4.75.20  Final Case Processing

Manual Transmittal

October 15, 2014

Purpose

(1) This transmits revised IRM 4.75.20, Exempt Organizations Examination Procedures, Final Case Processing.

Material Changes

(1) Converted the manual to plain language. For more guidance on plain language, see www.plainlanguage.gov.

(2) IRM 4.75.20.1: Replaced the three paragraphs with two paragraphs, fully revising the introduction.

(3) IRM 4.75.20.2: Added notes concerning short statute cases and the requirement for the assessment statute of limitations to have at least a year remaining before the expiration date. Removed paragraphs that discussed Mandatory Review issuing the 30-day letter.

(4) IRM 4.75.20.3: Replaced existing paragraphs with guidance on the contents of a protest, case file assembly, the presence of a disc containing selected files, and the need for an original return.

(5) IRM 4.75.20.4: Replaced existing paragraphs with explanation of authorities to issue 90-day letters, the types of cases that require 90-day letters, and the types of 90-day letters issued by reviewers.

(6) IRM 4.75.20.5: Replaced existing procedures with reference to new procedures in IRM 4.75.17, Mandatory Review. Shifted guidance on the redaction process to IRM 4.75.20.5.1, replacing the directions on the taxpayer's response to the adverse determination letter.

(7) IRM 4.75.20.6: Eliminated most of the content of the section, and some of the subsections, and directed reviewers to IRM 4.8.9, Statutory Notice of Deficiency for much of the directions, due to duplication of material.

(8) IRM 4.75.20.7: Eliminated the section on discrepancy adjustments, IRM 4.8.9 provides guidance on statutory notices of deficiency for individual taxpayers. Renumbered the following section, also eliminating various paragraphs and replacing them with references to IRM 4.8.9.

(9) IRM 4.75.20.8: Inserted new section on notices of determination of worker classification, with references to IRM 4.8.10, Notices of Determination of Worker Classification.

(10) IRM 4.75.20.9: Revised the section to eliminate much of the procedures, currently contained in IRM 4.75.16.5.6.1, Inadequate Records Notice.

(11) Exhibit 4.75.20-1: Replaced the reviewer memorandum exhibit with Mandatory Review's case closing check sheet.

(12) Exhibit 4.75.20-2: Inserted new exhibit for the memorandum to Area Counsel for pre-issuance review of a 90-day letter and accompanying case file.

(13) Exhibit 4.75.20-3: Inserted new exhibit of the final adverse determination letter (custom crafted by Area Counsel) for 501(c)(3) exempt status revocations.

(14) Exhibit 4.75.20-4: Inserted new exhibit of the final adverse determination letter (custom crafted by Area Counsel) for foundation status modifications.

(15) Exhibit 4.75.20-5: Inserted instructions for completing Form 4194, Revocation of IRC § 170(c) Status.

(16) Exhibit 4.75.20-6: Inserted a sample statutory notice of deficiency package for an income tax case.

(17) Exhibit 4.75.20-7: Inserted a sample statutory notice of deficiency package for an IRC 4958 excess benefit transaction case.

(18) Exhibit 4.75.20-8: Inserted a sample statutory notice of deficiency package for an unagreed, uncorrected IRC 4941 self-dealing tax case involving a discrete act.

(19) Exhibit 4.75.20-9: Inserted a sample statutory notice of deficiency package for an unagreed, corrected IRC 4941 self-dealing tax case involving a continuous act.

(20) Exhibit 4.75.20-10: Inserted a list of sample summaries inserted in the final adverse determination letters and statutory notices of deficiency.

(21) Exhibit 4.75.20-11: Inserted a set of instructions for Form 2363–A, Request for IDRS Input for BMF/EO Entity Change for 501(c)(3) exempt status revocation.

(22) Exhibit 4.75.20-12: Inserted a set of instructions for Form 2363-A for 501(c)(3) foundation status modifications.

Effect on Other Documents

This manual supersedes IRM 4.75.20, Final Case Processing, dated 07-01-2003.
Additionally, this manual incorporates the information in the following obsoleted memoranda and alerts:
Correspondence Control Number: T:EO:E - 26-2004, New Group Letter Closing Procedures dated October 29, 2004.
Correspondence Control Number: T:EO:E - 14-2005, Closing Letters on Mandatory Review Cases, dated August 16, 2005.
EO Examinations Programs & Review Mandatory Review Alert, Unagreed Case – Formal Protest Filed, dated March 11, 2013.

Audience

Tax Exempt and Government Entities
Exempt Organizations
Examination

Effective Date

(10-16-2014)

Tamera L. Ripperda
Director, Exempt Organizations
Tax Exempt and Government Entities

4.75.20.1  (10-16-2014)
Introduction

  1. This IRM section contains specific guidance for EO Reviewers regarding the proper final case closing processing procedures and also provides information regarding the quality control procedures established for EO Examination review functions. As Special Review holds responsibility for cases returned to groups after the case originally closed, these procedures apply to both Special and Mandatory Review.

  2. Agent refers to the EO Examination employee assigned the case, regardless of whether the employee is in the GS-0512, GS-0526, GS-0592, or GS-0987 series.

4.75.20.2  (10-16-2014)
Quality Control

  1. Mandatory Review receives cases after issuance of unagreed formal audit reports proposing changes in exemption, foundation status, and tax as well as other specific types of cases. For a list of such cases, see IRM 4.75.16.6, Cases Subject to Mandatory Review. Certain types of unagreed cases bypass Mandatory Review, such as unagreed non-worker classification employment tax cases and cases returning to Special Review. (See IRM 4.75.18.9.1, Reopening Memorandum.) Prior to closing a case to the EO Examinations Mandatory Review Statute Coordinator(s) for final processing, reviewers inspect the cases and either:

    • Return the case to the group via a Form 5456, Reviewer's Memorandum - EP/EO. See IRM 4.75.17.2.3, Returning a Case.

    • Forward the case to Appeals. See IRM 4.75.20.3.

    • Prepare and issue an adverse determination letter. See IRM 4.75.20.5.

    • Prepare and issue a statutory notice of deficiency. See IRM 4.75.20.6.

    • Prepare and issue a notice of determination of worker classification. See IRM 4.75.20.8.

  2. All EO Examination employees: Observe and follow the quality control procedures outlined below:

    1. Agents: Send all completed case files through your group manager for closing. See IRM 4.75.16.9, Shipping From the Group, when forwarding cases to Mandatory Review.

    2. Group Managers: If a case requires action by another group or area prior to final closing, forward the case directly to that area after your approval and after updating the case to its proper status as provided in IRM 4.75.16, Case Closing Procedures.

    Note:

    Mandatory Review does not accept short statute cases without proper documentation and approval. See IRM 4.75.16.4.2, Statute Considerations, for further guidance.

    Note:

    Effective September 2, 2014, Appeals will reject cases that have less than a year until the assessment statute expiration date (ASED).

  3. Group Manager: prior to forwarding a case to Mandatory Review, inspect the case and initial your concurrence.

    Note:

    There is no specific place designated for your signature. Use bottom of the last page of Form 5464, Case Chronology Record.

  4. Reviewer: verify computations in "change" cases, before forwarding any case to the closing unit.

  5. Reviewer: if you receive a case with Form 5666, TE/GE Information Report, attached, review and perfect the form if incorrect.

    • For form instructions, refer to IRM 4.5.1-12, Instructions for Preparing Form 5666, TE/GE Referral/Information Report (Reference: IRM 4.5.1.3.9.2).

    • For information on what to include with the form, see IRM 4.75.16.4.8.1, Form 5666 - Revocations.

4.75.20.3  (10-16-2014)
Forwarding TEGE Cases to Appeals

  1. Reviewer: ensure the case file includes the following information in the taxpayer's protest:

    • The taxpayer’s name, address, Employer Identification Number (EIN) and a daytime phone number.

    • A statement that the taxpayer wants to protest the proposed determination.

    • An explanation of the taxpayer's reasons for disagreeing, including any supporting documents.

    • The law or authority, if any, relied upon by the taxpayer.

    Note:

    The taxpayer must submit the protest statement with the following signed declaration: "Under penalties of perjury, I declare that I have examined this protest statement, including accompanying documents, and to the best of my knowledge and belief, the statement contains all relevant facts, and such facts are true, correct and complete."

  2. If the taxpayer's representative submits the protest, the representative must include a substitute declaration stating:

    • That he or she submitted the protest and accompanying documents.

    • Whether he or she knows personally that the facts stated in the protest and accompanying documents are true and correct.

  3. Reviewer: ensure the:

    1. Agent assembled the case file per IRM 4.75.16.7, Case File Assembly. Place the protest on top of the 30-day letter. If the case file spans multiple boxes, note the location of the protest, audit report, and rebuttal on Form 3198-A, TE/GE Special Handing Notice.

    2. Form 5599, TE/GE Examined Closing Record, contains appropriate Appeals office and issue codes. See Document 6379, Exempt Organizations Management Information Systems Codes for the list of applicable codes.

    3. Agent prepared and mailed a rebuttal to the protest, with copies to the power of attorney.

  4. Reviewer: verify that the agent prepared a disc for Appeals. If none is present, return the case to the agent to burn a disc with the following items:

    • Proposed adverse (30-day) letter

    • Form 886-A, Explanation of Items (final version only)

    • Form 5772, EO Workpaper Summary

    • Form 5773, EO Workpaper Continuation Sheet

    • Form 5464, Case Chronology Record

    • Administrative Record Index (if applicable)

    • Computational spreadsheets

    • Taxpayer’s protest (if electronically available)

    • Rebuttal to protest

    Note:

    In regards to the taxpayer’s protest, if the taxpayer (or representative) does not submit it electronically, the agent need not scan the document. However, if the agent chooses to scan the protest, the agent should scan any attachments in addition to the letter.

    Note:

    For directions on returning a case to an agent, see IRM 4.75.17.2.3, Returning a Case.

  5. Potentially any case going to Appeals may go to court. For employment, income, and excise taxes, Chief Counsel requires the original return to be present in the file. Chief Counsel accepts copies of Forms 990 and 4720 series returns generated from SEIN. For e-filed returns, obtain the complete TRDBV print from the Integrated Data Retrieval System (IDRS).

  6. Reviewer: close the case as per the instructions at IRM 4.75.17.4.2, Closing a Case. Upon receipt in Dallas, the Mandatory Review Statute Coordinator processes the closing check sheet, prepares a Form 3210, Document Transmittal, and closes the case to Examination Special Support.

4.75.20.4  (10-16-2014)
90-Day Letters

  1. Under Delegation Orders 4-8 (IRM 1.2.43.9) and 4-26 (IRM 1.2.43.24), area managers and reviewers (grade 12 and above) have the authority to issue statutory notices of deficiency and notices of determination concerning worker classification. Under Delegation Order 7-2 (IRM 1.2.46.3) and TE/GE Delegation Order 18, the Manager, Exam Programs and Review has the authority to issue a final adverse determination letter.

  2. Reviewers in Mandatory Review prepare and issue most 90-day letters, with three exceptions:

    1. Reviewers in Special Review prepare and issue 90-day letters in cases reopened by Special Review.

    2. The Manager, Exam Programs and Review approves all final adverse determination letters. The reviewer date stamps and mails the approved letter.

    3. Groups holding short statute cases prepare the 90-day letters, with assistance from a reviewer. The reviewer issues the 90-day letter. See IRM 4.75.16.4.2.3, Short Statute Cases - 90-Day Letter Process.

