4.75.22  EO Delinquent, Amended and Substitute for Return Procedures

Manual Transmittal

November 06, 2012

Purpose

(1) This transmits revised IRM 4.75.22, EO Delinquent, Amended, and Substitute for Return Procedures. This manual contains procedures for determining when a taxpayer is liable for a delinquent return and for processing of delinquent returns that are subsequently received. Also included are procedures for when a taxpayer decides not to file a return.

Material Changes

(1) The name of this manual has been changed to reflect the addition of procedures dealing with amended returns.

(2) Procedures have been modified to incorporate the services provided by the Field Agent Support Team. See IRM 4.75.22.2(5), 4.75.22.2(6), 4.75.22.3.3(5), 4.75.22.3.3(6), 4.75.22.3.4(2), 4.75.22.3.5(2), 4.75.22.3.5(3), 4.75.22.3.6(1), 4.75.22.4(8), 4.75.22.4(17), 4.75.22.4(20), 4.75.22.4(23), 4.75.22.4(25), 4.75.22.4.1(5), 4.75.22.4.1(16), 4.75.22.4.1(19), 4.75.22.4.1(22), 4.75.22.4.1(24), 4.75.22.4.2.1(1), 4.75.22.4.2.1(3), 4.75.22.4.2.1(5), 4.75.22.7.4(1), 4.75.22.7.4(2), and IRM Exhibit 4.75.22-4.

(3) Exhibits that consisted of blank forms have been removed from the list of exhibits, as required under IRM 1.11.2. This list includes Exhibit 4.75.22-3, Form 2363-A, Exhibit 4.75.22-6, Form 4844, Exhibit 4.75.22-7, Form 13133, Exhibit 4.75.22-8, Form 3198-A, Exhibit 4.75.22-10, Form 3177, and Exhibit 4.75.22-11, Form 13496. The remaining exhibits have been renumbered as appropriate.

(4) In IRM 4.75.22.1(1), the statement was changed to include amended returns.

(5) In IRM 4.75.22.2(1), the IRM reference was changed from IRM 4.75.10.9.2 to IRM 4.75.10.6.2, to reflect the pending publication of IRM 4.75.10.

(6) The list of transaction codes in IRM 4.75.22.3(4) has been truncated. A note has been included to advise agents to solicit a return in certain situations. In IRM 4.75.22.3(5), two more items were added to the list of conditions where returns will not be solicited.

(7) The filing requirement threshold for Form 990-EZ was increased to $50,000 in IRM 4.75.22.3.3(2). In IRM 4.75.22.3.3(5), a note was added concerning the types of returns for which transaction code 590 closing code 75 could be used.

(8) In IRM 4.75.22.3.4(1)(a), the check box on Form 990 must be marked final. For IRM 4.75.22.3.4(2)(a), the IRM reference for terminations was changed to IRM 4.75.16. A note and reminder have been appended to IRM 4.75.22.3.4(2) If marked final, no Form 2363-A is required, and terminations are subject to Mandatory Review.

(9) Transaction code 590 closing code 75 can prevent automatic revocations from occurring under IRC 6033(j). Procedures in IRM 4.75.22.3.5 have been changed to reflect the use of transaction code 598 in lieu of transaction code 590.

(10) IRM 4.75.22.3.7 IRM 4.75.22.3.7 was added to address what to do if the taxpayer is in bankruptcy.

(11) In IRM 4.75.22.4(1) the emphasis is on indicating the earliest received date. In IRM 4.75.22.4(8), red ink was eliminated. A note was added to explain that the FAST unit takes care of the transaction code 599 closing code 96. IRM 4.75.22.4(9), IRM 4.75.22.4(12), IRM 4.75.22.4(19), IRM 4.75.22.4(20), and IRM 4.75.22.4(29) were removed, with the remainder of the section renumbered. In the new IRM 4.75.22.4(9), the earliest ASED date was added to the list of items to be written on Form 3198-A. In the new IRM 4.75.22.4(16), the Form 3244-A was eliminated, and a reference to oral statement authority was added to the note. In IRM 4.75.22.4(24) (now (20)) the mailing addresses were removed.

(12) Editorial corrections were made to IRM 4.75.22.4.1(10). The step list is now a step list table. At IRM 4.75.22.4.1(19), the mailing addresses were removed.

(13) In IRM 4.75.22.4.2(10), the penalty waivers procedures were eliminated, and the references updated.

(14) Instructions pertaining to the use of Computer Condition Codes (CCC) have been removed and replaced in IRM 4.75.22.4.2.1 and IRM 4.75.22.4.2.2.

(15) A toll-free number was added to IRM 4.75.22.4.3(6).

(16) IRM 4.75.22.5, Examination Determination has been renumbered as. IRM 4.75.22.6 A new section IRM 4.75.22.5, Amended Return Received was inserted to precede the examination determination section. IRM section 4.75.22.6 through 4.75.22.8 have likewise been renumbered.

(17) IRM 4.75.22.6(3) has had the phrase "in the RCCMS establishment" removed.

(18) In IRM 4.75.22.6.1(7), the instructions in the alpha list have been changed. Form 4844 was removed, the second bullet was split into two bullets, and the stated reason statement was converted into a note. In IRM 4.75.22.6.1(8), the effective revocation date was corrected.

(19) A statement concerning auto revocations was added to IRM 4.75.22.6.2.

(20) The Document Locator Number format was corrected in IRM 4.75.22.7(4). In IRM 4.75.22.7(5) and IRM 4.75.22.7(7) the IRM references were updated. A statement concerning the failure to pay penalty was inserted at IRM 4.75.22.7(8), causing the renumbering of the previous IRM 4.75.22.7(8) to IRM 4.75.22.7(9).

(21) In IRM 4.75.22.7.1(2), the phrase "or equivalent" was added to the first bullet point. IRM 4.75.22.7.1(3) was removed, causing the renumbering of the rest of the subsection. In the new IRM 4.75.22.7.1(3), the list of equivalent agreement forms was expanded, and in IRM 4.75.22.7.1(4), the reference to the exhibit was eliminated. A reminder concerning preparing the certification for every SFR was added to IRM 4.75.22.7.1(6). The direction to annotate a TC 599 CC 96 at the bottom of the return in IRM 4.75.22.7.1(8) was removed.

