpayer or representative should be requested to prepare and attach to each copy of the agreement a list setting forth the names and addresses of the taxpayers in the group on behalf of whom the designated taxpayer is executing the agreement.
There should be attached to the original of the agreement properly executed powers of attorney for all of the taxpayers listed, authorizing the designated taxpayer to execute the agreement in their behalf. Upon signing of the letter ruling and approval of the official file copy, Form , of the closing agreement by the Associate Chief Counsel, the file is returned to the originating branch for insertion of proper dates in the closing agreement.
The letter ruling with the unsigned closing agreement in triplicate is then mailed to the taxpayer. The section copies remain in the file. When a closing agreement has been executed, in triplicate, and returned for approval, it is directed to the initiator for examination to ensure that it is in proper order.
The initiator should make no changes or additions to the agreement. If additions or corrections have been made by the taxpayer or authorized representative, the initiator should make sure that such additions or corrections have been initialed and dated by the taxpayer or authorized representative. When satisfied that the closing agreement is in proper order, the initiator signs and dates on the reverse of the last page of the original as Receiving Officer.
The initiator also prepares a transmittal letter to the taxpayer, Exhibit The Special File is a temporary file for all papers relating to the closing agreement. A manila folder is used for this file. If case was forwarded to Chief Counsel, the official file copy, Form , of transmittal memorandum. Transmittal letter and memorandum original and all copies to taxpayer and appropriate operating division, respectively. Closing agreements, executed in triplicate, with necessary documentary evidence, and all copies except the official file copy.
The necessary number of copies in excess of one of these documents will be reproduced. The deleted copy of the letter ruling and closing agreement and the section copies of the letter ruling and accompanying closing agreement referred to in the letter ruling. The initiator assembles the material in the Special File as explained in Exhibit Each office is responsible for controlling closing agreements originating within its jurisdiction. After the closing agreement is controlled and the transmittal memorandum to the Associate Chief Counsel is signed, the Special File is forwarded to the person in the Associate Chief Counsel office who approved the letter ruling, if one was issued, for signing by the Associate Chief Counsel and dating of the original, duplicate, and triplicate of the closing agreement.
After signing, the closing agreement is returned with the Special File to the originating office. A copy is made of the original of the closing agreement, and the appropriate deletions are made following the guidelines in CCDM The letter transmitting the duplicate closing agreement and the section copy of the letter ruling to the taxpayer and the memorandum transmitting the triplicate to the field are signed and dated.
Also transmitted to the field with the triplicate of the closing agreement is a copy of each of the following: The original of the closing agreement and a copy each of the related letter ruling, the transmittal letter to the taxpayer, and the transmittal memorandum to the field are retained in the originating office. Agreements made under section may be set aside by the Commissioner upon a showing of fraud or malfeasance, or misrepresentation of a material fact.
In the event of litigation on the point, the burden of proof for setting aside a closing agreement has been held to be upon the party desiring to do so.
Commissioner , 30 B. Commissioner , 32 B. 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. Requests from field offices for consideration of setting aside of a closing agreement executed in the Office of the Chief Counsel should be submitted to the appropriate Associate Chief Counsel and be accompanied by a recommendation and the reasons therefor.
In considering the field request, Associate Chief Counsel will grant the taxpayer a conference only if it is deemed necessary and would be advantageous to the interests of the Government.
If it is determined that the closing agreement should not be set aside, a memorandum to that effect, setting forth the basis therefor, should be issued to the field office. The signature of the Associate Chief Counsel or Commissioner is required for this memorandum. It should be submitted to the Commissioner for approval, accompanied by an appropriate explanatory memorandum. A memorandum to the appropriate field office transmitting a copy of the letter to the taxpayer will be mailed at the same time the letter to the taxpayer is mailed.
Please click here for the text description of the image. The necessary number of copies in excess of one of these documents will be reproduced;.
For you and your family. Individuals abroad and more. EINs and other information. Get Your Tax Record. Bank Account Direct Pay. Debit or Credit Card. Payment Plan Installment Agreement. Standard mileage and other information. Instructions for Form Request for Transcript of Tax Return.
Employee's Withholding Allowance Certificate. Employer's Quarterly Federal Tax Return. Employers engaged in a trade or business who pay compensation. Popular For Tax Pros. Apply for Power of Attorney. Apply for an ITIN. Home IRM Part32 Closing Agreements Covering Specific Matters.
