Categories: General Tax Terms
Closing Agreement
A Closing Agreement is a binding contract between a taxpayer and the Internal Revenue Service (IRS) that finalizes the tax treatment of a specific issue, transaction, or set of facts. It is used to resolve disputes and provide certainty regarding the tax consequences of a particular situation.
Once a Closing Agreement is executed, it typically prevents the IRS from reopening the matter or changing the agreed-upon treatment, thus providing the taxpayer with peace of mind and clarity about their tax obligations. Examples include agreements related to specific deductions, credits, or the classification of income.
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