Internal Revenue Bulletin:  2006-11 

March 13, 2006 

APPENDIX A
CLOSING AGREEMENT
 

Under § 7121 of the Internal Revenue Code, [insert taxpayer’s name, address, and identifying number] (“Taxpayer”) and the Commissioner of Internal Revenue (“Commissioner”) make the following closing agreement:

WHEREAS:

1. On or before October [insert date and year], Taxpayer submitted to the Internal Revenue Service (“IRS”), an application for certification under the qualifying advanced coal project program described in Notice 2006-24 (“Application for § 48A Certification”);

2. Taxpayer’s Application for § 48A Certification is for the qualifying advanced coal project (the “Project”) described below—

(1) The Project will use [insert either “an integrated gasification combined cycle (as defined in § 48A(c)(7))” or “an advanced coal-based technology (as defined in § 48A(c)(2) and (f)) other than an integrated gasification combined cycle”];

(2) The Project will be located at [insert address or other identifying designation];

(3) The Project is [insert either: “a new electric generation unit (as defined in § 48A(c)(6))”; “a retrofit of an existing electric generation unit (as defined in § 48A(c)(6))”; or “a repower of an existing electric generation unit (as defined in § 48a(c)(6)”);

(4) The Project will have a total nameplate generating capacity of [insert number] megawatts;

[If the Project is an integrated gasification combined cycle project, insert:

(5) At all times more than 50 percent of the cumulative total fuel input (coal and any other fuel input) for the Project will be [insert either: “bituminous coal”; “subbituminous coal”; or “lignite”];

(6) The Project is entitled to priority under § 48A(e)(3)(B) for [insert either: “greenhouse gas capture capability (as defined in § 48A(c)(5))”; “increased by-product utilization”; or “both greenhouse gas capture capability (as defined in § 48A(c)(5)) and increased by-product utilization”];] and

3. On or before November 30, [insert year], the IRS accepted Taxpayer’s Application for § 48A Certification for the Project and allocated a qualifying advanced coal project credit under § 48A in the amount of $[insert number] to the Project.

NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:

1. The total amount of the qualifying advanced coal project credit to be claimed for the Project under § 48A(a) must not exceed $[insert the number in WHEREAS clause #3].

2. If Taxpayer fails to satisfy any of the certification requirements in § 48A(e)(2) within 2 years of [insert date of acceptance letter issued under section 4.02(10) of Notice 2006-24], or if the IRS does not issue a certification for the Project under Notice 2006-24, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.

3. If the Project is not placed in service by Taxpayer within 5 years of the date of issuance of the certification as determined under section 6.03 of Notice 2006-24, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.

4. If the Project does not have a total nameplate generating capacity of [insert the number in WHEREAS clause #2(4)] megawatts on the date the Project is placed in service, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is reduced proportionately.

[If the Project is not an integrated gasification combined cycle project, insert:

5. If the Project fails to satisfy any of the requirements in § 48A(e)(1) for a qualifying advanced coal project—

(1) at the time the Project is placed in service, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited; and

(2) after the Project is placed in service (and after satisfying all such requirements at the time the Project is placed in service), the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.]

[If the Project is an integrated gasification combined cycle project, insert:

5. (1) If the Project fails to satisfy any of the requirements in § 48A(e)(1) for a qualifying advanced coal project—

(a) at the time the Project is placed in service, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited; and

(b) after the Project is placed in service (and after satisfying all such requirements at the time the Project is placed in service), the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.

(2) If at any time more than 50 percent of the cumulative total fuel input (coal and any other fuel input) for the Project is not [insert the primary feedstock in WHEREAS clause #2(5)], the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.

(3) If the Project fails to provide [insert priority benefits in WHEREAS clause #2(6)] at the time the Project is placed in service, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.]

6. Taxpayer will not claim the qualifying gasification project credit under § 48B for any qualified investment for which the qualifying advanced coal project credit is allowed under § 48A.

7. If Taxpayer elects to claim the qualifying advanced coal project credit on the qualified progress expenditures paid or incurred by Taxpayer during the taxable year for construction of a qualifying advanced coal project, rules similar to the recapture rules in § 50(a)(2)(A) through (D) apply.

8. This agreement applies only to Taxpayer. Any successor in interest must execute a new closing agreement with the IRS. If the interest is acquired at or before the time the Project is placed in service and the successor in interest fails to execute a new closing agreement, the qualifying advanced coal project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited. If the interest is acquired after the time the Project is placed in service and the successor in interest fails to execute a new closing agreement, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.

THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:

1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;

2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including any stated exception for § 7122) notwithstanding any law or rule of law; and

3. If it relates to a tax period ending after the date of this Closing Agreement, it is subject to any law enacted after such date, which applies to the tax period.

   
By signing, the parties certify that they have read and agreed to the terms of this Closing Agreement.
 
Taxpayer: [insert name and identifying number]
By: Date Signed:
[insert name]
 
Title: [insert title]
[insert taxpayer’s name]
 
Commissioner of Internal Revenue
 
By: Date Signed:
[insert name]
Title: Associate Chief Counsel, Passthroughs and Special Industries, CC:PSI
I have examined the specific matters involved and recommend the acceptance of the proposed agreement.
(Receiving Officer)
(Title)
Date Signed
 
I have reviewed the specific matters involved and recommend the acceptance of the proposed agreement.
(Reviewing Officer)
(Title)
Date Signed

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