Basis for Entering Into Closing Agreements. Processing Requests for Closing Agreements. Finality of Closing Agreements. Guidelines for Drafting Closing Agreements. Preparation of Closing Agreements. The following covers preparation of closing agreements. An original and eight identical copies of each page of the closing agreement should be prepared. The original and all copies of each page other than page one will be identified in the upper left corner as follows: Form Closing Agreement name of taxpayer.
Single Closing Agreement — Specific. Where there is no letter ruling to be issued in connection with the closing agreement, the first WHEREAS paragraph should read substantially as follows: The first paragraph should read as follows: An election made pursuant to section This election pertains to an automatic extension of time. In addition, the section The running of any applicable period of limitations is not suspended for the period during which a section If the period of limitation on assessment under section a for the taxable year in which an election should have been made or any taxable year that would have been affected by the election had it been timely made will expire before receipt of a section Therefore, the taxpayer must secure a consent under section c 4 to extend the period of limitation on assessment.
Note that the filing of a claim for refund under section does not extend the period of limitation on assessment. The examining officer, appeals officer, or government counsel is not authorized to deny consideration of a section To ensure uniformity in responding to requests for relief under section The initiator to whom the section This memorandum also explains the basis for the recommendation.
This file memorandum is prepared in the format shown in Exhibit The letter ruling granting or denying section Not all reviewers have been delegated the authority to sign letters responding to requests for relief under section See Delegation Order The Service has discretionary authority to issue letter rulings or to enter into closing agreements.
That discretion is exercised in the light of all relevant circumstances, including the business or other reasons motivating the transaction and considering whether issuing the letter ruling or entering into the agreement is consistent with sound tax administration. Generally, the Service does not issue letter rulings dealing with a particular area that is under extensive study or review, except that, where the Service has an established position, it will ordinarily continue to rule in accordance with that position until it has adopted a new or changed position.
The Service has identified a number of specific and general areas in which it will not issue letter rulings. There are certain areas in which, because of the inherently factual nature of the problem involved, or for other reasons, the Service will not issue or ordinarily will not issue letter rulings. A list of these areas is set forth in separate revenue procedures issued annually. When there are additions to and deletions from these no-rule revenue procedures, they are announced in revenue procedures published during the year.
If the issue is recurring or otherwise part of a pattern, the office should consider submitting a proposal to establish a no-rule area for the issue. Has been examined by a field office or considered by an area office and the statutory period of limitations on assessment or on filing a claim for refund or credit of tax has not expired; or. Has been examined by a field office or considered by an area office and a closing agreement covering the issue or liability has not been entered into by a field office or by an area office.
An Associate office ordinarily will not issue a letter ruling on only part of an integrated transaction. If, however, a part of a transaction falls under a no-rule area, a letter ruling on other parts of the transaction may be issued. The Service does not ordinarily issue a letter ruling on which of two entities, under common law rules applicable in determining the employer-employee relationship, is the employer, when one entity is treating the worker as an employee.
The Service does not issue letter rulings to business, trade, or industrial associations or to similar groups concerning the application of the tax laws to members of the group. But groups and associations may submit suggestions of generic issues that would be appropriately addressed in revenue rulings. The Service may issue letter rulings to groups or associations on their own tax status or liability. The Service does not issue letter rulings to foreign governments or their political subdivisions about the U.
The Associate office also does not issue letter rulings on the effect of a tax treaty on the tax laws of a treaty country for purposes of determining the tax of the treaty country. Treaty partners can continue to address matters such as these under the provisions of the applicable tax treaty. In addition, the Associate office may issue letter rulings to foreign governments or their political subdivisions on their own tax status or liability under U.
The Service ordinarily does not issue letter rulings on a matter involving the federal tax consequences of any proposed federal, state, local, municipal, or foreign legislation. The Associate office also may provide general information in response to an inquiry.
The Service will not issue a letter ruling if the request presents an issue that cannot be readily resolved before a regulation or any other published guidance is issued. When the Service has closed a regulation project or any other published guidance project that might have answered the issue or decides not to open a regulation project or any other published guidance project, the Associate office may consider all letter ruling requests unless the issue is covered by a no-rule area.
The Service will not issue a letter ruling on frivolous issues. A "frivolous issue" is one without basis in fact or law, or that espouses a position which has been held by the courts to be frivolous or groundless. Examples of frivolous or groundless issues include, but are not limited to:. Frivolous "constitutional" claims, such as claims that the requirement to file tax returns and pay taxes constitutes an unreasonable search barred by the Fourth Amendment; violates Fifth and Fourteenth Amendment protections of due process; violates Thirteenth Amendment protections against involuntary servitude; or is unenforceable because the Sixteenth Amendment does not authorize nonapportioned direct taxes or was never ratified;.
