21.3.8  Tax Exempt/Government Entities (TEGE) Customer Account Services (CAS) Telephone Operations (Cont. 2)

21.3.8.10 
Account Issues - TEGE

21.3.8.10.1 
Extensions for TEGE Return Filing

21.3.8.10.1.2  (10-01-2007)
Extension Due Dates

  1. Extension requests are due by the return due date (or extended due date for second requests). If the normal due date falls on a Saturday, Sunday or legal holiday, the extension must be filed on the next business day following the Saturday, Sunday or legal holiday.

    Note:

    Federally-declared disasters may affect the due dates of returns, independent of filed extensions. See the Small Business/Self-Employed Web site for a list of disasters and affected zip codes.

21.3.8.10.1.3  (10-01-2011)
Extensions — EO

  1. The following forms may be used to request an extension of time to file a return.

  2. Form 8868, Application for Extension of Time to File an Exempt Organization Return, except as noted below, is used to request an automatic 3-month extension of time to file the following forms and also to apply for an additional (not automatic) 3-month extension if the original 3-month extension was not enough time. Effective TY 2010, both Part I and Part II of Form 8868 may be filed electronically.

    • Form 990

    • Form 990-BL

    • Form 990-EZ

    • Form 990-PF

    • Form 990-T (sec. 401(a) or 408(a) trust)

    • Form 990-T (trust other than above)

    • Form 1041-A

    • Form 4720

    • Form 5227

    • Form 6069

    • Form 8870

    Note:

    Corporations filing a Form 8868 to extend the due date of their Form 990-T receive an automatic 6-month extension to file that return.

  3. Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, is used to request an automatic 6-month extension of time to file Form 1120-C and all other 1120 series returns. A copy of Form 7004 must be attached to the return when filed.

  4. Organizations that submit a Form 8868 should receive one of the following notices:

    • CP 211A, Application for Extension of Time to File an Exempt Organization Return - Approved

    • CP 211B, Application for Extension of Time to File an Exempt Organization Return - Request Not Signed

    • CP 211C, Application for Extension of Time to File an Exempt Organization Return - Request Not Timely

    • CP 211D, Application for Extension of Time to File an Exempt Organization Return - Reasonable Cause Not Established

    • CP 211E, Application for Extension of Time to File an Exempt Organization Return - General

    Note:

    All but the CP 211A are denials.

  5. Research for extensions and the related notices using SUMRY/TXMOD/BMFOLT.

    • A TC 460 reflects that the extension was approved; the extended due date displays at the end of the transaction code line.

    • A TC 620 with no TC 460 reflects that the extension request was denied.

      Note:

      Prior to January 1, 2007, both approvals and denials were posted as TCs 460. If there was one TC 460 and the date shown at the end of the transaction code line was the original due date of the return, then the first extension request was denied. If there were two TCs 460 and the date at the end of the second transaction code line was the date of the first extension, then the first extension was approved and the second extension was denied. If there were two TCs 460 and the date at the end of the second transaction code line was the original due date of the return, then there was no first extension request or both the first and the second extension requests were denied.

21.3.8.10.1.4  (05-16-2014)
Extensions - EP

  1. This section contains a list of forms that may be used to request an extension of time to file an EP-related return.

  2. Currently, the only extensions being denied are extensions that are filed late.

  3. Form 5330 extensions are posted to the BMF. If a customer states he/she submitted an extension for Form 5330 and it is not present on Master File, advise him/her to attach a copy of the Form 5558 he/she filed when submitting the return.

  4. During the period from January 2004 through December 31, 2008, Form 5500 series extensions that were denied posted to the EPMF, blocking series 800 (prior to January 2004, Form 5500 series extensions were not posted to the EPMF). Reconsiderations also posted whether they were approved or denied. If a customer states he/she submitted an extension for Form 5500 during this period:

    • If the extended due date is the same as the original due date, the extension was denied.

    • If the extended due date is past the original due date, the extension was granted and the extended due date is the new due date of the return.

  5. Beginning January 1, 2009, all extensions (approved, denied, and reconsiderations) post to IDRS as TC 460s.

  6. If the caller has received a CP 216 series notice about an extension and states that no extension was requested, suggest to the caller that he/she contact the plan POA and/or administrator to see if that individual filed an extension request. If the authorized caller asks whether a copy of the filed extension can be sent to his/her attention, prepare a Form 4442 referral to your team's Office Assistant requesting that a copy of the extension be mailed to the caller's attention.

    Caution:

    DO NOT VOLUNTEER THE COPY. Initiate the request for a copy only when the caller specifically asks whether it is possible to receive a copy of the document.

  7. Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, is used to request:

    • An automatic one time extension for filing Forms 5500/5500-EZ/5500-SF or Form 8955-SSA until the 15th day of the third month following the date prescribed for filing the return/form (extensions granted on the Form 5500 series will also apply to the Form 8955-SSA for the same tax year) or

    • A 6-month extension for filing Form 5330. The extension for filing Form 5330 is not automatic and is subject to IRS approval.

      Note:

      For signature applicability, refer to Form 5558 instructions.

  8. Plan sponsors that submit a Form 5558 to extend the due date of their Form 8955-SSA or Form 5500 series return should receive one of the following notices:

    • CP 216F, Application for Extension of Time to File an Employee Plan Return - Approved

    • CP 216H, Application for Extension of Time to File an Employee Plan Return Denied - Not Timely

  9. Plan sponsors that submit a Form 5558 to extend the due date of their Form 5330 should receive one of the following notices:

    • CP 232A - Form 5558 Extension Approved

    • CP 232B - Form 5558 Extension Not Approved - Late

    • CP 232C - Form 5558 Extension Not Approved - Not Signed

    • CP 232D - Form 5558 Extension Not Approved - Unacceptable Reason

  10. Form 7004 or Form 4868 may be used in lieu of filing Form 5558 for Form 5500, Form 5500-SF, or Form 5500-EZ if the following criteria are met:

    • The plan year and the employer's tax year are the same.

    • The employer has been granted an extension of time to file its Federal income tax return to a date later than the normal due date for filing the Form 5500 series return.

    • A copy of the application for extension of time to file the Federal income tax return is attached to Form 5500 (after January 1, 2010, no extension can be attached to the return).

    Note:

    Using a Form 7004 or 4868 extends the due date of the Form 5500 series return only until the due date of the employer's federal income tax return. An extension granted by using this automatic extension procedure CANNOT be extended further by filing a Form 5558, nor can it be extended beyond a total of 9 1/2 months beyond the close of the plan year.

  11. Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, is used to request an automatic 6-month extension of time to file all 1120 series returns.

  12. Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, may be filed to give a sole proprietor an automatic 6-month extension of time to file an Individual Income Tax Return (Form 1040 series).

    Note:

    If an electronic method for filing the extension was used, an electronic acknowledgement or confirmation number is returned to the filer. A paper copy of Form 4868 must be completed (including an annotation of the electronic confirmation number) and attached to the Form 5500-EZ when it is filed. If a Form 5500 or Form 5500-SF is filed, the filer should retain a copy of the extension acknowledgement in his/her permanent records.

21.3.8.10.2  (03-14-2014)
Notices/Letters

  1. This subsection serves as a guide for issues relating to notices and letters received by TEGE customers.

  2. A CP notice results from:

    1. Input of notice codes

    2. Computer analysis of an account on Master File, or

    3. Posting of a transaction

  3. Notices may:

    1. Request payment

    2. Give instructions

    3. Inform

    4. Request returns or missing information from previously-filed returns

    5. Propose penalties or assessments

  4. Notice (CP) numbers are usually printed in the upper right corner of the notice. Each notice contains the taxpayer's name, address, TIN, and a computer-generated pre-printed message.

  5. See IRM 21.3.1, Taxpayer Contacts Resulting From Notice Issuance, for additional information. Samples of most notices may be found on the SNIP Web site.

  6. IRS issues letters to taxpayers to solicit information necessary to perfect returns and documents being processed. Letters are also issued to respond to taxpayer inquiries.

  7. If the caller is not authorized to receive account-specific information, but has questions about a notice or a letter, provide general information about the purpose of the letter/notice and instruct the customer to respond to the notice/letter in writing to the address given on the notice/letter. See IRM 21.3.8.4.1.5 , "Taxpayer Authentication Procedures."

  8. If the issue cannot be resolved by the notice assistor during or as a result of the phone call, advise the caller to respond in writing to the address or fax number given in the notice/letter.

    Note:

    See (10) below for the notice calls that should not be transferred to the notice application.

  9. If the caller asks you to confirm receipt of a response to a notice/request for penalty abatement that was mailed/faxed within two weeks of the call, explain that you cannot confirm receipt but that normal processing time for the initiation of an action/response is 30 days from the IRS received date. If it has been more than two weeks since the response was submitted, research IDRS and/or CIS to determine whether the response has been received/controlled. If it has been received and you have been trained on CIS, work the case as applicable, per guidance. If you have not been trained on CIS, notate AMS (when available) with the remarks: Not trained on CIS. Provided correspondence time frame. If it has been more than two weeks since the response was submitted and there is no record of it having been received/controlled, ask the caller if she/he can fax in a copy of the response to 801-620-5555. If you determine that you are unable to work the CIS case while the caller is on the telephone, provide the caller with the normal processing time.

    Note:

    If the caller asks a specific question about the submitted correspondence which you are able to answer by accessing CIS, you should attempt to answer the caller's question (whether or not you are then able to work the correspondence). If you are not able to answer the specific question, prepare a Form 4442 referral to the Lead with the appropriate contact information.

  10. Tax law assistors should transfer questions on notices to the appropriate notice application.

    Exception:

    Questions on CP 299, on CP 120-A, on CP 259-H, and on the CP 249 series should be answered by tax law assistors and should not be transferred to the EO Notice application. Questions on CP 259-H and on the CP 249 series should be transferred to the advanced tax law application for political organizations.

21.3.8.10.2.1  (07-01-2009)
Campus Letters Issued to TEGE Customers

  1. When OSPC receives an incomplete TEGE return (e.g., 990, 8038), they issue a letter to the taxpayer/POA requesting the missing information to complete the processing of the return. Letters may also be issued for entity, penalty and other miscellaneous purposes.

  2. These letters are issued via IDRS. Once issued, ENMOD displays the following for each letter:

    1. Letter #

    2. Date

    3. Employee #

    4. MFT

    5. Tax period

  3. Each of these letters may address more than one situation. ENMOD does not display the paragraph numbers that were issued. Letter information remains on ENMOD until the account has had no activity for a period of time.

    Note:

    Once the requested information is received, or the response time has lapsed, Error Resolution System (ERS) forwards the return for processing without adding any information to IDRS. If a caller wants to know whether submitted information has been received, the only way the assistor can confirm that is by looking for a TC 150 (information received) or for some indication that a CP 141 was issued (information not received or insufficient). If you cannot confirm, prepare a Form 4442 referral to ERS.

  4. See Exhibit 21.3.8-11 for a list (not all-inclusive) of common campus letters issued to TEGE customers. You may view a copy of these letters through the Correspondex Letters on SERP.

  5. If an authorized caller received an ERS notice and indicates that the organization needs a copy of the return as submitted in order to respond to the notice requesting missing information (e.g., because the organization did not keep a copy of the return it submitted), prepare a Form 4442 referral to ERS.

21.3.8.10.2.2  (10-01-2008)
CP 80 and CP 81

  1. A CP 80 is issued when a taxpayer makes a payment(s) to the IRS but fails to file a tax return within 6 months after the return due date. CP 80’s continue to generate every 6 months until the credit condition no longer exists or until 6 months prior to the statute date.

  2. A CP 81 is a final notice that is generated six months prior to the refund statute expiration date.

  3. If the caller received a CP 80 or 81, advise the caller to respond to the notice.

    1. If the taxpayer is liable for the tax, a return must be filed.

    2. If the taxpayer is not liable for the tax, advise the taxpayer of the requirement to file a signed return within three (3) years from the due date or within two years of the receipt of the payment to get a refund of prepaid tax or refundable credits, unless other obligations are owed. The return must be postmarked before the statute expires.

    Note:

    If an overpayment exists, IRS cannot refund any overpayment after the statute of limitations has expired.

21.3.8.10.2.3  (10-01-2009)
CP 140/CP 144

  1. CP 140/CP 144 were last issued in December 2007. They were replaced by the e-postcard (Form 990-N) initiative. See IRM 21.3.8.12.24, "Annual Electronic Notice Filing Requirement, Form 990-N."

21.3.8.10.2.4  (03-11-2011)
CP 141I, CP 141L, CP 141C, and CP 504/CP 504B

  1. These notices are generated when an information return is received late and/or incomplete and the Daily Delinquency Penalty is asserted. See IRM 21.3.8.10.3.1, "Daily Delinquency Penalty (TC 238/TC 234)," and IRM 21.7.7 , Exempt Organizations and Tax Exempt Bonds, for a full discussion of how to process these calls. See IRM 21.3.8.4.1.5, "Taxpayer Authentication Procedures," for third party contacts.

  2. There are three different types of CP 141s:

    • CP 141I is sent to those filers whose return was filed incomplete. See IRM 21.7.7.4.23.1.3.1, "Incomplete Return Item (IRI) Codes," for a list of the paragraphs included in the notice sent to these filers to show what is missing from the return.

    • CP 141C is sent when our records indicate the return is incomplete and late. See IRM 21.7.7.4.23.1.3.1 , "Incomplete Return Item (IRI) Codes," for a list of the paragraphs included in the notice sent to these filers to show what is missing from the return.

      Note:

      This information is also available on IDRS.

    • CP 141L is sent to filers who, according to our records, filed a complete return late.

  3. A CP 504/CP 504B is a final balance due notice advising the taxpayer of the intent to levy their assets and informing them how to prevent collection action.

  4. Probe to determine which notice the caller received. If the caller received the CP 504/CP 504B, determine what the previous notice was.

  5. If the current (or previous) notice is a CP 141I or CP 141C, regarding missing information, advise the caller the missing information must be provided to complete the return, as well as an explanation for not supplying the information with the originally-filed return. If the caller cannot provide the missing information, advise the caller to provide a detailed explanation why the missing information cannot be provided. Instruct the caller to pay the penalty. If the caller feels they have reasonable cause for removing the penalty, instruct the caller to provide a detailed explanation requesting that the penalty be abated and submit the request to the address shown in (7)(b) and follow (7)(c) below if applicable.