(22) The statement concerning Mandatory Review procedures at IRM 4.75.22.7.3(6) have been modified and expanded into an If, And, Then table.

(23) Instructions with respect to the receipt of original returns after the posting of the TC 150 have been modified in IRM 4.75.22.7.4 to incorporate FAST procedures. The list of actions resulting from the input of a TC 971 AC 282 was modified in IRM 4.75.22.7.4(3), and a similar list was added concerning TC 971 AC 013 at IRM 4.75.22.7.4(4). The IRM reference as IRM 4.75.22.7.4(6) (formerly IRM 4.75.22.7.4(5)) was updated.

(24) Procedures for processing delinquent Forms 1099 and W-2 have been adapted from IRM 4.23.8.11 for use by EO Examinations, as there is no Centralized Case Processing Unit for EO Examinations.

(25) In Exhibit 4.75.22-1, the words that are being defined are now in bold. A definition was added for the FAST.

(26) In Exhibit 4.75.22-3, the references to Figures in another IRM were modified to enable direct links to that manual.

(27) The table in Exhibit 4.75.22-4 now indicates that the FAST will input the computer condition codes, and that the Forms 943 and 945 have the same location for placement of the computer condition code.

(28) The delinquent return check sheet in Exhibit 4.75.22-6 has been modified to reflect the reduction in paperwork necessary with the changes in return processing due to the FAST.

(29) The text of Letter 854-C has been included as ,Exhibit 4.75.22-8 as agents do not have access to command code LETER on IDRS.

(30) Disposal codes are identified by the AIMS disposal code followed by the corresponding RCCMS disposal code in parenthesis. For example, disposal code 06 (208) denotes Delinquent Return Secured.

(31) Added new Exhibit 4.75.22-9, 90-Day Demand Letter for Form 990, and moved former contents to Exhibit 4.75.22-5.

Effect on Other Documents

IRM 4.75.22, revision date November 21, 2010, has been obsoleted.

Audience

TE/GE Exempt Organizations Examinations.

Effective Date

(11-06-2012)


Lois G. Lerner
Director, Exempt Organizations
Tax Exempt and Government Entities

4.75.22.1  (11-06-2012)
Introduction

  1. This manual section addresses the entire scope of the issue of delinquent returns, amended returns, and substitute for returns. Converted returns are covered in IRM 4.75.31.

  2. Decisions to be made by the examining agent include determining:

    • Whether an organization is liable for a return

    • Whether a delinquent return is to be requested

    • What to do if a return is received

    • Whether to examine the return

    • When to pursue substitute for return procedures

  3. Also included in this manual section are procedures for:

    • Processing payments

    • Determining reasonable cause

    • Requesting an employer identification number

4.75.22.2  (11-06-2012)
Determining Liability For Returns

  1. During the pre-audit portion of the examination, determine the filing requirements of the organization. See IRM 4.5.3.1.2 for returns of exempt organizations.

  2. Based on records reviewed during the examination, identify additional liabilities not previously reported, such as:

    • Unrelated business income taxes, imposed under IRC 511

    • Proxy tax, under IRC 6033(e)(2)

    • Political expenditures tax of IRC 501(c) organizations, imposed under IRC 527(f)(1)

    • Political organizations income tax, under IRC 527(b)

    • Employment and withholding taxes, imposed under Subtitle C

    • Income tax withholding on foreign persons, reported on Form 1042.

    • Excise tax on excess lobbying expenditures of certain electing IRC 501(c)(3) organizations, under IRC 4911

    • Excise tax on disqualifying lobbying expenditures of non-electing IRC 501(c)(3) organizations, under IRC 4912.

    • Excise tax, Private Foundations, imposed under IRC 4940, 4941, 4942, 4943, 4944, 4945 and 4948.

    • Excise tax, Black Lung Benefit Trusts, imposed under IRC 4951 and 4952

    • Excise tax on political expenditures of IRC 501(c)(3) organizations, under IRC 4955

    • Excise tax on excess benefit transactions, imposed under IRC 4958

    • Excise tax on hospital facilities, under IRC 4959, effective for failures occurring after March 23, 2012.

    • Excise tax on premiums paid on personal benefit contracts, under IRC 170(f)(10)(F).

    • Excise tax on unrelated business income of Charitable Remainder Trusts, under IRC 664(c)(2).

    • Other Chapter 42 excise taxes described in IRC 4965, 4966, and 4967.

    • Gaming excise taxes, under IRC 4401 and 4411

    Note:

    For a complete list of required filing checks, see IRM 4.75.12.

  3. Research IDRS using command codes INOLES/BMFOLO to verify existing filing requirements.

  4. Prepare Form 2363-A to request a change to the filing requirement.

  5. Forward Form 2363-A by fax, secure e-mail, or mail to the FAST.

  6. Research IDRS two weeks later to verify posting of the new filing requirement. The FAST sends a notification e-mail as well.

4.75.22.3  (08-01-2010)
Determine Delinquency

  1. Before requesting delinquent returns, research IDRS using command codes BMFOLI and BMFOLT.

  2. BMFOLI displays all filed returns. Tax delinquency investigations (TDI) are also shown, with status codes 01 through 04. Any tax modules not displayed are either:

    • Stored on a retention register (filed/full paid modules more than seven years old)

    • Not previously required to be filed (no filing requirement on INOLES/BMFOLO) or

    • Not yet due

  3. BMFOLT is a transcript of the transactions on a tax module. BMFOLT displays whether:

    • A TDI has been initiated

    • A TDI has been resolved

    • A return has been filed and

    • A substitute for return has been recorded

  4. If BMFOLT displays a transaction code (TC) 150, 590, 591, 593, 594, 596, 597, or 599, there is no delinquency for that tax module. Do not solicit a non-filed return for that tax module.

    Note:

    When TC 590, 591, and 593 are used on Forms 990, solicit a return unless a TC 590 CC 14 is present.