  3. The following lists the possible adverse situations for which reviewers may issue 90-day letters to taxpayers:

    • Modifications of foundation status under IRC 509 (IRC 7428)

    • Revocations of exemption of IRC 501(c)(3) organizations (IRC 7428)

    • Unagreed converted Form 1120 assessments (IRC 6212)

    • Unagreed discrepancy adjustments (IRC 6212)

    • Unagreed excise tax assessments (IRC 6212)

    • Unagreed unrelated business income tax assessments (IRC 6212)

    • Unagreed worker classification determinations (IRC 7436)

  4. Reviewers issue the following types of 90-day letters to taxpayers:

    • Final adverse determination letters (revocations and foundation status modifications)

    • Notices of determination of worker classification

    • Statutory notices of deficiency

  5. Potentially any taxpayer receiving a 90-day letter may go to court. For employment, income, and excise taxes, Chief Counsel requires the original return to be present in the file. Chief Counsel accepts copies of Forms 990 and 4720 series returns generated from SEIN. For e-filed returns, obtain the complete TRDBV print from IDRS.

4.75.20.4.1  (10-16-2014)
Declaratory Judgments Under IRC 7428

  1. IRC 7428 provides for the judicial review of certain final adverse EO determinations by the United States Tax Court, the United States Court of Federal Claims, and the United States District Court for the District of Columbia.

  2. Matters subject to court review covered under IRC 7428(a)(1) include disagreements with respect to initial or continuing qualification of an organization under IRC 501(c)(3).

    Note:

    Refer to IRM 4.75.13.8.9 , Issues Subject to Declaratory Judgment Under IRC 7428.

  3. When a taxpayer files suit under IRC 7428, the government has 45 days (motions) to 60 days (answers) to file a response with the court. Because the government may file a motion to dismiss before submitting an answer, timeliness is critical.

  4. In unagreed IRC 501(c)(3) modifications, the procedures are the same as for revocations, except there's no loss of exempt status.

4.75.20.5  (10-16-2014)
Final Adverse Determination Letter Case Processing

  1. Reviewer: for unagreed, unprotested IRC 501(c)(3) exempt status revocations where you agree with the agent’s decision to revoke, prepare:

    1. The final adverse determination letter and any accompanying power of attorney cover letters. If one is already present in the file, make corrections as needed. See Exhibit 4.75.20-3 or Exhibit 4.75.20-4 as needed.

    2. A memorandum to Area Counsel. Request a pre-issuance review of the letter. See Exhibit 4.75.20-2.

    3. Forms 3210, Document Transmittal, and 9814, Request for Mail/Shipping Service, to transmit the case to the appropriate area counsel office. For office addresses, see http://ccintranet.prod.irscounsel.treas.gov/OrgStrat/Offices/TEGE/Pages/AreaCounselOffices.aspx.

    Note:

    For purposes of the final adverse determination letter, treat IRC 7428 declaratory judgment cases as unagreed even if in receipt of a signed Form 6018. Area Counsel review of cases with signed Forms 6018 is not required.

  2. Reviewer: see IRM 4.75.17.2.5, 90-Day Letter Preparation and Issuance for directions on preparing and issuing the final adverse determination letter.

  3. Reviewer: prepare a Form 2363-A, Request for IDRS Input for BMF/EO Entity Change, and send it to the FAST for processing. See Exhibit 4.75.20-11 for revocations and Exhibit 4.75.20-12 for foundation status modifications.

4.75.20.5.1  (10-16-2014)
Publication of the Determination

  1. The Internal Revenue Service publishes a list of revoked 501(c)(3) organizations in the Internal Revenue Bulletin. The Service also publishes a list of 501(c)(3) organizations that have lost their public charity status and have become private foundations. Taxpayers can search to see the organization's status via EO Select Check. Taxpayers can also inspect a redacted copy of the final adverse determination letter at the IRS Reading Room.

  2. Reviewer: prepare Form 4194, Revocation of IRC § 170(c) Status. See Exhibit 4.75.20-5 for directions.

    Note:

    Prepare Form 4194 for the revocation of an IRC 501(c)(8), (c)(10), (c)(13) or (c)(19) organization, if contributions are deductible under IRC 170(c).

  3. Reviewer: secure e-mail the following items to the Manager, Mandatory Review:

    1. The electronically signed Form 4194.

    2. The 30-day letter.

    3. The revenue agent report (Form 886-A, Explanation of Items)

    4. The final adverse determination letter, with date of mailing.

  4. Manager, Mandatory Review: forward the e-mail to an assigned group member for redaction. The assigned group member may refer to IRM 7.28.4.4, Guidelines for Deletion (Redaction) for guidance on processing the redaction.

  5. Reviewer: check for Form 2363-A, Request for IDRS Input for BMF/EO Entity Change, in the file. Make corrections, as needed, or prepare a new Form 2363-A. See Exhibit 4.75.20-11 or Exhibit 4.75.20-12 for instructions. E-mail the form to the FAST unit.

  6. Manager, Mandatory Review: have the assigned group member mail the Form 4194 and a copy of the 90-day letter to Business Systems Planning (BSP) for subsequent publication of the adverse decision. The address is:
    TE/GE Business Systems Planning Division
    Attn.: T:BSP
    1111 Constitutional Avenue, NW
    Washington, D.C. 20224

  7. Reviewer: If the adverse determination involves a modification to a private foundation, prepare Form 5060, Report of Adverse Determination on Private Foundation Status and Private Operating Foundation, and include in the case file for processing for subsequent publication of the adverse private foundation determination. The address to ship the Form 5060 is:
    Technical Services Staff
    CC:IND, Room 2579
    1111 Constitution Avenue. NW.
    Washington, DC, 20224

  8. Foundation status modification cases follow the same procedures as 501(c)(3) revocation cases. However, foundation status modifications cases do not require redaction of the letters or preparation of Form 4194 as they are not disclosed or sent to the IRS Reading Room.

4.75.20.6  (10-16-2014)
Statutory Notice of Deficiency

  1. A notice of deficiency, also called a "statutory notice of deficiency" or "stat notice" , is the Service's determination of a taxpayer's income, excise, estate or gift tax deficiency sent to the taxpayer by certified or registered mail.

  2. The IRS is authorized to send this notice per IRC 6212(a) and Treas. Reg. 301.6212-1. The issuance of a statutory notice of deficiency begins the litigation process.

  3. Mandatory Review issues a statutory notice of deficiency when the:

    1. Taxpayer does not file a valid protest in response to a 30-day letter or fails to respond to a 30-day letter for unrelated business income deficiencies, excise taxes, and discrepancy adjustments.

    2. Imminent expiration of the statute of limitations and no extension can be obtained.

    3. Taxpayer requests the issuance of the notice in order to plead the case in the US Tax Court.

4.75.20.6.1  (10-16-2014)
Preparation and Issuance

  1. The notice of deficiency is a legal determination that is presumptively correct. The notice of deficiency will consist of:

    1. A letter explaining the purpose of the notice, the amount of the deficiency, and the taxpayer's options.

    2. A copy of the aforementioned letter.

    3. A waiver, typically Form 4089, Notice of Deficiency -Waiver or Form 4089-B, Notice of Deficiency - Waiver.

    4. Appropriate tax computation forms such as Form 4549-A, Income Tax Discrepancy Adjustments, or Form 4883, Exempt Organizations Excise Tax Audit Changes.

    5. A written explanation of all the adjustments, often on Form 886-A, Explanation of Items.

    6. Information about the services offered by the Taxpayer Advocate Service (TAS), along with the closest TAS office address.

  2. When composing the explanation of the adjustments, provide a short synopsis of the facts and law. For examples, see Exhibit 4.75.20-10.

    Caution:

    Never include the complete revenue agent report in the statutory notice of deficiency.

  3. For sample notices, see Exhibit 4.75.20-6, Exhibit 4.75.20-7, Exhibit 4.75.20-8, and Exhibit 4.75.20-9.

  4. Refer to IRM 4.8.9, Statutory Notices of Deficiency for directions on preparing notices. Focus on IRM 4.8.9.8, Preparing Notices of Deficiency, IRM 4.8.9.10, Signing and Dating the Notice of Deficiency, IRM 4.8.9.11, Disposition of Copies, IRM 4.8.9.15, Overassessments and Claims, IRM 4.8.9.16, Special Issues and IRM 4.8.9.17, Special Cases.

    Note:

    When reviewing directions in IRM 4.8.9, keep in mind that Area Counsel (Chief Counsel TE/GE Field Service) reviews all TE/GE issued statutory notices of deficiency prior to issuance, and that Examination Support Services processes the notices in lieu of Small Business/Self Employed's (SB/SE) Centralized Case Processing (CCP) units. Also note that for Chapter 42 excise taxes, replace Letter 531 with Letter 1753 (as modified in Exhibit 4.75.20-7, Exhibit 4.75.20-8, and Exhibit 4.75.20-9).

  5. Reviewer: see IRM 4.75.17.2.5, 90-Day Letter Preparation and Issuance for directions on issuing the notice.

  6. After issuing the notice, add 150 days (210 if sent to a foreign address) to the statute of limitations for each tax year included in the notice. Notify the Statute Coordinator, Mandatory Review, who will use RCCMS to perform the AIMS update. Complete the Mandatory Review check sheet (Exhibit 4.75.20-1), checking the box for the 90-day suspense date. Enter a date 105 days from the date you issued the notice.

  7. See IRM 4.75.17.2.4, Closing a Case for directions on closing the case.

4.75.20.6.2  (10-16-2014)
Procedures Following the 90 Day Period

  1. If the organization does not respond to the statutory notice of deficiency within 90 days and the case is not docketed, hold the case for an additional 15 days and then close to Examination Support Services (ESS).

  2. Attach Form 3198-A, EO Special Handling Notice, with the following instructions "STATUTORY NOTICE OF DEFICIENCY DEFAULTED - ASSESS TAX IMMEDIATELY."

  3. Before closing, the Mandatory Review Statute Coordinator verifies that the case has not been docketed. If the case is docketed for Tax Court, the coordinator updates and forwards to the closing unit for transfer to Appeals.

    Note:

    For information on petitions, see IRM 4.8.9.25, United States Tax Court Petition Filed

    .

4.75.20.6.3  (10-16-2014)
Rescinding A Notice of Deficiency

  1. Under Delegation Order 4-8 (IRM 1.2.43.9 ) reviewers can rescind a notice of deficiency mailed to a taxpayer, but only with the consent of the taxpayer. If the taxpayer responds to the statutory notice of deficiency by signing Form 872, Consent to Extend the Time to Assess Tax, prepare a Form 8626, Agreement to Rescind Notice of Deficiency, to secure an agreement between the taxpayer and the government.

    Note:

    The signed and executed consent must be in hand before mailing the Form 8626.

  2. If the organization agrees to the deficiency by signing Form 4089 the case should be closed following agreed case closing procedures.

4.75.20.6.4  (10-16-2014)
Protests, Correspondence and Waivers Received After Issuance

  1. See IRM 4.8.9.23, Protests, Correspondence and Waivers Received After Issuance of Notice of Deficiency, for general procedures when the taxpayer sends in something other than a signed Form 4089.

  2. Reviewer: If during the 90 day period the taxpayer submits a signed Form 4089, notify the Mandatory Review Statute Coordinator, who will transmit the case to ESS for assessment of the deficiency.

4.75.20.7  (10-16-2014)
Claims - Issue Not Before Tax Court or Other Courts

  1. If a taxpayer invokes the jurisdiction of the Tax Court in redetermining the amount of the deficiency, the taxpayer is precluded from instituting suit at a later date in the courts on a claim for refund filed for the same kind of tax for the same taxable year. For guidance for when these situations arise, see IRM 4.8.9.15.3 , Claims and Petitions to the United States Tax Court.

4.75.20.7.1  (10-16-2014)
Overassessment - Claim Invitation

  1. While the taxpayer may be advised in a notice of deficiency that there is an overassessment of income tax for another year or years, the Tax Court has no authority to review and redetermine such overassessments. Therefore, if the overassessment of tax shown in a deficiency notice is not protected by a claim for refund based on the issues producing the overassessment, the taxpayer should be advised of his/her right to file a claim for refund based on the issues producing the overassessment and of his/her right to file a claim for refund within the time provided by law.