    Caution:

    Do not use Oral Statement Authority to address penalties assessed against an incomplete return.

  6. If the current (or previous) notice is a CP 141L, account assistors may abate the penalty only if one of the following applies:

    • The penalty is below the oral statement ceiling and the organization has reasonable cause for the abatement of the penalty. See IRM 21.1.3.20, "Oral Statement Authority," and IRM 20.1.1.3.2, "Reasonable Cause," for procedures to remove the penalty.

    • OL-SEIN shows that a reasonable cause statement for late filing was included with the return.

    • The caller faxes proof of timely mailing to the assistor's attention.

    • A case on CIS shows that the return was timely filed or contains an acceptable Reasonable Cause statement.

  7. If you are unable to abate the penalty (i.e., none of the bullets in (6) applies) and the caller has reasonable cause for penalty abatement, instruct the caller to:

    1. Submit a detailed explanation requesting that the penalty be abated. The request should address the reason for the late filing.

    2. Advise the caller to respond in writing to the address or fax number on the notice. The appropriate contact information shown below may also be provided to the caller in lieu of or in addition to referring the caller to the contact information on the notice:

      Sent via US Postal Service Sent via private delivery service (e.g., UPS, Fed Ex, etc.)
      Internal Revenue Service
      P.O. Box 9941
      Ogden, UT 84409
      Internal Revenue Service
      1973 N Rulon White Blvd
      Mail Stop 6552
      Ogden, UT 84404
      Fax 801-620-5555
    3. If the account shows an amount due, proceed as follows:

    If MF status is Then
    21 or 58 1. See (6) above to determine whether you can abate the penalty.
    2. If you cannot abate the penalty, input a STAUP for 9 cycles. This allows the caller time to submit a written request for penalty abatement consideration.
    3. Advise the caller you will stop collection activities for 9 weeks; however, accrual of penalties (in the case of incomplete returns) and/or interest will continue until the penalty is paid or removed.
    4. Place a history item on IDRS explaining the corrective action taken or the reason for the STAUP.

    Note:

    If an unauthorized third party asks whether you will put a hold on notices, explain that the appropriate actions will be taken. If the caller presses you for details, explain that IRC 6103 prohibits you from disclosing account-specific information to unauthorized third parties.

    22, 24 or 26 1. See (6) above to determine whether you can abate the penalty.
    2. If you cannot abate the penalty, instruct the caller to pay the penalty or follow the guidance in (7)(a) and (7)(b) above.

21.3.8.10.2.5  (10-01-2009)
CP 142/CP 143

  1. CP 142, Request for Reason of Late Filing, is issued on late filed Tax Exempt Bond Form 8038, Form 8038-G, and Form 8038-GC, filed without a reason for filing late. This is not an assessment notice; it is requesting an explanation for what IRS believes is a late-filed return.

    Note:

    As of January 1, 2010, Form 8038-B and Form 8038-TC will also generate CP 142/CP 143.

  2. The customer must respond within 30 days from the date of the notice either to the address on the notice or by faxing the response to the fax number on the notice.

  3. CP 143, Late filing Accepted, is issued after an acceptable response to CP 142 is received. If the caller received a CP 143 notice, inform the caller the reason they provided was accepted and no further action is required.

  4. Unless given other guidance (e.g., via a SERP Alert for specific situations), prepare a Form 4442 referral for the TEB subject matter expert in EO Accounts (fax 801-620-5555) for all questions relating to the CP 142.

21.3.8.10.2.6  (12-11-2009)
CP 217, CP 218, CP 219 and CP 221

  1. CP 217, CP 218, CP 219, and CP 221 are issued to organizations that file a "zero" Form 940 and based on the type of organization they are, they don't have to file a Form 940.

    • CP 217 is issued to organizations with Employment Codes G, F, or T.

    • CP 218 is issued to organizations with Employment Code C.

    • CP 219 is issued to organizations with Employment Code W and the EO Subsection Code is 03, or the Employment Code is blank and the EO Subsection Code is 03.

    • CP 221 is issued to organizations with Employment Code W and the EO Subsection Codes are 50, 60, or 70.

  2. Refer to the TTG if the caller has questions about one of these CP notices.

21.3.8.10.2.7  (04-01-2013)
CP 42X and the CP 259 Series (EO TDIs)

  1. Taxpayer Delinquent Returns Notices and Taxpayer Delinquent Investigations (TDIs) are issued from Master File on accounts that have not received a return (Form 990/Form 990-EZ, Form 990-PF, Form 990-T, Form 990-N, Form 5227, and Form 1120-POL) to satisfy the filing requirement. The following table lists the forms and the applicable notices.

    Form 1st Notice 2nd Notice

    Note:

    The 42X series of notices stopped generating in January 2013 (official obsolescence date July 2013) and only one notice (259 series) is now issued.

    990 259-A (420 prior to January 2009) 425
    990-PF 259-B (421 prior to January 2009) 426
    Presumptive 990-PF 259-C (422 prior to January 2009) 427
    990-T 259-D (423 prior to January 2009) 428
    990-N 259-E (as of July 2008)

    Note:

    CP 259-E was eliminated as of January 2013 and the verbiage from the notice was incorporated into CP 259-A.

    Not applicable
    5227 259-F (424 prior to January 2009) 429
    1120-POL 259-G 430
    990/990-EZ

    Note:

    This notice differs from the 259-A in that it is sent to 527 political organizations.

    259-H Not applicable

    Note:

    See the Servicewide Notice Information Program (SNIP) site for an example of CP Notices.

  2. If the caller received a notice from the 259 series, use the following table to provide appropriate advice to the caller:

    If Then
    The organization previously filed a return or submitted a Form 990-N for the period Advise the caller to complete the section of the notice headed If you already filed a form…

    Note:

    If IDRS or OL-SEIN research confirms receipt of the return requested by the notice, advise the caller to disregard the notice.

    The organization is required to file an EO return (other than the Form 990-N) for the period Advise the caller to complete the section of the notice headed If you are filing late and to attach a completed return, including all required forms, schedules and statements, to the response.

    Note:

    If the caller asks where to send the response to the notice, instruct him/her to send it to the address on the notice.

    The organization is eligible to submit a Form 990-N for the period Determine if they still have time to submit the form for the period in question:
    • If they do, advise them to submit their Form 990-N and to disregard the notice otherwise. Ensure that the caller understands that the organization is required to file an annual return or e-Postcard by the fifteenth day of the fifth month following the end of its accounting period and that a failure to file the required return for three consecutive years will result in the automatic revocation of the organization's exemption.

      Example:

      If the notice concerns the period ending December 31, 2008, and the date the organization contacts the IRS is before January 1, 2010, the organization would still be able to submit its Form 990-N.

    • If there is no longer enough time to submit the form for the period in question (see example above), input a TC 598, CC 082 to satisfy the module; update the organization's filing requirement to 990-02 (if appropriate); advise the caller to disregard the notice; ensure that the caller understands that:

      • Paid preparers are available to submit prior year forms; information can be found on the IRS Web site.

      • Action being taken simply prevents any future notices from generating for that same return and period (in other words, no Form 990-N is being submitted on the organization's behalf).

      • Organization is still required to file an annual return or e-Postcard by the fifteenth day of the fifth month following the end of its accounting period.

      • Organization is still subject to automatic revocation if it fails to file a required return for three consecutive years (including the one on the notice).

    The organization is not required to file an EO return or to submit a Form 990-N for the period Advise the caller to check the appropriate box in the section of the notice headed If you don't think you have to file… and to return the notice. (Refer to the sample notice on SNIP).
    The organization is a subordinate included in a group return for which an extension was filed
    1. Research IDRS for the group return and input the TC 460 on the subordinate's module if you are able to determine that the subordinate should have been included in the extension; apologize and tell the caller to disregard the notice.

    2. If you determine that the group return was already filed and that the subordinate should have been included, input the TC 590 cc 014 on the subordinate's module; apologize and advise the caller to disregard the notice.

    3. If you cannot determine that the subordinate's (group) return should have been extended or that the group return was already filed, advise the caller to contact the central organization for substantiation and to complete Section I or II of the notice, as applicable.

  3. If the caller received a CP 259-B (Form 990-PF), but research indicates that the entity is a presumptive PF and there is no open "F" case on LINUS or EDS/TEDS:

    1. Instruct the caller to submit a Form 8940, a Form 8734 completed for the five most recent tax periods, and the appropriate user fee (see Rev. Proc. 2014-8 or its successor for the current fee) to the Cincinnati Campus and a response to the notice to the Ogden Campus

    2. Update the organization's filing requirement to 990PF-3.

  4. If the caller received a CP 259-C, research EDS/TEDS for a favorable "F" case. If none is found, instruct the caller to submit a Form 8940, a Form 8734 completed for the five most recent tax periods, and the appropriate user fee ( see Rev. Proc. 2014-8 or its successor for the current fee) to the Cincinnati Campus and a response to the notice to the Ogden Campus.

  5. If the caller received a CP 259-H, use the Political Organization Filing Requirements page of the TEGE P&RG located on the Portal to determine the organization's liability for the return for the period addressed in the notice.

    • If it is determined that the organization is liable for the return for that period, instruct the caller to complete the appropriate section of the notice and to send it back with a complete return.

    • If it is determined that the organization is not liable for the return for that period, give the caller the choice of responding to the notice with a statement that the organization is not liable for the return for that period OR having you prepare a Form 4442 referral to EO Entity (fax 801-620-7116) stating that the organization is not liable and requesting that the module be satisfied and, if applicable, that the filing requirements be deleted.

    Reminder:

    Summarize the call in a history on AMS (name of the caller and his/her position in the organization; whether the organization is liable for the return or not; if not, why, and whether the assistor prepared a Form 4442 to that effect or whether the caller is going to respond to the notice in writing).

  6. If the caller states a response was previously sent to a CP 259 series notice, verify disclosure, per IRM 21.3.8.4. Check for the following:

    • A CIS control base on TXMOD for the MFT/tax period about which the notice was issued indicates OSPC has received a response. No further action is required from the customer at this time.

    • A TC 590 on TXMOD indicates the account is resolved. (See Document 6209 Section 11 for additional Closing Code information.)

    • A TC 150 on the appropriate TXMOD indicates OSPC has received and accepted a return for that module. No further action is required from the customer at this time.

    • No indication on ENMOD or TXMOD that a response was received. Advise caller to complete items shown in (2) above and resubmit it to OSPC.

  7. If the caller indicates that he/she sent a return under separate cover from the CP 259 series notice, inform the caller that it could take up to three months to appear on our system.

    Note:

    Research TXMOD and/or OL-SEIN; there is no indication on ENMOD.

  8. Refer to IRM 3.13.12, Exempt Organization Account Numbers, for additional information.

  9. Organizations must file returns as required by law. If they want to request a change in current filing requirements, they must submit the pertinent information to EO Determinations. Organizations that intend to submit such a request must still respond to OSPC's notices in a timely manner.

    Note:

    See IRM 21.3.8.12.5.7, "Request to Change Filing Requirement," and IRM 21.3.8.11.7.2, "Filing Requirements for Organizations within the First Five Years of Operation and Beyond," for exceptions to the written notification requirement.

21.3.8.10.2.8  (01-17-2013)
CP 213

  1. The CP 213 Notice was obsoleted in January 2013. The remaining information in this subsection provides a historical background.

  2. The CP 213 Notice was not a bill. Except for the CP 213R, it contained a "proposed" penalty amount due to a late filed and/or incomplete Form 5500, Form 5500-SF, or Form 5500-EZ.

    1. The CP 213N was issued to plan sponsors who filed a Form 5500 series return late.

    2. The CP 213I was sent to plan sponsors who filed an incomplete Form 5500 series return which may also have been filed late. The long version indicated what information was missing on the return by means of a series of check boxes.

  3. The Department of Labor's (DOL's) ERISA - Filing Acceptance System (EFAST/EFAST2) may correspond twice asking for missing information and/or addressing the late-filed return. If the customer does not respond to either of the letters, the return is processed as is, and the information is provided to the IRS.

    Note:

    To verify if DOL issued a letter, research IDRS CC EMFOL for a TC 155 (1st letter) or TC 156 (2nd letter).

    Reminder:

    Information from the Forms 5500 and Forms 5500-SF that are processed by DOL is transmitted to the IRS to update the Service's records. This includes returns that are complete or incomplete, timely or delinquent.

  4. Once IRS receives the information from EFAST/EFAST2, a module is established on Master File with a return condition code of 'I' for an incomplete return and/or an 'N' for a late filed return. Previously, this information was used to generate the CP 213N or I Notices.

    Caution:

    The proposed penalty notice (CP 213I) generated based on the original filing of the employee plan return. Therefore, even if the filer filed an amended return to correct/complete the original submission, the filer may have received a CP 213I if the original filing was incomplete. Consequently, it is imperative that the assistor perform complete research, as well as probe the caller for information on post-original filings, before advising the caller what actions, if any, the caller must take.

  5. The CP 213 Notice gave the filer 30 days after the date of the notice to respond. The proposed penalty listed on the notice was assessed after 60 days, unless Ogden Accounts Management Center (OAMC):

    • Received written correspondence that established reasonable cause

    • Was provided the missing information from the filer, or

    • Was notified that a processing error was made on the part of the IRS or Employee Benefits Security Administration (EBSA)

  6. A CP 213R was generated when EP Accounts accepted reasonable cause and no penalty was assessed. For these modules, EMFOLT shows a TC 971 with the applicable Action Code.

21.3.8.10.2.9  (10-01-2013)
CP 283/CP 295

  1. The CP 283, Penalty Charged on Your Form 5500 Return, is issued to notify the Form 5500 series filer of a balance due resulting from the assessment of a penalty. The filer may have already received the CP 213 (I or N), which proposed a penalty for an incomplete or a late filed return (or both).

    Note:

    CP 213 Notices were obsoleted in January 2013.

  2. Based on the response (or lack of response) to the CP 213, a Transaction Code (TC) 971 with a specific Action Code (AC) posted to the EPMF. TC 971 and the applicable Action Code appears on TXMOD and BMFOL. The following is a list of the Action codes and the definitions that triggered a file to be sent to BMF:

    Action Code Definition
    AC 292 No reply to CP 213 notice
    AC 291 Reasonable Cause Statement Denied

    Note:

    A copy of this notice is available through the SNIP Web site at http://gatekeeper.web.irs.gov.