  5. Do not solicit a non-filed return under the following conditions:

    1. Fraud is indicated. See IRM 25.1.

    2. The return has been filed under another employer identification number.

    3. The organization has not filed a return or Form 990-N for the last three years (pending Status 97).

    4. INOLES shows the organization is in status 97 (not applicable to employment tax returns).

      Note:

      If a taxpayer under examination contends that its exempt status was auto-revoked under IRC 6033(j) in error, you must review the facts and make a determination regarding the taxpayer’s contention. If the determination is that the taxpayer was auto-revoked in error, submit all supporting documents to the FAST. If auto-revocation was appropriate, advise the taxpayer you must withdraw from the examination, issue a withdrawal letter (Exhibit 4.75.16-9), and advise the taxpayer that it can re-apply for tax-exempt status.

  6. For cases involving subordinate organizations under a group ruling, do not solicit Form 990 if the organization was included on a group return.

  7. For church cases, do not solicit a Form 990. A Form 990-T may be solicited during the formal notice of inquiry and/or notice of examination periods. Forms 941 and 945 may be solicited in the course of an employment tax examination.

  8. Unless it is needed for other purposes (such as a termination) if the return is not delinquent, do not solicit it.

4.75.22.3.1  (08-01-2010)
Extent of Retroactive Enforcement

  1. Enforcement of the delinquency procedures depends on the facts and circumstances of each case. Policy Statement P-5-133 discusses delinquent returns and the enforcement of filing requirements.

  2. Per Policy Statement P-5-133, the enforcement period is not to exceed six years.

  3. Apply shorter or longer periods if such action is in the best interest of the Service, pending management approval.

  4. If the examination involves a plan or trust that has been granted a conditional waiver of the minimum funding deficiency, the extent of enforcement may exceed six years.

  5. Consider:

    1. The taxpayer's prior history of noncompliance.

    2. The extent of the delinquency.

    3. The effect upon voluntary compliance.

    4. Whether the delinquency involves diverted trust funds.

    5. Whether the circumstances are peculiar to a specific entity.

    6. Anticipated revenue in relation to the time and effort required to determine the tax due.

4.75.22.3.2  (08-01-2010)
Management Approval

  1. If the enforcement period for delinquent returns is less than or greater than six nonfiled tax years, management approval is necessary. Document the case file to:

    1. Outline the facts of the case.

    2. Detail the reasons for recommendation of the longer or shorter period.

  2. Management approval is unnecessary if the non-filer voluntarily files returns beyond the six year period.

    Note:

    Management approval is not required if it is determined, based on taxpayer records, that no net tax would be due for the years under consideration.

4.75.22.3.3  (11-06-2012)
No Filing Requirement

  1. Certain types of entities are not required to file Form 990 or 990-EZ. These include:

    1. Churches, associations of churches, and their integrated auxiliaries

    2. Political organizations (IRC 527) excepted from the requirement to file Forms 8871

    3. Any political organization that is a caucus or association or state or local officials

    4. Subordinate organizations that file on a group return

    5. Governmental units and affiliates of governmental units

    6. IRC 501(c)(1) organizations

    7. Certain foreign organizations

    8. Certain U.S. possession organizations

    9. Private foundations.

      Note:

      All private foundations file Form 990-PF.

  2. All other organizations that would be subject to the filing requirement for either Form 990 or 990-EZ, but do not meet the requirement strictly due to failure to meet the gross receipts minimum threshold ($50,000) are required to file the electronic postcard (Form 990-N).

  3. All IRC 509(a)(3) organizations are required to file Form 990 or 990-EZ, even if its gross receipts are normally $50,000 or less, and even if it is described in Rev. Proc. 96-10, or is an affiliate of a governmental unit; unless it qualifies as one of the following:

    • Integrated auxiliary of a church

    • An exclusively religious activity of a religious order

    • An organization, the gross receipts of which are normally not more than $5,000 that supports an IRC 501(c)(3) religious organization

  4. IRC 501(c)(3) organizations do not file Forms 940.

  5. For open tax delinquency investigations (TDI) (BMFOLI, status 01 through 04) determine whether the taxpayer is required to file.

    Example:

    An organization has a TDI for a fourth quarter Form 941. The organization had no employees for that quarter. The organization is not required to file a delinquent return for that period.

    Example:

    An organization has a TDI for a Form 990-T. The organization discontinued the activity giving rise to unrelated business income. The organization is not required to file a delinquent return for that period.

  6. If the organization is not required to file for the period in question, prepare Form 4844. In the remarks write, "Input TC 590 CC 75." Send the request via fax, secure e-mail, or mail to the FAST.

    Note:

    Applicable to Forms 990-T and other non-Form 990 series returns only.

  7. If the organization is no longer required to file the return for any future period, prepare Form 2363-A to change the filing requirement, and forward it by fax, secure e-mail, or mail to the FAST.

4.75.22.3.4  (11-06-2012)
Out Of Business / Terminated / Dissolved

  1. If the organization is not liable for filing Form 990 because the organization ceased to operate, went out of business, terminated, or filed for dissolution, obtain the following:

    1. Any required final returns. Ensure the check box for final is marked.

    2. Copies of any documents authorizing dissolution.

    3. A statement signed by an officer of the organization showing the disposition of assets on hand at the date of dissolution.

  2. Upon receiving these documents:

    1. Prepare a termination closing letter. See IRM 4.75.16 for termination cases.

    2. Prepare the Form 2363-A to correct the status code on BMF to 20, Termination.

    3. Close the case using Disposal Code 14 (212).

      Note:

      If you secured a final return, marked as final, do not prepare Form 2363-A. When processed, the return changes the status to 20.

      Reminder:

      Terminations are subject to Mandatory Review. Forward the final return(s) to the FAST for processing. Keep the remainder of the documents in the file for Mandatory Review.

  3. For any other type of return, determine whether the organization was liable for the return.

  4. For employment taxes, prepare a referral package for a trust fund recovery penalty assessment, and send it to the Classification unit via secure e-mail. The referral will be forwarded onto the appropriate SB/SE PSP unit for development.

  5. For gaming excise or unrelated business income taxes, consult with management before determining whether to pursue enforcement.

  6. For private foundation excise (IRC 4941, IRC 4945) taxes or excess benefit transactions under IRC 4958, pursue enforcement against the liable party.

4.75.22.3.5  (11-06-2012)
Inactive Organizations

  1. Unless the organization meets one of the exceptions listed at IRM 4.75.22.3.3 (1), an inactive organization that fails to file the electronic postcard (Form 990-N) during a three year consecutive period will be automatically revoked. Pension Protection Act of 2006, §1233(b).

