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2. Closing Agreements Under Section 7121
Section 7121 provides as follows:
Sec. 7121. Closing Agreements.
(a) Authorization.--The Secretary is authorized
to enter into an agreement in writing with any person
relating to the liability of such person (or of the
person or estate for whom he acts) in respect of any
internal revenue tax for any taxable period.
(b) Finality.--If such agreement is approved by
the Secretary (within such time as may be stated in
such agreement, or later agreed to) such agreement
shall be final and conclusive, and, except upon a
showing of fraud or malfeasance, or misrepresentation
of material fact--
(1) The case shall not be reopened as to the
matters agreed upon or the agreement modified
by any officer, employee, or agent of the
United States, and
(2) In any suit, action, or proceeding, such
agreement, or any determination, assessment,
collection, payment, abatement, refund, or
credit made in accordance therewith, shall
not be annulled, modified, set aside, or
disregarded.
Statutory authority for closing agreements has existed
since 1921. Revenue Act of 1921, ch. 136, tit. XIII, sec. 1312,
42 Stat. 227, 313. At least since 1934, the U.S. Treasury
Department has had two forms on which closing agreements may be
executed. XIII-1 C.B. 162, 162-163 (1934). Form 866 provides
for a final and conclusive agreement between the Commissioner and
the taxpayer to the total tax liability of the taxpayer. Form
906 provides for a final and conclusive agreement between the
Commissioner and the taxpayer to matters or issues specified in
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Last modified: May 25, 2011