  3. If reasonable cause was not previously denied, the filer may respond to the CP 283/295 with a request for penalty abatement due to reasonable cause. If reasonable cause was denied (AC 291), instruct the caller to follow the Payment Instructions and to submit the check with the Payment and Response Stub. If the caller wishes to appeal the denial, he/she should follow the Penalty Appeals instructions included in the 854C letter previously received.

  4. If the caller wants to respond, instruct the caller either to fax or to mail the response to the address/fax number on the notice. A final response should be initiated within 30 days of the earliest IRS received date. Tell the caller that interest will continue to accrue until the penalty is abated or until the account is full paid.

    Exception:

    The TEGE telephone account assistors may abate the assessed penalty in the following situations only:

    • The penalty was for late filing, the caller has reasonable cause, and the penalty meets the conditions set forth in IRM 21.5.2.4.9.2,"Oral Statement and Penalty Relief Request "

    • The penalty was for late filing and the caller can fax in proof of timely filing (Service error).

    • The caller can fax in proof of acceptance into the DOL's DFVCP with a signed and dated fax cover sheet.

  5. The CP 295, Request for Payment - Form 5500, is an annual reminder notice as a follow up for the accounts in balance due. Refer to the CP 283 instructions above for resolution.

21.3.8.10.2.10  (10-03-2012)
CP 403 and CP 406

  1. CP 403 and CP 406 notices are sent to plan sponsors who have not filed a Form 5500 series return for a particular plan year and our records indicate that the plan is still active. Both of these notices are computer generated.

    Note:

    Except for a small volume of CP 406s issued to clean out the queue, CP 403 and CP 406 notices are no longer issued to Form 5500-EZ filers as of January 2010.

  2. The CP 403 notice is generally sent out to the taxpayer 15 months after the original due date of the return to remind delinquent filers to file a return. This notice has a 30-day response time frame.

  3. The CP 406 notice is the second and final notice sent to the plan sponsor for a delinquent return, if we have not received a timely response from the taxpayer. The CP 406 notice is generally issued 15 weeks after the CP 403 notice. This notice also has a 30-day response time frame.

  4. Use the following information to respond to callers' inquiries on these notices:

    If the caller indicates that Then
    He/she already filed a return for the period noted on the CP notice Instruct the caller to complete Section I of the notice.

    Note:

    Tell him/her to verify that the EIN, plan number, and tax period printed on the notice match the information previously submitted on his/her Form 5500 and to notate any discrepancies.

    He/she is not required to file a return for the period or plan number noted on the CP notice (including for the reason that a final return was filed in a previous period) Instruct the caller to complete Section II of the notice.
    He/she is required to file a return for the period noted on the CP notice Instruct the caller to file the delinquent return electronically with EFAST2. See IRM 21.3.8.13.2, "Form 5500/Form 5500-SF/Form 5500-EZ," for additional details.

    Note:

    If the caller has reasonable cause for filing the return late, instruct him/her to complete Section III of the notice.

    He/she responded to the CP 403 but still received a CP 406 Research for the response.
    • If found, apologize to the caller and tell him/her to disregard the second notice.

    • If not found (and it has been longer than 30 days since the response was sent), recommend that the caller send a copy of the response. If less than 30 days since the response was sent, inform the caller that it could take up to 30 days for the response to show on our system.

  5. Advise the caller to respond in writing to the address or fax number on the notice. The appropriate contact information shown below may also be provided to the caller in lieu of or in addition to referring the caller to the contact information on the notice:

    Sent via US Postal Service Sent via private delivery service (e.g., UPS, Fed Ex, etc.)
    Internal Revenue Service
    Ogden, UT 84201-0018
    Internal Revenue Service
    1973 N Rulon White Blvd
    Attn: EP Entity M/S 6273
    Ogden, UT 84404
    Fax: 801-620-7116

    Note:

    If the caller received a CP 403 and will not be able to respond in writing to the notice before the CP 406 is generated (see (3) above):

    • Use command code ASGNB to delay the generation of the CP 406 by 15 weeks. See IRM 3.13.36.19.1.16, "Command Code ASGNI/ASGNB," for additional information, OR

    • Prepare a Form 4442 referral and fax it to the EP Entity Unit in Ogden at 801-620-7116. See IRM 21.3.8.8.1, How to Prepare a Referral, for additional information.

  6. Filers who respond to the CP 403 or CP 406 with a copy of their unprocessed Form 5500 will have the return sent back to them with a Notice 1393 instructing them to file the return electronically. Advise the caller that the processing of the delinquent return may result in a notice of proposed penalty (CP 213 series) and that he/she should be prepared to supply proof that the return was originally timely filed or a reasonable cause statement requesting that the penalty not be assessed should he/she receive such a notice. See IRM 21.3.8.13.2, "Form 5500/Form 5500-SF/Form 5500-EZ," if the caller has questions about filing the return.

    Note:

    If the filer responds to the CP 403/406 and completes section III with an acceptable reasonable cause statement, then a TC 971 AC 632 will be input on the module. The input of this TC should prevent the assessment of an IRS penalty. If you have researched the account in the course of the call and see that a TC 971 AC 632 was already input, then there would be no need to discuss the need to submit a request for penalty abatement.

21.3.8.10.2.11  (10-01-2012)
Notice 9774

  1. Notice 9774 is an annual notice that is generated from the Automated Non-Master File (ANMF) when the balance due is below the ACS tolerance.

  2. These notices are generated only on Form 5500 Series returns processed before January 1, 2006. These notices are generated from Cincinnati SP Accounting.

  3. If the caller is responding to the Notice 9774, determine if they have responded in the past.

    1. If the caller states that he or she previously responded, ask the caller what the outcome was to the previous communication.

      If Then
      The caller states that the request for abatement was denied Advise caller to remit the amount reflected in the notice to the address appearing in the heading of the Notice 9774.
      The caller states that the request for abatement was approved Advise the caller to respond to the Notice 9774 including a copy of the letter detailing the approval via fax or mail to:
      Sent via US Postal Service:
      Internal Revenue Service
      Attn: EP Accounts Unit, M/S 6552
      Ogden, UT 84201

      Sent via private delivery service:
      Internal Revenue Service
      1973 N Rulon White Blvd
      Attn: EP Accounts Unit, M/S 6552
      Ogden, UT 84404

      Fax Number: 801-620-5670
      The caller states they did not get a response Advise the caller to respond to the Notice 9774 including a copy of all previous correspondence via fax or mail to:

      Sent via US Postal Service:
      Internal Revenue Service
      Attn: EP Accounts Unit, M/S 6552
      Ogden, UT 84201

      Sent via private delivery service:
      Internal Revenue Service
      1973 N Rulon White Blvd
      Attn: EP Accounts Unit, M/S 6552
      Ogden, UT 84404

      Fax Number: 801-620-5670
    2. If the caller states he or she did not previously respond, provide reasonable cause guidelines then follow the instructions for the CP 213 in IRM 21.3.8.10.2.8(6).

  4. If the caller states he/she would like to pay the amount shown on Notice 9774, advise the caller to mail the amount due to the address located on the bottom of the form/notice.

    Note:

    For information about check annotation, refer to paragraph (8) of IRM 21.3.12.1, "Overview."

  5. If the caller's question/issue requires NMF research to resolve, prepare a Form 4442 referral to EP Accounts (fax 801-620-5670).

21.3.8.10.2.12  (11-09-2009)
CP 249
Notices for 527 Organizations

  1. When an organization files an SS-4 and indicates that it is a political organization, the entity is coded with a "1" in the new 527 Indicator field located on INOLES, "527-POL-ORG-CD #" . This sets in motion the follow-up on these organizations. If certain filing requirements are not met, the IRS sends the CP 249 series of notices.

    Note:

    There is no current intent to update political organizations that obtained their EIN prior to January 1, 2006.

    Note:

    All BMF entities in existence on January 1, 2006 have an "N" in the POL IND block.

    • The CP 249A requests that the organization file a Form 8871.

    • The CP 249B informs the organization that it filed the Form 8872 late and that there is a penalty for late filing. The CP notice asks for a reason for the late filing.

    • The CP 249C notifies an organization that it filed a Form 8871 and that it is required to file the Form 8872 unless the organization is a QSLPO (Qualified State or Local Political Organization). The CP 249 asks the organization to file a Form 8872 or to amend its Form 8871 to identify itself as a QSLPO.

  2. When a call is received concerning CP 249A or CP 249C, check INOLES for the indicator. The indicator should be "1" at the time of the initial call.

  3. The table below indicates the valid values for that field:

    Values Definition
    Blank Did not indicate they are a 527 political organization on the Form SS-4.
    1 Did indicate they are a 527 political organization on Form SS-4.
    2 527 organization contacted CAS/Ogden indicating they do not have to file a Form 8871.
    3 EO Examination determined the 527 political organization does not have to file Form 8871.
    4 The 527 political organization has to file a Form 8871 and Form 8872.
    5 The 527 political organization has to file Form 8871 but does not have to file Form 8872.
  4. If this new field needs updating, use CC ENREQ/BNCHG Doc Code 63. If the 527 political organization calls Customer Account Services (CAS) and states:

    • It is not required to file Form 8871, then update 527-IND field with a "2" .

    • It has to file both Form 8871 and Form 8872, then update 527-IND field with a "4" .

    • It has to file Form 8871, but not Form 8872, then update 527-IND field with a "5" .

    Note:

    If you determine that the entity does not qualify as an IRC 527 political organization, input a "9" to delete the indicator.

  5. To input the code:

    1. Bring up ENMOD

    2. Overlay with ENREQ

    3. Enter the appropriate code in the "527-IND>" field

  6. If you cannot resolve the caller's CP 249 series issue using the procedures and information above (i.e., the issue involves more than simply changing the political organization indicator on IDRS), advise the caller that you are unable to take an appropriate action based on the phone call and that he/she needs to respond to the notice in writing by completing the appropriate section of the notice.

21.3.8.10.2.13  (10-01-2010)
CP 138

  1. CP 138, Notification That the Overpayment on the Return was Offset Against Another Tax Period with a Balance Due, is issued to notify filers that an overpayment on a return has been offset to another tax period with a balance due.

  2. Refer to IRM 21.3.1.4.77, "CP 138 Notice of Credit Applied," to respond to callers who have questions about this notice.

21.3.8.10.2.14  (10-01-2010)
CP 231

  1. CP 231, Undelivered Refund Check, informs the taxpayer a refund check was returned undelivered and requests a correct address.

  2. If the caller is authorized and able to provide the required information, update the address of record.

  3. If the caller is unauthorized or unable to provide the required information, instruct the caller to respond to the notice.

  4. Once the TC 014 posts to Master File the S- freeze is released and the refund check is reissued. Refer to IRM 3.14.2.7.5.19, "Undelivered Refund Check Freeze (S-)," for other actions that will release the freeze.

21.3.8.10.2.15  (04-18-2012)
CP 214

  1. CP 214 is a reminder notice (new as of January 2012) sent to all filers with a Form 5500-EZ filing requirement two months before their plan ending date. The notice generates monthly.

  2. The notice summarizes the filing requirements for one-participant plans and tells the recipient to verify whether or not the plan will need to file. The notice also explains the potential penalties that may be assessed for not filing a timely return.

  3. While the notice does not require a response, it provides the TEGE toll-free number if the filer has any questions.

  4. If the caller states that he/she should not have received the reminder because the plan had filed a final return in a previous period, research IDRS to verify that a proper final return had been filed and processed.

    • If research confirms that a properly-filed final return was processed, apologize to the caller and tell him/her to disregard the notice.

    • If no final return was processed, review the requirements of a final return with the caller and instruct him/her to amend the previous return or to file a final return, as appropriate.

21.3.8.10.3  (10-01-2013)
Penalties

  1. All TEGE telephone account assistors (Notice Application) must consider oral statement procedures, as applicable; see IRM 21.5.2.4.9.2,"Oral Statement and Penalty Relief Request " , when responding to calls concerning penalty abatement. Additionally, TEGE telephone account assistors (Notice Application), except as specifically prohibited by this IRM, should use all available tools to resolve penalty issues during a call with an authorized caller. This includes, but is not limited to, OL-SEIN, AMS, CIS, and the receipt of faxed POAs and proof of timely filing of returns and extensions. TEGE penalty abatement requests that do not meet Oral Statement Authority or IRS error criteria are worked in Ogden. See IRM 21.3.8.10.2.4 , "CP 141I, CP 141L, CP 141C, and CP 504/CP 504B," for information on abating an EO late filing penalty.

    Exception:

    Oral statement procedures do not apply to penalties assessed against incomplete returns.

  2. Listed below are various penalties that may be assessed when an organization or plan fails to meet established guidelines set forth by the IRC. These penalties include:

    1. Daily Delinquency Penalty

    2. Failure to File Penalty (Including failure to file a complete return)

    3. Failure to Pay Penalty

    4. Estimated Tax Penalty

    5. Failure to Deposit Penalty, and

    6. Making False Statements, concealing or not disclosing any fact required by the Employee Retirement Income Security Act (ERISA)

  3. The TEGE call sites may receive calls on a variety of penalties as listed in (2) above; however, the largest volume of calls usually involves the Daily Delinquency Penalty.

  4. Penalties exist to encourage voluntary compliance by supporting the standards of behavior expected by the IRC. For most taxpayers and organizations, voluntary compliance consists of preparing an accurate return, filing it timely, and paying any tax due. Efforts made to fulfill these obligations constitute compliant behavior. Most penalties apply to behavior that fails to meet any or all of these obligations.

  5. Penalties encourage voluntary compliance by:

    1. Defining standards of compliant behavior

    2. Defining remedial consequences for noncompliance

    3. Providing monetary sanctions against taxpayers who do not meet the standard

    Note:

    These three factors support the public conviction that the tax system is fair and the penalty is in proportion to the severity of the noncompliance.

  6. For additional information on IRS' penalty policy, see IRM 20.1.1-1, "Penalty Policy Statement (20-1)."

  7. If an organization or plan sponsor pays a penalty which is subsequently abated, the standard time frame for a refund of payment is four to six weeks.

  8. Currently, Form 990 and Form 5500 series penalties may not be paid using a credit card. EO penalties may be paid via EFTPS if the organization is enrolled. If the organization is not enrolled in EFTPS, it may go to the bank and make a same day payment.

    Reminder:

    If the organization is not enrolled in EFTPS, it may not make a payment via phone or Internet; its only option is to make a same day payment at a financial institution. Form 5500 series and Form 5330 penalties may not be paid via EFTPS.