  2. For directions, see IRM 4.8.9.15 , Overassessments and Claims. When inserting the paragraph provided in IRM 4.8.9.15.1(2) , Claim for Refund Invitation, insert Form 990-T, Exempt Organization Business Income Tax Return, or Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation, if applicable.

4.75.20.7.2  (10-16-2014)
Waiver of Restrictions

  1. In some cases, the deficiency in tax will be attributable to many adjustments. The taxpayer may be in accord with some of the adjustments and would be willing to consent to the immediate assessment and collection of that part of the deficiency if he/she could be assured that such action would not deprive him/her of his/her right to file a petition with the Tax Court. If such a situation arises, the agent should:

    • Calculate the amount of penalty and interest using the Report Generation System NT (RGS) for the partial agreement amount.

    • Provide the taxpayer with the computed amount of tax, penalties, and interest.

    • Advise the taxpayer to pay that amount at this time to prevent the accumulation of further penalty and interest on the partial agreement amount.

    • Explain that the taxpayer would need to file the petition in order to contest the remaining unagreed amount.

  2. For further guidance on this procedure, see IRM 4.8.9.20.3.1(3), Telephone Contact and IRM 4.8.9.23.3 , Waiver of Restriction on Assessment.

4.75.20.8  (10-16-2014)
Notice of Determination of Worker Classification

  1. The 30-day letter in employment tax cases that do not involve IRC 7436 worker classification issues serves as the final report. Cases that involve IRC 7436 worker classification issues that go unagreed require the issuance of a notice of determination of worker classification.

  2. SB/SE holds jurisdiction over employment taxes, even though TE/GE Counsel provides the legal guidance to SB/SE. As such, when needing to prepare a Notice of Determination of Worker Classification, refer to IRM 4.8.10, Notice of Determination of Worker Classification, and IRM 4.23.10, Report Writing Guide for Employment Tax Examinations.

  3. Reviewer: When following the procedures outlined in IRM 4.8.10, keep in mind that:

    • You hold the authority to sign and issue the notice. See IRM 1.2.43.24, Delegation Order 4-26 (Rev. 1) (formerly DO-251).

    • Area Counsel (Chief Counsel TE/GE Field Service) reviews all TE/GE issued notices of determination of worker classification prior to issuance.

    • ESS processes the case upon closure, not SB/SE's CCP.

4.75.20.9  (10-16-2014)
Inadequate Record Notice Case Processing

  1. Agents follow IRM 4.75.16.5.6.1 , Inadequate Records Notice which provides directions as to the documents necessary for an inadequate records notice.

  2. Reviewer: upon completion of the case review, if you concur in the issuance of a notice, send out the package to the taxpayer. See IRM 4.75.16.5.6.1(2) for the list of items constituting the package.

  3. Reviewer: if you do not concur with the agent, prepare a Form 5456, Reviewer's Memorandum - EP/EO, to return the case to the agent. See IRM 4.75.17.2.3, Returning a Case for further directions.

  4. ESS forwards Form 5666, TE/GE Referral Information Report, to Classification for a future year audit in both agreed and unagreed situations. Classification decides whether a follow-up audit is warranted.

Exhibit 4.75.20-1 
Mandatory Review Cover Sheet

             
MANDATORY REVIEW COVER SHEET
(Place on outside of Case File when closing)
TAXPAYER NAME:     EIN:    
             
STATUTE VERIFICATION  
MFT YEAR STATUTE DATE DATE VERIFIED RETURN INITIALS  
             
             
             
             
             
             
             
             
             
             
             
             
BMFOLT/AMDIS PRINTS ATTACHED? YES NO, WHY NOT?
             
  Close to ESS
  Reviewer signature on Form 5599
  Appeals Issue: Agent:
  All Revocations - Redaction Package e-mailed to Group Mgr on:
  1120 Suspense file
  Appeals Issue and Office Codes included on Form 5599 (if applicable)
  90 day suspense date:
  Taxable related case(s) enclosed needing assessment
  Copy of final closing letter enclosed in file
  2363-A's in file for processing
  Release of V-freeze
  Release of freeze code 3
             
             
Reviewer Signature     Date  

Exhibit 4.75.20-2 
Memorandum to Area Counsel

 
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
MC:4920:DAL
1100 Commerce St.
Dallas, TX 75242
 
[Insert date]
 
  Memorandum for: [Insert name of Area Counsel]
[Insert Area] Area Counsel
[Insert street address with mail stop]
[Insert city, state and zip code]
[Insert phone number]
 
  From: [Insert name of reviewer]
TE/GE Mandatory Review
 
  Subject: Pre-issuance review of [insert final adverse determination letter or statutory notice of deficiency]
 
  Please review the attached case file for issuance of the [insert final adverse determination letter or statutory notice of deficiency] and return to Reviewer at the following address:
 
  Internal Revenue Service
[Insert street address with mail stop]
[Insert city, state and zip code]
 
  If you have any questions, please call [Insert phone number] or e-mail [Insert e-mail address]@irs.gov.
 
  Attachment(s):
 
  Case file of [Insert name of entity]
 
 
 

Exhibit 4.75.20-3 
Final Adverse Determination Letter: 501(c)(3) Exemption Revocation

 
Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
1100 Commerce Street M/C 4920 DAL
Dallas, TX 75242
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Person to Contact:
[Insert name]
Employee Identification Number:
[Insert ID Number]
[Insert name of entity]
[Insert attention line]
[Insert street address]
[Insert city, state, and zip code]
Employee Telephone Number:
[Insert phone number] (Phone)
[Insert fax number] (Fax)
 
CERTIFIED MAIL
Dear [Sir or Madam],
This is a final adverse determination regarding your exempt status under section 501(c)(3) of the Internal Revenue Code (the Code). Our favorable determination letter to you dated [date] is hereby revoked and you are no longer exempt under section 501(a) of the Code effective [date].
The revocation of your exempt status was made for the following reason[s]:
[Insert applicable and appropriate summary of the reasons for the revocation.]
Contributions to your organization are no longer deductible.
{Note: If, the organization has deductibility code “2”, this paragraph is not applicable}
You are required to file income tax returns on Form [1120 or 1041]. If you have not already filed these returns and the agent has not provided you instructions for converting your previously filed Form(s) 990 [or 990-EZ or 990-BL or 990-PF] to Form(s) 1120 [or Form(s) 1041], you should file these income tax returns with the appropriate Service Center for the tax year[s] ending [date], and for all tax years thereafter in accordance with the instructions of the return.
[As you were a private foundation as of the effective date of revocation, you are considered to be taxable private foundation until you terminate your private foundation status under section 507 of the Code. In addition to your income tax return, you must also continue to file Form 990-PF by the 15th Day of the fifth month after the end of your annual accounting period.]
Processing of income tax returns and assessments of any taxes due will not be delayed should a petition for declaratory judgment be filed under section 7428 of the Internal Revenue Code.
If you decide to contest this determination, you may file an action for declaratory judgment under the provisions of section 7428 of the Code in one of the following three venues: United States Tax Court, the United States Court of Federal Claims, or the United States District Court for the District of Columbia. A petition or complaint in one of these three courts must be filed before the 91st day after the date this determination was mailed to you if you wish to seek review of our determination. Please contact the clerk of the respective court for rules and the appropriate forms regarding filing petitions for declaratory judgment by referring to the enclosed Publication 892. Please note that the United States Tax Court is the only one of these courts where a declaratory judgment action can be pursued without the services of a lawyer. You may write to the courts at the following addresses:
United States Tax Court
400 Second Street, NW
Washington, DC 20217
US Court of Federal Claims
717 Madison Place, NW
Washington, DC 20005
U. S. District Court for the District of Columbia
333 Constitution Ave., N.W.
Washington, DC 20001
You also have the right to contact the Office of the Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal Appeals process. The Taxpayer Advocate cannot reverse a legally correct tax determination, or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling. You may call toll-free, 1-877-777-4778, and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at:
Taxpayer Advocate Service
[1st Line Address]
[2nd Line Address]
[City, State Zip]
[Phone Number]
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
  Sincerely,
 
 
  [Name of Designated Official]
Designated Official
Enclosure:
Publication 892

Exhibit 4.75.20-4 
Final Adverse Determination Letter: 501(c)(3) Foundation Status Modification

 
Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
1100 Commerce Street M/C 4920 DAL
Dallas, TX 75242
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Person to Contact:
[Insert name]
Employee Identification Number:
[Insert ID Number]
[Insert name of entity]
[Insert street address]
[Insert city, state, and zip code]
Employee Telephone Number:
[Insert phone number] (Phone)
[Insert fax number] (Fax)
 
CERTIFIED MAIL
Dear [Sir or Madam],
This is a final determination regarding your foundation classification. This letter modifies our letter to you dated [date], in which we determined that you were an organization described in section[s] 509(a)(_) [and 170(b)(1)(A)(__)] of the Internal Revenue Code (Code).
[Based on your sources of support, we have determined that you are a private [operating] foundation described under section[s] 509(a) [and 4942(j)(3)] of the Code, effective [ date ]. [You will be treated as a private operating foundation as long as you continue to meet the requirements of section 4942(j)(3).] Your tax exempt status under section 501(c)(3) of the Internal Revenue Code is not affected.]
[Based on your sources of support, we have determined that you are not a private foundation within the meaning of section 509(a) of the Code because you are an organization of the type described in section[s] 509(a)(__) [and 170(b)(1)(A)(__) of the Code], effective [ date ]. Your tax exempt status under section 501(c)(3) of the Internal Revenue Code is not affected.]
Grantors and contributors may rely on this determination, unless the Internal Revenue Service publishes a notice to the contrary. Because this letter could help resolve any questions about your private foundation status, please keep it with your permanent records.
{For all organizations modified from publicly supported status to a private [operating] foundation} [Because you are a Private [Operating] Foundation, you are required to file Form 990-PF, Return of Private Foundation. If you have not already filed these returns and you have not received instructions for filing substitute Form[s] 990-PF, you should file these returns with the appropriate Service Center for the tax year[s] ending [ date ], and for all tax years thereafter in accordance with the instructions of the return.]
{For small organizations still considered publicly supported; i.e. modification from 509(a)(1) to 509(a)(2)} [For tax periods beginning after December 31, 2006, small tax-exempt organizations with gross receipts normally less than $25,000 a year are required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. Organizations that do not file a return or a notice for three consecutive years will lose their tax-exempt status.]
Processing of tax returns and assessments of any taxes due will not be delayed should a petition for declaratory judgment be filed under section 7428 of the Internal Revenue Code.
If you decide to contest this determination, you may file an action for declaratory judgment under the provisions of section 7428 of the Code in one of the following three venues: United States Tax Court, the United States Court of Federal Claims, or the United States District Court for the District of Columbia. A petition or complaint in one of these three courts must be filed before the 91st day after the date this determination was mailed to you if you wish to seek review of our determination. Please contact the clerk of the respective court for rules and the appropriate forms regarding filing petitions for declaratory judgment by referring to the enclosed Publication 892. Please note that the United States Tax Court is the only one of these courts where a declaratory judgment action can be pursued without the services of a lawyer. You may write to the courts at the following addresses:
United States Tax Court
400 Second Street, NW
Washington, DC 20217
US Court of Federal Claims
717 Madison Place, NW
Washington, DC 20005
U. S. District Court for the District of Columbia
333 Constitution Ave., N.W.
Washington, DC 20001
You also have the right to contact the Office of the Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal Appeals process. The Taxpayer Advocate cannot reverse a legally correct tax determination, or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling. You may call toll-free, 1-877-777-4778, and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at:
Taxpayer Advocate Service
[1st Line Address]
[2nd Line Address]
[City, State Zip]
[Phone Number]
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
  Sincerely,
 
 
  [Name of Designated Official]
Designated Official
Enclosure:
Publication 892

Exhibit 4.75.20-5 
Instructions for Form 4194, Revocation of IRC § 170(c) Status

 
Revocation of IRC § 170(c) Status
Instructions: The purpose of this form is to request that an announcement be published in the Internal Revenue Bulletin for an organization whose tax-exempt status has been revoked, and which no longer qualifies for deductible contributions under IRC § 170(c). The form is to be fully completed, giving the reason for revocation, and is to be signed by the preparer's reviewer.
This form should be submitted when the final revocation letter has been issued. It is not be completed for organizations that have voluntarily terminated.
Name of Organization
[Insert name of entity, as per INOLES/BMFOLO]
City State
[Insert city, as per INOLES/BMFOLO] [Insert state, as per INOLES/BMFOLO]
Signature Title Location of Preparer
     
Signature Title Location of Preparer
[Sign here. Electronic signature acceptable] Mandatory Reviewer [Insert POD]
Reason for revocation, including date of final letter.
[Insert the paragraph(s) from the Final Adverse Determination Letter explaining the reason for revocation.]
[Insert the date of the Final Adverse Determination Letter.]
 