    Note:

    If an “inactive” organization contends that it is exempt from filing an annual EO information return (and Form 990-N e-postcard) because it considers itself an “affiliate” to a governmental unit by Rev. Proc. 95-48, the examiner must review the facts and make a determination regarding the taxpayer’s contention. If the determination is that the taxpayer was auto-revoked in error, the examiner will submit all supporting documents to the FAST. If auto-revocation was appropriate, advise the organization that it can re-apply for tax-exempt status.

  2. If the organization has not been automatically revoked, was inactive during the year under exemption, and has an open tax delinquency investigation,

    1. Prepare Form 4844. In the remarks write, "Input TC 598 CC 57." Send the request via FAX, secure e-mail, or mail to the FAST.

    2. If records were examined, close with disposal code 02 (107). If no records were examined, close with disposal code 32 (908).

    Instruct the organization as to the consequences of not filing the Form 990-N, 990-EZ, or 990. Provide the organization with the answers to the frequently asked questions found at http://www.irs.gov/charities/article/0,,id=221600,00.html.

  3. For any open tax delinquency investigations on any taxable returns (not including Form 990-PF) verify that no activity was conducted giving rise to a liability. Prepare Form 4844 for each open TDI. In the remarks write, "Input TC 598 CC 57." Send the request via FAX, secure e-mail, or mail to the FAST.

4.75.22.3.6  (11-06-2012)
Subordinate Organization

  1. If the organization is not liable for filing Form 990 or 990-EZ because the organization filed a group return with a parent organization, prepare the Form 4844 to satisfy the module for this tax period. In the remarks write, "Input TC 590 CC 14." Send the request via FAX, secure e-mail, or mail to the FAST.

  2. Determine whether there are any other tax liabilities, such as employment or unrelated business income taxes.

  3. Pursue enforcement if additional liabilities are found.

4.75.22.3.7  (11-06-2012)
Bankruptcy

  1. If there is an indication that the organization under examination has filed for bankruptcy, immediately contact an Examination Bankruptcy Coordinator (SB/SE). The Coordinator determines if the bankruptcy is still pending and provides you with further instructions. For a list of Coordinators, see http://mysbse.web.irs.gov/exam/tip/bankruptcy/contacts/12268.aspx.

  2. Indications of a bankruptcy include:

    • -V Freeze on TXMOD

    • TC 520

    • -X Freeze on AIMS

    • The organization, through an officer, trustee, director, or representative indicates verbally or in writing that it is in bankruptcy

  3. If encountered, see IRM 4.19.13.19, IRM 4.27.1, and IRM 4.27.2. Bankruptcy prevents the collection of tax. Bankruptcy does not prevent the assessment of tax or request for delinquent returns.

4.75.22.4  (11-06-2012)
Delinquent Return Received

  1. Date stamp the return. If no date stamp is available, annotate the earliest IRS received date, your name, and title in the middle of the form on one of the dotted lines (so as not to cover a numerical entry).

  2. For returns received with payments, see IRM 4.75.22.4.1 for payment processing procedures.

  3. Verify that the return has an original signature and date.

  4. Inspect the return to ensure that all appropriate schedules and forms are attached. Review the instructions to the tax return to verify which documents should be included with the return.

  5. Verify that the return contains the correct:

    1. Name

    2. Address

    3. Taxpayer identification number

    4. Taxable period

  6. If incorrect information is present on the return, request the taxpayer to submit a corrected original signed and dated return.

  7. Verify that the return is in fact delinquent. See IRM 4.75.22.3

  8. Determine whether the delinquent return should be established on AIMS. See IRM 4.75.22.6(3).

  9. Write across the top of the return, starting on the left side, "Original Delinquent Return Secured by TEGE, sent to the FAST on" and indicate the date the return is shipped to the FAST. Leave sufficient space on the upper right side of the return for the Campus to stamp the document locator number.

    Note:

    FAST will input TC 599 code on IDRS and edit the TC 599 code on the return.

  10. Prepare a separate Form 3198–A, TE/GE Special Handling Notice, for each return. Enter the following on the form:

    1. Your name.

    2. Your badge number.

    3. Your phone number.

    4. Your primary business code (found in Document 6379.)

    5. Your group number.

    6. The taxpayer's identification number.

    7. The name control (see AMDISA, INOLES, BMFOLO, or BMFOLI.)

    8. The date the Form 2363 / 2363-A was prepared if the filing requirement or address was updated.

    9. The correct ASED, listed in the earliest statute date field.

  11. Check the delinquent return check box on the Form 3198-A.

  12. Prepare a separate Form 13133, Expedite Processing Cycle, for each return. This form accelerates the standard return processing time frame by one week. Enter the following on the form:

    1. Your name

    2. Your phone number

    3. Your address, including mail stop

  13. Check the delinquent return box on Form 13133.

  14. Determine the application of penalties. See IRM 4.75.22.4.2

  15. Scan the return (if a scanner is available), or photocopy the return for the file.

  16. If scanned, upload the return to RCCMS.

  17. Attach the following in order to the front of the delinquent tax return:

    1. Form 13133 (traditionally printed on pink paper)

    2. Form 3198-A (traditionally printed on yellow paper)

    3. A copy of the payment instrument (check, cashiers check, etc.)

    4. A copy of Form 3244-A, Payment Posting Voucher - Examination

    5. A copy of the taxpayer's written penalty relief request.

    Note:

    If the penalty is waived under oral statement authority, a Form 886-A, Explanation of Items, is to be attached instead, discussing the cause provided by the taxpayer, and the agent's determination. See IRM 4.75.22.4.2 for a discussion of reasonable cause and oral statement authority.

  18. Prepare Form 3210 to ship the return(s) to the FAST, listing each return, each payment instrument (check, cashiers check, etc.), and listing the associated Forms 3244-A below each such payment instrument.

  19. Print the Form 3210 in triplicate.

  20. Sign and date each copy of the Form 3210.

  21. Prepare an envelope with the FAST mailing address.

  22. Place the recipient and acknowledgment copies with the tax return package(s) in the envelope.

  23. Place the sealed envelope in a second mailing envelope.

  24. Send the package to the FAST.

  25. Follow local office procedures for the retention of the originator's copy of Form 3210.

  26. Monitor IDRS for the posting of the delinquent return. The case cannot close until the TC 150 posts. See Exhibit 4.75.22-6, Delinquent Return Checksheet, for assistance in ensuring all components of the delinquency process have been completed properly. The FAST will send a notification e-mail.

