CCA 200934042: Closing agreements are final but do not bar later offers in compromise

Plain-English summary

Chief Counsel Advice explains the disclosure and finality rules for closing agreements under IRC section 7121. It states that these agreements are subject to the disclosure laws, with sections 6103(a) and 6103(2)(D) specifically treating an agreement under section 7121 as confidential. Once a closing agreement establishes a tax liability or issue, that determination cannot be changed. The advice also explains that boilerplate referring to section 7122 preserves the taxpayer's ability to submit a later offer in compromise for the same liability or issue.

Ruling snapshot

• Question: What are the disclosure and finality effects of an IRC section 7121 closing agreement, and can a taxpayer later submit an offer in compromise?
• Outcome: Advice given
• Key authorities: IRC §§ 6103(a), 6103(2)(D), 7121, and 7122

Full text (IRS public release)

ID: CCA-701947-09 Number: 200934042
Release Date: 8/21/2009
Office: --------------
UILC: 7121.00-00

From: ------------------------
Sent: Wednesday July 1, 2009 9:47 AM
To: ------------------
Cc: ---------------------
Subject: RE: Closing agreement general questions

Closing agreements under section 7121 of the IRC are subject to the disclosure laws but not just section 6103 in general. Section 6103(2)(D), together with 6103(a), specifically provide that "any agreement under section 7121" is "confidential."

Closing agreements are final with regard to the determinations within them. Once the tax liability or issue is established by the closing agreement, it cannot be changed. Section 7122 of the IRC covers offers-in- compromise. The boilerplate language in a closing agreement regarding section 7122 notifies a taxpayer that regardless of the closing agreement the taxpayer would still be entitled to submit an offer-in- compromise with respect to the liability or the issue determined with finality in the closing agreement. In other words, a taxpayer who enters into a closing agreement with the IRS does not foreclose his right to submit an offer-in-compromise later with respect to the same liability or issues covered in an earlier closing agreement.