Note:

The 6700 penalties may apply to parties other than issuers and therefore, closing agreements regarding the 6700 penalties may not include the issuer of the bonds. See IRM 4.70.14.2.1.5.9.13, TEB – IRC Section 6700 Penalty.

To ensure that taxpayers are treated consistently and that agreements are enforceable, the TEB Closing Agreement Committee (Committee) reviews all nonstandard closing agreements (See IRM 4.81.6.5(3)). The Committee consists of two members from TEB Technical appointed by the TEB Technical Manager. The Committee may consult with designated counsel from Associate Chief Counsel, Financial Institutions & Products (Branch 5) and designated counsel from Associate Chief Counsel, Procedures & Administrative.

In an open exam case, the issuer may initiate closing agreement negotiations at any time. In most cases, the examiner or group manager negotiates the terms of the closing agreement. In some cases, the examiner and group manager may ask TEB Technical to help draft the closing agreements.

In negotiating the terms of a closing agreement, the examiner, specialist, group manager and the Committee ensure the terms:

Are fair and equitable.

Promote voluntary compliance and encourage due diligence in complying with all applicable federal tax laws.

Recognize the difference between the IRS enforcement and voluntary compliance programs.

Closing agreements with issuers generally don’t contain terms that address any potential IRC 6700 promoter penalty liabilities unless the agreement specifically resolves an open IRC 6700 exam case on a party to the agreement.