 
 
Check the box applicable to the organization type.
  X 501(c)(3) organizations that are described in section 170(c)(2).
    Non-501(c)(3) organizations that are eligible to receive deductible contributions because they are described in either: 170(c)(1) (contributions or gifts made to a State or possession of the U.S., to the U.S. to be used exclusively for public purposes); 170(c)(3) (a post or organization of war veterans, or an auxiliary unit, society of, or trust or foundation for any such post or organization exempt under section 501(c)(19)); 170(c)(4) (contributions or gifts made to a domestic fraternal society, order, or association operating under the lodge system that is exempt under either 501(c)(8) or (c)(10), but only if the contribution or gift is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals); or, 170(c)(5) (certain cemetery companies of corporations chartered solely for burial purposes that are exempt under 501(c)(13)).
Upon case closing, this document should be sent to the Internal Revenue Bulletin unit at *IRB@irs.gov
In addition, the following documents must accompany the Form 4194:
  Form 12971 - Memorandum for Bulletin Unit Coordinator
  Form 12972 - Internal Revenue Bulletin Submission Record
  Narrative statement for publication
Form 4194 (Rev. 03-2010) Catalog Number 41436A Department of the Treasury — Internal Revenue Service

Exhibit 4.75.20-6 
Statutory Notice of Deficiency: Income Taxes

 
Department of the Treasury
Internal Revenue Service
TE/GE Exempt Organizations Examinations
1100 Commerce Street M/C 4920 DAL
Dallas, TX 75242
Date: [Insert date]

Taxpayer Identification Number:
[Insert TIN]
[CERTIFIED MAIL/REGISTERED MAIL]
Form:
[Insert form]
Person to Contact:
[Insert name]
Contact Telephone Number:
[Insert phone number]
Contact Fax Number:
[Insert fax number]
[Insert name of entity]
[Insert street address]
[Insert city, state, and zip code]

Employee Identification Number:
[Insert ID number]
Last Day to File a Petition With the United States Tax Court:
[Insert date]
Tax Year Ended: December 31, 2012 December 31, 2013  
Deficiency:
Increase in tax:
7,500.00 4,500.00  
Penalties or Additions to tax
IRC 6651(a)(1) 1,687.50 1,012.50  
IRC 6651(a)(2) 1,537.50 652.50  
IRC 6655 158.19 89.26  
       
       
       
       
       
       
Dear [insert name of entity]:
Why We Are Sending You This Letter
We determined that you owe additional tax or other amounts, or both, for the tax year or years identified above. This letter is your NOTICE OF DEFICIENCY, as required by law. The enclosed Form 4549-A, Income Tax Discrepancy Adjustments or Form 5278, Statement - Income Tax Changes, shows how we figured the deficiency.
If You Wish to Challenge This Determination
If you want to challenge this determination in court before making any payment, you have 90 days from the date of this letter (150 days if this letter is addressed to you outside of the United States) to file a petition with the United States Tax Court to reconsider the deficiency.
Information You Will Need
If you have recently sought bankruptcy relief by filing a petition in bankruptcy court, see enclosed Notice 1421, How Bankruptcy Affects Your Right to File a Petition in Tax Court in Response to a Notice of Deficiency.
You can get a copy of the rules for filing a petition and a petition form by writing to the following address:
United States Tax Court
400 Second Street, NW
Washington, DC 20217
The Tax Court has a simplified procedure for small tax cases when the dispute for each tax year is $50,000 or less.
If you use this simplified procedure, you cannot challenge the Tax Court's decision. You can get information on the simplified procedure for small cases from the Tax Court by writing to the court at the address above or from the court's internet site at www.ustaxcourt.gov.
If you file a petition for multiple tax years and the dispute for any one or more of the tax years exceeds $50,000, this simplified procedure is not available to you.
The Law Regarding Married Couples
The law requires separate notices for husbands and wives. Both must sign and file the petition or each must file a separate, signed petition if this letter is addressed to both husband and wife, and both want to petition the Tax Court.
If only one spouse is in bankruptcy at the time this letter was issued or files a bankruptcy petition after the date of this letter, the bankruptcy automatic stay does not prohibit the spouse who is not in bankruptcy from filing a petition with Tax Court. The bankruptcy automatic stay of the spouse seeking bankruptcy relief does not extend the time for filing a petition in Tax Court for the spouse who is not in bankruptcy.
How to File Your Petition Form
Send the completed petition form, a copy of this letter, and copies of all statements and/or schedules you received with this letter to the Tax Court at the address above. If more than one tax year is shown above, you may file one petition form showing all of the years you are challenging.
You may represent yourself before the Tax Court, or you may be represented by anyone admitted to practice before the Tax Court.
Time Limits on Filing a Petition
The time you have to file a petition in the Tax Court is set by law.
1. The petition is considered timely filed if the postmark date falls within the prescribed 90 or 150 day period and the envelope containing the petition is properly addressed with the correct postage.
2. The Tax Court cannot consider your case if your Tax Court petition is filed late. IRS cannot grant an extension or allow a suspension of the prescribed deadline, even for reasonable cause. Thus, contacting the Internal Revenue Service (IRS) for more information, or receiving other correspondence from the IRS won't change the allowable period for filing a petition with the Tax Court.
If You Agree with the Notice of Deficiency
If you decide not to file a petition with the Tax Court, please sign the enclosed Form 4089-B, Notice of Deficiency - Waiver, and return it to us at the IRS address on the top of the first page of this letter. This will permit us to assess the deficiency quickly and can help limit the accumulation of interest.
If We Don't Hear from You
If you decide not to sign and return Form 4089-B, and you do not file a petition with the Tax Court within the time limit, the law requires us to assess and bill you for the deficiency after 90 days from the date of this letter (150 days if this letter is addressed to you outside the United States).
NOTE: If you are a C-corporation, section 6621(c) of the Internal Revenue Code requires that we charge an interest rate two percent higher than the normal rate on corporate underpayments in excess of $100,000.
Information About the IRS Taxpayer Advocate Office
The IRS office whose phone number appears at the top of the notice can best address and access your tax information and help get you answers. You may be eligible for help from the Taxpayer Advocate Service (TAS) if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. TAS is your voice at the IRS. TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation (this includes businesses as well as individuals). You can reach TAS by calling the TAS toll-free number at 1-877-777-4778 or by contacting the local Taxpayer Advocate office at:

[Street Address]
[City, State Zip]
[Phone Number]
To learn more about TAS and your basic tax responsibilities, visit www.TaxpayerAdvocate.irs.gov.
How to Contact Us
You may write or call the contact person whose name, telephone number, and IRS address are shown in the heading of this letter if you need further assistance. If you write, please include your telephone number, the best times if we need to call you and a copy of this letter to help us identify your account.
If you prefer to call and the telephone number is outside your local calling area, there may be a long distance charge to you.
Keep the original letter for your records.
  Sincerely,
 
 
  [Insert Commissioner name]
Commissioner
By
[Insert name of designated official]
Director, EO Examinations
Enclosures:
Form 4549-A or Form 5278
Form 4089-B
Notice 1421
  Letter 531 (Rev. 8-2012)
Catalog Number 40223L
 
Form 4549-A Department of the Treasury-Internal Revenue Service Page 1 of 2
Income Tax Discrepancy Adjustments
(Rev. March 2013) (Unagreed and Excepted Agreed)
Name and Address of Taxpayer Taxpayer Identification Number Return Form No.:
[Insert name of entity]
[Insert street address]
[Insert city, state and zip code]
[Insert EIN] 990-T
Person with whom examination changes were discussed. Name and Title:
 
  Period End Period End Period End
1. Adjustments to Income 12/31/2012 12/31/2013  
a. Net Unrelated Business Taxable Income from Management Services 50,000.00 30,000.00  
b.      
c.      
d.      
e.      
f.      
g.      
h.      
i.      
j.      
k.      
l.      
m.      
n.      
o.      
p.      
2. Total Adjustments 50,000.00 30,000.00  
3. Taxable Income Per Return or as Previously Adjusted 0.00 0.00  
4. Corrected Taxable Income 50,000.00 30,000.00  
  Tax Method      
Filing Status      
5. Tax      
6. Additional Taxes / Alternative Minimum Tax      
7. Corrected Tax Liability 7,500 4,500  
8. Less
Credits
a.      
b.      
c.      
d.      
9. Balance (Line 7 less Lines 8a through 8d) 7,500.00 4,500.00  
10. Plus
Other
Taxes
a.      
b.      
c.      
d.      
11. Total Corrected Tax Liability (Line 9 plus Lines 10a through 10d) 7,500.00 4,500.00  
12. Total Tax Shown on Return or as Previously Adjusted 0.00 0.00  
13. Adjustments to: a.      
  b.      
  c.      
14. Deficiency-Increase in Tax or (Overassessment-Decrease in Tax)
(Line 11 less Line 12 adjusted by Lines 13a through 13c)
     
  7,500.00 4,500.00  
15. Adjustments to Prepayment Credits - Increase (Decrease) 0.00 0.00  
16. Balance Due or (Overpayment) - (Line 14 adjusted by Line 15)
(Excluding interest and penalties)
     
7,500.00 4,500.00  
Catalog Number 23110T www.irs.gov Form 4549-A (Rev. 3-2013)
 
Form 4549-A Department of the Treasury-Internal Revenue Service Page 2 of 2
Income Tax Discrepancy Adjustments
(Rev. March 2013) (Unagreed and Excepted Agreed)
Name and Address of Taxpayer Taxpayer Identification Number Return Form No.:
[Insert name of entity] [Insert EIN] 990-T
  Period End Period End Period End
17. Penalties/ Code Sections 12/31/2012 12/31/2013  
a. Delinquency 2,737.50 1,372.50  
b. Estimated tax 193.53 105.02  
c.      
d.      
e.      
f.      
g.      
h.      
i.      
j.      
k.      
l.      
m.      
n.      
18. Total Penalties 2,931.03 1,477.52  
  Underpayment attributable to negligence: (1981 - 1987)
A tax addition of 50 percent of the interest due on the underpayment will accrue until it is paid or assessed.
     
  Underpayment attributable to fraud: (1981 - 1987)
A tax addition of 50 percent of the interest due on the underpayment will accrue until is paid or assessed.
     
  Underpayment attributable to Tax Motivated Transactions (TMT).
Interest will accrue and be assessed at 120% of underpayment rate in accordance with IRC § 6621(c).
     