4.75.22.4.1  (11-06-2012)
Payment Processing

  1. If payment is received with the return verify the following:

    1. The remittances by certified check(s), cashier's check(s), or similar instrument is payable to the "United States Treasury." If the payee line is blank or the check is made out to "IRS" , overstamp the check with the "United States Treasury" .

    2. The check information (date of check, check number, amount, payer, IRS recipient name and date received) must be entered into the logbook required to be maintained by the group.

    3. After preparation of Form 3244-A and Form 3210, a group manager must review Form 3210; compare it to the Form 3244-A; and sign Form 3210. The person who prepares Form 3244-A cannot be the same person who signs Form 3210.

      Note:

      Make sure the current version of Form 3244-A is used.

  2. Payments must be processed by the cashier at the service campus within 24 hours of receipt.

  3. All payments must be double-wrapped (with the payment placed in an opaque envelope before placing in the overnight mail envelope) and marked or delivered via overnight traceable method. A receipted copy of Form 3244-A may be used in lieu of Form 3210 only for payments which are hand-carried to the remittance processor.

  4. If unavailable to process the check within 24 hours, inform the secretary or other designee where the check should be applied against any future liability and that Forms 3244-A and 3210 need to be completed.

  5. A Manager or other designee concurrence is warranted prior to forwarding to the FAST.

  6. There should be a segregation of duties when performing a payment processing function.

  7. The Form 3210 return address should be to the attention of the group secretary or another designated employee.

  8. Part 4, the originators copy, of the Form 3210 must be retained and subsequently associated with Part 3, the acknowledgment copy.

  9. If a remittance must be held overnight, make certain that it is stored securely in a locked container.

    Caution:

    Hanging credenzas are not secure for storing payments.

  10. Prepare Form 3244-A for each tax year and class of tax involved for which payment is received.

    Prepare the form as follows:
    1. Type the employer identification number. If there is no EIN on file, see IRM 4.75.22.4.3.
    2. Type the form number and MFT. (Document 6379, provides MFT codes).
    3. Type the tax period in YYYYMM format.
    4. Type the date the payment was received.
    5. Type the name and address of the taxpayer.
    6. Type the check number and amount in the remarks field.
     

    Note:

    If the check is for more than one tax return, type "split remittance" into the remarks field, along with a breakdown of how the amounts are to be allocated. Also, prepare a separate Form 3244-A for each tax period involved.

    7. Type the amount of the payment in the TC 610 field.
    8. Type the same amount in the total payment field.
    9. Type Examiner's name and office symbols.

  11. Print all completed Forms 3244-A.

  12. Photocopy the Forms 3244-A with the respective checks.

    Note:

    Make sure the current version of Form 3244-A is used.

  13. Scan the photocopies and save them as PDF files. Label the files using the RCCMS naming convention 3.H.5 (Other Tax Liabilities - Collection of Tax.)

  14. Attach the photocopied Forms 3244-A to the front of the delinquent return.

  15. Upload the PDF files to RCCMS.

  16. Prepare Form 3210 to ship the payments to the FAST, listing each payment instrument (check, cashiers check, etc.), and listing the associated Forms 3244-A below each such payment instrument.

  17. Print the Form 3210 in triplicate.

  18. Sign and date each copy of the Form 3210.

  19. Prepare an envelope with the FAST mailing address.

  20. Place the recipient and acknowledgment copies with the Form(s) 3244-A and checks in the envelope. Checks should be paperclipped to each respective Form 3244-A (but do not staple or mutilate). If there is only a single check (split remittance), attach it to the Form 3244-A for the earliest tax period.

  21. Place the sealed envelope in an overnight mailing envelope and forward the remittance package via traceable overnight service.

  22. The group secretary or designee will monitor the acknowledgement of Form 3210, check, and documents within 10 days of issuance. If the acknowledgement is not received within 10 days the group secretary, or designee, will issue a follow up letter to the FAST. Associate the follow up letter with Part 4 of the original Form 3210. These actions must be documented in the group logbook.

  23. If the follow up is not subsequently received, use IDRS to ensure remittance was properly posted to the taxpayer’s account. If not, follow-up with a payment tracer.

  24. If the FAST acknowledges the Form 3210, check, and documents, file the acknowledgement copy (Form 3210) in the applicable log. No further action is required.

  25. See Exhibit 4.75.22-7 for a flowchart of the aforementioned procedures.

4.75.22.4.2  (11-06-2012)
Reasonable Cause Determination

  1. Make a penalty determination on each delinquent return received from a taxpayer.

  2. Review the taxpayer's filing history, using command codes BMFOLI and BMFOLT. Determine if the taxpayer has timely filed returns for prior and/or subsequent tax years.

  3. Taxpayers who seek to avoid the assessment of penalties should submit a written statement requesting the waiver of penalties. The statement should include the:

    • Taxpayer's name

    • Taxpayer's address

    • Taxpayer's identification number

    • Type of tax

    • Tax periods

    • Explanation of failure to file/pay/make deposits

    • The statement: "Under penalties of perjury, I declare that the above statement, to the best of my knowledge and belief, is true, complete, and correct"

    • An original signature and

    • Date signed

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    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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  7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  8. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Note:

      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  9. Exhibit 4.75.22-2 provides a listing of scenarios that are deemed to be acceptable for the non-assessment of penalties. For in depth discussions of reasonable cause, statutory exceptions, administrative waivers, and corrections of Service errors, see IRM 20.1.1.

  10. Make a determination as to whether the explanation establishes reasonable cause.

    1. If the relief criteria are clearly established. See IRM 4.75.22.4.2.1.

    2. If the relief criteria are not clearly established. See IRM 4.75.22.4.2.2.

  11. A penalty relief statement is acceptable if it:

    • appears to a person of ordinary prudence and intelligence as a reasonable cause for delay in filing a return

    • clearly indicates no willful intent to disobey the taxing statutes

  12. Do not presume reasonable cause in cases where ignorance of the law is claimed. Determine each case on its own merit.

