SECTION 3. DESCRIPTION OF THE

CLOSING AGREEMENT PROGRAM FOR ADVANCE REFUNDING ESCROWS

.01 Under the program established by this revenue procedure, the Service will enter into closing agreements with the issuers of bonds. These closing agreements will resolve the effect of the payment of more than fair market value for the nonpurpose investments for yield restriction and rebate purposes under § 148. The closing agreements will not resolve any other matters.

.02 The closing agreements will provide that, for purposes of § 148, the amount paid by the issuer for the Treasury securities deposited into an advance refunding escrow will be treated as the fair market value for those nonpurpose investments. For purposes of computing rebate under § 148(f), the closing agreement amount will not be treated as a rebate payment.

.03 This program is a compliance program but is not based upon an examination of an issue of bonds by the Service.

.04 Because this program does not arise out of an examination, consideration under this program does not preclude or impede an examination of the issuer, the bondholders, or the issue of bonds by the Service with respect to matters not addressed in the closing agreement.

.05 The intent underlying this program is to treat expeditiously all requests for closing agreements which are submitted in accordance with sections 5 and 6 of this revenue procedure. Accordingly, negotiations with the issuers on the basis of mitigating circumstances of individual cases will not be entertained under the terms of this revenue procedure.