SEC. 5. AGREEMENT — Internal Revenue Bulletin 2000-35

PAYMENT OF TAX

.01 In general . The Service will issue a withholding certificate that excuses withholding or that permits a transferee to withhold a reduced amount if either the transferor or the transferee enters into an agreement for the payment of tax. An agreement for the payment of tax is a contract between the Service and any other person that consists of two necessary elements. Those elements are:

A detailed description of the rights and obligations of each; and
A security instrument or other form of security acceptable to the Commissioner.

.02 Contents of agreement—In general . An agreement for the payment of tax must either provide adequate security for the payment of the tax in accordance with section 6 of this revenue procedure or provide

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for the payment of the tax through a combination of security and withholding of tax by the transferee. The agreement must cover an amount described in subdivision (a) or (b) of this paragraph.

(a) Tax that would otherwise be with- held . An agreement for the payment of tax may cover the tax that would otherwise be required to be withheld pursuant to section 1445(a) of the Code. In addition to securing the amount computed pursuant to section 1445(a), the agreement must provide that the applicant will pay interest upon that amount, at the rates and in the manner prescribed by section 6621 and 6622, with respect to the period between the date on which the tax imposed by section 1445(a) would otherwise be due (i.e., the 20th day after the date of transfer) and the date on which the transferor’s payment of tax with respect to the disposition will be due. Interest and additions with respect to the tax also must be secured. In most instances, payments of interest and additions to tax may be secured by the same agreement that secures payment of taxes. At the discretion of the Commissioner, however, separate security agreements may be required.

(b) Maximum tax liability . An agreement for the payment of tax may provide for the payment of the transferor’s maximum tax liability, determined in accordance with section 4.06(2) of this revenue procedure. The agreement must also provide for the payment of an additional amount equal to 25 percent of the amount determined under section 4.06(2). This additional amount secures the interest and additions to tax that would accrue between the date of a failure to file a return and pay tax with respect to the disposition and the date on which the Service collects the tax pursuant to the agreement.

.03 Parties to the agreement . All agreements for the payment of tax will be between the Commissioner and the applicant furnishing the security or personally guaranteeing payment of any tax later determined to be due. In addition, the Commissioner may require as a signatory any other party deemed to be appropriate. The Commissioner may require such other terms and conditions, or vary the format as appropriate in the particular case, to provide adequate security.

.04 Contents of agreement—Stated pur- pose and warranties . The agreement for

the payment of tax should state the purpose and basis of the agreement. It should also recite any warranties or representations upon which the Commissioner will be required to place material reliance in accepting the agreement.

.05 Contents of agreement—Identifica- tion of security . The agreement for the payment of tax must set forth in detail the obligations to be assumed and identify the nature of the security that is being offered. To the extent that the security is embodied in an instrument or document collateral to the agreement, such instrument or document must be incorporated by reference in the agreement.

.06 Sample agreement . The following example sets forth the language of an agreement for the payment of tax that in most circumstances will be acceptable to the Service:

This agreement is entered into pursuant to the provisions of section 1445 of the Internal Revenue Code (the “Code”) and the regulations thereunder.

The signatories warrant that they are authorized under applicable law to enter into the agreement and undertake the actions and obligations specified herein.

(name) warrants that (s)he/it will make timely payment of any liability (including tax, penalties, interest, and additions to tax) that may become lawfully due and owing under the Code as a result of the disposition or distribution by of the interest, or any part thereof, described in Exhibit(s) [the “subject interest(s)”] giving rise to tax liability by reason of the operation of sections 871(b), 882, and/or 897 of the Code. The related security secures payment of such amounts. Security for the payment of such liability is provided in the amount of, in accordance with the requirements of section 1.1445-3(e)(2) of the Income Tax Regulations. The computation of the proper amount of security to be provided is set forth in Exhibit and such computation is hereby incorporated by reference.
The provisions of this agreement shall be construed as binding upon all signatories to this agreement, unless the intent to exclude any one or more signatories is clearly set forth in the provisions or is clearly implicit in the terms hereof.
The amount of each deposit of estimated tax that will be required with respect to the amount recognized on the subject disposition may be collected by levy upon or recourse to the security as of the date following the date on which each such deposit is due (unless such deposit is timely made).
The entire amount of the liability may be collected by levy upon or recourse to the security at any time during the nine months following the date on which the payment of tax with respect to the subject disposition is due, subject to release of the security upon the full payment of the tax and any interest and penalties due. If the transferor requests an extension of time to file a return with respect to the disposition, the Commissioner may require that the term of the security instrument be extended until the date that is nine months after the filing deadline as extended.
The applicant shall make available to the Commissioner within 30 days of a request from the Commissioner all information that may be required by the Commissioner in order to verify that representations relied upon by the Commissioner in accepting the agreement are accurate, and that the obligations assumed by the applicant are performed pursuant to this agreement.
The parties agree that the review of books and records pursuant to this agreement shall not constitute an examination for purposes of section 7605(b) of the Code.
Nothing in this agreement shall limit the Commissioner from performing the obligations imposed upon or delegated to him under the law.
Upon the occurrence of any default by the applicant under the applicable provisions of this agreement, in addition to any and all other rights and remedies which the Commissioner may have hereunder, or under any other applicable law, or otherwise, the Commissioner may reduce the claim to judgment, otherwise enforce the security interests by any available judicial procedure, and exercise any other rights and remedies the Commissioner may have at law, or in equity, or otherwise, including, but not limited to the right to apply toward payment of the obligations hereunder, without notice to the applicant, any sums which may then be held by the Commissioner for said applicant.

