SECTION 5. MODEL CLOSING — Internal Revenue Bulletin 2008-29

AGREEMENT

required, no later than 90 days after the date of execution of the closing agreement with the Service, either (1) to increase the death benefit to not less than an amount that will ensure compliance with § 7702 or § 101(f), as applicable, or (2) to refund to the contract holder the excess of the sum of the premiums paid as of the effective date of the closing agreement over the guideline premium limitation as of that date. If the sum of the premiums paid does not exceed the guideline premium limitation, no corrective action is necessary.

.06 Required representations. The submission must include representations to the effect that (1) the issuer is within the

scope of section 3 of this revenue procedure; (2) the issuer properly computed the amount required to be paid with regard to the contracts in accordance with section 4.03 of this revenue procedure; and (3) the issuer has brought the contracts into compliance with the requirements of § 7702 or § 101(f), as applicable, or will do so within the time period specified in the model closing agreement set forth in section 5 of this revenue procedure. The representations must be executed under penalties of perjury by an appropriate party (as set forth in section 7.01 of Rev. Proc. 2008–1 (or its successor). The issuer must retain

Effective as of date executed by Internal Revenue Service

CLOSING AGREEMENT AS TO FINAL DETERMINATION

COVERING SPECIFIC MATTERS

UNDER § 7702 [Insert “or § 101(f)” if applicable]

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 number] (“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 [Insert “or § 101(f)” if applicable]. For each contract, however, Taxpayer accepted and retained premiums that exceeded the contract’s guideline premium limitations. As a result, the contract[s] failed to satisfy the requirements of § 7702 [Insert “or § 101(f)” if applicable].

B. Pursuant to Rev. Proc. 2008–40, 2008–29 I.R.B. 151, the Service under certain circumstances will waive civil penalties for failure of a taxpayer to satisfy the recordkeeping, reporting, withholding, or 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. 2008–1, 2008–1 I.R.B. 1 [or successor 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 represents that the failure[s] described in A above are eligible for relief under Rev. Proc. 2008–40.

E. Taxpayer represents that the amount determined under section 4.03 of Rev. Proc. 2008–40 is $ [Insert amount]. Taxpayer represents that this amount has been computed correctly under the provisions of Rev. Proc. 2008–40.

F. To ensure that the Contracts satisfy the requirements of § 7702(a) [Insert “or § 101(f)” if applicable], 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.

July 21, 2008 153 2008–29 I.R.B.

(i) neither the investment in the contract for purposes of § 72, nor the premiums paid, for purposes of § 7702

[Insert “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

[Insert “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 [Insert “or §101(f)” if applicable], no later than 90 days after the date of execution of this Agreement by the Service:

(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 [Insert “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 of § 7702 [insert “or § 101(f)” if applicable] as of such date, to take no corrective action.

(E) With respect to any Contract which terminated by reason of the death of the insured (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 amounts necessary to keep the Contracts in compliance with the requirements of § 7702 [Insert “or § 101(f)” if applicable] guideline premium limitation for the Contract, Taxpayer will pay the Contract holder, or the Contract holder’s estate, the amount of such excess with interest.

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 [Insert “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 corrective action described in Section 1(D) with respect to that Contract;

(B) To treat each Contract that terminated prior to the effective date of this Agreement as having satisfied the requirements of § 7702 [Insert “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 failure(s) 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, entered into, or purchased for purposes of any provision of the Code or regulations thereunder;

(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 due to the Contract’s failure to satisfy the requirements of § 7702

[Insert “or 101(f)” 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 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 60 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 & 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 of the Contracts 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.

2008–29 I.R.B. 154 July 21, 2008

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 (including any stated exception for Code § 7122) notwithstanding any other law or rule of law.
To the extent this Agreement relates to any tax period after the date on which it is executed, it is subject to any law, enacted after such date, that applies to that tax period.

IN WITNESS WHEREOF, the parties have subscribed their names in triplicate. By signing, the above parties certify that they have read and agreed to the terms of this document.

[Insert Taxpayer name]

Date Signed: By:

Title:

COMMISSIONER OF INTERNAL REVENUE

Date Signed: By:

Title: