A term to know.
This document is a final agreement between the Service and a taxpayer on a specific issue or liability (see Section 7121). It is final unless fraud, malfeasance, or misrepresentation of a material fact can be shown.
A taxpayer may request a closing agreement with a letter ruling or instead of a letter ruling. It may be entered into when it is advantageous to have a matter permanently and conclusively closed or when a taxpayer can show that there are good reasons for an agreement and that making the agreement will not prejudice the interests of the Government. In appropriate cases, a taxpayer may be asked to enter into a closing agreement as a condition for the issuance of a letter ruling.
There are special rules for closing agreements involving a class of taxpayers.