  13. Consider ignorance of the law for reasonable cause only if other facts support this contention, such as first-time filers, sudden first-time FTD requirements, etc. The taxpayer should exhibit ordinary business practices and prudence. Judge the case on its own merits.

  14. The Supreme Court in U.S. v Boyle, , 469 U.S. 241, has held that generally a taxpayer's reliance on a professional agent, such as an attorney or accountant, to timely file a tax return does not constitute reasonable cause for purposes of IRC 6651.

4.75.22.4.2.1  (11-06-2012)
Penalties To Be Waived

  1. On each Form 3198-A (see IRM 4.75.22.4,) indicate in the Other Instructions field to not assess the failure to file and/or failure to pay penalties as applicable.

    Example:

    "Do not assess the failure to file and/or failure to pay or other penalties - Reasonable Cause Established"

    Reminder:

    Attach the penalty relief statement to the tax return. FAST can not waive the penalty if no statement is attached.

  2. On Form 13133, check the appropriate computer condition code boxes.

  3. The FAST will edit the applicable computer condition code(s) in the appropriate location on the tax return(s).

  4. Exhibit 4.75.22-3 provides a list of valid computer condition codes that may be marked on the delinquent return to indicate the particular penalty to be waived.

  5. Exhibit 4.75.22-4 identifies where the FAST will mark the computer condition code on each type of return.

4.75.22.4.2.2  (11-06-2012)
Penalties To Be Assessed

  1. On Form 3198-A, indicate in the Other Instructions field to assess the failure to file and/or failure to pay penalties as applicable.

    Example:

    " Reasonable cause denied, assess the failure to file and/or failure to pay or other penalties"

    Example:

    "Reasonable cause not established, assess the failure to file and/or failure to pay or other penalties"

  2. Leave the computer condition code boxes on Form 13133 blank.

  3. The FAST will write computer condition code "7" at the appropriate location on each applicable tax return if reasonable cause was denied. In the event no request for relief from penalties was received, the FAST will take no action as far as the computer condition codes go.

    Caution:

    Request computer condition code 7 only if you have received a written reasonable cause statement and are denying penalty relief with a certified disallowance letter (Letter 854C).

4.75.22.4.3  (08-01-2010)
Employer Identification Number Issues

  1. In certain situations, there may be no EIN on the secured delinquent return.

    Example:

    A Form 11-C is filed for a bartender of a veterans organization that sells pull tabs to the public.

  2. Any payments received can not be processed until an EIN is associated with the return.

  3. Contact must be made with the person who signed the return to request an EIN.

  4. If the return signer does not have an EIN, have them obtain an EIN via the www.irs.gov site. The direct link is https://sa1.www4.irs.gov/modiein/individual/index.jsp.

  5. Taxpayers who complete the online application receive their new identification numbers immediately.

  6. If the taxpayer does not have internet access, the taxpayer can complete the Form SS-4 and fax or mail the form. They can also call 1-800-829-4933.

  7. To avoid delays in return and payment processing, have the taxpayer obtain the EIN prior to submitting a signed return.

  8. If the return is received without an EIN, and the taxpayer subsequently obtains an EIN, write the EIN on the tax return.

4.75.22.5  (11-06-2012)
Amended Return Received

  1. During the examination, the organization may file an amended return after an original return has been filed. Date stamp all amended returns upon receipt. If the return requests a refund or credit of tax paid, or abatement of tax assessed, see IRM 4.75.37 regarding claims.

  2. Check BMFOLI and/or BMFOLT to verify whether an -L freeze is present (TC 420 / TC 424). Any module with an -L freeze requires a report of examination that either:

    1. Adjusts the tax module to reflect the amended return.

    2. Adjusts the tax module per the agent's computations.

    3. Reflects no changes to the tax reported (disallowance of the amended return).

      Note:

      See IRM 4.75.15 for more information on reports of examination.

  3. For tax modules without an -L freeze, determine whether to examine the amended return.

    If... Then...
    The return is acceptable as filed Forward to FAST for submission processing. See IRM 4.75.22.5.1.
    The return should be examined Establish on RCCMS and AIMS using Source Code 50. Process as a regular examination. The amended return will be kept in the file all the way through closure.

  4. Make a copy of the examined amended return and forward the copy to the FAST. See IRM 4.75.22.7.4 (2).

4.75.22.5.1  (11-06-2012)
Non-Examined Amended Return Processing

  1. For returns received with payments, see IRM 4.75.22.4.1 for payment processing procedures. Replace references to TC 610 with TC 670.

  2. Verify that the return has an original signature and date.

  3. Inspect the return to ensure that all appropriate schedules and forms are attached. Review the instructions to the tax return to verify which documents should be included with the return.

  4. Verify that the return contains the correct:

    1. Name

    2. Address

    3. Taxpayer identification number

    4. Taxable period

  5. Write across the top of the return, starting on the left side, "Amended Return Secured by TEGE, sent to the FAST on" and indicate the date the return is shipped to the FAST. Leave sufficient space on the upper right side of the return for the Campus to stamp the document locator number.

  6. Scan the return (if a scanner is available), or photocopy the return for the file.

  7. If scanned, upload the return to RCCMS.

  8. Prepare Form 3210 to ship the return(s) to the FAST, listing each amended tax return, and if applicable, each payment instrument (check, cashiers check, etc.), and the associated Forms 3244-A below each such payment instrument.

  9. Print the Form 3210 in triplicate.

  10. Sign and date each copy of the Form 3210.

  11. Prepare an envelope with the FAST mailing address.

  12. Place the recipient and acknowledgment copies with the tax return package(s) in the envelope.

  13. Place the sealed envelope in a second mailing envelope.

  14. Send the package to the FAST.

  15. Follow local office procedures for the retention of the originator's copy of the Form 3210.

4.75.22.6  (08-01-2010)
Examination Determination

  1. There are several situations in which the examination may be expanded. Examples include:

    • An issue giving rise to an additional assessed liability on a previously filed return is also present on a delinquent return

    • A taxpayer is determined to be liable for a return but fails to file when requested, and

    • A taxpayer refuses to file a return in a disagreement over the determination of liability

  2. If you decide to expand the examination to include either a recently secured delinquent return or a tax delinquency for which no return has been secured, establish a module for the appropriate tax form and period on RCCMS. Management approval is required for the establishment.

