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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 12. Exempt Organization Returns

3.11.12  Exempt Organization Returns

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3.11.12.1  (01-01-2008)
Exempt Organization Returns

  1. This section provides instructions for processing exempt organization returns in the Ogden Submission Processing Campus, Code and Edit function.

3.11.12.1.1  (01-01-2008)
Overview of IRM 3.11.12

  1. This IRM is used by the Submission Processing Code and Edit (C&E) functions, and may be cited by other IRMs for processing BMF Exempt Organization (EO) returns. The Ogden Campus is the central processing center for all EO returns (excluding non-Master File returns). Unprocessed EO returns received in other Campuses or field offices must be routed to the Ogden Submission Processing Campus per IRM 3.10.72.

3.11.12.1.1.1  (01-01-2008)
Format of IRM 3.11.12

  1. Numbers in parenthesis (e.g., (1), (2)), indicate paragraph numbers.

  2. Indented numerical lists (e.g., 1., 2.), indicate steps that must be taken in order. For example, the procedure in step one must be completed before the procedure in step two is done, and all steps must be considered.

  3. Indented alphabetical or bullet lists (e.g., a., b.), indicate procedures or informational items where order is not important, however, all items must be considered.

3.11.12.1.2  (01-01-2008)
General

  1. IRMs 3.11.12.1.1 through 3.11.12.1.3 provide general information about EO returns and return processing.

  2. IRMs 3.11.12.1.4 through 3.11.12.1.45.2 provide general instructions applicable to many or all EO returns.

  3. IRMs 3.11.12.2 through 3.11.12.14 provide the following instructions for a specific EO return:

    1. General instructions and a definition of the organization required to file.

    2. Special instructions relating to the specific EO return.

    3. Tips and reminders for editing, perfecting and corresponding.

    4. Edit sheet T-lines, or coding T-lines.

    5. Tax return and supporting form T-lines and correspondence.

3.11.12.1.3  (01-01-2008)
Exempt Organization Filers Defined

  1. The Internal Revenue Code (IRC) defines the activities of an EO.

  2. The Subsection Code (SSXX) defines the IRC subsection (IRC §) under which the organization is exempt.

  3. The Foundation Code identifies whether an IRC §501(c)(3) organization is a private foundation required to file Form 990–PF, or a public charity required to file Form 990 or 990-EZ and Schedule A.

  4. EO Filers Defined: Figure 3.11.12-1a. and Figure 3.11.12-1b define Exempt Organizations in both Subsection/Foundation Code order and tax return number order.

  5. The Subsection Code and Foundation Code can be determined from either the IRS label, information on the return or attachment(s), or INOLES research.

    Figure 3.11.12-1a

    EO FILERS DEFINED
    SUBSECTION CODE ORDER
    SSXX FOUNDATION CODE ANNUAL RETURN SUPPLEMENTARY RETURN IRC SECTION
    02   990/990–EZ and Sch B 990–T §501 (c) (2)
    03 02 990–PF and Sch B 990–T, 4720 §501 (c) (3)
    03 03 990–PF and Sch B 990–T, 4720 §501 (c) (3)
    03 04 990–PF and Sch B 990–T, 4720 §501 (c) (3)
    03 10 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 11 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 12 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 13 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 14 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 15 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 16 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 17 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    03 18 990/990–EZ and Sch A, B 990–T, 4720 §501 (c) (3)
    04   990/990–EZ and Sch B 990–T, 4720 §501(c) (4)
    05 THRU 20   990/990–EZ and Sch B 990–T §501(c)(5) THRU (20)
    21   990–BL and Sch A 990–T, 6069 §501(c) (21)
    22 THRU 27   990/990–EZ and Sch B 990–T §501(c)(22) THRU (27)
    28   990/990-EZ 990-T §501(c)(28)
    40   990/990–EZ and Sch B 990–T §501(d)
    50   990/990–EZ and Sch A, B 990–T §501(e)
    60   990/990–EZ and Sch A, B 990–T §501(f)
    70   990/990–EZ and Sch A, B 990–T §501(k)
    71   990/990–EZ and Sch A, B 990–T §501(n)
    82   990/990–EZ and Sch B 1120 POL, 8871, 8872 §527
    90   5227 990–T, 1041–A, 4720 §4947(a) (2)
    91 00 990/990–EZ and Sch A, B 990–T, 1041, 4720 §4947(a) (1)
    92   990–PF and Sch B 990–T, 4720 §4947(a) (1)