  9. If the caller states that the organization/plan cannot pay its penalty because it has filed or intends to file for bankruptcy, prepare a Form 4442 referral to EO or EP Accounts.

21.3.8.10.3.1  (10-04-2011)
Daily Delinquency Penalty (TC 238/TC 234)

  1. The Daily Delinquency Penalty (DDP) under IRC 6652(c) (TC 238) is computed based on various factors such as the Return Due Date (RDD), Return Received Date (RRD), Correspondence Received Date (CRD), and the Correspondence Indicator Code (CIC).

  2. The DDP is a dual penalty and may be assessed if either or both of the following apply (without reasonable cause):

    1. Late filed return

    2. Incomplete return (missing information)

  3. In those cases where a return is incomplete, the return posts with Incomplete Return Item Codes (IRI Codes). See IRM 21.7.7.4.23.1.3.1 , "Incomplete Return Item (IRI) Codes," for a complete list of IRI Codes and the related missing or incomplete items and associated notice paragraphs.

  4. The IRI code is located on TXMODA under the "posted return information" section as "IRI-CD> #" . See "IRI Code Example" in the job aids section of the TEGE Research Portal on SERP.

  5. The DDP may be assessed for either a late-filed or incomplete return. CIC's are input during processing to help identify why the penalty was assessed. The CIC also identifies the type of information requested in the correspondence (e.g., Non-IRI or IRI) and the response, if any, that was received from the organization. A Correspondence Received Date (CRD) is also entered indicating the date the missing/incomplete information was provided.

  6. Missing information is divided into two categories:

    1. Incomplete Return Items (IRI)

    2. Correspondence Items (Non-IRI)

  7. Penalty rates:

    1. Taxpayer Bill Of Rights II (TBOR 2) increased the penalty rate to $20 a day for Form 990/Form 990-EZ and Form 990-PF, not to exceed the lesser of $10,000 or 5 percent of the gross receipts of the organization for the year for tax periods beginning 199607. For organizations with gross receipts of over $1 million for any year, the penalty is $100 a day, with a maximum of $50,000. The penalty on Form 1041-A remains at $10 a day with a $5,000 maximum against both the trust and the trustee. The penalty on Form 5227 is $20 a day with a $10,000 maximum. For trusts with gross income greater than $250,000, the penalty is $100 a day with a $50,000 maximum.

    2. For returns for taxable years ending prior to July 30, 1996, the penalty rate assessed on a DDP was $10 a day, with a maximum of $5,000 or 5 percent of the gross receipts, whichever was less. There was not a higher rate for organizations with gross receipts over $1 million.

  8. For additional information regarding the DDP, including all applicable codes, an explanation of penalty computation, and abatement procedures, see IRM 21.7.7, Exempt Organizations and Tax Exempt Bonds, IRM 20.1.1, Introduction and Penalty Relief, and IRM 20.1.8, Employee Plans and Exempt Organizations Penalties.

21.3.8.10.3.2  (10-04-2011)
Failure to Deposit Penalty (TC 186/TC 180)

  1. If a taxpayer fails to make timely and sufficient deposits of tax amounts with an authorized financial institution or by using the Electronic Federal Tax Payment System (EFTPS), when required by regulations, a Failure to Deposit Penalty (FTD) under IRC 6656 may be assessed. The penalty is equal to the applicable percentage of the amount of the underpayment. The penalty may be abated upon showing reasonable cause (and not willful neglect) for the failure.

  2. Certain government entities should not be assessed a Failure to Deposit penalty for employment taxes, so long as they are depositing such employment taxes with a timely-filed employment tax return. See Notice 2003-70, 2003-2 C.B. 916, and Rev. Proc. 80-4, 1980-1 C.B. 581. The Service places an Employment Code A on the BMF account of these entities. Thus, these entities have a reasonable cause for penalty abatement in these limited circumstances.

21.3.8.10.3.3  (10-01-2006)
Failure to File Penalty (TC 166/TC 160)

  1. If a return is not filed on or before the due date, including any extension, a Failure to File (FTF) penalty under IRC 6651(a)(1) may be assessed. The portion of the penalty attributable to a deficiency must be assessed using deficiency procedures. The penalty may be abated upon showing reasonable cause for the failure.

  2. When a return is received without sufficient data to calculate the tax liability shown on the return (supporting schedules and/or forms) or without a signature, the processing center corresponds to try to obtain the missing information. If the taxpayer does not respond, a FTF penalty may be assessed.

21.3.8.10.3.4  (10-01-2006)
Failure to Pay Penalty (TC 276/TC 270)

  1. If the amount shown on a return is not paid on or before the date prescribed for payments, a Failure to Pay (FTP) penalty under IRC 6651(a)(2) may be assessed. The penalty may be abated upon showing reasonable cause for the failure.

  2. If an Examination/DP Adjustment is not paid within 21 calendar days from the notice and demand date (10 business days if the amount equals or exceeds $100,000), an FTP penalty under IRC 6651(a)(3) may be assessed. The penalty may be abated upon showing reasonable cause for the failure.

21.3.8.10.3.5  (10-04-2011)
Estimated Tax Penalty (TC 176/TC 170)

  1. Most exempt organizations are required to make estimated tax payments on their unrelated business income tax as if they were corporations.

  2. Form 990-T and Form 990-PF are subject to estimated tax penalties under IRC 6655. Political organizations are not required to make ES payments; therefore, Form 1120-POL filed by a political organization is not subject to ES payments. However, filers of Form 1120-POL that are not political organizations are required to make ES payments. The rules for computing, assessing and abating these penalties are basically the same as those for Form 1120.

  3. Tax-exempt corporations use Form 990-W or Form 1120-W to compute their estimated tax. Estimated tax must be paid by EFTPS, if required.

  4. Estimated tax payments must be made if the total expected tax (income tax minus credits) for the tax year is $500 or more.

  5. See IRM 21.7.7.4.23.2, "Estimated Tax Penalty," for additional information.

21.3.8.10.3.6  (10-01-2014)
Reasonable Cause for Penalty Abatement

  1. Reasonable cause is based on all the facts and circumstances in each situation and allows the Service to provide relief from a penalty that would otherwise be assessed. Reasonable cause relief is generally granted when the taxpayer exercises ordinary business care and prudence in determining its tax obligations, but is unable to satisfy those obligations.

  2. Reasonable cause relief is not available for all penalties. However, other exceptions may apply. For those penalties where reasonable cause can be considered, any reason which establishes that the taxpayer exercised ordinary business care and prudence, but was unable to comply with a prescribed duty within the prescribed time, is considered.

  3. Generally, excise taxes cannot be abated due to reasonable cause.

  4. Interest is required by law and cannot be abated due to reasonable cause.

  5. Refer to the chart below when responding to inquiries on the status of a penalty abatement request:

    If Then advise the caller
    No correspondence received and it has been more than 30 days since it was originally submitted 1. We have no record of receiving correspondence
    2. He/she should submit the request again, annotating "second request."
    No correspondence received and it has been less than 30 days since submitted 1. The correspondence is not yet showing as having been received.
    2. Actions are normally initiated on abatement requests within 30 days from the earliest IRS received date.
    1. The account reflects TC290
    2.  TC235 with same date as TC238 date with an amount equal to the TC238 penalty assessment
    3. ADJ-RSN-CD>62- - -XX
    4.      DLN Blocking Series: 10X, 15X or 18X
    The penalty has been abated.
    1. The account reflects TC290
    2.      TC235 with same date as TC238 date with an amount less than the TC238 penalty assessment
    3.      ADJ-RSN-CD>62- - -XX
    4.      DLN Blocking Series: 10X, 15X or 18X
    The penalty has been partially abated.
    1. The account reflects TC290
    2. NO TC235
    3. ADJ-RSN-CD>62-----
    4. HOLD-CD>3
    5. DLN Blocking Series: 98X or 99X
    Reasonable cause is denied (854c denial letter will appear on ENMOD).
    1. The account reflects TC290.
    2. Penalty Reason Code (PRC) 62 in the first position with a PRC 041 (sustained by Appeals) or PRC 042 (partial abatement by Appeals) in the 4th position
    3. DLN Blocking Series: 96X
    A second penalty abatement request was received by the Service and forwarded to Appeals for determination. The taxpayer should receive a letter from Appeals advising them of the next steps in the Appeals process.

    Reminder:

    Penalties and Interest sustained by Appeals may be abated only by Appeals.

    Note:

    See IRM 21.5.2.4.9.2, Oral Statement and Penalty Relief Request , if you receive a telephone request for penalty abatement.

  6. For more information regarding reasonable cause, refer to the following IRMs:

    1. IRM 21.7.7, Exempt Organizations and Tax Exempt Bonds

    2. IRM 21.5.11, Employee Plan Accounts

    3. IRM 20.1.1, Introduction and Penalty Relief

    4. IRM 20.1.7, Information Return Penalties

    5. IRM 20.1.8, Penalty Handbook - Employee Plans and Exempt Organizations Miscellaneous Civil Penalties

21.3.8.10.3.7  (01-25-2011)
Requests for Installment Agreements on EO and EP Tax Modules

  1. Requests for installment agreements on EO and EP returns should be handled by TEGE notice assistors. If the request is made on a TEGE tax law application, transfer the caller to the appropriate TEGE notice application.

  2. If the caller requests an installment agreement to pay off a balance due on an exempt organization return, route/refer the caller based on the collection status of the module:

    If the module is in Then
    Notice status (21, 58) Prepare a Form 4442 referral and route it to M/S 5500 at the Ogden campus.
    Status 22 or 24 Transfer the caller to ACS per the TTG.
    Status 26
    • If the taxpayer already has the phone number of the Revenue Officer, advise the taxpayer to contact the RO directly.

    • If the case is assigned to a specific RO (the last two digits of the assignment codes are 01-99) and the taxpayer does not have the RO telephone number, provide the RO name and phone number available on the RO by the RO by TSIGN/ZIP/STATE site on the Who/Where tab on SERP.

    • If the case is assigned to an RO group, but not yet assigned to a specific RO, inform the taxpayer that another office has jurisdiction of their account and they will contact the taxpayer when the account is assigned.

    Caution:

    Do not provide a specific time frame; we are unable to predict when a case is worked in the field.

    Note:

    Do not transfer the call or provide a direct telephone number of a revenue officer if the case is unassigned.

    Reminder:

    Address all filing requirement and compliance issues with the authorized caller before completing the transfer/referral process. Inform the caller it is in the organization’s best interest to make payments on the balance due to reduce the interest continuing to accrue until the balance is paid in full.

  3. If the caller requests an installment agreement to pay off a penalty assessed on an employee plan return, explain to the caller that we are unable to set up an installment agreement at this time. Instruct the caller to begin making payments and inform him/her that a yearly reminder notice will be sent to the address of record for the plan. Remind the caller that interest will continue to accrue until the penalty is paid in full.

21.3.8.11  (10-01-2006)
Determination Issues

  1. This section serves as a guide for performing tasks involved in addressing general determination related issues.

21.3.8.11.1  (04-06-2010)
Applications for Determinations

  1. Refer to Doc. 6379, Exempt Organizations Management Information Systems Codes, for a complete list of EO applications and descriptions of EO coding related to determination case processing used on EDS/TEDS.

  2. Refer to Doc. 6476, Employee Plans Systems Codes, for a complete list of EP applications and descriptions of EP coding related to determination case processing used on EDS/TEDS.

  3. Mail application packages and the appropriate user fee to the address shown on SERP.

  4. Enhancements made to EDS/TEDS in March 2010 added a Dishonored Check indicator. Valid code for this field are "Y," indicating that the check was dishonored, and "N," indicating that the payment was valid. For both EP and EO, a "Y" in this field will prevent certain case closings from moving forward. See IRM 21.3.8.11.2, "Dishonored EO/EP User Fee Checks," for additional information.

  5. Another field added in March 2010 is the User Fee Payment Status. The valid entries for this field are:

    • C = Correct Amount (Amount submitted is the proper user fee.)

    • I = Insufficient Payment

    • O = Overpayment

    • N = Non-remit

    • U = Unknown

    • V = Verified

    Note:

    A blank entry in this field is not necessarily an indication that there is a problem with the user fee. Older EDS cases might not reflect an entry in this field. However, if the field displays an "I," "O," or "N," the determination specialist and/or manager must coordinate with the Adjustments Unit before the case can be closed as an approval or a denial in EDS.

  6. Once a determination has been granted, the organization or plan must continue to conform with IRS regulations which govern their ruling.

21.3.8.11.1.1  (10-01-2013)
Processing the EO Application

  1. When an application for recognition of exemption is received, an acknowledgement letter (Notice 3367) is generated to the applicant and to the primary (first listed) authorized Power of Attorney, if applicable. The applicant should allow up to three weeks from the mailing date of the application to receive the acknowledgement letter. If an insufficient user fee was paid, or if the application is an obsoleted revision, the applicant will not receive the acknowledgement letter described in this subsection. See IRM 21.3.8.11.5, "Applications with No/Insufficient Fee and/or on Obsoleted Forms," for additional details. Applications that are substantially incomplete are not processed beyond initial screening. See IRM 21.3.8.11.1.1.1, "Processing Applications (Other Than Form 1023-EZ) That Are Substantially Incomplete (Letter 1042) and Other Long Form Status 03 Closures," for additional information.

  2. The acknowledgement letter shows the organization’s Employer Identification Number and the Document Locator Number assigned to the application for tracking purposes. The letter also shows the application form number and, for exempt organization applications, the amount of user fee that was received with the application.

  3. The acknowledgement letter explains to the applicant that the IRS does not issue "tax-exempt numbers" or "tax-exempt certificates" for state or local sales or income tax purposes and instructs the applicant to contact his/her state or local tax office for information on those topics.

  4. Incoming applications which are substantially complete and which are submitted on a current revision and with the correct user fee undergo an initial review (Screening Group) and are separated into three categories:

    1. Those that can be processed immediately based on the information submitted (closed in Screening)

    2. Those that need minor additional information to be resolved

    3. Those that require additional development (assigned to determination specialists)

  5. Organizations whose applications fall in the first or second categories described above can expect to receive their exemption letter or a request for additional information within approximately six months of the date the application was submitted.

  6. Applications that fall in the third category are assigned to an EO determination specialist in the order they are received. The organization will be contacted by the determination specialist when the application is assigned and is generally requested to submit additional information to develop the application.

