Charity and Nonprofit Audits: Closing Agreements
An exempt organization may request a closing agreement when a satisfactory resolution to tax issues can't be achieved via normal procedures. For closing agreements involving an audit, an organization should work with the revenue agent conducting the audit.
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:
Attn: Joyce Hoover
EO Exam Closing Agreement Coordinator
3730 Elizabeth Avenue
Independence, MO 64057
The letter must contain the following information:
- Why a closing agreement is appropriate
- The advantages to the organization and how the government will sustain no disadvantages
- A detailed description of the method proposed for correcting non-compliant activities
- A narrative description of each step of the correction method, providing specific information to support the suggested method
- How the taxpayer will achieve future compliance
- Proposed methodology to calculate any tax, interest, and penalty, for the tax period(s)
- Internal Revenue Manual 4.75.25, Exempt Organizations Examination Procedures, Exempt Organizations Closing Agreements
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