    EO Filers defined — Subsection Code Order

    Figure 3.11.12-1b

    EO FILERS DEFINED IN
    RETURN NUMBER ORDER
    RETURN SSXX FOUNDATION CODE IRC SECTION
    990/990-EZ 28   §501(c)(28)
    990/990–EZ and Sch B 02   §501(c)(2)
      04 THRU 20   §501(c)(4) THRU (20)
      22 THRU 27   §501(c)(22) THRU (27)
    990/990–EZ and Sch A, B 03 09 THRU 18 §501(c)(3)
      50   §501(e)
      60   §501(f)
      70   §501(k)
      71   §501(n)
      82   §527
      91 00 §4947(a)(1)
    990–BL 21   §501(c)(21)
    990–PF and Sch B 03 02 THRU 04 §501(c)(3)
      92   §4947(a)(1)
    990–T ALL   ALL
    1041–A     TRUST
      90   §4947(a)(2)
    1120-POL 82   §527
    4720 03   §501(c)(3)
      04   §501(c)(4)
      90   §4947(a)(2)
      91   §4947(a)(1)
      92   §4947(a)(1)
    5227 90   §4947(a)(2)

    EO Filers Defined — Return Number Order

3.11.12.1.4  (01-01-2008)
♦BMF Consistency♦

  1. The purpose of this initiative is to achieve consistency in the BMF Code & Edit processing IRMs.

  2. Topics for BMF Consistency have been identified and developed as a coordinated effort between Cincinnati Submission Processing Center (SPC), Ogden SPC, and CAS Submission Processing (BMF Policies, Procedures, and Guidance Branch).

  3. BMF Consistency tridocs are identified by a "♦" (diamond) before and after the tridoc title.

  4. The text in normal print within a consistency tridoc signifies the common process to be used for all BMF returns. The text in bold print is form-specific and only applies to this IRM.

3.11.12.1.5  (01-01-2008)
General Perfecting of EO Returns

  1. The following general information can be used when editing Exempt Organization returns. If the general instructions and the form specific instructions conflict, follow the form specific instructions.

  2. Perfect the lines to be transcribed (T-lines) on the return as indicated by a "T" on the exhibit for the form to be edited as follows:

    Note:

    Perfect means to edit a T-line entry for legibility if a dollar amount is present. If a dollar amount is not present, bring amount to the line from attachment(s) or from the lines feeding into the "total" line.

    1. "X" the T-line if the taxpayer has crossed out the wording and replaced it with wording with a different meaning from the wording on the return.

    2. "X" any line and edit or add the entry on the correct T-line if the wording has been crossed out and replaced with wording that is on a T-line.

    3. Recompute a "total" T-line if all of the lines above it are also T-lines, and one or more dollar entries have been edited or deleted ("X" ed).

  3. A dollar entry is a positive or negative dollar amount.

    1. Document Perfection is no longer required to edit dollars and cents.

    2. Do not edit brackets or parentheses around amounts clearly indicated to be negative with a bracket or a minus (-) sign. A true negative entry means that, through computation or perfection, the result or entry is actually negative.

      Reminder:

      It is necessary to bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a missing line entry, etc.).

3.11.12.1.6  (01-01-2008)
♦Edit Marks♦

  1. Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through ISRP. Code and Edit must edit in red pencil/pen. Other areas can edit in brown, orange or green pencil/pen.