  7. If, after additional development, the determination specialist concludes that the organization qualifies for exemption, a determination letter is generated and sent to the organization.

  8. If the determination specialist concludes that the organization does not qualify for exemption, the organization is sent a letter explaining the Service’s reason for denying the exemption. This letter includes a complete explanation of the organization’s appeal rights ( Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues).

21.3.8.11.1.1.1  (10-01-2014)
Processing Applications (Other Than Form 1023-EZ) That Are Substantially Incomplete (Letter 1042) and Other Long Form Status 03 Closures

  1. EO Determinations does not process cases that are substantially incomplete beyond the initial screening of the application.

    Note:

    If the case is missing only an organizing document or an additional user fee (except as noted below), EO Determinations will continue processing the case.

  2. Cases that are substantially incomplete are closed status 03 on EDS/TEDS (status 12 was used before December 2008) and show a Letter 1042 on the initial research screen. The entire application (including all attachments) is sent back to the applicant (or to the POA if there is a valid POA entered on EDS/TEDS), along with Letter 1042 and a missing information checklist.

    Note:

    See IRM 21.3.8.11.2, "Dishonored EO/EP User Fee Checks," if the case displays Dishonored Check indicator "Y."

  3. The organization has 90 days from the closed (status 03) date to respond with a complete application or it must reapply and pay another user fee. As this is not considered an FTE, no extension is granted to the organization.

    Note:

    The organization must return the entire application, all attachments, and the requested missing information in order for EO to continue processing the application. If the caller asks where to mail the information, tell the caller that the letter should include a paragraph instructing the applicant where to send the requested information.

  4. EO Determinations maintains a tickler file on these cases that contains a copy of the Letter 1042, the list of missing items, a copy of page 1 of the application, and a copy of the user fee information.

  5. If the Letter 1042/application packet comes back undeliverable, EO Determinations calls the contact name on the application or POA document to get a better mailing address and resends the letter/application. If no contact can be made, the letter/application are put in the tickler file and held until the 90 days has expired. See (7) and (8) below if the caller says she/he did not receive Letter 1042/application packet.

  6. EO submodules are not created for these entities, but a taxable filing requirement is established on IDRS if the application contains a valid organizing document: Form 1120 for corporations and unincorporated associations and Form 1041 for trusts.

  7. If an authorized caller states that she/he did not receive the application, missing information checklist, etc. on a case closed status 03 with Letter 1042 (status 12 before December 2008), verify the address showing on EDS/TEDS. If the address is correct, instruct the caller to allow up to 30 days to receive the information. If the address is not correct, prepare a Form 4442 to the Adjustments Unit (EEFAX 855-204-6185) with the pertinent information.

    Exception:

    If the caller claims to have received the Letter 1042 without the application and/or the missing information checklist, prepare a Form 4442 referral to the Adjustments Unit even if it has been less than 30 days since the case went into status 03.

    Note:

    If a POA is showing on EDS, tell the caller the information is being sent to that POA.

  8. If it has already been more than 30 days (even if it has been more than 90 days) and neither the organization (nor the POA, as applicable) has received the letter/application, prepare a Form 4442 to the Adjustments Unit (EEFAX 855-204-6185) with the pertinent information.

    Note:

    Tell the caller to be prepared to send a copy of the application and proof of payment of the user fee when he/she receives the copy of the Letter 1042 and missing items checklist. If the Adjustments Unit no longer has a copy of the missing information letter and Letter 1042, they will notify the caller to that effect.

  9. If the authorized caller has specific questions about his/her Letter 1042 or about the organization's application that cannot be answered with information contained in this IRM, prepare a Form 4442 to the Adjustments Unit (EEFAX 855-204-6185) with the pertinent information.

    Note:

    DO NOT provide the telephone number of the employee named on Letter 1042.

  10. In addition to applications that are substantially incomplete, EO applications that do not qualify for the reduced $100 user fee granted by Notice 2011-43 (e.g., because they were revoked for years other than 2007, 2008, and 2009 or because of their gross receipts) are also closed in status 03.

    • If the only issue is the user fee, the organization will be sent a letter explaining why it did not qualify for the reduced fee and telling the organization how much additional fee is owed.

    • If the application is substantially incomplete and the organization does not qualify for the reduced fee, the organization will receive a Letter 1042 and an explanation about the required fee.

    Note:

    If the application is closed 03, shows a $100 user fee paid, and a Letter 1042 generated, the assistor will not necessarily be able to determine whether an additional fee is required. If the assistor addresses the fee at all, he/she should simply say that if an additional fee is required, the organization will be asked for it in the letter they receive from EO Determinations.

  11. If the caller is checking on the status of an application and the case is closed in status 03, verify the address showing on EDS and tell the caller to allow up to 30 days to receive the letter explaining why the case was closed. If it has been more than 30 days since the closed date and the caller claims that no letter was received OR the address on EDS is not correct, prepare a Form 4442 referral to the Adjustments Unit (EEFAX 855-204-6185).

  12. If a taxpayer meets TAS criteria and you cannot resolve the taxpayer’s problem, refer him or her to TAS for assistance. For example, if a taxpayer has experienced a delay of more than 30 days (beyond IRS-established time frames, if any) to resolve a tax account problem, he/she meets the criteria for assistance from TAS. See IRM 21.3.8.8.6, "Taxpayer Advocate Service Referral Guidelines, Including Congressional Inquiries, and Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order)," and IRM 13.1.7.2.2, "TAS Case Criteria 5 – 7, Systemic Burden," for more information. Employees should also report systemic problems (including delays) to TAS.

21.3.8.11.1.2  (04-06-2010)
Acknowledging the EP Application

  1. The EP acknowledgement letter is Letter 3336C.

21.3.8.11.1.3  (12-14-2012)
Online Payments for EP Applications User Fees

  1. Beginning in January 2013, EP applicants will be able to pay their user fee online at www.pay.gov using a credit card or ACH debit from their checking or savings account.

  2. The filer will complete an online form similar to Form 8717, User Fee for Employee Plan Determination Letter Request.

  3. The payment will be downloaded to LINUS and will be identified by a DLN beginning with 26.

  4. The filer will be directed to print out the confirmation page and mail it in with the application to the Cincinnati campus (Covington, KY). Once received, the application will be entered in LINUS as a no-remit and associated with the online payment. In other words, there will be two entries on LINUS for the application, one with a 26 DLN showing the payment and one with a 17 DLN showing no remit.

  5. The application and user fee will move to TEDS only after both have been received. If there is only a 26 DLN entry on LINUS, then no application was received.

  6. During the testing phase, the filer will receive a confirmation email with the name and contact telephone number of a TEGE HQ analyst for questions. Once the new process has tested successfully, the email will contain the toll-free number.

  7. Only EP user fees will be accepted online at this time.

21.3.8.11.2  (10-01-2013)
Dishonored EO/EP User Fee Checks

  1. If the user fee check submitted with the application (or as an additional user fee payment) was returned as dishonored, EDS/TEDS reflects a "Y" in the Dishonored Check indicator field and an "I" in the User Fee Payment Status field. Also, LINUS displays code 5302 with the associated payment.

    Note:

    When a valid payment is received, the Dishonored Check indicator is updated to "N" and the User Fee Payment Status field is updated to "C."

  2. Advise customer the user fee check submitted was returned due to insufficient funds.

  3. If the case is still open on EDS/TEDS:

    Step Action
    1 Explain to the customer that the organization/plan sponsor should have received, or will receive, a letter requesting a certified check or money order to cover the processing fee.
    2 Advise the customer that the organization/plan sponsor must respond with the replacement user fee (along with a copy of letter requesting the new fee) within 15 days of the date of our letter to:
    Regular Postal Delivery
    Internal Revenue Service
    TEGE Adjustments Unit, Attn: User Fee
    Room 4024
    P. O. Box 2508
    Cincinnati, OH 45201
    (EEFAX 855-204-6185)
    Express And Overnight Delivery
    Internal Revenue Service
    TEGE Adjustments Unit, Attn: User Fee
    Room 4024
    550 Main St.
    Cincinnati, OH 45202
    3 Advise the customer to note the DLN or EIN on the replacement certified check or money order to ensure proper posting.
    4 Verify the organization’s/plan sponsor’s mailing address is correctly reflected on EDS/TEDS. If different:
    a) If the letter has not been received, advise the customer that our letter may not be timely received, and to go ahead and remit a replacement user fee to the address in step 2 above.
    b) Advise the customer to include a signed statement providing the appropriate mailing address.
  4. Use the following table if the case is closed in status 03 on EDS/TEDS and displays Dishonored Check indicator "Y" :

    If Then
    It has been less than six months since the case closed Provide the caller with the payment requirements/address information given in paragraph (3) above.
    It has been six months or longer since the case closed Advise the customer that if the organization still wishes to receive a determination, the organization must resubmit the application along with a new user fee (certified check or money order). See (3) above for address information.

    Note:

    See IRM 21.3.8.11.1.1.1, "Processing Applications (Other Than Form 1023-EZ) That Are Substantially Incomplete (Letter 1042) and Other Long Form Status 03 Closures," if the case closed in status 03 also shows that a Letter 1042 was issued.

  5. If the organization/plan sponsor wants to confirm receipt of the replacement check or money order previously sent to cover the dishonored check, research LINUS/EDS/TEDS to determine if the payment has been processed.

    If Then
    LINUS/EDS/TEDS reflects receipt of the new user fee Advise the customer the fee was received, and provide customer with the current status of the application (e.g., waiting to be assigned, assigned to a determination specialist, etc.).
    The new fee has been submitted within the last 30 days and LINUS/EDS/TEDS do not reflect receipt 1. Advise the customer you cannot confirm the receipt of the payment.
    2. Verify the mailing address to which the payment was submitted.

    Note:

    The organization/plan sponsor may have used the envelope supplied with our request.


    3. Advise the customer to allow for processing time and he/she can call back after 30 days from the date he/she mailed the check, to verify receipt.
    The new fee has been submitted over 30 days ago and LINUS/EDS/TEDS do not reflect receipt 1. Advise the customer you cannot confirm the receipt of the payment.
    2. If the customer can obtain proof the replacement check/money order was processed, advise him/her to fax to EEFAX 855-204-6185 (or mail to the address shown in IRM 21.3.8.11.2(3) step 2) a copy of the cancelled check/money order (front and back) along with his/her EIN or DLN and daytime phone number, with an explanation that the fee was paid.
    3. If the customer cannot obtain proof the replacement check/money order was processed, apologize, and explain that there is nothing further you are able to do to confirm receipt of the payment. Advise the customer he/she will either have to:
    a. Wait a week or two and call us back.
    b. Submit another fee along with an explanation that a replacement check/money order was previously submitted (and the date) along with a request to locate the payment and provide a refund.

21.3.8.11.3  (03-14-2014)
User Fee Extensions

  1. Refer to IRM 21.3.8.12.17, "EO Case Development: Cases in Suspense Status (Status 37, EDS Letter 4587) and Cases in Failed to Establish (FTE) Status (Status 11 and Status 12, EDS Letter 1314)," for cases in status 37 and for cases closed FTE after July 25, 2010.

    Note:

    The procedures do not apply to incomplete cases closed status 12 before December 2008 that show a Letter 1042 issued. See IRM 21.3.8.11.1.1.1, "Processing Applications (Other Than Form 1023-EZ) That Are Substantially Incomplete (Letter 1042) and Other Long Form Status 03 Closures."

21.3.8.11.4  (10-01-2013)
User Fee Refunds - EO

  1. In general, the user fee paid for processing an initial EO application or for a group ruling letter is not refundable. (See the annual user fee revenue procedures for details.) However, there are certain circumstances under which a determination specialist may authorize a refund of all or a portion of the user fee (e.g., an organization was already exempt under an individual or group ruling).

  2. If an organization requests a refund and the application is already assigned to a determination specialist or to a group, refer the caller to the determination specialist or to the group for the determination.

  3. If the case has not been assigned, or if the ruling has already been made, advise the caller to send a written request for a refund of the user fee to:
    TEGE Adjustments Unit
    P.O. Box 2508, Room 4024
    Cincinnati, OH 45201

    EEFAX 855-204-6185

    Express and Overnight Delivery
    TEGE Adjustments Unit
    Room 4024
    550 Main Street
    Cincinnati, OH 45202

    if one of the following applies:

    1. The organization was already exempt under its own individual ruling and applied again in error.

    2. The organization was already covered under a group exemption.

    3. The organization paid a higher user fee than it was required to pay based on its average gross receipts as shown in the budget information provided by the organization in its application for exemption.

  4. User fee refund checks are made payable to the name of the organization as shown on the application for exemption, regardless of the original payor.

  5. Research LINUS to determine whether a refund was initiated. The organization can expect to receive its refund within 90 days from the date the transaction was initiated. If the organization indicates that it has not received its refund and it has been more than 90 days from the initiation date shown on LINUS, instruct the caller to complete a Form 3911 , Taxpayer Statement Regarding Refund, and send it to the attention of the manager:
    TEGE Adjustments Unit
    PO Box 2508, Room 4024
    Cincinnati, OH 45201

    EEFAX 855-204-6185

    Note:

    The following refund codes are used on LINUS:
    5301 = Refund issued
    5303 with a 5301 = A refund was issued and the check came back to the Finance Center as undeliverable or with a stale date. The Finance Center notifies the Adjustments Unit, and the refund is put back on LINUS until contact can be made with the taxpayer to verify the correct mailing address or the refund is re-issued because the taxpayer did not deposit the original refund check timely. When the address has been verified, another 5301 code will display when the refund has been reissued.

  6. If the caller indicates that the organization was told more than 30 days prior to the contact that it was entitled to a refund of all or a portion of the user fee but LINUS does not indicate that a refund was initiated, prepare a Form 4442, Inquiry Referral , with the caller's contact information and forward it to the attention of the manager of the TEGE Adjustments Unit (EEFAX 855-204-6185). Tell the caller to expect to be contacted within 30 days.

    Exception:

    Do not prepare a Form 4442 referral if there is an open case on EDS. Explain to the caller that refunds are generally not initiated on open cases because the user fee amount could change based on the determination specialist's development of the application.

21.3.8.11.5  (10-01-2013)
Applications with No/Insufficient Fee and/or on Obsoleted Forms

  1. EO applications submitted with no or insufficient user fee and/or on an obsoleted form are entered on LINUS but are not entered on EDS and are not processed through TEDS.

