SECTION 5. REQUEST FOR — Internal Revenue Bulletin 2007-7

COMMENTS

.01 In general . Because additional changes to the existing procedures may be warranted, the Service invites comments on how the various correction procedures in general may be simplified.

.02 Draft model closing agreements . The Service requests comments on the model closing agreements that are included in this notice as Exhibits A, B, C, and D. The Service will consider all comments before issuing final model closing agreements.

.03 Other matters . In addition to the general matters described in section 5.01 and 5.02, the Service requests comments in the following specific areas:

(a) Under what circumstances, if any, should the Service retain the discretion to negotiate different terms and conditions for failures that otherwise would be covered by the final model closing agreement?

(b) Would additional model closing agreements be useful to remedy other failures involving life insurance or annuity contracts, such as the failure of a life insurance contract to satisfy the cash value accumulation test of § 7702(b), or the failure of an annuity contract to contain the distribution provisions required under § 72(s)? If so, please describe the specific failures.

(c) Could the process for obtaining a waiver of reasonable errors under § 7702(f)(8) be simplified? If so, please describe.

(d) Do the three alternatives set forth in Rev. Rul. 2005–6 provide an appropriate model for remedies of other errors under § 7702 that would have been considered reasonable within the meaning of § 7702(f)(8) before, but not after, the Service published guidance on the underlying legal issue?

February 12, 2007 505 2007–7 I.R.B.

by publication in the Internal Revenue Bulletin.

EXHIBIT A

DRAFTING INFORMATION

The principal author of this notice is Melissa S. Luxner of the Office of Associate Chief Counsel (Financial In

stitutions & Products). For further information regarding this notice, contact Melissa S. Luxner at (202) 622–3970 (not a toll-free call).

Effective as of date executed by Internal

Revenue Service

CLOSING AGREEMENT AS TO FINAL DETERMINATION

COVERING SPECIFIC MATTERS

UNDER SECTION 7702

THIS CLOSING AGREEMENT (“Agreement”) is made pursuant to § 7121 of the Internal Revenue Code (the “Code”) by and between [Insert Taxpayer Name, Address and EIN] (“Taxpayer”) and the Commissioner of Internal Revenue (the “Service”).

WHEREAS,

A. Taxpayer is the issuer of one or more contracts that were intended to qualify as life insurance contracts under § 7702.

B. Pursuant to Rev. Rul. 91–17, 1991–1 C.B. 190, amplified by Rev. Proc. 92–25, 1992–1 C.B. 741, as supplemented by Notice 99–48, 1999–2 C.B. 429, the Service under certain circumstances will waive civil penalties for failure of a taxpayer to satisfy the reporting, withholding and deposit requirements for income received or deemed received under § 7702(g).

C. By letter dated [Insert date] Taxpayer submitted to the Service, pursuant to Rev. Proc. 2006–1, 2006–1 I.R.B. 1 [or successor Rev. Proc., if applicable], a request for this Agreement covering [Insert number] of Taxpayer’s life insurance contracts identified on Exhibit A attached to this Agreement (the “Contracts”).

D. Taxpayer intended that each of the Contracts meet the definition of life insurance contract under § 7702. For each Contract, however, Taxpayer accepted and retained premiums that exceeded the Contract’s guideline premium limitations under § 7702(c)(2)

[or § 101(f), if applicable] . As a result, each of the Contracts identified on Exhibit A failed to satisfy the requirements of § 7702.

E. The Service has determined that the errors described in C above which caused the Contracts to fail to satisfy the requirements of § 7702 were not reasonable errors within the meaning of § 7702(f)(8) [or § 101(f)(3)(H), if applicable], but are eligible for relief under Rev. Rul. 91–17.