  2. The only items edited on the return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

  3. The original entry on a return is never obliterated, altered or erased when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

  4. For a description of specific edit marks, see the table below:

    Edit Mark Description
    "X" or "/" The "X" is used to delete tax data or to indicate that an item is not to be transcribed. A "/" can be used when deleting a form or schedule not being transcribed.
    "//$" The "//$" is used in the entity area to identify the beginning and ending of a foreign country code. For example, "/EI/$" is edited for Ireland and "/GM/$" is edited for Germany.
    "%" or "c/o" Indicates an "in-care-of" name for transcription.
    Circle Indicates that an entry is not to be transcribed. Also used to delete Entity data or a Received Date.

    Note:

    If the taxpayer circles an entry, edit the entry.
    Underline Indicates that an entry is to be transcribed (e.g., Name Control, Tax Period, and a Received Date that is other than an IRS stamped date).
    Arrow Indicates the correct placement of a misplaced entry. An arrow may be used if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    A double arrow may be used if the same figure is to be transcribed in two different places (along with any required transcription data between the two arrows).

    Check Mark Indicates that an entry has been manually math verified and is correct.
    Bracket/Parenthesis Indicates a negative numerical amount.

    Note:

    C&E is no longer required to bracket negative amounts when brackets are preprinted on the form or schedule, or when the taxpayer clearly indicates a negative amount with brackets or (-) sign. It will be necessary to bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a line entry, entering a missing entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollar and cents if no distinction has been made by the taxpayer.
    Zero, Dash, None, or N/A "ZERO" , "DASH" , "NONE" , or "N/A" are considered valid entries except when specific instructions require editing of an entry.
    Edit Marks Made by Other IRS Functions Edit marks entered by other areas, such as Collection or Accounts Management, are not to be re-edited except to place the marks in the correct area.
    Rocker Indicates the amount paid when drawn under a remittance amount.

3.11.12.1.7  (01-01-2008)
Attachments to an EO Return

  1. Put the EO return and any IRS forms and schedules in order per the general instructions for the return. This includes zero filers with transcription lines present on Form 990, Parts I-XI, or Form 990-EZ, Parts I-V. For zero filers that have no transcription lines on Form 990, Parts I-XI or Form 990-EZ, Parts I-V, it is NOT necessary to put pages in order after page 1.

  2. Always perfect the return from a supporting attachment unless otherwise stated. If unable to easily perfect from an attachment (e.g., line numbers are not specified), correspond. Request that the taxpayer provide specific line information.

  3. Detach only original documents (e.g. documents which have an original signature or documents which are not marked "copy" or attached to supplement or support the return) by doing the following (see Exhibit 3.11.12–21, Attachment Routing Guide):

    1. Note on the document "detached from F. XXXX" and edit the received date of the return on the detached document.

    2. Continue routing or perfecting the return from which the attachment was separated.

  4. A slash "/" can be used when deleting a form or schedule not being transcribed.

3.11.12.1.8  (01-01-2008)
Researching an EO Return

  1. Use Form 12837 to request research when instructed to do so.

  2. The following IDRS Command Codes may be used for research:

    1. BMFOLE

    2. BMFOLI

    3. BMFOLO

    4. BMFOLT

    5. ENMOD

    6. INOLES

    7. NAMEE/NAMEB

  3. Effective January 2004, Modernized electronic Filing (MeF) became available for Form 990, 990-EZ and 1120-POL filers. Effective January 2005, MeF became available for Form 990-PF filers.

  4. MeF returns can be identified on IDRS by DLNs with a File Location Code of 92 or 93 (first two digits of the DLN).

  5. The return in its entirety can be viewed and/or printed by accessing the MeF Employee User Portal (EUP).

  6. Procedures to access and use the EUP can be found in IRM 3.42.4.4.

3.11.12.1.9  (01-01-2008)
Using Routing Form 4227

  1. Use Form 4227 to route either a numbered or unnumbered return, attachment, photocopy, or other document to a function inside the Ogden IRS Center. See Figure 3.11.12-2.