    Exception:

    See IRM 21.3.8.11.1.1.1, "Processing Applications (Other Than Form 1023-EZ) That Are Substantially Incomplete (Letter 1042) and Other Long Form Status 03 Closures," for cases closed in status 03 showing $100 user fee paid.

  2. Processing corresponds with the filer for the fee and/or the correct form revision:

    • Notice 1363 is sent if an insufficient user fee is submitted.

    • Notice 3370 is sent if no user fee is submitted and the Form 1023 is substantially incomplete or is an obsoleted revision.

    • Notice 3371 is sent if the Form 1023 is substantially incomplete or is an obsoleted revision.

    • Notice 3373 is sent if no user fee is submitted.

  3. If the filer does not submit the correct fee and/or form within 90 days, any user fee paid is forfeited and the filer must submit the full user fee amount if a new application is submitted.

    Exception:

    If the organization paid an insufficient user fee and chooses not to pay the additional user fee, it may submit a written request for a refund of the user fee already paid (see address in (5) below). The application process will be terminated.

  4. If LINUS indicates that the (additional) user fee was received within the deadline and was processed more than 30 days ago and EDS/TEDS has not been updated, prepare a Form 4442, Inquiry Referral, with the caller's contact information and forward it to the attention of the manager of the TEGE Adjustments Unit (EEFAX 855-204-6185). Tell the caller to expect to be contacted within 30 days. See (6) below if the obsolete indicator is posted under the "reason for payment" code.

    Note:

    There is a TEDS indicator on LINUS to identify the cases that are processed through TEDS.

  5. If the caller states that she/he submitted the (additional) fee at least two weeks prior to the date of the call and that the payment was processed, but LINUS research does not show the (additional) fee, instruct the caller to send a cover letter and a copy of the front and back of the cancelled check to:
    TEGE Adjustments Unit
    P.O. Box 2508, Room 4024
    Cincinnati, OH 45201

    EEFAX 855-204-6185

    Express and Overnight Delivery
    TEGE Adjustments Unit
    Room 4024
    550 Main Street
    Cincinnati, OH 45202

    This is also the address that should be given to callers who ask where to send the additional user fee, correct form revision, etc.

    Note:

    If the applicant receives an Automated Information System (AIS) document with the request for a current form or for an additional user fee, she/he should follow the mailing instructions that accompany the request.

  6. If LINUS shows that a user fee was paid, the case has not been established on EDS/TEDS, and the obsolete indicator is posted under the "reason for payment" code, check for the submission date:

    If Then
    It has been less than two weeks since the application was submitted Explain to the authorized caller that the organization should be receiving a letter advising them to re-submit the application on the revised Form 1023.
    It has been more than two weeks since the application was submitted
    • Prepare a Form 4442 to the EO Adjustments Unit (EEFAX 855-204-6185) with the caller's contact information and notate the fact that the "obsolete application" notice has not been received.

    • Advise the caller that the organization will be contacted within 30 days.

  7. If the caller states that the account on which the user fee is drawn has insufficient funds to cover the check, but the organization has not yet been notified by the IRS that the user fee check was returned from the bank (LINUS or EDS/TEDS research may not display this information yet), instruct the caller to submit a cashier's check or a money order for the appropriate user fee to the TEGE Adjustments Unit (address shown in (5) above) as soon as possible. This will prevent undue delays in the processing of the application. See IRM 21.3.8.11.2, "Dishonored EO/EP User Fee Checks," for additional information.

  8. If the caller has a question about a user fee or an obsolete application form that cannot be answered using the information in this subsection or elsewhere in IRM 21.3.8, prepare a Form 4442 referral to the TEGE Adjustments Unit (EEFAX 855-204-6185).

    Note:

    Also prepare a Form 4442 referral to the Adjustments Unit (EEFAX 855-204-6185) if the caller states that the organization did not receive the notice about obsolete form and/or insufficient fee and it has been more than two weeks (but less than one year) since the application was mailed. Notate on the referral if the caller indicates that the organization is going to mail in the (additional) user fee without waiting to receive a copy of the notice. If it has been more than a year since the application was mailed, inform the authorized caller that the organization must submit a new application and user fee.

21.3.8.11.6  (02-12-2008)
Re-designated DLNs for Determination Cases on EDS

  1. Every year (usually in January) a mass update is made to EDS to change the DLN of any 10-year old case whose DLN could possibly be duplicated in the current year. For example, a DLN ending in 8 could represent a case submitted in 1998 or 2008.

  2. To avoid this duplication, the third digit of the older case's DLN is replaced with a "Y."

    Note:

    LINUS is not updated to reflect these changes and will continue to display the DLN as originally assigned. However, the records in LINUS that are 10 years old or older are archived and are only available if the record is pulled from the archives.

21.3.8.11.7  (10-01-2010)
Elimination of the Advance Ruling Process

  1. Effective with the release of temporary Regulations on September 9, 2008, the advance ruling process was eliminated for organizations receiving rulings after June 8, 2008, and for those whose advance ruling periods ended on or after June 9, 2008.

  2. Organizations with unexpired advance ruling dates impacted by the new process will receive a revised CP 158 explaining the change in the process.

  3. Links to several documents, including the revised CP 158, have been added to the TEGE Research Portal in the General Job Aids section. Use the information in this and the following subsections, as well as the FAQs and related pages on the IRS Web site, to respond to callers with questions about the new process or who are requesting letters affirming their exemption.

  4. If the caller asks about when the organization’s initial five years began and/or end(ed) or what the organization’s sixth (or subsequent) year would be, use the status code date and ARED information on IDRS to respond accordingly.

  5. Form 1023 will eventually be revised to reflect the new procedure, but a revision date has not been set. In the interim, applicants who download Form 1023 from the Internet or who order it from the Forms Distribution Center will receive an errata sheet that explains the changes to the application. A link to this errata sheet is also included on the Research Portal. If the organization has already submitted its Form 1023, it does not need to amend its application based on the errata sheet, unless the determination specialist assigned to the case specifically requests that the organization do so. If the caller is in the process of completing the Form 1023 and asks what changes are contained in the errata sheet, read the information to him/her.

  6. If the caller has questions that you cannot answer using the information in the IRM or on the pages of the EO Web site covering this topic, contact your Lead.

    Reminder:

    The ARED itself is disclosable under IRC 6104.

21.3.8.11.7.1  (02-03-2012)
Requests for Affirmation Letters from Organizations Showing an ARED on IDRS

  1. If a caller requests an affirmation letter for an organization that shows an ARED of 200806 or later, the new process applies. Prepare Letter 4168C for the organization or Letter 4170C for third parties.

    • If the organization shows a Form 990 filing requirement, select the appropriate public charity paragraph(s), but DO NOT DELETE the ARED.

    • If the organization’s filing requirement has been updated to 990-PF and their foundation classification to 04 and there is no favorable "F" case on EDS/TEDS that was closed after the date the organization’s filing requirements and foundation classification were changed (or an "A" case that changed the organization’s foundation classification), delete the ARED and select the appropriate private foundation paragraph.

    • If there is a favorable "F" case on EDS/TEDS that closed later than the date the filing requirements and foundation classification were changed (or an "A" case that changed the organization’s foundation classification), correct the information on IDRS accordingly and select the appropriate public charity paragraph(s).

  2. If a caller requests an affirmation letter for an organization that shows an ARED of 200805 or earlier, the "old" rules apply and the organization must submit a Form 8734.

    • If there is no closed favorable "F" case on EDS/TEDS (or an "A" case that changed the organization’s foundation classification), prepare Letter 4164C for the organization or Letter 4170C for third parties (and do not select any of the foundation classification paragraphs).

      Reminder:

      Inform the authorized caller that the organization must provide documentation showing that it met an applicable public support test (Form 8734 or a support schedule from Schedule A of the Form 990/Form 990-EZ). The organization should provide financial information for the five most recent completed tax periods. The organization must also submit Form 8940 and the appropriate user fee (see Rev. Proc. 2014-8 or its successor for the current fee).

    • If there is a closed favorable "F" case (or an "A" case that changed the organization’s foundation classification), update IDRS accordingly and prepare the appropriate affirmation letter with the pertinent foundation paragraph(s).

  3. The information above does not pertain to organizations undergoing termination of their private foundation status by operating under 170(b)(1)(A)(vi) or 509(a)(2), i.e., organizations in status 25. These organizations must submit a completed Form 8734 or the applicable support schedule from the Schedule A of the Form 990 within 90 days after the end of their 60-month termination. If a caller asks for an affirmation letter for an organization in status 25 with an unexpired ARED, prepare a Form 4442 to the Correspondence Unit (EEFAX 855-204-6184). If the ARED has expired and there is no final "P" case on EDS/TEDS, prepare an affirmation letter with the appropriate private foundation paragraph selected.

21.3.8.11.7.2  (10-04-2011)
Filing Requirements for Organizations within the First Five Years of Operation and Beyond

  1. If the caller asks about the requirement to file a return during (or after) the initial five years of operation, explain that the normal tolerance rules apply, as well as the requirement to submit a Form 990-N if the annual gross receipts of the organization are normally $50,000 or less. In other words, during the first five years of operation, the organization must file a Form 990/990-EZ if its annual gross receipts are normally more than $50,000; otherwise it must submit a Form 990-N.

  2. Regardless of their gross receipts, the organization should be encouraged to prepare a Schedule A for the fifth year of operation to determine whether it is meeting a public support test.

  3. Beginning with the organization’s sixth year, again regardless of its gross receipts, it should complete the Schedule A of the Form 990 to determine whether it has met an applicable public support test.

    • If it has met the public support test for the sixth year of operation and its gross receipts average $50,000 or less, it may submit the Form 990-N for the sixth year of operation (and for the seventh year, as well, if the organization remains under the filing threshold); it need not file the Form 990/Form 990-EZ (but it should continue to prepare the Schedule A to demonstrate that it continues to meet the public support test).

    • If the organization has not met the public support test for the first five years or for the sixth year of operation, the organization must file a Form 990-PF for that sixth year.

  4. Based on the organization's initial filing of the Form 990-PF, Ogden will update the organization’s filing requirement and foundation classification. EO Determinations will list the organization in the Internal Revenue Bulletin as one whose foundation status was reclassified. This procedure will apply whenever a public charity files a Form 990-PF based on a failure to meet the public support test for two consecutive years.

  5. If the organization wishes to be reclassified as a public charity once it has filed a Form 990-PF, it must undergo the 60-month termination procedure under IRC 507(b).

  6. The following table summarizes an organization's foundation classification based on its passing or failing a public support test during its initial five years of operation and its sixth year:

    Years 1 - 5 Year 6 Then for year 6, the organization is considered to be
    PASS PASS PC
    PASS FAIL PC (based on being the carryover second year for passing in years 1 - 5, but the organization will change to a PF if it fails again in year 7)
    FAIL (but the organization is still considered a PC for the first five years) PASS PC (and will still be considered PC for year 7 even if it fails in year 7 because it must fail for two consecutive years to be changed to a PF)
    FAIL (but the organization is still considered a PC for the first five years) FAIL PF

21.3.8.11.8  (10-01-2014)
Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code

  1. Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, was released to the public on July 1, 2014. Most small organizations applying for exemption under IRC 501(c)(3) are eligible to file this three-page online form.

  2. Form 1023-EZ may be used by organizations with annual gross receipts of $50,000 or less and assets of $250,000 or less.

  3. An interactive eligibility worksheet is included in the Instructions.

  4. Organizations that are not eligible to file Form 1023-EZ may file Form 1023.

  5. The form and the correct user fee (currently $400) must be submitted electronically through www.pay.gov. Payment must be from a bank account or credit/debit card.

  6. Paper applications are not accepted. Applicants who attempt to submit a paper Form 1023-EZ are sent Letter 5333, Form 1023-EZ Rejection of Paper Submission, returning the application and any user fee paid.

  7. To be considered a completed application, the Form 1023-EZ:

    • Must include responses for each required line item, including the attestation that the applicant has completed the Form 1023-EZ Eligibility Worksheet

    • Must include accurate date of organization

    • Must include the correct Employer Identification Number (EIN)

    • Must be electronically signed by an individual authorized to sign

    • Must be accompanied by the correct user fee

      Note:

      User fees will be refunded for any application deemed incomplete.

  8. An organization may not request expedited handling of its Form 1023-EZ submission.

  9. Form 1023-EZ applicants do not receive an acknowledgement letter giving them a DLN, etc.

  10. Form 1023-EZ applications can be identified on EDS because their DLNs begin with 26.

    Note:

    New EDS functionality has been implemented allowing EDS to display a new form version code for EO cases. The value will be blank except for Form 1023-EZ cases, where the version code will be "Z."

  11. If an organization already has a Form 1023 application pending with EO Determinations:

    • Form 1023-EZ will be accepted if the Form 1023 has NOT yet been assigned for review. Form 1023-EZ will be considered a request for withdrawal of the pending Form 1023. The user fee for the Form 1023 will NOT be refunded.

    • Form 1023-EZ will NOT be accepted if the Form 1023 has already been assigned for review. The organization will be notified of non-acceptance of the Form 1023-EZ and the Form 1023-EZ user fee will be refunded.

    • If the organization has a pending application for recognition of tax-exempt status on a form other than a Form 1023 (e.g., Form 1024), the Form 1023-EZ will NOT be accepted and the Form 1023-EZ user fee will be refunded.

  12. Organizations applying for retroactive reinstatement under section 4 of Rev. Proc. 2014-11 (streamlined retroactive reinstatement for small organizations within 15 months of revocation) can use Form 1023-EZ if they meet all other eligibility requirements described in Rev. Proc. 2014-11. Organizations applying for reinstatement under section 7 of Rev. Proc. 2014-11 (reinstatement of tax-exempt status from the postmark date) can also use Form 1023-EZ (assuming they meet all other eligibility requirements).

    Reminder:

    If the organization is applying for retroactive reinstatement under section 5 or 6 of Rev. Proc. 2014-11, it must file the full Form 1023.

  13. Applicants whose Forms 1023-EZ are rejected are sent Letter 1049, Form 1023EZ Rejection. This letter explains the reason(s) for the rejection and whether the user fee is being returned. This information is embedded in the body of the letter and is generated from paragraphs selected by the tax examiner/determination specialist working the application. These applications are closed with status 03 on EDS.

  14. Some applicants whose Forms 1023-EZ require additional information before a determination can be made are sent Letter 1312, Request for Additional Information, and are given 21 days to respond (these cases should show assigned to a specialist). If the applicant doesn't respond within the 21 days (or request and receive a response date extension), the case is closed status 03 and Letter 1049 is issued.