19. Summary of Taxes, Penalties and Interest:      
a. Balance due or (Overpayment) Taxes - (Line 16, Page 1) 7,500.00 4,500.00  
b. Penalties (Line 18) - computed to 10/15/2012 2,931.03 1,477.52  
c. Interest (IRC § 6601) - computed to 10/15/2012 785.30 250.77  
d. TMT Interest - computed to (on TMT underpayment)      
e. Amount due or refund (sum of Lines a, b, c, and d) 11,216.33 6,228.29  
Other Information:
During the tax years ending December 31, 2005 and 2006, while described as a tax exempt organization under I.R.C. §501(c)(6), you received gross income of $75,000 and $100,000 respectively, for engaging in the business of providing management services, for a market-priced fee, on a regular basis.
I.R.C. §511 imposes a tax on the unrelated business taxable income of exempt organizations. I.R.C. §513 provides that an unrelated trade or business is any trade or business not substantially related (aside from the need of such organization for income) to the exercise or performance by such organizations of its exempt purpose or function constituting the basis for its exemption.
Because the provision of management services, for a market-priced fee, on a regular basis, is not substantially related to and does not contribute importantly to the accomplishment of the purposes for which tax exemption was granted (aside for the need to produce income), you received unrelated business taxable income in the amounts of $50,000 and $30,000 in taxable years 2005 and 2006 respectively. Accordingly, you are subject to unrelated business income tax in the amount of $7,500 and $4,500 for the tax years ending December 31, 2005 and 2006, respectively.
Examiner's Signature:      
Name Employee ID: Office: Date:
    SE:T:EO:E:EPR:7994  
The Internal Revenue Service has agreements with state tax agencies under which information about federal tax, including increases or decreases, is exchanged with the states. If this change affects the amount of your state income tax, you should amend your state return by filing the necessary forms.
You may be subject to backup withholding if you underreport your interest, dividend, or patronage dividend income you earned and do not pay the required tax. The IRS may order backup withholding (withholding of a percentage of your dividend and/or interest payments) if the tax remains unpaid after it has been assessed and four notices have been issued to you over a 120-day period.
Catalog Number 23110T www.irs.gov Form 4549-A (Rev. 3-2013)
 
Form 4089-B Department of the Treasury - Internal Revenue Service Symbols
(Rev. October 1999) Notice of Deficiency - Waiver SE:T:EO:E:EPR:MR
Name, SSN or EIN, and address of Taxpayer(s)
[Insert name of taxpayer] [Insert EIN]
[Insert street address]
[Insert city, state, and ZIP code]
Kind of Tax   Copy to Authorized Representative
Income
DEFICIENCY - Increase in Tax and Penalties
Tax Year Ended: December 31, 2012 December 31, 2013  
Deficiency: Increase in tax 7,500.00 4,500.00  
Penalties      
  IRC 6651 1,687.50 1,012.50  
  IRC 6651(a)(2) 1,050.00 360.00  
  IRC 6655 193.53 105.02  
         
         
         
         
         
         
         
         
See the attached explanation for the above deficiencies
I consent to the immediate assessment and collection of the deficiencies (increase in tax and penalties) shown above, plus any interest provided by law.
Your Signature  
  (Date signed)
Spouse’s Signature,
(If a Joint Return
Was Filed)
 
  (Date signed)
Taxpayer’s
Representative
Sign Here
 
  (Date signed)
Corporate Name:  
Corporate Officers
Sign Here
 
  (Date signed)
 
  (Date signed)
If you agree, please sign one copy and return it; keep the other copy for your records.
Cat. No. 29000E www.irs.gov Form 4089-B (10-1999)
 
Instructions for Form 4089 B
Note:
If you consent to the assessment of the amounts shown in this waiver, please sign and return it in order to limit the accumulation of interest and expedite our bill to you. Your consent will not prevent you from filing a claim for refund (after you have paid the tax) if you later believe you are entitled to a refund. It will not prevent us from later determining, if necessary, that you owe additional tax; nor will it extend the time provided by law for either action.
If you later file a claim and the Internal Revenue Service disallows it, you may file suit for refund in a district court or in the United States Claims Court, but you may not file a petition with the United States Tax Court.
Who Must Sign
If this waiver is for any year(s) for which you filed a joint return, both you and your spouse must sign the original and duplicate of this form. Sign your name exactly as it appears on the return. If you are acting under power of attorney for your spouse, you may sign as agent for him or her.
For an agent or attorney acting under a power of attorney, a power of attorney must be sent with this form if not previously filed.
For a person acting in a fiduciary capacity (executor, administrator, trustee), file Form 56, Notice Concerning Fiduciary Relationship, with this form if not previously filed.
For a corporation, enter the name of the corporation followed by the signature and title of the officer(s) authorized to sign.
Optional Paragraphs
A check in the block to the left of a paragraph below indicates that the paragraph applies to your situation.
  [_]   The amount shown as the deficiency may not be billed, since all or part of the refund due has been held to offset all or a portion of the amount of the deficiency. The amount that will be billed, if any, is shown on the attached examination report.
[_] The amount shown as a deficiency may not be billed, since the refund due will be reduced by the amount of the deficiency. The net refund due is shown on the attached examination report.
 
 
 
 
 
 
 
 
 
 
 
 
 
Cat. No. 29000E www.irs.gov Form 4089-B (10-1999)

Exhibit 4.75.20-7 
Statutory Notice of Deficiency: IRC 4958

 
Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
1100 Commerce Street M/C 4920 DAL
Dallas, TX 75242
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Form Number:
4720-A
Person to Contact:
[Insert name/ID number]
Contact Hours:
[Insert disqualified person's name]
[Insert disqualified person's street address]
[Insert city, state, and zip code]
Telephone Number:
[Insert phone number]
[Insert fax number] (Fax)

LAST DAY TO FILE A PETITION IN THE UNITED STATES TAX COURT:
[Insert date]
 

CERTIFIED MAIL
Tax Year(s) Ended:
[mm/dd/yyyy]
First Tier (Initial)
Tax Deficiency
I.R.C. §4958(a)(1):
$X.XX
Second Tier
(Additional)
Tax Deficiency
I.R.C. §4958(b):
$X.XX
 
Dear [Sir or Madam],
NOTICE OF DEFICIENCY
We have determined that there is a deficiency (increase) in your excise tax as shown above. This letter is a NOTICE OF DEFICIENCY sent to you as required by law. The enclosed statements show how we figured the deficiency.
The second tier tax deficiency shown above will be eliminated if correction is made by the end of the correction period, which ends 90 days after the mailing of this letter plus the total period of any extensions that may apply. You may request this office to grant an extension of the correction period for the time reasonable and necessary for you to bring about correction of the act giving rise to the first tier tax. However, an extension can be granted only if warranted by the facts and requested before the correction period would otherwise end. A statement as to the actions required for correction is enclosed.
If you want to contest this deficiency in court before making any payment, you must file a petition with the United States Tax Court for a redetermination of the deficiency. Your petition must be filed with the Court within 90 days from the mailing date of this letter (150 days if addressed to you outside of the United States), plus the time (if any) during which this office has extended the correction period as a result of your request. The petition should be filed with the United States Tax Court, 400 Second Street N.W., Washington, D.C. 20217, and the copy of this letter should be attached to your petition. The time in which you must file a petition with the Court (90 or 150 days, as the case may be, plus any extension of the correction period that may be granted) is fixed by law and the court cannot consider your case if your petition is filed late. Filing a petition will extend the correction period until after the Tax Court has decided whether the second tier tax was properly imposed.
If your petition involves a dispute of not more than $50,000 for any one taxable period (or, if there is no taxable period, taxable event) a simplified procedure is provided by the Tax Court for small tax cases. You can get information about this procedure, as well as a petition form you can use, by writing to the Clerk of the United States Tax Court at 400 Second Street N.W., Washington D.C. 20217. You should do this promptly if you tend to file a petition with the Tax Court.
If you decide not to file a petition with the Tax Court, please sign and return the enclosed waiver form. This will permit us to assess the deficiency quickly and will limit the accumulation of interest. The enclosed envelope is for your convenience. If you decide not to sign and return the statement and you do not timely petition the Tax Court, the law requires us to assess and bill you for the deficiency after 90 days from the mailing date of this letter (150 days if this letter is addressed to you outside the United States). The time for making the assessment is extended by any extension of the correction period that may be granted.
You have the right to contact the office of Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal appeals process. The Taxpayer Advocate cannot correct a legally correct tax determination or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels get prompt and proper handling. You may call toll-free 1-877-777-4778 and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at the address and telephone number shown below:
Taxpayer Advocate Service
[1st Line Address]
[2nd Line Address]
[City, State Zip]
[Phone Number]
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
  Sincerely,
 
 
  [Commissioner's Name]
Commissioner
By
 
 
  [Name of Designated Official]
Designated Official
 
Enclosures:
Statements (Form 4883 and Explanation of Items)
Copy of this letter
Waiver (Form 4089)
Envelope
 
Exempt Organizations Excise Tax Audit Changes
(Chapter 41, Chapter 42, and Section 170(f)(10(F) Excise Taxes)
Name of Taxpayer Employer ID No. Schedule or Exhibit
[Insert name] [Insert SSN]  
Name of Exempt Organization (if different from taxpayer)  
[Insert name of public charity]
  Taxable Years Ended
12/31/20XX 12/31/20XX  
Internal Revenue Code Section for Proposed Adjustment 4958(a) 4958(b)  
1. Adjustments Excess Benefit Transaction 100,000.00 100,000.00  
       
       
       
       
       
2. Total adjustments 100,000.00 100,000.00  
3. Amount reported on return or as previously adjusted 0 0  
4. Total amount as corrected 100,000.00 100,000.00  
5. Applicable tax rate % 25%    
6. Initial tax liability as corrected (line 4 x line 5) 25,000.00    
7. Initial tax liability reported 0    
8. Increase (or decrease) in tax 25,000.00    
9. Additional tax (minimum) at 200% Rate   200,000.00  
10. Penalties (Code section ________)      
Explanation of Adjustments Alternatively, each column can represent one tax year, and the additional tax on line 9 can be included in the 1st column, so long as "Sec 4958(b) at 200% is indicated on line 9."
See attached Explanation of Items
 
 
 
Form 4883 (Rev. 1-2004) Catalog Number 42083F Department of the Treasury-Internal Revenue Service
www.irs.gov
  Addendum to Form 4883
Explanation of Adjustments
[Name of Taxpayer]
[EIN of Taxpayer]
We have determined that you were a disqualified person of XXPC during 2008, within the meaning of I.R.C. § 4958(f)(1). We have further determined that XXPC is an applicable tax exempt organization and that you engaged in certain “excess benefit transactions” with XXPC.
Specifically, we have determined that in 2008 XXPC paid $100,000 in economic benefits to you or for your use by making credit card payments on your behalf for purchases of personal goods and services. You have not demonstrated that you provided reciprocal economic value to XXPC and have not demonstrated that you received these economic benefits as a bona fide loan from XXPC to you. Our determination is made in accord with the principles described in Treas. Reg. § 53.4958-4(c)(1). As such, you engaged in excess benefit transactions and are liable for the first tier excise taxes computed pursuant to I.R.C. § 4958(a)(1) as shown on the attached Form 4883.
We have further determined that you have not established that you have corrected these excess benefit transactions. To correct, the amount of the excess benefit transactions plus applicable interest, must be paid to the applicable tax exempt organization in accord with the principles enumerated in Treas. Reg. § 53.4958-7. As such, we have determined that you are liable for the applicable second tier excise tax of I.R.C. § 4958(b).
 
