SECTION 7. NATURE AND EFFECT

OF AN LMSB PFA

(4) The ability and willingness of the agreement. The LMSB PFA will be pre- .01 Criteria for issuance. The Director, taxpayer to dedicate sufficient resources pared by the taxpayer and the audit team Field Operations (or other authorized offito the LMSB PFA process; with assistance, as necessary, from the cial) may execute an LMSB PFA if:

2001–9 I.R.B. 749 February 26, 2001

(4) The ability and willingness of the taxpayer to dedicate sufficient resources to the LMSB PFA process;

.01 Planning. If the Service accepts the taxpayer’s request for an LMSB PFA, a representative of LMSB will contact the taxpayer to schedule an orientation meeting with the taxpayer and examination personnel to discuss the LMSB PFA process and explain the roles and responsibilities of each participant. Immediately following the orientation meeting, the taxpayer and the Service should meet to formulate a plan and timeline that will result in a thorough development of the facts and a successful resolution of the issue prior to the time for filing the taxpayer’s return.

.02 Drafting. After the development of the facts and issues, the Team Manager will informally meet with the taxpayer to determine whether the parties can reach agreement on a proposed LMSB PFA. If the parties reach agreement, the taxpayer will work with the Service to prepare the initial draft of the LMSB PFA closing agreement. The LMSB PFA will be prepared by the taxpayer and the audit team with assistance, as necessary, from the

(1) Entering into the LMSB PFA is consistent with the goals of the LMSB PFA program;

(2) The resolution(s) of issue(s) in the LMSB PFA reflect well settled legal principles and correctly apply those principles (or positions authorized under Delegation Order No. 236 or 247) to the facts established by the audit team; and

(3) There is an advantage in having the issue(s) permanently and conclusively closed for the taxable period covered by the LMSB PFA, or that the taxpayer shows good and sufficient reasons for desiring a closing agreement and that the United States will sustain no disadvantage through consummation of such an agreement (see § 301.7121–1 (a) of the Regulations on Procedure and Administration).

.02 Form and content generally. An LMSB PFA between the Service and the taxpayer is a closing agreement under § 7121, and, accordingly, must comply with the requirements of Rev. Proc. 68–16, 1968–1 C.B. 770, regarding the form and content of closing agreements.

.03 Methods of accounting . An LMSB PFA shall not constitute a final determination under § 7121 with respect to the methods of accounting of the taxpayer for any taxable year. Further, an LMSB PFA does not constitute the consent of the Commissioner under § 446(e) to any change in method of accounting by the taxpayer.