  15. Public charities that apply and qualify for exemption using Form 1023-EZ receive Letter 5436, which is equivalent to Letter 947. Private foundations that apply and qualify for exemption using Form 1023-EZ receive Letter 5437, which is equivalent to Letter 1076.

  16. Callers with general questions about the process and about qualifying should be directed to the EO page of the IRS Web site. As this is a computer-based application, virtually all information about it is going to be communicated electronically.

  17. TEGE assistors are not responsible for answering technical, computer-related questions or resolving hardware/software issues. There is contact information on the Web for technical problems.

  18. The organizational and operational requirements for section 501(c)(3) status are not different for the small organizations that qualify for the Form 1023-EZ. Consequently assistors should apply the same tax law principles to questions about the content of the Form 1023-EZ as they would to questions about the long form.

  19. Assistors should not go through the worksheet question-by-question with the caller. It is the organization's responsibility for determining its own eligibility based on its completion of the worksheet. However, assistors should respond to requests for guidance/explanation about specific questions on the worksheet using the instructions to the form and other applicable resources.

  20. Unlike helping a small organization submit a Form 990-N, assistors will not be able to help an organization file its Form 1023-EZ. Organizations must have access to a computer!

  21. For additional information about Form 1023-EZ, refer to the form instructions, to Rev. Proc. 2014-40, to the IRS Web site, and to the FAQs on the TEGE Research Portal. Issues and questions not addressed in these resources should be elevated to the HQ analyst via your lead or manager.

21.3.8.12  (10-01-2006)
Exempt Organizations (EO)

  1. This section serves as a guide for performing tasks involved in addressing general EO related issues.

21.3.8.12.1  (10-01-2014)
Calls from Organizations Just Starting/Asking about Applying for Exemption

  1. When a caller asks about applying for exemption, use of the TEGE P&RG, located on SERP, is mandatory except when the organization has been auto-revoked, whether or not it is in status 97.

  2. If, during the course of discussion about applying for exemption, the caller asks you to make a recommendation on organization type (incorporated vs unincorporated association vs trust), do not offer advice on the type of organizing document the organization should have. Advise the caller to research and decide what is best for the organization based on its stated/proposed activities/purposes. Tell the caller that Pub 557, Tax-Exempt Status For Your Organization, and the information on the IRS Web site provide useful information about organizing documents, forming, and applying for exempt status. Tell the caller, however, that the organization will have to reapply if it changes organization type after it has received its exemption if it wishes to continue to be formally exempt.

21.3.8.12.2  (10-01-2006)
State Reinstatement Affirmation

  1. When an organization requests a state affirmation letter, use extreme caution before generating a letter, even though Master File indicates the organization’s corporation is currently recognized by the IRS as tax exempt under 501(c)(X). In the case of a corporate entity, recognition is contingent on the continuance of its corporate standing with the state in which it is incorporated (and assuming it remains in compliance with the operational and organizational requirements of the Internal Revenue Code section under which it received its exemption).

  2. If an organization indicates it needs a letter from the IRS affirming its tax exemption in order to be "reinstated" with its state:

    Step Action
    1 Verify the organization is a corporation in status "01." If status is other than "01," See IRM 21.3.8.9.8, "Status Codes – EO."
    2 If status "01," attempt to determine whether the organization’s:
    • Recognition as a tax-exempt or non-profit organization with the state has been terminated, is inactive; or

    • Corporate standing with the state has been terminated or is inactive.

  3. If the organization’s recognition as a tax-exempt or non-profit organization with the state has been terminated or is inactive with the state, but its corporate standing is active and it needs a letter from IRS to "reinstate" its tax-exempt or non-profit standing with the state, prepare the appropriate affirmation letter and send to the organization (if our records indicate its tax-exempt status is in Status 01).

  4. If the organization’s corporate standing with the state has been terminated or is inactive:

    Step Action
    1 Do not send the organization an affirmation letter even though our records indicate it is in Status 01.
    2 Inform the organization that the Internal Revenue Service based its tax exemption on its original articles of incorporation filed with its state and that its recognition is contingent upon the continuance of active corporate standing with its state.

    Note:

    If its corporate standing has become inactive, or if the state has terminated its corporate standing, its tax-exempt recognition by the IRS is no longer active, regardless of what Master File might indicate.

    3 Suggest that the organization confirm with the state that the issue is "corporate" standing and not the state’s "non-profit" or tax-exempt recognition.
  5. If the organization insists that the issue is its "corporate" standing and that its state is requiring a letter from the Internal Revenue Service in order to reinstate its corporate standing:

    Step Action
    1 Prepare Form 4442, obtaining complete information from the caller. Explain the issue in the remarks section of Form 4442.
    2 If the caller has a contact name and telephone number from the state, also include that information in the remarks section of Form 4442.
    3 Indicate at the top of Form 4442 "State Standing."
    4 Inform the caller you will refer the issue and someone will contact him/her within 30 days after researching the matter.
    5 Give the completed Form 4442 to your manager, who will refer it to the Correspondence Unit (EEFAX 855-204-6184).

21.3.8.12.3  (06-03-2013)
Bingo, Raffle and Pull-Tab Rules

  1. If you receive a call concerning Bingo, Raffles and Pull-Tabs, refer to the appropriate publication when answering the caller's question: Publication 3079, Gaming Publication for Tax-Exempt Organization, Publication 3908 , Gaming Tax Law and Bank Secrecy Act Issues for Indian Tribal Governments, Notice 1335, Gaming Activities, and Notice 1340 , Tax-Exempt Organizations and Raffle Prizes Reporting Requirements and Federal Income Tax Withholding .

  2. If the question is beyond the scope of the application you are staffing, follow the out of scope procedures or transfer the caller per the TTG, as appropriate. See IRM 21.3.8.8.2, "Form 4442 - Inquiry Referral," if you are unable to respond to a question that is within the scope of the application you are staffing.

21.3.8.12.4  (10-01-2014)
Deductibility of Contributions

  1. Accounts reflecting exempt (01/25/32) status:

    1. Before responding to a question on the deductibility of contributions or before generating an affirmation letter, research the deductibility code on BMFOLO to determine if contributions to the organization are deductible:

      If deductibility code is a Then donations to the organization are
      1 Tax deductible (See (4) below for additional information.)
      2 NOT tax deductible (See (4) below for additional information.)
      4 Tax deductible (foreign)
    2. Most 501(c)(13), cemetery companies and some 501(c)(4) and 501(c)(19) veterans organizations (if they meet the "War Veterans" definition, i.e., at least 90 percent of the organization's members are war veterans), volunteer fire departments and similar organizations, 501(c)(8) and 501(c)(10) organizations may accept deductible contributions under sections 170(c)(3), (4) and (5).

  2. For accounts NOT reflecting exempt (01/25/32) status, including organizations whose applications for exemption are pending, advise the caller that we have no record of the organization having tax-exempt recognition by virtue of an approved application, i.e., that we have no record of the organization having tax-exempt status under section 501(a) of the Internal Revenue Code, but that contributions may be deductible if any of the following is true:

    • The entity is organized and operated as a church. (See Publication 1828 for additional information.)

    • The entity is a unit of federal, state or local government (instrumentality) and the contribution is to be used exclusively for public purpose.

    • The entity is organized and operated as a 501(c)(3) and is within 27 months of its formation.

    • The entity is organized and operated as a 501(c)(3) public charity and its average annual gross receipts are $5,000 or less.

    • The entity is organized and operated as a 501(c)(13) and the contribution is to be used for the maintenance of the cemetery as a whole.

    Note:

    When the IRS approves a timely-filed exemption application, exempt status is recognized back to the date the organization was created. Thus, while an application is pending, the organization can treat itself as exempt from federal income tax. However, contributors to the organization do not have advance assurance of deductibility because the organization's exemption is pending. If the organization ultimately qualifies for exemption for the period in which the contribution is made and is entitled to receive tax-deductible contributions, the contribution will be tax deductible by the donor. Alternatively, if the organization ultimately does not qualify for exemption or does not qualify to receive tax-deductible contributions, then the contribution will not be tax deductible.

    Exception:

    If the organization's exemption was revoked for failure to file a return (status 97) and it has submitted an application for exemption, the effective date of the exemption will not go back to the formation date, but rather to the date the application was submitted (the control date on EDS/TEDS). This effective date of exemption cannot be determined until the case has been closed with a favorable ruling. If the organization requests retroactive reinstatement due to reasonable cause and the request is approved, the effective date of the exemption will be the due date of the third year's return.

  3. Refer to the TTG (Charitable Contributions (Deductions)) if the caller has a question about deductibility from the donor's perspective (U.S. federal income tax) or refer him/her to the appropriate taxing authority for state, local or foreign government tax questions.

  4. Whether a donation or gift is tax deductible to the donor depends on the specific facts and circumstances. For example, a 501(c)(19) organization must meet the 90 percent war veterans test in order for contributions to it to be deductible. Also, for organizations with formal exemption listed in the Publication 78 data, a donor may normally rely on the fact that a donation made to a qualifying organization is deductible until the IRS publishes information that states that contributions to the organization are no longer considered tax deductible and/or the organization is removed from the Publication 78 data.

  5. General information on the deductibility of contributions can be found on the "Contribution Deductibility" page of the TEGE P&RG.

    Reminder:

    Use of the TEGE Probe and Response Guide (TEGE P&RG) is mandatory for topics for which pages have been developed.

21.3.8.12.5  (10-01-2006)
EO Organizational Changes

  1. The following sections cover some of the organizational changes which existing exempt organizations may undergo.

21.3.8.12.5.1  (10-01-2013)
Dissolution

  1. If an organization with an EO submodule indicates it has dissolved or intends to dissolve (including organizations that merge into an organization that does not have formal exemption), provide the following guidance based on the organization's filing requirement (see (2) below if the organization is not required to file a return or to submit a Form 990-N).

    Caution:

    Some organizations have an EO filing requirement even though it does not display on IDRS because of the programming related to the particular status code. For example, organizations in status 40 may submit a Form 990-N even though no Form 990 filing requirement can display on organizations in that status.

    If the organization is Then instruct the caller to
    Required to file Form 990/990-EZ
    • File a final return not later than 4 months and 15 days after the date of the organization’s termination.

    • Check the Termination/Final Return box in the header area on page 1 of the return and answer "Yes" to the question whether the organization liquidated, terminated, dissolved or substantially contracted, and, if applicable, to the question whether the organization engaged in a significant disposition of net assets.

    • File a Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets, with the return.

    • Attach a certified copy of the articles of dissolution or merger, resolutions and plans of liquidation or merger and any other relevant documentation to the return.

    Required to file Form 990-N
    • Answer "Yes" to the question, "Has your organization terminated or gone out of business?" and confirm in the follow-up question that the organization has terminated.

    • Complete and submit the remainder of the Form 990-N.

      Reminder:

      Form 990-N can be submitted only after the tax period ends. If the organization dissolves before the end of the period, the organization will have to wait to submit its Form 990-N or, if it does not want to wait, file a paper return not later than 4 months and 15 days after the date of termination.

    Required to file Form 990-PF
    • File a final return not later than 4 months and 15 days after the date of the organization’s termination.

    • Check the Termination/Final Return box in the header area on page 1 of the return and answer "Yes" to the question whether the organization liquidated, terminated, or dissolved.

    • Provide the information set forth in General Instruction T of the Form 990-PF instructions.

  2. Instruct organizations with individual rulings that are not required to file a return or to submit a Form 990-N (i.e., 990-06, 990-13, or 990-14 filing requirement) to send the following dissolution documentation to:
    TEGE Correspondence Unit
    P.O. Box 2508, Room 4024
    Cincinnati, OH 45201

    Express and Overnight Delivery
    TEGE Correspondence Unit
    Room 4024
    550 Main Street
    Cincinnati, OH 45202

    The information may also be faxed to EEFAX 855-204-6184:

    1. Articles of Dissolution filed with the state (for incorporated entities), or minutes of the meeting where the vote was taken to dissolve, signed and dated by an officer (for unincorporated associations or for corporations that did not file Articles of Dissolution with their state), or resolution to dissolve the trust, signed and dated by a trustee

    2. A list of the last set of officers or trustees with daytime telephone numbers

    3. A statement signed by an officer giving details on final distribution of assets (for 501(c)(3) organizations only)

    Note:

    No new "T" cases have been established since November 2009. Organizations that submit dissolution information to the Correspondence Unit will receive an acknowledgement of receipt of the information.

  3. If IDRS shows that the organization is already in status 20, tell the authorized caller that our records indicate that the organization has terminated and that no additional action is required. Tell an unauthorized caller that the organization is no longer exempt by virtue of an approved application (i.e., that we have no record of the organization having tax-exempt status under section 501(a) of the Internal Revenue Code) as of the status code date.

  4. If the organization is a subordinate under a group ruling, advise the caller that the IRS does not require written documentation from a subordinate. The subordinate should file its final return, if required, and inform the central organization, which will notify the IRS.

  5. If the organization does not have an EO submodule and/or EO filing requirements (or if no information comes up for the EIN), instruct the caller to send a letter requesting the closing of their account to:
    IRS
    Attn.: EO Entity, MS 6273
    Ogden UT 84201

    They may also fax it to 801-620-7116. The organization should state the reason they wish to close their account. If they have a copy of the EIN Assignment Notice that was issued when their EIN was assigned, they should include that when they write. Otherwise, they should be sure to include the complete legal name of the entity, the EIN, and the address.

    Note:

    Do not create an EO submodule for these organizations. Refer to the TTG if it appears from the caller's description of the organization's purpose and activities that it would not have qualified for tax exemption.

  6. Refer to Publication 4779, Facts about Terminating or Merging Your Exempt Organization, if additional information is required.

21.3.8.12.5.2  (01-14-2011)
Merger of Two or More Organizations

  1. Exempt organizations which undergo a merger are required to notify the Service of the merger.

  2. If the merging organizations are required to file an annual information return other than the Form 990-N, the merger should be reported on the return and the merger documents (see (6) below) should be submitted with the return.

  3. If the merging organization has an individual ruling and is not required to file an annual information return or is required only to submit the Form 990-N, it should mail/fax the documents referenced in (6) below to:

    IRS
    TEGE Attn.: Correspondence Unit, Room 4024
    P. O. Box 2508
    Cincinnati, OH 45201
    (EEFAX 855-204-6184)
  4. If the surviving entity does not already have formal recognition of tax-exempt status, it must submit the appropriate application and pay the applicable user fee in order to receive a letter of determination.