  2. Use the Area Office List to determine the Area Office of jurisdiction of the edited state of the organization’s address. See Figure 3.11.12-3.

  3. Include on Form 4227 all of the following information:

    1. Your name or C&E stamp

    2. Where you are routing the document(s)

    3. The reason why you are routing the document(s) and/or any instructions for the receiving area

  4. Examples of reasons for routing and/or instructions to note on Form 4227 are:

    • Entity issue, per IRM 3.11.12.1.10

    • Move $$ for Non-Master File Assessment

    • Assign EIN

    • Return numbered with the wrong DLN (use Action Code 640 for documents batched as Forms 990/990–EZ, 990–PF, 990-T, 1120-POL, 5227, or 8872. Use CCC "U" for all others).

  5. Attach a completed Form 4227 under the entity section of the original or photocopied document(s).

    Figure 3.11.12-2

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Form 4227 — Intra-SC Reject or Routing Slip

    Figure 3.11.12-3

    EO Area Offices — Codes and States of Jurisdiction
    01— Northeast Area
    IRS
    GPO Box 029162
    625 Fulton Street
    Brooklyn, NY 11201     		Connecticut
    Maine
    Massachusetts
    New Hampshire
    New Jersey
    New York
    Rhode Island
    Vermont     		02 — Mid-Atlantic Area
    IRS
    P.O. Box 260
    12th Floor
    Rm 1235
    Newark, NJ 11201     		Delaware
    District of Columbia (Washington DC)
    Maryland
    New Jersey

    North Carolina
    Ohio
    Pennsylvania
    South Carolina
    Virginia
    West Virginia


    Military
    Foreign
    03 — Great Lakes Area
    IRS
    230 S. Dearborn St
    M/S 4900 CHI
    Chicago, IL 60604     		Illinois
    Indiana
    Iowa
    Kentucky
    Michigan
    Minnesota
    Nebraska
    North Dakota
    South Dakota


    Wisconsin     		04— Gulf Coast Area
    IRS
    401 W. Peachtree Street
    Suite 1665
    Atlanta, GA 30308     		Alabama
    Arkansas
    Florida
    Georgia
    Kansas
    Louisiana
    Mississippi
    Missouri
    Oklahoma
    Tennessee
    Texas
    05— Central Mountain Area: Effective June 26, 2005, Area 05 ceased operations. All states previously assigned to this area was realigned to one of the other 4 areas.   06 — Pacific Coast Area
    IRS
    300 N. Los Angeles St.
    Mail Stop 7000
    Los Angeles, CA 90012-3335     		Alaska
    Arizona
    California
    Colorado
    Hawaii
    Idaho
    Montana
    Nevada
    New Mexico
    Oregon
    Utah
    Washington
    Wyoming

    EO Area Offices — Codes and States of Jurisdiction

3.11.12.1.9.1  (01-01-2008)
Prompt Determination Request

  1. Returns may be received requesting a prompt determination of any unpaid tax liability of a bankruptcy estate. The trustee or debtor-in-possession must file a written request for the determination with the IRS Area Office Director.

  2. If wording similar to "Prompt Determination" , "Title 11, U.S.C. Section 505(b)" , "Rev. Proc. 81–17" , or "Rapid Examination" are indicated on a return or attachments, or a letter to an Area Office Director requesting a prompt determination or a prompt audit is attached, review the return for an Area Office Received Date Stamp. If present, continue processing. If not present, do all of the following:

    1. Photocopy the return and all attachments.

    2. Route the photocopies to the appropriate Area Office (See Figure 3.11.12–3) Special Procedures Function (SPF) Bankruptcy Section via Form 4227. Annotate on the Form 4227 "Prompt Determination, U.S.C. Section 505(b)" .

    3. Continue processing the original return.

3.11.12.1.10  (01-01-2008)
Routing to Entity

  1. Route the following ENTITY ISSUES to Entity if there is no indication Entity worked the issue (e.g. TC 59X, Entity stamp).