F. Taxpayer represents to the Service that:

(1) With respect to Contracts under which the “death benefit,” within the meaning of Notice 99–48, 1999–2 C.B. 429, is less than $50,000, the aggregate “income on the contract,” within the meaning of § 7702(g)(1), through [Insert date], is $ [insert amount] . The aggregate “income on the contract” for each year of failure is:

Year Amount

Total

(2) With respect to Contracts under which the “death benefit,” within the meaning of Notice 99–48, is equal to or exceeds $50,000 but is less than $180,000, the aggregate “income on the contract,” within the meaning of § 7702(g)(1), through

[Insert date], is $ [insert amount] . The aggregate “income on the contract” for each year of failure is:

Year Amount

Total

2007–7 I.R.B. 506 February 12, 2007

(3) With respect to Contracts under which the “death benefit,” within the meaning of Notice 99–48, is equal to or exceeds $180,000, the aggregate income on the contract,” within the meaning of § 7702(g)(1), through [Insert date], is $ [insert amount] . The aggregate “income on the contract” for each year of failure is:

Year Amount

Total

G. With respect to Contracts under which the death benefit is less than $50,000, the tax (determined at a tax rate of 15 percent) that would have been owed by the Contract holders if they were treated as receiving the income on the Contracts set forth in E(1) above is $ [insert amount] . With respect to Contracts under which the death benefit is equal to or exceeds $50,000 but is less than $180,000, the tax (determined at a rate of 28 percent) that would have been owed by the Contract holders if they were treated as receiving the income on the Contracts set forth in E(2) above is $ [insert amount] . With respect to Contracts under which the death benefit is equal to or exceeds $180,000, the tax (determined at a tax rate of 36 percent) that would have been owed by the Contract holders if they were treated as receiving the income on the Contracts set forth in E(3) above is $ [insert amount] .

The total tax that would have been owed by the Contract holders if they were treated as receiving the income on the Contracts is $ [insert amount] . Interest on the total tax through [Insert date] is $ [insert amount] . The two amounts total $ [insert amount] .

H. To ensure that the Contracts qualify as life insurance contracts under § 7702(a), 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:

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

(A) Taxpayer will pay the Service the amount of $ [insert amount] 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, nor is such amount refundable, subject to credit or

offset, or otherwise recoverable from the Service.

(i) neither the investment in the contract for purposes of § 72, nor the premiums paid for purposes of § 7702 [or § 101(f), if applicable], on any Contract can be increased by any portion of the amount set forth in Section 1(A) above. If any such increases are made, they are entitled to no effect.

(ii) neither the investment in the contract for purposes of § 72, nor the premiums paid, for purposes of § 7702 [or §101(f), if applicable], on any Contract can be increased by any portion of the amount which Taxpayer represents to be the income on the contract for all of the Contracts in the aggregate. If any such increases are made, they are entitled to no effect.

(D) With respect to each Contract that is in force on the effective date of this Agreement, to the extent necessary in order to

bring such Contract into compliance with § 7702 [or §101(f), if applicable] :

(i) If the sum of the premiums paid as of the effective date of this Agreement exceeds the guideline premium limitation as of such date, Taxpayer will take the following corrective action:

(a) Increase the death benefit to not less than an amount that will ensure compliance with § 7702 [or §101(f), if applicable], or

(b) Refund to the Contract holder the amount of such excess, with interest at the Contract’s interest crediting rate; or

(ii) If the sum of the premiums paid as of the effective date of this Agreement does not exceed the guideline premium limitation as of such date, Taxpayer will take no corrective action.

(E) With respect to any Contract which terminated by reason of the death of the insured and (i) prior to the date this

Agreement is executed by the Service and Taxpayer and (ii) at a time when the premiums paid exceeded the guideline premium limitation for the Contract, Taxpayer will pay the Contract holder or the Contract holder’s estate such excess, with interest at the Contract’s interest crediting rate.

February 12, 2007 507 2007–7 I.R.B.