    Note:

    If the merging organizations are subordinates in a group exemption, the central organization may report the merger when it responds to its annual SGRI or it may send separate notification to:
    IRS
    Attn.: EO Entity, MS 6273
    Ogden UT 84201

    It may also fax the information to 801-620-7116.

  5. If none of the merging organizations has formal exemption, they should send the documentation and a letter of explanation to EO Entity at the address shown above. If only one or more of the merging organizations (not the surviving organization) have formal exemption, they must notify the Service of their termination. See IRM 21.3.8.12.5.1 , "Dissolution," for additional information.

  6. The merger documentation required to be submitted by the organization(s) is determined by the entity type:

    If two or more And Then the surviving organization must submit
    Incorporated organizations are merging The surviving organization has an individual ruling of tax-exempt status A copy of the Articles of Merger which reflects they were filed with and approved by the state in which the organization was incorporated
    Unincorporated associations are merging The surviving organization has an individual ruling of tax-exempt status A Plan of Merger signed by at least two officers and showing the date of adoption
    Trusts are merging The surviving organization has an individual ruling of tax-exempt status An amendment to the trust document signed by at least one trustee and, if required by state or local law, approved by the appropriate state or local authority, e.g., Probate Court.

    Note:

    It is the responsibility of the organization to determine the applicability of state and local law.

21.3.8.12.5.3  (11-17-2011)
Changes in Activities/Organizing Documents/By-Laws and Private Letter Rulings

  1. If an organization with an individual ruling of formal exemption wants approval on proposed changes to its activities and purpose:

    1. Explain that most proposed changes can only be ruled on by Headquarters in a private letter ruling.

      Exception:

      Advance approval of set asides under IRC 4942(g), voter registration activities under IRC 4945(f), and grant making requests as defined by IRC 4945(g) are processed in Cincinnati. See IRM 21.3.8.12.5.3.1, "4945(g) Grant Making Request," IRM 21.3.8.12.5.3.2, "4942(g) Set Asides," and IRM 21.3.8.12.5.3.3, "4945(f) Voter Registration Activities," for additional information. Refer to Rev. Proc. 2014-4, or its successor for a complete listing of issues and the corresponding office with jurisdiction over those issues.

    2. Advise the caller to prepare a letter describing the change in detail, per Rev. Proc. 2011-4 or its successor.

    3. Mail the request and appropriate user fee (per Rev. Proc. 2014-8 or its successor) to:

      EO
      IRS
      Commissioner (TEGE)
      Attn: SE:T:EO:RA
      P.O. Box 27720, McPherson Station
      Washington, DC 20038

      For overnight/courier delivery, mark the package "RULING REQUEST SUBMISSION" and use the following address:
      Courier’s Desk
      Internal Revenue Service
      Attention: SE:T:EO:RA
      1111 Constitution Avenue, NW — PE
      Washington, DC 20224

    4. Refer to IRM 21.3.8.8.5, "Miscellaneous Referrals and Contacts," if an authorized caller asks about the status of a previously-submitted private letter ruling (PLR) request.

  2. Private letter rulings (in redacted form) are open to public inspection under IRC 6110. See IRM 21.3.8.4.1.3 , "IRC 6110," for additional details.

  3. If an organization with an individual ruling of formal exemption has already begun engaging in an activity that was not included in its application for exemption or has made changes to its organizing documents and/or by-laws, it must attach a complete description of the new activity/changes, including a conformed copy of any amendment(s) to its organizing document and/or by-laws, if applicable, to its annual information return (if it is a Form 990-PF filer) or it must fully describe the change(s) on Schedule O of the Form 990/990-EZ if it is a Form 990 series filer.

  4. If the organization with an individual ruling of formal exemption is not required to file an annual return (990-02, 990-06, 990-13, or 990-14 filing requirement), it may submit the information to the TEGE Correspondence Unit. (The information may also be faxed to EEFAX 855-204-6184.)

    IRS
    TEGE, Attn: Correspondence Unit, Room 4024
    P.O. Box 2508
    Cincinnati, OH 45201

    Express and Overnight Delivery
    IRS
    TEGE, Attn: Correspondence Unit
    Room 4024
    550 Main Street
    Cincinnati, OH 45202

    Note:

    If the organization submits the information to the Correspondence Unit, it will receive a letter thanking it for the submission but no determination will be made concerning the effect of the change(s) on the organization's exemption. For additional information, see Rev. Proc. 2014-4 or its successor, Publication 4221-PC, Compliance Guide for 501(c)(3) Public Charities , Publication 4221-PF, Compliance Guide for 501(c)(3) Private Foundations, and Publication 4221-NC, Compliance Guide for Tax Exempt Organizations (other than 501(c)(3) Public Charities and Private Foundations) .

21.3.8.12.5.3.1  (10-01-2011)
4945(g) Grant Making Request

  1. If a private foundation requests a ruling under IRC 4945(g) or states it wishes to be considered for approval of its scholarship procedures, advise the caller to prepare a letter requesting to be considered for 4945(g) grant making procedures, including the information requested in Form 1023 Schedule H, and mail the request, along with Form 8940, Request for Miscellaneous Determination, and the required user fee (currently $1000 per Rev. Proc. 2013-8) to:

    IRS
    P.O. Box 12192
    Covington, KY 41012-0192

    Express mail or private delivery service:

    IRS
    201 West Rivercenter Blvd
    Attn: Extracting Stop 312
    Covington, KY 41011

    Note:

    This procedure pertains to private foundations that did not receive advance approval of grant-making activities by submitting Schedule H of the Form 1023 at the time of application. A private foundation must provide the IRS with advance notice of scholarship granting activities or any scholarships granted may be treated as taxable expenditures.

  2. Public charities may also engage in grant-making activities. If the organization decides to start awarding grants/scholarships after it has received its ruling of exemption, it should include the Form 1023 Schedule H information and any other pertinent data with the next Form 990/Form 990-EZ it files.

    Note:

    If the organization has an individual ruling and is not required to file an annual information return or is required only to submit the Form 990-N, it may send the information about its grant-making activities to:
    EO Correspondence Unit
    P.O. Box 2508, Room 4024
    Cincinnati, OH 45201

    EEFAX 855-204-6184

    Express and Overnight Delivery
    EO Correspondence Unit
    Room 4024
    550 Main Street
    Cincinnati, OH 45202

21.3.8.12.5.3.2  (06-03-2013)
4942(g) Set Asides

  1. If the requirements of IRC 4942(g) are met, an amount set aside for a specific project which comes within one or more purposes described in IRC 170(c)(2)(B) may be treated as a qualifying distribution in the year of the set-aside rather than in the year in which it is actually paid.

  2. Private foundations requesting advance approval of certain set-asides described in IRC 4942(g) should send the details of the set-aside(s), along with Form 8940, Request for Miscellaneous Determination, and the required user fee (currently $1000 per Rev. Proc. 2013-8) to:

    IRS
    P.O. Box 12192
    Covington, KY 41012-0192

    Express mail or private delivery service:

    IRS
    201 West Rivercenter Blvd
    Attn: Extracting Stop 312
    Covington, KY 41011

  3. Questions on set asides under IRC 4942(g) which cannot be answered using the information in this IRM are out of scope.

21.3.8.12.5.3.3  (06-03-2013)
4945(f) Voter Registration Activities

  1. A private foundation is subject to tax if it expends funds for a voter registration drive that does not meet the requirements listed in IRC 4945(f).

  2. A private foundation will be given an advance ruling that it qualifies under the exceptions that apply to nonpartisan activities if it submits evidence establishing that it can reasonably expect to meet these tests for the year. Grantors or contributors to these organizations may rely on the advance ruling until a notice of change of status of the organization is made to the public. This does not apply, however, if the grantor or contributor was responsible for, or was aware of, the fact that the organization did not qualify under these provisions at the end of the tax year for which it obtained an advance ruling or determination letter, or acquired knowledge that the Service had given notice to the organization advising that it would be deleted from this classification.

  3. Private foundations requesting advance approval of their voter registration activities described in IRC 4945(f) should send the details of the activities, along with Form 8940, Request for Miscellaneous Determination, and the required user fee (currently $1000 per Rev. Proc. 2013-8) to:

    IRS
    P.O. Box 12192
    Covington, KY 41012-0192

    Express mail or private delivery service:

    IRS
    201 West Rivercenter Blvd
    Attn: Extracting Stop 312
    Covington, KY 41011

  4. Questions on voter registration activities under IRC 4945(f) which cannot be answered using the information in this IRM are out of scope.

21.3.8.12.5.4  (10-01-2014)
Change in Foundation Classification

  1. If an organization, including a subordinate in a group exemption, wants to change its foundation classification as shown on IDRS, it must make the request in writing (a cover letter summarizing the request and signed by an authorized individual) and submit the appropriate documentation to support the request as noted in the table below.

    Note:

    Beginning with TY 2008, an organization can check the foundation code box on Schedule A of the Form 990/Form 990-EZ that it believes best describes its reason for not being a private foundation even if it differs from the foundation classification shown on its determination letter, but checking a different foundation code on the return does not update IRS records.

    If Then It Must Submit
    The organization wants to be reclassified as a church Schedule A from the 1023.
    The organization wants to be reclassified as a school Schedule B from the 1023.
    The organization wants to be reclassified as a hospital Schedule C from the 1023.
    The organization wants to be reclassified as a 509(a)(3) supporting organization Schedule D from the 1023 and documentation of control by the supported organization.
    The organization wants to be reclassified from 509(a)(1) to 509(a)(2) or from 509(a)(2) or a public charity classification under 170(b)(1)(A) to 170(b)(1)(A)(vi) The applicable sections of the Schedule A from the 990 or the Form 8734.
    The organization wants to be reclassified as a private non-operating foundation A letter requesting the change that explains the reason for the request and the effective date. The determination specialist will request additional details, including financial information, if necessary.

    Exception:

    If the organization is requesting reclassification because it is no longer meeting an applicable public support test, it should file a timely Form 990-PF and check the box that it was previously a public charity. IRS records will be updated to reflect the new foundation classification and there is no user fee required for this reclassification. In order for the organization to be reclassified as a public charity thereafter, however, it must follow the guidelines for the IRC 507(b)(1)(B) termination provided below.

    A private foundation wants to be reclassified as a public charity See IRM 21.3.8.12.5.4.1, "IRC 507(b)(1)(B) Terminations (60-Month Terminations). "

    Exception:

    This does not pertain to presumptive private foundations, to organizations with foundation code 09, or to an organization that erroneously determined that it was a private foundation but that actually qualified and has continued to qualify as a public charity. Such organizations must demonstrate that they continually qualified as a public charity by submitting a completed Form 8734 showing they met an applicable public support test or, if applicable, the information from the first four rows of this table.

    A 509(a)(3) organization wants to be reclassified as a 509(a)(1) and 170(b)(1)(A)(vi) or a 509(a)(2) organization 1. A subject line or other indicator on the first page of the request in bold, underlined, or all capitals font indicating "REQUEST FOR DETERMINATION AS TO PUBLIC CHARITY STATUS."
    2. A statement requesting reclassification from IRC 509(a)(3) to another public charity classification under IRC 509(a)(1) and 170(b)(1)(A)(vi) or IRC 509(a)(2).
    3. Either
    • A copy of the organization's signed Form 990, Parts I through XI, or Form 990-EZ, Parts I through VI, with the completed Schedule A, as filed with the IRS for the taxable year immediately preceding the taxable year in which the request is made, or

    • The organization's support information for the past five completed tax years, using the organization's overall method of accounting used to complete the Form 990 or Form 990-EZ for such years. This information may be provided to the IRS on a completed Schedule A to the Form 990 or Form 990-EZ (2008 or later year, as appropriate).

    A private non-operating foundation or a public charity wants to be reclassified as a private operating foundation Part X of Form 1023 and Part XIV of the Form 990-PF, showing it has met the criteria for at least three of the last four years of operation.

    Note:

    This applies to organizations that have been in existence for at least four tax years. Organizations that have been in existence for less than four years must meet the criteria for every year of their existence.

  2. Organizations requesting a change of their foundation classification should send the documentation described above, along with Form 8940, Request for Miscellaneous Determination, and the required user fee (currently $400 per Rev. Proc. 2013-8) to:

    IRS
    P.O. Box 12192
    Covington, KY 41012-0192

    Express mail or private delivery service:

    IRS
    201 West Rivercenter Blvd
    Attn: Extracting Stop 312
    Covington, KY 41011

  3. Requests to change foundation classification (other than IRC 507(b)(1)(B) terminations) are processed as "Amendment" or "A" cases. The organization will receive a determination letter in response to its request for reclassification indicating whether a change in public charity classification has been made.

  4. If, based on an original ruling letter or a subsequent determination letter designating its foundation classification, an organization believes that its foundation classification is incorrect on IRS records, the organization must request correction. The organization must mail or fax a copy of the determination letter showing the correct foundation classification, along with a cover letter requesting correction, to:
    EO Correspondence Unit
    P.O. Box 2508, Room 4024
    Cincinnati, OH 45201

    EEFAX 855-204-6184

    Express and Overnight Delivery
    EO Correspondence Unit
    Room 4024
    550 Main Street
    Cincinnati, OH 45202

  5. For information specific to 509(a)(3) organizations and the Pension Protection Act of 2006, see IRM 21.3.8.12.5.4.2, "509(a)(3) Organizations Affected by the Pension Protection Act of 2006 and Types of 509(a)(3) Organizations."

  6. If IDRS shows that an organization has an expired ARED and there is no "F" case or foundation classification-affecting "A" case on EDS/TEDS (but there is an indication that Letter 1048 was issued):

    • Update the organization's foundation classification to foundation code 04.

    • Update the organization's filing requirements to 990PF-3.

    • Delete the ARED.

  7. If a 501(c)(3) organization shows as a presumptive private foundation or as a foundation code 09 on IDRS, research EDS/TEDS to see whether a ruling of foundation classification has been made. If found, update Master File accordingly. If not found (and the caller is authorized to act on behalf of the organization), instruct the organization to provide the information described in (1) and (2) above. See IRM 21.3.8.5.1.3.1, "Verification of Tax-Exempt Status and Foundation Classification," if the caller is unauthorized.


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