42-2056

42-2056. Closing agreements in cases of
extensive taxpayer misunderstanding or misapplication; attorney
general approval; rules; definition

A. If the department determines that noncompliance with tax obligations results
from extensive misunderstanding or misapplication of provisions of this title or title 43
it may enter into closing agreements with those taxpayers under the following terms and
conditions:

1. Extensive misunderstanding or misapplication of the tax laws occurs if the
department determines that more than sixty per cent of the persons in the affected class
have failed to properly account for their taxes owing to the same misunderstanding or
misapplication of the tax laws.

2. The department shall publicly declare the nature of the possible
misunderstanding or misapplication and the proposed definition of the class of affected
taxpayers and shall conduct a public hearing to hear testimony regarding the extent of
the misunderstanding or misapplication and the definition of the affected class.

3. If, after the public hearing, the department determines that a class of affected
taxpayers has failed to comply with their tax obligations because of extensive
misunderstanding or misapplication of the tax laws it shall issue a tax ruling announcing
that finding and publish the ruling in a newspaper of general circulation.

4. A closing agreement under this section may abate some or all of the penalties,
interest and tax that the taxpayers have failed to remit, or the agreement may provide
for the prospective treatment of the matter as to the class of affected
taxpayers. Notwithstanding section 42-1113, all taxpayers in the class shall be offered
the opportunity to enter into a similar agreement for the same tax periods.

5. Taxpayers in the affected class who have properly accounted for their tax
obligations for these tax periods shall be offered the opportunity to enter into a
similar closing agreement providing for a pro rata credit or refund of their taxes
previously paid, subject to section 42-1104, subsection A and section 42-1106, subsection
A.

6. The closing agreement shall require the taxpayers to properly account for and
pay such taxes in the future. If a taxpayer fails to comply with that requirement, the
agreement is voidable by the department and the department may assess the taxpayer for
the delinquent taxes. The department may issue such a proposed assessment within six
months after the date that it declares the agreement void or within the period prescribed
by section 42-1104, whichever is later.

B. Before entering into closing agreements pursuant to this section, the department
shall secure the approval of the attorney general of the tax ruling and the
agreements. The department may not enter into the agreements without the approval of the
attorney general.

C. After a closing agreement has been signed pursuant to this section, and subject
to the taxpayer's compliance with the requirements of subsection A, paragraph 6 of this
section, it is final and conclusive except on a showing of fraud, malfeasance or
misrepresentation of a material fact. The case shall not be reopened as to the matters
agreed on, and the agreement shall not be modified by any officer, employee or agent of
the state. The agreement or any determination, assessment, collection, payment
abatement, refund or credit made pursuant to the agreement shall not be annulled,
modified, set aside or disregarded in any suit, action or proceeding.

D. The department shall report in writing its activities under this section to the
governor, the president of the senate and the speaker of the house of representatives on
or before February 1 of each year.

E. The department may adopt rules to implement this section.

F. For the purposes of this section, "affected class" means taxpayers who are
directly affected by the department's position in a tax matter.