In consideration of the agreement of Taxpayer set forth in Section 1 above, the Service agrees as follows:

(A) To treat each Contract that is still in force as of the effective date of this Agreement as having satisfied the requirements of

§ 7702 [or § 101(f), if applicable] during the period from the date of issuance of the Contract through and including the later of (i) the date of the execution of this Agreement by the Service; or (ii) the date of any corrective action described in Section 1(D) above;

(B) To treat each Contract that terminated prior to the effective date of this Agreement as having satisfied the requirements

of § 7702 [or 101(f), if applicable] during the period from date of issuance of the Contract through and including the date of the Contract’s termination;

(C) To treat the failures described above, and any corrective action described in Section 1(D) or 1(E) above, as having no

effect on the date the Contract was issued or entered into;

(D) To treat any amount paid prior to the effective date of this Agreement to any beneficiary under a Contract by reason of

the death of the insured as paid under a life insurance contract for purposes of the exclusion from gross income under § 101(a)(1);

(E) To waive civil penalties for failure of Taxpayer to satisfy the reporting, withholding, or deposit requirements for income

deemed received by Contract holders under § 7702; and

(F) To treat no portion of the amount described in Section 1(A) above as income to the Contract holders.

Any action required of Taxpayer in Section 1(D) or 1(E) above shall be taken by Taxpayer no later than ninety (90) days after 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 after the date of execution of this Agreement by the Service by check payable to the “United States Treasury,” delivered together with a copy of this executed Agreement to Internal Revenue Service, Receipt and Control Stop 31, 201 W. Rivercenter Blvd., Covington, KY 41011.
This Agreement is, and shall be construed as being, for the benefit of Taxpayer. Contract holders covered by this Agreement are intended beneficiaries of this Agreement. This Agreement shall not be construed as creating any liability of Taxpayer to the Contract holders.
Neither the Service nor Taxpayer shall endeavor by litigation or other means to attack the validity of this Agreement.
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 the Service and Taxpayer mutually agree that the matters so determined shall be final and conclusive, except as follows:

The matter to which this Agreement relates may be reopened in the event of fraud, malfeasance, or misrepresentation of material facts set forth herein.
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.
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 to these presents in triplicate.

[Insert Taxpayer name]

Date Signed: By:

Title:

COMMISSIONER OF INTERNAL REVENUE

Date Signed: By:

Title:

2007–7 I.R.B. 508 February 12, 2007

EXHIBIT B

Effective as of date executed by Internal

Revenue Service

CLOSING AGREEMENT AS TO FINAL DETERMINATION

COVERING SPECIFIC MATTERS

UNDER REV. RUL. 2005–6

WHEREAS,

A. Taxpayer is the issuer of one or more contracts that were intended to qualify as life insurance contracts under § 7702 and that provided qualified additional benefits (QABs) within the meaning of § 7702(f)(5).

B. Pursuant to Rev. Rul. 2005–6, 2005–1 C.B. 471, the Service under certain circumstances will waive civil penalties for failure of a taxpayer to satisfy the reporting, withholding and deposit requirements for income received or deemed received under § 7702(g).

D. Taxpayer intended that each of the Contracts meet the definition of a life insurance contract under § 7702 and not be a modified endowment contract (MEC) within the meaning of § 7702A. Taxpayer, however, maintained a compliance system for the contracts that did not account properly for charges for qualified additional benefits (QABs) under § 7702(c)(3)(B)(ii). As a result, the Contracts identified in Exhibit A failed to satisfy the requirements of § 7702 or § 7702A, as applicable.

E. The Service has determined that the errors described in C above qualify the issuer for the remedy described in Rev. Rul. 2005–6.

F. To ensure that the Contracts qualify as life insurance contracts under § 7702(a), 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:

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

(A) To pay the Service the amount of $ [insert amount] 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, nor is such amount refundable, subject to credit or

offset, or otherwise recoverable from the Service.

(i) neither the investment in the contract for purposes of § 72, nor the premiums paid for purposes of § 7702, on any Contract can be increased by any portion of the amount set forth in Section 1(A) above. If any such increases are made, they are entitled to no effect.

(ii) neither the investment in the contract for purposes of § 72, nor the premiums paid, for purposes of § 7702, on any Contract can be increased by any portion of the amount which Taxpayer represents to be the income on the contract for all of the Contracts in the aggregate. If any such increases are made, they are entitled to no effect.

