Tax-exempt organizations may want to enter into a closing agreement to resolve tax liability issues with finality. This article describes the procedures for voluntary taxpayer-initiated closing agreements.  For a closing agreement involving an exempt organization examination, an organization should work with the examining agent.

To initiate a closing agreement unrelated to an examination, an exempt organization sends a letter to the EO closing agreement coordinator for Examination closing agreements:

IRS
1100 Commerce Street
MC 4920 DAL
Dallas, TX  75242

The letter must contain the following information:

1. Why a closing agreement is appropriate
2. The advantages to the organization and how the government will sustain no disadvantages
3. A detailed description of the method proposed for correcting non-compliant activities
4. A narrative description of the each step of the correction method, providing specific information to support the suggested method
5. How the taxpayer will achieve future compliance
6. Proposed methodology to calculate any tax, interest, and penalty, for the tax period(s)

Additional information

• Internal Revenue Manual 4.75.25, Exempt Organizations Examination Procedures, Exempt Organizations Closing Agreements
• Internal Revenue Code section 7121
• Treasury Regulations § 301.7121-1