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Title 26, United States Code, Section 7206(5), makes it a crime to make a false or fraudulent statement relating to a closing agreement and provides as follows:

Any person who —

(5) Compromises and closing agreements. — In connection with any compromise under section 7122, or offer of such compromise, or in connection with any closing agreement under section 7121, or offer to enter into any such agreement, willfully —

(A) Concealment of property. — conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or

(B) Withholding, falsifying, and destroying records. — receives, withholds, destroys, mutilates, or falsifies any book, document, or record, or makes any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax;

shall be guilty of a felony and, upon conviction thereof, shall be fined … or imprisoned not more than 3 years, or both, together with the costs of prosecution.

Prosecutions under § 7206(5) may be brought when an individual (whether or not they are the taxpayer) hid or removed or destroyed property/records relating to a taxpayer’s closing agreement or compromise of their civil tax liability.

This section is rarely used, as violations of this type are generally charged under § 7206(1), § 7206(2), or § 7212(a). Another reason for the paucity of prosecutions under this statute may be attributed to the Department of Treasury’s position not to settle civil tax liabilities while criminal procedures are in process.

For more detailed discussion of processes relating to criminal violations under this statute, please refer to § 7206(1), fraud and false statements.


In order to prove willfulness in a §7206(5) prosecution, the government must show that an individual intentionally concealed property, withheld, falsified, or destroyed records, or otherwise intentionally made a false or fraudulent statement. A mistake or negligent (even grossly negligent) conduct will not be enough to prove the willfulness element in a §7206(5) prosecution.


The venue, for purposes of prosecutions under § 7206(5), is in the district in which any action prohibited by § 7206(5) took place.

Statute of Limitations

The statute of limitations for violations of § 7206(5) is three years.