TEB - Adjustments to Direct Pay Credits

When TEB and the issuer agree that a closing agreement will exclude a portion of allowable credit payments from future credit calculations to resolve a direct-pay bond violation IRM 4.70.14.2.1.5.9.6(2), the agreement generally includes these terms, conditions and supporting documentation:

The closing agreement identifies the credits claimed and refunds paid to which the closing agreement applies.

The closing agreement specifies that it is executed for the qualification for credit under IRC 6431.

The closing agreement specifies any period for which the IRS won’t assess tax, interest, or penalty.

Any closing agreement terms that affect the future allowability of credits must not indicate specific amounts to be allowed, but must describe how the credit amount is determined for each future interest payment date.