(D) With respect to each Contract that is in force on the effective date of this Agreement, to the extent necessary in order to

bring such Contract into compliance with § 7702:

(i) If the sum of the premiums paid as of the effective date of this Agreement exceeds the amount necessary to keep the contracts in compliance with the requirements of § 7702, Taxpayer will take the following corrective action:

(a) Increase the death benefit to not less than an amount that will ensure compliance with § 7702, or

(b) Refund to the Contract holder the amount of such excess, with interest at the Contract’s interest crediting rate; or

February 12, 2007 509 2007–7 I.R.B.

(ii) If the sum of the premiums paid as of the effective date of this Agreement does not exceed the amount necessary to keep the contracts in compliance with the requirements of § 7702, Taxpayer will take no corrective action.

(E) With respect to any Contract which terminated by reason of the death of the insured and (i) prior to the date this

In consideration of the agreement of Taxpayer set forth in Section 1 above, the Service agrees as follows:

(A) To treat each Contract that is still in force as of the effective date of this Agreement as having satisfied the requirements of

§ 7702 [and § 7702A, if applicable], during the period from the date of issuance of the Contract through and including the later of (i) the date of the execution of this Agreement by the Service, or (ii) the date of any corrective action described in Section 1(D) above;

(B) To treat each Contract that terminated prior to the effective date of this Agreement as having satisfied the requirements of

§ 7702 [and § 7702A, if applicable] during the period from date of issuance of the Contract through and including the date of the Contract’s termination;

(C) To treat the failures described above, and any corrective action described in Section 1(D) or 1(E) above, as having no

effect on the date the Contract was issued or entered into;

(D) To treat any amount paid prior to the effective date of this Agreement to any beneficiary under a Contract by reason of

the death of the insured as paid under a life insurance contract for purposes of the exclusion from gross income under § 101(a)(1);

(E) To waive civil penalties for failure of Taxpayer to satisfy the reporting, withholding, or deposit requirements for income

deemed received by Contract holders under § 7702 [and § 7702A, if applicable] ; and

(F) To treat no portion of the amount described in Section 1(A) above as income to the Contract holders.

Any action required of Taxpayer in Section 1(D) or 1(E) above shall be taken by Taxpayer no later than ninety (90) days after 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 after the date of execution of this Agreement by the Service by check payable to the “United States Treasury” delivered together with a copy of this executed Agreement, to Internal Revenue Service, Receipt and Control Stop 31, 201 W. Rivercenter Blvd., Covington, KY 41011.
This Agreement is, and shall be construed as being, for the benefit of Taxpayer. Contract holders covered by this Agreement are intended beneficiaries of this Agreement. This Agreement shall not be construed as creating any liability of Taxpayer to the Contract holders.
Neither the Service nor Taxpayer shall endeavor by litigation or other means to attack the validity of this Agreement.
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 the Service and Taxpayer mutually agree that the matters so determined shall be final and conclusive, except as follows:

The matter to which this Agreement relates may be reopened in the event of fraud, malfeasance, or misrepresentation of material facts set forth herein.
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.
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 to these presents in triplicate.

[Insert Taxpayer name]

Date Signed: By:

Title:

2007–7 I.R.B. 510 February 12, 2007

COMMISSIONER OF INTERNAL REVENUE

Date Signed: By:

Title:

EXHIBIT C

Effective as of date executed by Internal

Revenue Service

CLOSING AGREEMENT AS TO FINAL DETERMINATION

COVERING SPECIFIC MATTERS

UNDER SECTION 7702A

THIS CLOSING AGREEMENT (“Agreement”) is made pursuant to § 7121 of the Internal Revenue Code (the “Code”) by and between [Insert Taxpayer name, address, and EIN] (“Taxpayer”) and the Commissioner of Internal Revenue (the “Service”).