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For purposes of this agreement, the term “default” means a material misrepresentation of material fact or a failure to honor an obligation or warranty agreed to herein.
Except as otherwise provided in this agreement, no provision of this agreement shall be deemed to constitute a waiver of any right that any party may have to recover any amount in accordance with the laws, statutes, and regulations of the United States, nor shall any provision of the agreement be deemed to be an admission by any person, whether or not a party hereto, that such person is liable for any federal income tax, or, if a foreign corporation or nonresident alien, that such person is subject to the taxing jurisdiction of the United States, or if the Commissioner, that the facts upon which this agreement is based are true and accurate.
This agreement and all of its terms and conditions shall inure to the benefit of, and be binding upon, the Commissioner and the applicant, and their respective successors.
All notices, instructions and other communications (“Notices”) required or permitted to be given, forwarded, or transmitted hereunder or necessary or convenient in connection herewith shall be in writing and addressed to:

Internal Revenue Service Center P.O. Box 21086 DP 8731 FIRPTA Unit Philadelphia, PA 19144-0586

To [the applicant: the applicant’s address etc]. and shall be deemed to have been given only when delivered personally or by private delivery service as designated by the Internal Revenue Service under I.R.C. §7502(f) (see Notice 99-41, 1999-35 I.R.B. 325, or its successor for a listing of private delivery services); or sent by first class U.S. mail

(postage pre-paid, by registered or certified mail, return receipt requested); or sent by cable, telex, telegram or facsimile transmission (for example, telecopier) and confirmed by letter mailed the same day to the party receiving the notice. Any notice sent by mail to or from a place outside the continental United States shall be sent by air mail. Any notice sent by cable, telegram, or telex may be addressed to any published cable, telegram, or telex address that the addressee may have specified by notice to all the signatories. Any signatory may change the address or addresses to which communications are to be directed to it by giving written notice of such change to the persons above specified in the manner provided above, provided, however, that [the applicant] may establish or change an address to which notices are to be directed only if the new address is the address of [the applicant] itself or the address of a person with power of attorney to act for [the applicant] with respect to the disposition or distribution described in paragraph 2.

This agreement may not be amended, modified, superseded, or canceled and none of the terms hereof may be waived, except by a written instrument executed by the Commissioner and the other party or parties hereto sought to be charged thereby. In the case of a waiver of the breach of any term contained in this agreement in any one or more instances, the waiver shall be neither deemed to be nor construed as a further or continuing waiver of any such breach or term or any other term contained in this agreement.
This agreement may be in any number of counterparts with all the counterparts together constituting one and the same agreement.
The term “Commissioner” as used herein also shall include any successors in office, and any and all agents or

employees thereof duty authorized for the purpose.

This agreement shall not be binding upon any signatory hereto until it has been signed by the Commissioner and the Commissioner has received counterparts thereof duly executed by each of the signatories whose names appear at the end of this agreement.
No provision of this agreement shall relieve any party or person of any obligation or liability under the internal revenue laws of the United States, except as specifically provided in this agreement.
This agreement is made without prejudice to the assertion and/or collection of tax liabilities other than for any tax imposed by section 871(b)(1) or 882(a)(1) of the Code on any gain realized by the transferor on the disposition of the subject United States real property interest.
This agreement shall be governed, construed, and enforced in accordance with the laws of the United States of America and, where applicable, the laws of the State of [insert applicable local jurisdiction.]
It is agreed that nothing herein shall be construed to increase, decrease, or otherwise affect in any way the substantive tax liability of the taxpayer under any other provision of the Code.
The Commissioner will not, in part or in full, release, subordinate, or return the security held with respect to this agreement except upon the payment of any liability determined to be due or upon the deposit of an acceptable amount of estimated tax or upon a showing to the satisfaction of the Commissioner that the liability is zero.

I accept this Agreement Under penalties of perjury, I declare that I have examined this Agreement, related exhibits, schedules and statements and to the best of my knowledge and belief it is true, correct and complete.

Signature Signature of Signatory/Power of Attorney

Title

[Commissioner or person acting on behalf of the Commissioner]

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