Form 4089 Department of the Treasury - Internal Revenue Service Symbols
(Rev. January 1983) Notice of Deficiency - Waiver SE:T:EO:E:EPR:MR
Name, SSN or EIN, and address of Taxpayer(s)
[Insert name of taxpayer] [Insert SSN]
[Insert street address]
[Insert city, state, and ZIP code]
Kind of Tax   Copy to Authorized Representative
4720-A
Tax Year Ended Deficiency
Increase in Tax Penalties
  Initial Tax Additional Tax  
December 31, 2008 25,000.00 200,000.00  
 
 
 
See the attached explanation for the above deficiencies
I consent to the immediate assessment and collection of the deficiencies (increase in tax and penalties) shown above, plus any interest provided by law.
Your
Signature
 
  (Date signed)
Spouse’s Signature,
If a Joint Return
Was Filed
 
  (Date signed)
Taxpayer’s
Representatives
Sign Here
 
  (Date signed)
Corporate
Name:
 
 
Corporate
Officers
Sign Here
 
  (Date signed)
 
  (Date signed)
Note: Who Must Sign
 
If you consent to the assessment of the amounts shown in this waiver, please sign and return it in order to limit the accumulation of interest and expedite our bill to you. Your consent will not prevent you from filing a claim for refund (after you have paid the tax) if you later believe you are entitled to a refund. It will not prevent us from later determining, if necessary that you owe additional tax; nor will it extend the time provided by law for either action. If you later file a claim and the Internal Revenue Service disallows it, you may file suit for refund in a district court or in the United States Claims Court, but you may not file a petition with the United States Tax Court. If this waiver is for any year(s) for which you filed a joint return, both you and your spouse must sign the original and duplicate of this form. Sign your name exactly as it appears on the return. If you are acting under power of attorney for your spouse, you may sign as agent for him or her. For any agent or attorney acting under a power of attorney, a power of attorney must be sent with this form if not previously filed. For a person acting in a fiduciary capacity (executor, administrator, trustee), file Form 56, Notice Concerning Fiduciary Relationship, with this form if not previously filed. For a corporation, enter the name of the corporation followed by the signature and title of the officer(s) authorized to sign.
 
 
If you agree, please sign one copy and return it; keep the other copy for your records.
Cat. No. 22650Y www.irs.gov Form 4089 (Rev. 1-1983)

Exhibit 4.75.20-8 
Statutory Notice of Deficiency: IRC 4941(a)(1), (a)(2), (b)(1), and (b)(2): Discrete Act

 
Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
1100 Commerce Street M/C 4920 DAL
Dallas, TX 75242
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Form Number:
4720-A
Person to Contact:
[Insert name/ID number]
Contact Hours:
[Insert disqualified person's name]
[Insert disqualified person's street address]
[Insert city, state, and zip code]
Telephone Number:
[Insert phone number]
[Insert fax number] (Fax)

LAST DAY TO FILE A PETITION IN THE UNITED STATES TAX COURT:
[Insert date]
 
CERTIFIED MAIL
Tax Year(s) Ended: First Tier (Initial)
Tax Deficiency
I.R.C. §4941(a)(1):
First Tier (Initial)
Tax Deficiency
I.R.C. §4941(a)(2):
Second Tier
(Additional)
Tax Deficiency
I.R.C. §4941(b)(1):
Second Tier
(Additional)
Tax Deficiency
I.R.C. §4941(b)(2):
12/31/2011 $2,000.00 $1,000.00    
12/31/2012 $2,000.00 $1,000.00    
12/31/2013 $2,000.00 $1,000.00    
12/31/2014 $2,000.00 $1,000.00 $40,000.00 $10,000.00
Dear [Sir or Madam],
NOTICE OF DEFICIENCY
We have determined that there is a deficiency (increase) in your excise tax as shown above. This letter is a NOTICE OF DEFICIENCY sent to you as required by law. The enclosed statements show how we figured the deficiency.
The second tier tax deficiency shown above will be eliminated if correction is made by the end of the correction period, which ends 90 days after the mailing of this letter plus the total period of any extensions that may apply. You may request this office to grant an extension of the correction period for the time reasonable and necessary for you to bring about correction of the act giving rise to the first tier tax. However, an extension can be granted only if warranted by the facts and requested before the correction period would otherwise end. A statement as to the actions required for correction is enclosed.
If you want to contest this deficiency in court before making any payment, you must file a petition with the United States Tax Court for a redetermination of the deficiency. Your petition must be filed with the Court within 90 days from the mailing date of this letter (150 days if addressed to you outside of the United States), plus the time (if any) during which this office has extended the correction period as a result of your request. The petition should be filed with the United States Tax Court, 400 Second Street N.W., Washington, D.C. 20217, and the copy of this letter should be attached to your petition. The time in which you must file a petition with the Court (90 or 150 days, as the case may be, plus any extension of the correction period that may be granted) is fixed by law and the court cannot consider your case if your petition is filed late. Filing a petition will extend the correction period until after the Tax Court has decided whether the second tier tax was properly imposed.
If your petition involves a dispute of not more than $50,000 for any one taxable period (or, if there is no taxable period, taxable event) a simplified procedure is provided by the Tax Court for small tax cases. You can get information about this procedure, as well as a petition form you can use, by writing to the Clerk of the United States Tax Court at 400 Second Street N.W., Washington D.C. 20217. You should do this promptly if you tend to file a petition with the Tax Court.
If you decide not to file a petition with the Tax Court, please sign and return the enclosed waiver form. This will permit us to assess the deficiency quickly and will limit the accumulation of interest. The enclosed envelope is for your convenience. If you decide not to sign and return the statement and you do not timely petition the Tax Court, the law requires us to assess and bill you for the deficiency after 90 days from the mailing date of this letter (150 days if this letter is addressed to you outside the United States). The time for making the assessment is extended by any extension of the correction period that may be granted.
You have the right to contact the office of Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal appeals process. The Taxpayer Advocate cannot correct a legally correct tax determination or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels get prompt and proper handling. You may call toll-free 1-877-777-4778 and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at the address and telephone number shown below:
Taxpayer Advocate Service
[1st Line Address]
[2nd Line Address]
[City, State Zip]
[Phone Number]
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
  Sincerely,
 
 
  [Commissioner's Name]
Commissioner
By
 
 
  Name of [Designated Official]
Designated Official
 
Enclosures:
Statements (Form 4883 and Explanation of Items)
Copy of this letter
Waiver (Form 4089)
Envelope
 
Exempt Organizations Excise Tax Audit Changes
(Chapter 41, Chapter 42, and Section 170(f)(10(F) Excise Taxes)
Name of Taxpayer Employer ID No. Schedule or Exhibit
[Insert name] [Insert SSN] Page 1 of 4
Name of Exempt Organization (if different from taxpayer)  
[Insert name of private foundation]
  Taxable Years Ended
12/31/2011 12/31/2012 12/31/2013
Internal Revenue Code Section for Proposed Adjustment 4941(a)(1) 4941(a)(1) 4941(a)(1)
1. Adjustments Self-dealing: Amount involved 20,000.00 20,000.00 20,000.00
       
       
       
       
       
2. Total adjustments 20,000.00 20,000.00 20,000.00
3. Amount reported on return or as previously adjusted 0 0 0
4. Total amount as corrected 20,000.00 20,000.00 20,000.00
5. Applicable tax rate % 10% 10% 10%
6. Initial tax liability as corrected (line 4 x line 5) 2,000.00 2,000.00 2,000.00
7. Initial tax liability reported 0 0 0
8. Increase (or decrease) in tax 2,000.00 2,000.00 2,000.00
9. Additional tax (minimum)      
10. Penalties (Code section ________)      
Explanation of Adjustments
See attached Explanation of Items
 
 
 
Form 4883 (Rev. 1-2004) Catalog Number 42083F Department of the Treasury-Internal Revenue Service
www.irs.gov
 
Exempt Organizations Excise Tax Audit Changes
(Chapter 41, Chapter 42, and Section 170(f)(10(F) Excise Taxes)
Name of Taxpayer Employer ID No. Schedule or Exhibit
[Insert name] [Insert SSN] Page 2 of 4
Name of Exempt Organization (if different from taxpayer)  
[Insert name of private foundation]
  Taxable Years Ended
12/31/2014    
Internal Revenue Code Section for Proposed Adjustment 4941(a)(1)    
1. Adjustments Self-dealing: Amount involved 20,000.00    
       
       
       
       
       
2. Total adjustments 20,000.00    
3. Amount reported on return or as previously adjusted 0    
4. Total amount as corrected 20,000.00    
5. Applicable tax rate % 10%    
6. Initial tax liability as corrected (line 4 x line 5) 2,000.00    
7. Initial tax liability reported 0    
8. Increase (or decrease) in tax 2,000.00    
9. Additional tax (minimum) 40,000.00    
10. Penalties (Code section ________)      
Explanation of Adjustments
See attached Explanation of Items
 
 
 
Form 4883 (Rev. 1-2004) Catalog Number 42083F Department of the Treasury-Internal Revenue Service
www.irs.gov
 
Exempt Organizations Excise Tax Audit Changes
(Chapter 41, Chapter 42, and Section 170(f)(10(F) Excise Taxes)
Name of Taxpayer Employer ID No. Schedule or Exhibit
[Insert name] [Insert SSN] Page 3 of 4
Name of Exempt Organization (if different from taxpayer)  
[Insert name of private foundation]
  Taxable Years Ended
12/31/2011 12/31/2012 12/31/2013
Internal Revenue Code Section for Proposed Adjustment 4941(a)(2) 4941(a)(2) 4941(a)(2)
1. Adjustments Self-dealing: Amount involved 20,000.00 20,000.00 20,000.00
Foundation Manager      
       
       
       
       
2. Total adjustments 20,000.00 20,000.00 20,000.00
3. Amount reported on return or as previously adjusted 0 0 0
4. Total amount as corrected 20,000.00 20,000.00 20,000.00
5. Applicable tax rate % 5% 5% 5%
6. Initial tax liability as corrected (line 4 x line 5) 1,000.00 1,000.00 1,000.00
7. Initial tax liability reported 0 0 0
8. Increase (or decrease) in tax 1,000.00 1,000.00 1,000.00
9. Additional tax (minimum)      
10. Penalties (Code section ________)      
Explanation of Adjustments
See attached Explanation of Items
 
 
 
Form 4883 (Rev. 1-2004) Catalog Number 42083F Department of the Treasury-Internal Revenue Service
www.irs.gov
 
Exempt Organizations Excise Tax Audit Changes
(Chapter 41, Chapter 42, and Section 170(f)(10(F) Excise Taxes)
Name of Taxpayer Employer ID No. Schedule or Exhibit
[Insert name] [Insert SSN] Page 4 of 4
Name of Exempt Organization (if different from taxpayer)  
[Insert name of private foundation]
  Taxable Years Ended
12/31/2014    
Internal Revenue Code Section for Proposed Adjustment 4941(a)(2)    
1. Adjustments Self-dealing: Amount involved 20,000.00    
Foundation Manager      
       
       
       
       
2. Total adjustments 20,000.00    
3. Amount reported on return or as previously adjusted 0    
4. Total amount as corrected 20,000.00    
5. Applicable tax rate % 5%    
6. Initial tax liability as corrected (line 4 x line 5) 1,000.00    
7. Initial tax liability reported 0    
8. Increase (or decrease) in tax 1,000.00    
9. Additional tax (minimum) 10,000.00    
10. Penalties (Code section ________)      
Explanation of Adjustments
See attached Explanation of Items
 
 
 
Form 4883 (Rev. 1-2004) Catalog Number 42083F Department of the Treasury-Internal Revenue Service
www.irs.gov
      Addendum to Form 4883
Explanation of Adjustments
[Name of Taxpayer]
[EIN of Taxpayer]
 
On March 20, 2011, you sold real property which you owned to XYZ Foundation, a private foundation pursuant to I.R.C. section 509. The sales price was $20,000. As a substantial contributor to the Foundation and a foundation manager, you are a disqualified person with respect to the Foundation. I.R.C. § 4941(d)(1 )(A) provides that a sale or exchange, or leasing, of property between a private foundation and a disqualified person is an act of self-dealing.
I.R.C. § 4941(a)(1) imposes a 10% excise tax on the amount involved in the act of self-dealing for each year (or part thereof) in the taxable period. The tax is imposed on disqualified persons who participate in the act of self-dealing. I.R.C. § 4941(b) provides that if the act of self-dealing is not corrected within the taxable period, a tax of 200% on the amount involved is imposed on the disqualified person. The taxable period begins with the date on which the act of self-dealing occurs and ends on the earliest of (a) the mailing date of a notice of deficiency; (b) the date on which tax is assessed; or (c) the date on which correction of the act of self-dealing is completed. See I.R.C. § 4941(e).
Accordingly, you are liable for excise taxes under I.R.C. § 4941(a)(1) in the amount of $2,000.00 in each of the taxable years ended December 31, 2011, December 31, 2012, December 31, 2013 and December 31, 2014 (the taxable period). We have further determined that you have not corrected the self-dealing transaction within the taxable period, as described in I.R.C. § 4941(e)(1). Because the act of self-dealing has not been corrected within the taxable period, additional excise tax in the amount of $40,000.00 has been asserted against you pursuant to section I.R.C. § 4941(b)(1). To correct, you must undo the self-dealing transaction to the extent possible, but in any case placing the private foundation in a financial position not worse than that which it would be if you were dealing under the highest fiduciary standards, and in accord with the principles enumerated in Treas. Reg. § 53.4941(e)-1(c).
In any case in which a tax is imposed by I.R.C. § 4941(a)(1), a tax under I.R.C. § 4941(a)(2) is imposed on the participation of any foundation manager in an act of self-dealing between a disqualified person and a private foundation, knowing that it is such an act. The tax is 5% of the amount involved in the act of self-dealing for each year or part of the year in the taxable period (not to exceed $20,000.00) unless such participation is not willful and is due to reasonable cause. The tax is imposed on any foundation manager who participated in the act of self-dealing. Because you have refused to agree to correct the act of self-dealing, an additional excise tax in the amount of $10,000.00 has been asserted against you pursuant to I.R.C. § 494 I(b)(2) which provides for a tax equal to 50 percent of the amount involved, but not to exceed $20,000.00.
 