    1. Mismatch, multiple, "applied for" , or no EIN.

      Note:

      Follow the procedures in IRM 3.11.12.1.24.1 prior to routing EIN issues to Entity.

    2. Name change.

    3. Name and EIN are not legible or not present.

    4. Address changes for affiliates or credit unions.

    5. "We are not required to file."

      Exception:

      Do not route to Entity CP 140/144 replies stating "not required to file" unless the organization indicates they are a church or government.

    6. "We are not an exempt organization."

    7. "Our exempt status has been terminated" or "We are no longer exempt."

    8. "We have merged our assets with another organization."

      Exception:

      Do not route to Entity if CCC "F" has been edited per IRM 3.11.12.1.25.

    9. "We have assumed, purchased, acquired, etc. the assets of another organization."

    10. "We are no longer a group or no longer an affiliate of this group."

    11. "We no longer charter credit unions."

    12. Undeliverable CPs 140/144, 411/414 and 420–429.

    13. Form 8872 has the "change of address" box checked. Annotate "Oracle update required" in the remarks area of Form 4227.

  2. Route to Entity by leaving the perfected numbered or unnumbered return in the batch or by following local procedures. Attach a completed Form 4227, and edit ERS Action Code 320 for Forms 990/990–EZ, 990–PF, 990-T, 1120-POL, 5227 and 8872 or CCC "U" for all other Master File returns.

    Exception:

    If a CP4XX is attached to an unnumbered return, and the CP has not been cleared by Entity, attach the CP to the front of the return and pull the return from the pack to be routed to Entity.

3.11.12.1.11  (01-01-2008)
Routing to Other Functions

  1. Route to another function (e.g. ERS/Rejects, Statutes, OAMC, NMF, R&C) by doing one of the following:

    1. Pull the perfected unnumbered return from the batch. Attach a completed Form 4227 and route the return to the function.

    2. Leave the perfected numbered return in the batch. Perfect only the entity information. Attach a completed Form 4227 and edit an ERS Action Code (see IRM 3.11.12.1.12) for Forms 990/990–EZ, 990–PF, 990-T, 1120-POL, 5227 and 8872 or CCC "U" for all other Master File returns.

  2. Route a photocopy of an unnumbered return or CP notice to the Area Office by attaching a completed Form 4227 and following the specific instruction(s) given in IRM 3.11.12.1.9.

  3. Route NMF returns per local procedures.

3.11.12.1.12  (01-01-2008)
♦Action Codes (ERS)♦

  1. Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When necessary, a three-digit Action Code will be assigned by the tax examiner. Action Codes are valid for Forms 990, 990-EZ, 990-PF, 990-T, 1120-POL, 5227, and 8872. Any other returns are processed through a manual correction process. Use Computer Condition Code "U" on these returns when actions such as correspondence is needed.

  3. Edit the Action Code in the bottom left margin of the return.

  4. Assign Action Codes in the following priority:

    1. Action Code 310 (Statute Control)

    2. Action Code 320 (Entity Control)

    3. Action Code 4XX

    4. Action Code 6XX

    5. Action Code 3XX

    6. Action Code 2XX (Correspondence)

    Exception:

    Use Action Code 211, 215, 225, or 226 before Action Code 341 to ensure the return is complete before a manual refund is issued.

  5. Form 4227 is required except when Action Codes 211, 225, and 226 are used for correspondence or Action Code 480 is used for early filed future returns.

  6. Only one Action Code can be assigned to a return at one time. If more than one Action Code is needed edit the second Action Code on Form 4227.

  7. If more than one Action Code of the same priority is required (e.g., 342 and 355), edit the Action Code with the shortest suspense period and attach Form 4227 to indicate the second unprocessable condition. See Exhibit 3.11.12-35.

  8. Edit the following Action Codes when a return cannot be perfected from the information present: