SECTION 6. MODEL CLOSING

AGREEMENT

Effective as of the date executed by Internal Revenue Service _________

CLOSING AGREEMENT AS TO FINAL DETERMINATION COVERING SPECIFIC MATTERS

THIS CLOSING AGREEMENT (“Agreement”), made pursuant to section 7121 of the Internal Revenue Code (the “Code”) by and between [taxpayer’s name, address, and identifying number] (“Taxpayer”), and the Commissioner of Internal Revenue (the “Service”). WHEREAS,

A. Taxpayer is the issuer of one or more modified endowment contracts, as defined in section 7702A of the Code;

B. On , Taxpayer pursuant to Rev. Proc. 2001–1, 2001–1 I.R.B. 1, submitted to the Service a request for a ruling that modified endowment contracts (the “Contract[s]”), which are identified on Exhibit A to this Agreement, be treated as contracts that are not modified endowment contracts.

C. Taxpayer represents that the Contract[s] is [are] not described in section 4.02 of Rev. Proc. 2001–42. D. Taxpayer represents that the cumulative “overage earnings,” within the meaning of section 3.06 of Rev. Proc. 2001–42, for the Contract[s] equal $_____.

E. Taxpayer represents that the total of the amounts determined under section 5.03(1)(a), (b), and (c) of Rev. Proc. 2001–42, after taking the special rule in section 5.03(2) of the revenue procedure into account, with regard to the Contract[s] are $, $, and $______, respectively.

F. To ensure that the Contracts are not treated as modified endowment contracts, Taxpayer and the Service have entered into this Agreement.

NOW THEREFORE, IT IS HEREBY FURTHER DETERMINED AND AGREED BETWEEN TAXPAYER AND THE SERVICE AS FOLLOWS:

1. In consideration for the agreement of the Service as set forth in Section 2 below, Taxpayer agrees as follows:

dollars and cents ($_____) at the time and in the manner described in Section 3 below;

(B) The amount paid pursuant to Section 1(A) above is not deductible by Taxpayer, nor is such amount refundable, subject to credit or offset, or otherwise recoverable by Taxpayer from the Service;

(A) To pay to the Service the sum of

(C) For purposes of its information reporting and withholding obligations under the Code, no holder’s investment in any Contract may be increased by any portion of—

(i) the sum set forth in Section 1(A) above, or (ii) the excess of the cumulative overage earnings over the proportionate share of overage earnings included in gross income reported to the Service on a timely filed information return or income tax return with regard to amounts received under any Contract; and

(D) To bring Contract[s] for which the testing period (as defined in section 3.01 of Revenue Procedure 2001–42) will not have expired on or before the date 90 days after the execution of this Agreement into compliance with § 7702A, either by an increase in death benefit[s] or the return of the excess premiums and earnings thereon to the contract holder[s].

2. In consideration of the agreement of Taxpayer set forth in Section 1 above, the Service and Taxpayer agree as follows:

(A) To treat each Contract as having satisfied the requirements of section 7702A during the period from the date of issuance of the Contract through and including the later of—

(i) date of the execution of this Agreement, and

(ii) the date of the corrective actions described in Section 1(D) above;

(B) To treat the corrective action described in 1(D) above as having no effect on the date the Contract was issued or entered into;

(C) To waive civil penalties for failure of Taxpayer to satisfy the reporting, withholding, and/or deposit requirements for income subject to tax under § 72(e)(10) that was received or deemed received by a contract holder under a Contract in a calendar year ending prior to the date of execution of this Agreement; and

(D) To treat no portion of the sum described in Section 1(A) above as income to the holders of the Contracts.

3. The actions required of Taxpayer in Section 1(D) above shall be taken by Taxpayer within ninety (90) days of the date of execution of this Agreement by the Service. Payment of the amount described in Section 1(A) above shall be made within thirty (30) days of the date of

2001–36 I.R.B. 217 September 4, 2001

execution of this Agreement by the Service by check payable to the “United States Treasury,” delivered together with a fully executed copy of this Agreement, to Internal Revenue Service, Philadelphia Service Center, 11601 Roosevelt Boulevard, Philadelphia, Pennsylvania 19154, Attention: Chief, Receipt and Control Branch, DP3190.

4. This Agreement is, and shall be construed as being, for the benefit of Taxpayer. The holder[s] of Contract[s] covered by this Agreement are intended beneficiaries of this Agreement. This Agreement shall not be construed as cre

ating any liability of an issuer to the holders of the Contract[s].

5. Neither the Service nor Taxpayer shall endeavor by litigation or other means to attack the validity of this Agreement.

6. This Agreement may not be cited or relied upon as precedent in the disposition of any other matter.

NOW THIS CLOSING AGREEMENT FURTHER WITNESSETH, that Taxpayer and the Service mutually agree that the matters so determined shall be final and conclusive, except as follows:

1. The matter to which this Agreement relates may be reopened in the event of

fraud, malfeasance, or misrepresentation of material facts set forth herein.

2. This Agreement is subject to sections of the Code that expressly provide that effect be given to their provisions notwithstanding any other law or rule of law except § 7122 of the Code.

3. This Agreement is subject to any legislation enacted subsequent to the date of execution hereof if the legislation provides that it is effective with respect to closing agreements.

IN WITNESS WHEREOF, the parties have subscribed their names in triplicate.

Taxpayer

Date Signed: By:

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Title/Office

Commissioner of Internal Revenue

Date Signed: By: _______________________________

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Title/Office