Form 4089 Department of the Treasury - Internal Revenue Service Symbols
(Rev. January 1983) Notice of Deficiency - Waiver SE:T:EO:E:EPR:MR
Name, SSN or EIN, and address of Taxpayer(s)
[Insert name of taxpayer] [Insert SSN]
[Insert street address]
[Insert city, state, and ZIP code]
Kind of Tax   Copy to Authorized Representative
4720-A
Tax Year Ended Deficiency
Increase in Tax Penalties
  Initial Tax Additional Tax  
4941(a) 4941(a)(2) 4941(b)(1) 4941(b)(2)  
December 31, 2010 2,000.00 1,000.00      
December 31, 2011 2,000.00 1,000.00      
December 31, 2013 2,000.00 1,000.00      
December 31, 2014 2,000.00 1,000.00 40,000.00 10,000.00  
See the attached explanation for the above deficiencies
I consent to the immediate assessment and collection of the deficiencies (increase in tax and penalties) shown above, plus any interest provided by law.
Your
Signature
 
  (Date signed)
Spouse’s Signature,
If a Joint Return
Was Filed
 
  (Date signed)
Taxpayer’s
Representatives
Sign Here
 
  (Date signed)
Corporate
Name:
 
 
Corporate
Officers
Sign Here
 
  (Date signed)
 
  (Date signed)
Note: Who Must Sign
 
If you consent to the assessment of the amounts shown in this waiver, please sign and return it in order to limit the accumulation of interest and expedite our bill to you. Your consent will not prevent you from filing a claim for refund (after you have paid the tax) if you later believe you are entitled to a refund. It will not prevent us from later determining, if necessary that you owe additional tax; nor will it extend the time provided by law for either action. If you later file a claim and the Internal Revenue Service disallows it, you may file suit for refund in a district court or in the United States Claims Court, but you may not file a petition with the United States Tax Court. If this waiver is for any year(s) for which you filed a joint return, both you and your spouse must sign the original and duplicate of this form. Sign your name exactly as it appears on the return. If you are acting under power of attorney for your spouse, you may sign as agent for him or her. For any agent or attorney acting under a power of attorney, a power of attorney must be sent with this form if not previously filed. For a person acting in a fiduciary capacity (executor, administrator, trustee), file Form 56, Notice Concerning Fiduciary Relationship, with this form if not previously filed. For a corporation, enter the name of the corporation followed by the signature and title of the officer(s) authorized to sign.
 
 
If you agree, please sign one copy and return it; keep the other copy for your records.
Cat. No. 22650Y www.irs.gov Form 4089 (Rev. 1-1983)

Exhibit 4.75.20-9 
Statutory Notice of Deficiency: IRC 4941(a)(1): Continuing Act

 
Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
1100 Commerce Street M/C 4920 DAL
Dallas, TX 75242
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Form Number:
4720-A
Person to Contact:
[Insert name/ID number]
Contact Hours:
[Insert disqualified person's name]
[Insert disqualified person's street address]
[Insert city, state, and zip code]
Telephone Number:
[Insert phone number]
[Insert fax number] (Fax)

LAST DAY TO FILE A PETITION IN THE UNITED STATES TAX COURT:
[Insert date]
 

CERTIFIED MAIL
Tax Year(s) Ended: First Tier (Initial)
Tax Deficiency
I.R.C. §4941(a)(1):
 

12/31/2011
12/31/2012
12/31/2013

$300.00
$900.00
$1,500.00
 
Dear [Sir or Madam],
NOTICE OF DEFICIENCY
We have determined that there is a deficiency (increase) in your excise tax as shown above. This letter is a NOTICE OF DEFICIENCY sent to you as required by law. The enclosed statements show how we figured the deficiency.
The second tier tax deficiency shown above will be eliminated if correction is made by the end of the correction period, which ends 90 days after the mailing of this letter plus the total period of any extensions that may apply. You may request this office to grant an extension of the correction period for the time reasonable and necessary for you to bring about correction of the act giving rise to the first tier tax. However, an extension can be granted only if warranted by the facts and requested before the correction period would otherwise end. A statement as to the actions required for correction is enclosed.
If you want to contest this deficiency in court before making any payment, you must file a petition with the United States Tax Court for a redetermination of the deficiency. Your petition must be filed with the Court within 90 days from the mailing date of this letter (150 days if addressed to you outside of the United States), plus the time (if any) during which this office has extended the correction period as a result of your request. The petition should be filed with the United States Tax Court, 400 Second Street N.W., Washington, D.C. 20217, and the copy of this letter should be attached to your petition. The time in which you must file a petition with the Court (90 or 150 days, as the case may be, plus any extension of the correction period that may be granted) is fixed by law and the court cannot consider your case if your petition is filed late. Filing a petition will extend the correction period until after the Tax Court has decided whether the second tier tax was properly imposed.
If your petition involves a dispute of not more than $50,000 for any one taxable period (or, if there is no taxable period, taxable event) a simplified procedure is provided by the Tax Court for small tax cases. You can get information about this procedure, as well as a petition form you can use, by writing to the Clerk of the United States Tax Court at 400 Second Street N.W., Washington D.C. 20217. You should do this promptly if you tend to file a petition with the Tax Court.
If you decide not to file a petition with the Tax Court, please sign and return the enclosed waiver form. This will permit us to assess the deficiency quickly and will limit the accumulation of interest. The enclosed envelope is for your convenience. If you decide not to sign and return the statement and you do not timely petition the Tax Court, the law requires us to assess and bill you for the deficiency after 90 days from the mailing date of this letter (150 days if this letter is addressed to you outside the United States). The time for making the assessment is extended by any extension of the correction period that may be granted.
You have the right to contact the office of Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal appeals process. The Taxpayer Advocate cannot correct a legally correct tax determination or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels get prompt and proper handling. You may call toll-free 1-877-777-4778 and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at the address and telephone number shown below:
Taxpayer Advocate Service
[1st Line Address]
[2nd Line Address]
[City, State Zip]
[Phone Number]
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
  Sincerely,
 
 
  [Commissioner's Name]
Commissioner
By
 
 
  [Name of Designated Official]
Designated Official
 
Enclosures:
Statements (Form 4883 and Explanation of Items)
Copy of this letter
Waiver (Form 4089)
Envelope
 
Exempt Organizations Excise Tax Audit Changes
(Chapter 41, Chapter 42, and Section 170(f)(10(F) Excise Taxes)
Name of Taxpayer Employer ID No. Schedule or Exhibit
[Insert name] [Insert SSN]  
Name of Exempt Organization (if different from taxpayer)  
[Insert name of private foundation]
  Taxable Years Ended
12/31/2011 12/31/2012 12/31/2013
Internal Revenue Code Section for Proposed Adjustment 4941(a) 4941(a) 4941(a)
1. Adjustments Self-dealing: Amount involved 3,000.00 9,000.00 15,000.00
       
       
       
       
       
2. Total adjustments 3,000.00 9,000.00 15,000.00
3. Amount reported on return or as previously adjusted 0 0 0
4. Total amount as corrected 3,000.00 9,000.00 15,000.00
5. Applicable tax rate % 10% 10% 10%
6. Initial tax liability as corrected (line 4 x line 5) 300.00 900.00 1,500.00
7. Initial tax liability reported 0 0 0
8. Increase (or decrease) in tax 300.00 900.00 1,500.00
9. Additional tax (minimum)      
10. Penalties (Code section ________)      
Explanation of Adjustments
See attached Explanation of Items
 
 
 
Form 4883 (Rev. 1-2004) Catalog Number 42083F Department of the Treasury-Internal Revenue Service
www.irs.gov
  Addendum to Form 4883
Explanation of Adjustments
[Name of Taxpayer]
[EIN of Taxpayer]
 
On July 1,2011, XYZ Foundation, a private foundation pursuant to I.R.C. section 509, made a loan to you in the amount of $100,000 at an annual interest rate of 6%. Interest on the loan was paid timely. The loan was repaid on December 31, 2013. As a substantial contributor to the Foundation and a foundation manager, you are a disqualified person with respect to the Foundation.
I.R.C. § 4941(d)(1)(B) provides that the lending of money or other extension of credit between a private foundation and a disqualified person is an act of self-dealing. Where the transaction relates to the lending of money or other extension of credit, the transaction is an act of self-dealing on the day the transaction occurs plus an act of self-dealing on the first day of each taxable year or portion of a taxable year which is within the taxable period and which begins after the taxable year in which the transaction occurs. See Treas . Reg. § 53.4941(e)-1(e)(1). The taxable period begins with the date on which the act of self-dealing occurs and ends on the earliest of (a) the mailing date of a notice of deficiency; (b) the date on which tax is assessed; or (c) the date on which correction of the act of self-dealing is completed. See I.R.C. § 4941(e).
I.R.C. § 4941(a)(1) imposes a 10% excise tax on the amount involved in the act of self-dealing for each year (or part thereof) in the taxable period. The amounts involved are determined using the greater of interest paid or fair market interest rate on day the act occurs. The tax is imposed on disqualified persons who participate in the act of self-dealing. Appendix 1 shows how we calculated the amount involved.
Accordingly, you are liable for excise taxes under I.R.C. § 4941(a)(1) in the amounts of $300.00, $900.00 and $1,500.00 for the taxable years ended December 31, 2011, December 31, 2012 and December 31 , 2013, respectively (the taxable period).
[Taxpayer name]
[EIN]
[Taxable years]
 
 
Appendix I
 
Date of Act Loan Amount Interest Rate Paid FMV Interest Rate Time in Years Amount Involved Total Amounts Involved
7/1/2011 $100,000 6% 5% 1/2 $3,000 $3,000
1/1/2012 $100,000 6% 6% 1 $6,000 $9,000
1/1/2013 $100,000 6% 6% 1 $6,000 $15,000
             
Amount of tax (10% of amount involved with respect to each act of self-dealing for each year in taxable period) is calculated as follows:
             
Act Date/Taxable Period Beginning Date 2008 2009 2010 Total  
7/1/2011 $300 $300 $300 $900  
1/1/2012   $600 $600 $1,200  
1/1/2013     $600 $600  
Totals: $300 $900 $1,500 $2,700  
 