WHEREAS,

A. Taxpayer is the issuer of one or more life insurance contracts under § 7702;

B. Pursuant to Rev. Proc. 2001–42, 2001–2 C.B. 212, an issuer under certain circumstances may remedy an inadvertent nonegregious failure to comply with the modified endowment contract rules under § 7702A.

C. By letter dated [Insert date], Taxpayer submitted to the Service, pursuant to Rev. Proc. 2006–1, 2006–1 I.R.B. 1 [or successor Rev. Proc., if applicable], a request for this Agreement covering [Insert number] modified endowment contracts identified on Exhibit A attached to this Agreement (the “Contracts”).

D. Taxpayer intended that each of the Contracts not be a modified endowment contract (MEC) under § 7702A. Taxpayer represents that the Contract[s] is [are] not described in Sec. 4.02 of Rev. Proc. 2001–42.

E. The Service has determined that the contracts identified on Exhibit A are eligible for relief under Rev. Proc. 2001–42.

F. Taxpayer represents that the cumulative “overage earnings,” within the meaning of Sec. 3.06 of Rev. Proc. 2001–42, for the Contract[s] equal $ [Insert amount] .

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

H. To ensure that the Contract[s] is/are not treated as [a] modified endowment contract[s], 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:

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

(A) Taxpayer will pay to the Service the amount of $ [Insert amount] 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.

February 12, 2007 511 2007–7 I.R.B.

(D) To bring Contract[s] for which the testing period (as defined in Sec. 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].

In consideration of the agreement of Taxpayer set forth in Section 1 above, the Service agrees as follows:

(A) To treat each Contract as having satisfied the requirements of § 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 Contract holders.

The actions required of Taxpayer in Section 1(D) above shall be taken by Taxpayer no later than ninety (90) days after 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 execution of this Agreement by the Service by check payable to the “United States Treasury,” delivered together with a copy of this executed Agreement to Internal Revenue Service, Receipt & Control Stop 31, 201 W. Rivercenter Blvd., Covington, KY 41011.
This Agreement is, and shall be construed as being, for the benefit of Taxpayer. The Contract holders covered by this Agreement are intended beneficiaries of this Agreement. This Agreement shall not be construed as creating any liability of an issuer to the Contract holders.
Neither the Service nor Taxpayer shall endeavor by litigation or other means to attack the validity of this Agreement.
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:

The matter to which this Agreement relates may be reopened in the event of fraud, malfeasance, or misrepresentation of material facts set forth herein.
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.
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 to these presents in triplicate.

[Insert Taxpayer name]

Date Signed: By:

Title:

2007–7 I.R.B. 512 February 12, 2007

COMMISSIONER OF INTERNAL REVENUE

Date Signed: By:

Title:

EXHIBIT D

Effective as of date executed by Internal

Revenue Service

CLOSING AGREEMENT AS TO FINAL DETERMINATION

COVERING SPECIFIC MATTERS

UNDER SECTION 817(h)

THIS CLOSING AGREEMENT (“Agreement”), is made pursuant to § 7121 of the Internal Revenue Code (the “Code”) by and between [Insert Taxpayer, Name, Address and EIN] (Taxpayer”) and the Commissioner of Internal Revenue (the “Service”).

WHEREAS,

A. Taxpayer is the issuer of one or more variable contracts, as defined in § 817(d) (without regard to § 817(h)), which are based, in whole or in part, on a segregated asset account (the “Account”) and that provide for the allocation of amounts received under the variable contracts to the Account.

B. Pursuant to Rev. Proc. 92–25, 1992–1 C.B. 741, the Service may treat the investments of a segregated asset account on which a variable contract is based as satisfying the diversification requirements of § 817(h) and § 1.817–5(b) of the Income Tax Regulations for periods during which there was an inadvertent failure to diversify.

C. By letter dated [Insert date,] Taxpayer submitted to the Service, pursuant to Rev. Proc. 2006–1, 2006–1 I.R.B. 1 [or successor Rev. Proc., if applicable], a request for this Agreement that the [Insert account name] be treated as adequately diversified under § 817(h) for the period [Insert period of nondiversification] (“the period of nondiversification”).

