SECTION 5. CLOSING

AGREEMENTS

.01 General Rules for Closing Agreements under this Notice

Under this section, a RIC that receives a refund of foreign tax that had been paid in a prior taxable year in which an election was made under section 853(a) may request a closing agreement addressing the treatment of the refund. A request for a closing agreement will be granted when such an agreement is determined by the IRS to be in the interest of sound tax administration.

A closing agreement generally will be considered to be in the interest of sound tax administration when:

(a) the RIC has demonstrated that either it is precluded from applying, or it is not reasonably practical for it to apply, the general rules under section 905(c) or the method described in section 4; and

(b) the RIC can provide information that is sufficient to establish, to the satisfaction of the IRS, a reasonable estimate of the aggregate adjustments that would be due under section 905(c) with respect to the foreign tax credits claimed by its shareholders (including former shareholders) who were treated under section 853 as paying the foreign tax.

.02 Requirements for, and Timing of, Requesting a Closing Agreement

A request for a closing agreement must comply with applicable guidance relating to such requests, including, but not limited

to, Revenue Procedure 2016–1, 2016–1 I.R.B. 1, or its successor, as well as any future guidance published in the Internal Revenue Bulletin applicable to closing agreements on this issue. Due to applicable deadlines for tax reporting, a tentative request for a closing agreement under this section 5 should be initially submitted in accordance with the pre-submission conference procedures provided in Revenue Procedure 2016–1 or other applicable guidance in the Internal Revenue Bulletin, as soon as possible after the receipt of the refund of foreign tax. The tentative request should propose a method for calculating the aggregate adjustment and should include details regarding the information available to make such calculations and the information that reasonably could be obtained.

.03 Notification Requirement for RICs Requesting Closing Agreements

If a RIC has submitted a request for a closing agreement but the IRS has not yet determined whether a closing agreement is in the interest of sound tax administration, then the RIC must attach a statement to its Form 1118 for the refund year containing the information required in paragraphs (a) through (f) of section 4.05, along with a statement that a closing agreement has been requested, that the request has not been withdrawn or denied, and the date on which the request was submitted.