Claims that income taxes are voluntary, that the term "income" is not defined in the Internal Revenue Code, or that preparation and filing of income tax returns violates the Paperwork Reduction Act;. Claims that tax may be imposed only on coins minted under a gold or silver standard or that receipt of Federal Reserve Notes does not cause an accretion to wealth;. Claims that a person is not taxable on income because he or she falls within a class entitled to "reparation claims" or an extra-statutory class of individuals exempt from tax, e.
Claims that a taxpayer can refuse to pay taxes on the basis of opposition to certain governmental expenditures;.
Claims that taxes apply only to federal employees; only to residents of Puerto Rico, Guam, the U. Virgin Islands, the District of Columbia, or "federal enclaves" ; or that sections through or any other provision of the Internal Revenue Code imposes taxes on U. Claims that wages or personal service income are not "income," are "nontaxable receipts," or "are a nontaxable exchange for labor;". Further information on frivolous tax arguments can be found at http: In general, a letter ruling will not be issued with respect to an issue that is clearly and adequately addressed by statute, regulations, decisions of a court, revenue rulings, revenue procedures, notices, or other authority published in the Internal Revenue Bulletin.
However, the Associate office may in its discretion determine to issue a letter ruling on such an issue if the Associate office is otherwise issuing a ruling on another issue arising in the same transaction. The Associate office does not issue a letter ruling on the replacement of involuntarily converted property, whether or not the property has been replaced, if the taxpayer has already filed a return for the taxable year in which the property was converted.
The Service will not issue a letter ruling on alternative plans of proposed transactions or on hypothetical situations. The Service will not issue a letter ruling on a matter upon which a court decision adverse to the Government has been handed down and the question of following the decision or litigating further has not yet been resolved. Requests for determination letters received by directors that may not be issued by a field office will be forwarded to the Associate office for reply.
The field office will notify the taxpayer that the matter has been referred. If the request involves an issue on which the Service will not issue a letter ruling or determination letter, the request will not be forwarded to the Associate office.
The field office will notify the taxpayer that the Service will not issue a letter ruling or a determination letter on the issue. The taxpayer will be notified of this action. A request for a letter ruling mistakenly sent to a director will be returned by the director to the taxpayer so that the taxpayer can send it to the Associate office.
Directors will also refer to the Associate office any request for a determination letter that in their judgment should have the attention of the Associate office. Generally, no statement by any official of the Service, other than a closing agreement under section , is final and conclusive upon the Service.
A letter ruling, except to the extent incorporated in a closing agreement, may be revoked or modified at any time under appropriate circumstances. A taxpayer ordinarily may rely on a letter ruling received from the Associate office subject to the conditions and limitations described in this section. Unless it was part of a closing agreement, a letter ruling found to be in error or not in accord with the current views of the Service may be revoked or modified.
If a letter ruling is revoked or modified, the revocation or modification applies to all years open under the period of limitations unless the Service uses its discretionary authority under section b to limit the retroactive effect of the revocation or modification.
The issuance of a revenue ruling, revenue procedure, notice, or other statement published in the Internal Revenue Bulletin. The publication of a notice of proposed rulemaking does not affect the application of any letter ruling. If a letter ruling relates to a continuing action or a series of actions, it ordinarily will be applied until any one of the events described above occurs or until it is specifically revoked.
The revocation or modification of a letter ruling will be applied retroactively to the taxpayer for whom the letter ruling was issued or to a taxpayer whose tax liability was directly involved in the letter ruling if:.
The facts at the time of the transaction are materially different from the controlling facts on which the letter ruling was based; or. If the transaction involves a continuing action or series of actions, the controlling facts change during the course of the transaction. If a letter ruling is issued covering a particular transaction and the controlling facts on which the letter ruling is based are later changed, a taxpayer is not protected against retroactive revocation or modification of the letter ruling when the transaction is completed after the change in the controlling facts.
Similarly, a taxpayer is not protected against retroactive revocation or modification of a letter ruling involving a continuing action or a series of actions occurring after the controlling facts on which the letter ruling is based have changed.
Except in rare or unusual circumstances, the revocation or modification of a letter ruling for reasons other than a change in facts as described in CCDM If a letter ruling is revoked or modified by a letter with retroactive effect, the letter will, except in fraud cases, state the grounds on which the letter ruling is being revoked or modified and explain the reasons why it is being revoked or modified retroactively.
Section b , Revenue Act of A taxpayer is not protected against retroactive revocation or modification of a letter ruling involving a transaction completed before the issuance of the letter ruling or involving a continuing action or series of actions occurring before the issuance of the letter ruling because the taxpayer did not enter into the transaction relying on a letter ruling.
See section f regarding the abatement of penalties or addition to tax attributable to erroneous written advice of the Service. A determination letter issued by a director has the same effect as a letter ruling issued to a taxpayer. The Service does not orally issue letter rulings or determination letters, nor does it issue letter rulings or determination letters in response to oral requests from taxpayers.
Service employees ordinarily will discuss with taxpayers or their representatives inquiries regarding whether the Service will rule on particular issues and questions relating to procedural matters about submitting requests for letter rulings or determination letters for a particular case.
At the discretion of the Service and as time permits, substantive issues also may be discussed. Such a discussion will not be binding on the Service in general or on the Office of Chief Counsel in particular and cannot be relied upon as a basis for obtaining retroactive relief under the provisions of section b.
Substantive tax issues involving the taxpayer that are under examination, in appeals, or in litigation will not be discussed by Service employees not directly involved in the examination, appeal, or litigation of the issues unless the discussion is coordinated with those Service employees who are directly involved in the examination, appeal, or litigation of the issues.
A taxpayer may withdraw a request for a letter ruling or determination letter at any time before the letter ruling or determination letter is signed by the Service.
Correspondence and exhibits related to a request that is withdrawn or related to a letter ruling request for which the Associate office declines to issue a letter ruling will not be returned to the taxpayer. In appropriate cases, the Service may publish its conclusions in a revenue ruling or revenue procedure. Occasionally, an obvious error in a letter ruling is discovered by the taxpayer or the Service. Depending on the nature of the error, corrections may be accomplished by substituting corrected pages or by reissuing an entire letter.
An obvious error includes a typographical error, incorrect citation, incorrect cross references, or an inadvertent omission of a requested ruling. A request for reconsideration of a ruling or a request for supplemental rulings is not a request for correction of an obvious error and therefore is not subject to the procedures that follow.
A taxpayer may request correction of obvious errors either orally or in writing. Requests for corrections of obvious errors in letter rulings are to be processed within 14 calendar days of the receipt of the request for correction.
Prepare a short cover letter addressed in the same manner as the original letter ruling to transmit the page or pages that are being corrected along with copies of the corrected pages deleted for section purposes.
Email the redacted version of the corrected letter ruling to the mailbox Disclosure. If the underlying letter ruling has been released under section , the request for correction of the obvious error should be controlled as an initial request for ruling but processed within 14 days of receipt of the request for correction. When released, it will be cross-referenced to the previously released section document. Every request for a letter ruling must comply with the general requirements set forth in the annual revenue procedure for letter rulings.
If a request does not comply with those requirements, the office that receives the request will acknowledge the request and inform the requester of the requirements of the revenue procedure that have not been met.
If the request lacks essential information, which may include additional information needed to satisfy the procedural requirements as well as substantive changes to transactions or documents needed from the taxpayer, the branch representative will tell the taxpayer during the initial or subsequent contact that the request will be closed if the Service does not receive the information within 21 calendar days from the date of the request for additional information, unless an extension of time is granted.
A request must be accompanied by the appropriate user fee. If the Service provides general information instead of the requested ruling, a requester may be entitled to a refund of the user fee. As an alternative procedure for the issuance of letter rulings, a taxpayer who is requesting a particular conclusion on a proposed transaction may request a two-part letter ruling request. The first part must include the complete statement of facts and related documents. The second part must include a summary statement of the facts the taxpayer believes to be controlling in reaching the conclusion requested.
Ordinarily, the statement of controlling facts will be incorporated into the letter ruling. The Service reserves the right to rule on the basis of a more complete statement of the facts and to seek more information in developing the facts and restating them. Requests should be sent to the appropriate offices as provided in the annual revenue procedure for letter rulings and determination letters.
If a request is not addressed to the proper official, the office that receives the request in error will acknowledge the request, forward the request to the appropriate office, and advise the requester of the office to which the request was forwarded. Subject to the deletion of certain information, letter rulings are required to be open to public inspection under section The Service makes the deletions required by section c before the text is made available to the public.