D. Taxpayer intended that Account be adequately diversified within the meaning of § 817 and § 1.817–5(b). The failure of the investments of the Account to satisfy the requirements of § 1.817–5(b) for the period of nondiversification was inadvertent.

E. The Service has determined that the failure of Account to satisfy the requirements of § 817(h) is eligible for relief under Rev. Proc. 92–25.

F. Taxpayer represents that the failure of the investments of the Account to satisfy the requirements of § 1.817–5(b) was discovered on [Insert date], and the investments came into compliance with those requirements on [Insert date] .

G. The “income on the contract,” within the meaning of § 1.817–5(a)(2) and § 7702(g)(l)(B) (without regard to § 7701(g)(l)(C)), for all contracts based on the Account during the period of non-diversification in the aggregate totals $ [Insert amount] for the

[Insert account name] .

H. The sum of the amounts computed in sections 4.02(1)(A) and (B) and 4.02(2)(A) of Rev. Proc. 92–25 is $ [Insert amount] . The sum of the interest amounts computed in sections 4.02(1)(C) and 4.02(2)(A) of Rev. Proc. 92–25 is $ [Insert amount] .

I. To ensure that variable contracts that provide for the allocation of amounts received thereunder to the Account are treated as annuity, endowment, or life insurance contracts, as applicable, Taxpayer and the Service have entered into this Agreement.

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

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

(A) Taxpayer will pay the Service the amount of $ [Insert amount] 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, nor is such amount refundable, subject to credit or

offset, or otherwise recoverable from the Service;

February 12, 2007 513 2007–7 I.R.B.

In consideration of the agreement of Taxpayer set forth in Section 1 above, the Service agrees as follows:

(A) To treat the investments of the Account as adequately diversified for purposes of § 817(h) during the period of

nondiversification; and

(B) To treat no portion of the amounts described in Section 1(A) above as income to the Contract holders.

Payment of the sum described in section 1(A) above shall be made within thirty (30) days of the date of execution of this Agreement by the Service. This payment must be made by check payable to the “United States Treasury,” delivered, together with a copy of this executed Agreement, to Internal Revenue Service Center, Receipt and Control Stop 31, 201 W. Rivercenter Blvd., Covington, KY 41011.
This Agreement is, and shall be construed as being, for the benefit of Taxpayer. Holders of contracts based on the Account are intended beneficiaries of this Agreement. This Agreement shall not be construed as creating any liability of Taxpayer to the holders of the contracts based on the Account.
Neither the Service nor Taxpayer shall endeavor by litigation or other means to attack the validity of this Agreement.
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 the Service and Taxpayer mutually agree that the matters so determined shall be final and conclusive, except as follows:

The matter to which this Agreement relates may be reopened in the event of fraud, malfeasance, or misrepresentation of material facts set forth herein.
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.
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 to these presents in triplicate.

[Insert Taxpayer name]

Date Signed: By:

Title:

COMMISSIONER OF INTERNAL REVENUE

Date Signed: By:

Title:

2007–7 I.R.B. 514 February 12, 2007

istered Rev. Proc. 2001–42, the Service has become aware of a number of changes that would make it easier for issuers to use that procedure to seek relief. The Service has determined that the General Account Total Return would be more accessible to taxpayers if based on Moody’s Seasoned Corporate Aaa and Baa Bond Yields, rather than on the indices provided in Rev. Proc. 2001–42; similarly, the Bond Fund Total Return would be more accessible if the Merrill Lynch Corporate Bond Master Bond Index, Total Return, were instead identified as the Merrill Lynch U.S. Corporate Master Index (C0A0); the Service has the capacity to process electronic exhibits in connection with requests for closing agreements involving life insurance contracts ( see, e.g., Notice 2005–35, 2005–1 C.B. 1087); and, the Service has changed the address to which payments under Rev. Proc. 2001–42 must be sent.