Form 4089 Department of the Treasury - Internal Revenue Service Symbols
(Rev. January 1983) Notice of Deficiency - Waiver SE:T:EO:E:EPR:MR
Name, SSN or EIN, and address of Taxpayer(s)
[Insert name of taxpayer] [Insert SSN]
[Insert street address]
[Insert city, state, and ZIP code]
Kind of Tax   Copy to Authorized Representative
4720-A
Tax Year Ended Deficiency
Increase in Tax Penalties
December 31, 2011 $300.00  
December 31, 2012 $900.00  
December 31, 2013 $1,500.00  
 
 
See the attached explanation for the above deficiencies
I consent to the immediate assessment and collection of the deficiencies (increase in tax and penalties) shown above, plus any interest provided by law.
Your
Signature
 
  (Date signed)
Spouse’s Signature,
If a Joint Return
Was Filed
 
  (Date signed)
Taxpayer’s
Representatives
Sign Here
 
  (Date signed)
Corporate
Name:
 
 
Corporate
Officers
Sign Here
 
  (Date signed)
 
  (Date signed)
Note: Who Must Sign
 
If you consent to the assessment of the amounts shown in this waiver, please sign and return it in order to limit the accumulation of interest and expedite our bill to you. Your consent will not prevent you from filing a claim for refund (after you have paid the tax) if you later believe you are entitled to a refund. It will not prevent us from later determining, if necessary that you owe additional tax; nor will it extend the time provided by law for either action. If you later file a claim and the Internal Revenue Service disallows it, you may file suit for refund in a district court or in the United States Claims Court, but you may not file a petition with the United States Tax Court. If this waiver is for any year(s) for which you filed a joint return, both you and your spouse must sign the original and duplicate of this form. Sign your name exactly as it appears on the return. If you are acting under power of attorney for your spouse, you may sign as agent for him or her. For any agent or attorney acting under a power of attorney, a power of attorney must be sent with this form if not previously filed. For a person acting in a fiduciary capacity (executor, administrator, trustee), file Form 56, Notice Concerning Fiduciary Relationship, with this form if not previously filed. For a corporation, enter the name of the corporation followed by the signature and title of the officer(s) authorized to sign.
 
 
If you agree, please sign one copy and return it; keep the other copy for your records.
Cat. No. 22650Y www.irs.gov Form 4089 (Rev. 1-1983)

Exhibit 4.75.20-10 
Examples of 90-Day Letter Summaries

The following examples of caveats can be used to explain the reasons for the adverse action. Every caveat must be tailored to fit the unique facts and circumstances of particular situations.

 
Revocation of IRC §501(c)(3), Failure to Provide Books and Records
 
1. You have failed to produce documents to establish that you are operated exclusively for exempt purposes within the meaning of Internal Revenue Code section 501(c)(3), and that no part of your net earnings inure to the benefit of private shareholders or individuals. Also, you have failed to keep adequate books and records as required by IRC section 6001 and the regulations thereunder.
 
2. In our letter(s) dated Month, DD, YYYY and Month DD, YYYY, we requested information necessary to conduct an examination of your Form 990 for the year ended Month, DD, YYYY. We have not received the requested information. Section 1.6033-2(i(2) of the Income Tax Regulations provides, in part, that every organization which is exempt from tax, shall submit such additional information as may be required by the Internal Revenue Service for the purpose of inquiring into its exempt status. Since you have not provided the requested information, you have failed to establish that you are operated exclusively for exempt purposes within the meaning of Internal Revenue Code section 501(c)(3) and that no part of your net earnings inure to the benefit of private shareholders or individuals..
 
Revocation of IRC §501(c)(3), Operational Test – including failure to provide Books and Records.
 
3. You have failed to provide documents to establish that you are organized and operated exclusively for exempt purposes within the meaning of Internal Revenue Code section 501(c)(3) and that no part of your net earnings inure to the benefit of private shareholders or individuals. Also, you have failed to keep adequate books and records as required by I.R.C. section 6001 and the regulations thereunder.
 
Revocation of IRC §501(c)(3), Operational Test.
 
4. Your primary activity since your inception has consisted of the operation of bingo games, which is an activity not accomplishing an exempt purpose. In addition, your executives unlawfully appropriated funds for their personal use, which is a means by which net earnings of your organization have inured to your private shareholders or individuals. I.R.C. § 501(c)(3) requires organizations to operate exclusively for an exempt purpose, which includes having a primary activity accomplishing exempt purposes. See Treas. Reg. § 1.501(c)(3)-1(a). Section 501(c)(3) precludes Federal income tax exemption if net earnings inure to the benefit of private shareholders or individuals. See Treas. Reg. § 1.501(c)(3)-1(c)(2). As such, you are not an organization described in section 501(c)(3).
 
5. You paid over $100,000 in compensation to your Chief Executive Officer during each of the tax years ended December 31, 2005 and 2006, pursuant to an employment contract approved by your board of directors. During 2005 and 2006, you received only $125,000 and $117,000, respectively, in monetary donations. You did not in either year fund acquisitions for your collection of natural history exhibits. You also cut back the hours of the museum from 6 Days a week to weekends only. In addition, you turned down a large bequest from a private donor because you did not have the funds to pay for storing, cataloging or displaying the donated items. You did make two $10,000 grants to CEO Foundation, an organization set up by your CEO’s step-son to rescue retired greyhounds, and guaranteed a note from CEO Foundation to ABC Bank, the proceeds of which were used to build a state-of-the art kennel on your CEO’s property (CEO Foundation conducted its rescue operation at CEO’s ranch).
 
I.R.C. §501(c)(3) precludes Federal income tax exemption if net earnings inure to the benefit of private shareholders or individuals and if it is operated for the benefit of private interests. Because I.R.C. §501(c)(3) prohibits inurement of earnings and you operated for the benefit of private interests more than insubstantially, your exempt status is hereby revoked..
 
6. As a result of our examination of your activities and financial records for the year ending October 31, we have determined that your organization has been inactive for several prior years and that there have been no operations or financial activities conducted or planned. As such, you fail to meet the operational requirements for continued exemption under IRC § 501(c)(3).
 
Unrelated Business Income Tax
 
8. During the tax year ending December 31, 2005 and 2006, while described as a tax exempt organization under I.R.C. §501(c)(6), you received gross income of $75,000 and $100,000, respectively, for engaging in the business of providing management services, for a market-priced fee, on a regular basis.
 
I.R.C. §511 imposes a tax on the unrelated business taxable income of exempt organizations. I.R.C. §513 provides that an unrelated trade or business is any trade or business not substantially related (aside from the need of such organization for income) to the exercise or performance by such organization of its exempt purpose or function constituting the basis for its exemption.
 
Because the provision of management services, for a market-priced fee, on a regular basis, is not substantially related to and does not contribute importantly to the accomplishment of the purposes for which tax exemption was granted (aside for the need to produce income), you received unrelated business taxable income in the amounts of $50,000 and $30,000 in taxable years 2005 and 2006 respectively. Accordingly, you are subject to unrelated business income tax in the amount of $7,500 and $4,500 for the tax years ending December 31, 2005 and 2006, respectively.
 
[Set forth any applicable penalties and their explanations in separate paragraphs.]
 

Note:

Since this is a tax determination, a Form 4549-A should be attached showing the computation and summary.

 
Chapter 42 Excise Tax
 
9. We have determined that you were a disqualified person of XX Public Charity (“XXPC”) during 2005 and 2006, within the meaning of I.R.C. § 4958(f)(1). We have further determined that XXPC is an applicable tax exempt organization and that you engaged in certain “excess benefit transactions” with XXPC.
 
Specifically, we have determined that in 2005 XXPC paid $12,434.23 in economic benefits to you or for your use and that you provided reciprocal value to XXPC in the amount of $121.65. The payments to or for your personal use occurred throughout 2005. For 2006, we have determined that you intercepted $10,000 of XXPC assets without providing any reciprocal value. As such, you engaged in excess benefit transactions and are liable for the first tier excise taxes computed pursuant to I.R.C. § 4958(a)(1) as shown on the attached Form 4883.
 
We have further determined that you were an organization manager of XXPC and that as an organization manager you participated in the excess benefit transactions described above, knowing them to be such transactions within the meaning of I.R.C. § 4958(a)(2). We have further determined that you have not demonstrated that such participation was not willful or that there was reasonable cause for such knowing participation. As such, you are liable for the excise taxes computed pursuant to I.R.C. § 4958(a)(2) as shown on the attached Form 4883.
 
We have further determined that you have not established that you have corrected these excess benefit transactions. To correct, the amount of the excess benefit transactions plus applicable interest must be paid to an organization described in I.R.C. § 501(c)(3) in accord with the principles enumerated in Treas. Reg. § 53.4958-7, including sub-paragraph (e) of these regulations, Correction in the case of an applicable tax-exempt organization that has ceased to exist, or is no longer tax-exempt.. As such, we have determined that you are liable for the applicable second tier excise tax of I.R.C. § 4958(b).
 
Addendum to Form 4883
Explanation of Adjustments
Name of Taxpayer
EIN of Taxpayer
 
We have determined that you were a disqualified person of XXPC during 2008, within the meaning of I.R.C. § 4958(f)(1). We have further determined that XXPC is an applicable tax exempt organization and that you engaged in certain “excess benefit transactions” with XXPC.
 
Specifically, we have determined that in 2008 XXPC paid $100,000 in economic benefits to you or for your use by making credit card payments on your behalf for purchases of personal goods and services. You have not demonstrated that you provided reciprocal economic value to XXPC and have not demonstrated that you received these economic benefits as a bona fide loan from XXPC to you. Our determination is made in accord with the principles described in Treas. Reg. § 53.4958-4(c)(1). As such, you engaged in excess benefit transactions and are liable for the first tier excise taxes computed pursuant to I.R.C. § 4958(a)(1) as shown on the attached Form 4883.
 

Exhibit 4.75.20-11 
Instructions for Form 2363–A, Request for IDRS Input for BMF/EO Entity Change: 501(c)(3) Exemption Revocation

Revocation of §501(c)(3) - Instructions For Form 2363-A
Field 1 Enter the EIN
Field 2 Enter the name control
Field 3 Place an X in the box next to 80
Field 4 Place an X in the box next to 016
Field 5 Type in definer codes A and B
Field 8 Type in the name of the entity.
Field 17 Enter 03
Field 18 Type in the two digit foundation status code. See BMFOLO or INOLES.
Field 19 Type in the one digit classification code. See BMFOLO or INOLES.
Field 22 Type in 22 followed by the year and month of effective revocation.
Field 35 Type in the two digits representing the ending month of the fiscal year.
Field 38 Place an 01 in the 941 field and an 01 in the 940 field (if applicable.)
Field 39 Type REVOKE C-3 AND SET 941-940 AND 1120 FILING REQ
Field 40 Digitally sign and date or print the form, sign and date it.
Field 41 Type EO:E:EPR:MR

Exhibit 4.75.20-12 
Instructions For Form 2363-A, Request for IDRS Input for BMF/EO Entity Change: 501(c)(3) Foundation Status Modification

Foundation Status Modifications - Instructions For Form 2363-A
Field 1 Enter the EIN
Field 2 Enter the name control
Field 3 Place an X in the box next to 80
Field 4 Place an X in the box next to 016
Field 5 Type in definer code A
Field 17 Enter 03
Field 18 Type in the two digit foundation status code. See Document 6379, II-5.
Field 19 Type in the one digit classification code. See Document 6379, II-2.
Field 35 Type in the two digits representing the ending month of the fiscal year.
Field 38 Place an 01 in the Form 990 field. Place a 1 in the Form 990-T if applicable.
Field 39 Type FDN ST-CHANGE in the boxes
Field 40 Digitally sign and date or print the form, sign and date it.
Field 41 Type EO:E:EPR:MR

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