  3. All establishments are made on AIMS Master File. For secured delinquent returns, use push code 020. For cases where a return has not and will not be secured, see substitute for return procedures at IRM 4.75.22.7.

    Exception:

    For cases involving Forms 990 for organizations not required to file Form 990 (see IRM 4.75.22.3.3 (1)), establish the case on AIMS Non-Master File. Also, Forms 4720-A (MFT 66) and 990-BL (MFT 56) are established on AIMS Non-Master File

    Note:

    Do not use push code 036 for a delinquent return. The delinquent return will never post if push code 036 is used.

  4. Upload the scanned return to RCCMS for the respective tax module.

  5. When closing the delinquent return, use disposal code 06 (208). If there is a change to the delinquent return and a higher priority disposal code would be more appropriate, that code should be used.

    Note:

    A delinquent return module on RCCMS can not be closed until the TC 150 has posted.

4.75.22.6.1  (11-06-2012)
Refusal To File A Required EO Information Return

  1. If the organization refuses to file an annual EO information return (Form 990 or 990-EZ) send a written notice to the organization by certified mail requesting the return be filed with the group within 90 days of the date of the notice. See Exhibit 4.75.22-9.

  2. The written notice will inform the organization of the $20 per day, $100 per day for organizations having gross receipts exceeding $1,000,000 for the subject tax year, penalty imposed by IRC 6652(c)(1) and solicit a written statement explaining the cause for late filing. The notice also informs the organization of the penalty imposed against responsible persons within the organization (officers, directors, trustees, etc.).

  3. If the organization is exempt under IRC 501(a) and the return is required by IRC 6033 or IRC 6043(b), the written notice will notify the organization if it fails, without reasonable cause, to file the return, its exempt status will be revoked because it has failed to establish it is observing the conditions required for continuation of its exempt status

  4. If the organization responds to the notice by filing a completed return within the 90-day period, take the following actions:

    1. Process the delinquent return in accordance with IRM 4.75.22.4.

    2. If an examination is warranted, establish the module on RCCMS using push code 020.

    3. Retain a copy of the return for the case file. Upload to RCCMS if scanned or if later available from On Line SEIN.

    4. Complete the examination.

  5. If the organization fails to respond to the 90 day demand letter, Rev. Rul. 59-95 provides that the failure or inability of an organization to file a required information return can result in termination of the organization’s exempt status because the organization is not complying with the conditions required for continuation of exempt status.

  6. Revocation is appropriate where the sanctions of IRC 6652 have proven ineffective in securing compliance with the filing requirements of IRC 6033 or IRC 6034.

  7. If an organization is required to file, but refuses to file a completed return, or an officer of the organization states that it is out of existence but refuses to submit a document authorizing dissolution and the disposition of assets, the examiner will process the case in accordance with the following procedures:

    1. Prepare a revenue agent report (Form 886-A) proposing revocation of exempt status.

    2. Issue with Letter 3618 for IRC 501(c)(3) organizations or Letter 3610 for all other IRC 501(c) organizations.

      Note:

      The stated reason for revocation will be that the organization has not established that it is observing the conditions for continuation of its exempt status.

  8. The revenue agent report for the proposed revocation is to include:

    1. A statement of the material facts upon which the revocation is based.

    2. The applicable statute, regulations and other governing precedent.

    3. The Service’s proposed conclusion and a clear explanation of the underlying reasoning.

    4. The proposed effective date of revocation.

    5. A statement that the organization is required to file Form 1120 returns (or Form 1041) for the tax periods after the effective date of the revocation.

      Note:

      The effective date of the revocation will be the first day of the first year being examined.

  9. Upload the report, workpapers, and correspondence to RCCMS.

  10. Close the case on RCCMS to Mandatory Review.

4.75.22.6.2  (11-06-2012)
Refusal To File A Required Tax Return

  1. If you solicit a tax return, e.g., Form 990-PF, 990-T, 1120-POL, 4720, 940, 941, 945, 730 or 11-C, and the organization refuses to file the return, prepare a substitute for return (SFR) package. See IRM 4.75.22.7.

  2. In the case of Forms 4720, prepare the substitute for return for the organization in the name of the organization on MF (MFT 50). Establish the Form 4720 for any disqualified person liable for Chapter 42 taxes on NMF (MFT 66). Establish both returns separately on RCCMS.

  3. If the nonfiling taxpayer is not subject to auto revocation under IRC 6033(j), and if the case is subject to Mandatory Review, prepare the SFR package for all open Form 990 series returns.

4.75.22.7  (08-01-2010)
Substitute For Return Procedures

  1. Delegation Order 5-2 (formerly DO-182, Rev. 7) provides that Internal Revenue Agents have the authority to prepare and execute returns required by law when the person required to file such returns fails to do so. Before any notice of deficiency is issued in substitute for return (SFR) situations, there must be a valid IRC 6020(b) return prepared for all pertinent non-filed tax periods.

  2. Secure current INOLES, IMFOLT/BMFOLT/TXMODA or IMFOLI/BMFOLI/SUMRY prints. (These can be printed directly to Adobe PDF from IDRS.)

    Note:

    Not necessary for NMF returns.

  3. Verify that no return has previously been filed for tax periods for which delinquent returns are solicited.

  4. Establish each substitute for return module on RCCMS and AIMS using push code 036, source code 44, and alpha code EE. This push code is used to establish a TC 150 that will post to IMF/BMF within two cycles of input or within 10 days. The BMF DLN will be displayed as XX-999-999-999-XX-X.

    Reminder:

    NMF AIMS controls require manual input via Form 5588. Leave the Update AIMS check box blank when establishing the NMF module on RCCMS.

    Caution:

    If the nonfiled return is a Form 990-T, 1120-POL, 1120, 1041, 4720 or 4720-A, the statute will be that of the filed Form 990 return. In these situations, do not use alpha code EE.

  5. Prepare a substitute for return package. See IRM 4.75.22.7.1.

  6. If remittance is received, follow the procedures in IRM 4.75.22.4.1.

    1. For payments received with a signed agreement form, use TC 640 in lieu of TC 610 on Form 3244-A.

    2. For payments received after the TC 150 posting, that are not included with a signed agreement form, use TC 670 in lieu of TC 610.

  7. Issue the report prepared in IRM 4.75.22.7.1 to the taxpayer with a 30 day letter by certified mail. For agreed deficiencies, see IRM 4.75.22.7.2. For unagreed deficiencies, see IRM 4.75.22.7.3.

    Reminder:

    Include Letter 3597, addressed to a power of attorney, if applicable.

  8. The failure to pay penalty is automatically assessed when the TC 300 posts with a tax due. To waive this penalty, put a TC 270 for .00 in box 12 on the Form 5599, and type a TC 270 for .00 in the transaction code field on the Individual/Bus. (1 of 3) tab in RCCMS. Secure a written statement from the taxpayer requesting relief from the penalty on the basis of reasonable cause.

  9. If an original return is received after the AIMS control with push code 036 has posted, see IRM 4.75.22.7.4.

4.75.22.7.1  (11-06-2012)
Substitute For Return Package

  1. The substitute for return package consists of a "dummy return" , a certification, a tax computation, a revenue agent report, supporting schedules, and a determination of whether to assess penalties.

  2. The package is assembled in the following order:

    1. Form 4549, Income Tax Examination Changes (or equivalent - see paragraph(3))

    2. Form 886-A, Explanation of Items

    3. Supporting schedules, spreadsheets, or exhibits.

    4. Form 3198-A, TE/GE Special Handling Notice

    5. Form 13496, IRC Section 6020(b) Certification

    6. A dummy return

    7. Current transcripts

  3. Equivalent acceptable forms in lieu of Form 4549 are the following, where the starting tax amount is $0.

    1. For Income Tax: Form 4549-A with Form 870

    2. For Chapter 41 or 42 Excise Tax: Form 4883 with Forms 870-E

    3. For Employment and Withholding Taxes: Forms 4666, 4668 and 4667 with Forms 2504, 2504-WC or 2504-S

    4. For Miscellaneous Excise Taxes: Form 5384

    5. For Miscellaneous Excise Taxes: Form 5385 with Form 2504

    6. For Form 990, 990-EZ, 990-BL Examinations: Form 4621 with Form 6018 or 6018-A.

  4. For the report component of the SFR package, include any determinations concerning penalties.

  5. On Form 3198-A, check the SFR box. Indicate in the Other Instructions field to not assess the failure to file and/or failure to pay penalties as applicable.

    Example:

    "Do not assess failure to file and/or failure to pay or other penalties - Reasonable Cause Established"

    Example:

    "Assess the failure to file penalties - No Reasonable Cause"

    Note:

    The failure-to-pay penalty does not apply to Forms 990. If there is a tax deficiency with respect to the SFR and the failure-to-pay penalty is recommended, the failure to pay penalty must be included in the proposed deficiency and in the statutory notice of deficiency.

  6. Form 13496 is associated with each substitute for return to establish that IRC 6020(b) criteria are met in order that the failure to pay penalty under IRC 6651(a)(2) will be sustained in court. Prepare and sign the Form 13496. Ensure that the signature date on the Form 13496 never precedes the date affixed to the Form 886-A or Form 4549 (or equivalent.)

    Reminder:

    Prepare a Form 13496 for every substitute for return, regardless of whether any penalties will apply.

  7. The dummy return consists of the first page of an otherwise blank return. Complete the skeletal information at the top of the form:

    • Taxpayer's name

    • Address

    • Tax period and

    • Taxpayer identification number

    1. In the top margin of the dummy return, annotate in red ink "Substitute for Return Prepared by TE/GE on (date prepared)" . The date prepared will be the same date as the Form 13496.

    2. If any tax data is present or if the taxpayer's name, tax period, TIN, and received date are not present, the closing unit will return the substitute for return to the originator for correction.

  8. The current transcripts referenced are those used in the determination of the entity’s failure to file a required return. The transcripts must not be more than thirty days old. The current transcripts include:

    1. INOLES.

    2. IMFOLT/TXMODA (IMF) or BMFOLT/TXMODA (BMF).

4.75.22.7.2  (08-01-2010)
Agreed SFR Cases

  1. Agreed tax changes are not subject to Mandatory Review (unless subject to Mandatory Review for other reasons).

  2. Prepare Letter 3607. Print a copy for the taxpayer and their power(s) of attorney. Upload the prepared Letter 3607 to RCCMS.

  3. Prepare Letter 3597, Transmittal Letter For Power of Attorney, if applicable.

  4. Photocopy the signed agreement form. For each printed copy of Letter 3607, associate a copy of the agreement form. Scan and upload the signed agreement to RCCMS, if available.

  5. Associate the signed agreement form with the substitute for return package.

  6. Prepare the case for closure.

  7. Close the case using disposal code 03 (102).

4.75.22.7.3  (11-06-2012)
Unagreed SFR Cases

  1. Unagreed proposals are subject to Mandatory Review.

  2. Prepare the paper case file for transmittal to Mandatory Review.

  3. Upload all workpapers, Service generated correspondence, forms, and the report to RCCMS. If available, scan all taxpayer correspondence and upload to RCCMS.

  4. Secure a written protest, if submitted.

    1. Issue a rebuttal to the protest.

    2. Scan the protest.

    3. Upload the scanned protest and the rebuttal to RCCMS.

    4. Await receipt of the response to the protest.

    5. Scan and upload the response to the protest to RCCMS.

  5. Close the case to Mandatory Review.

    If: Then:
    No protest is submitted Use disposal code 10 (604)
    A protest is filed and sent to Appeals Use disposal code 07 (601)
    A petition is timely filed with Tax Court Use disposal code 11 (603)
    The case is an unagreed church audit Use disposal code 15 (602)

  6. Mandatory Review or Appeals will perform the following actions:

    If: And: Then:
    No protest is submitted Adverse action is upheld Mandatory Review will issue any applicable letters and close the case to ESS for processing.
    No protest is submitted Adverse action is not upheld Mandatory Review will return the case to the group.
    A formal protest to Appeals is filed Appeals resolves the case Appeals will issue any applicable letters and process the case closure.
    A petition is filed The case is heard in court Appeals will issue any applicable letters and process the case closure.

4.75.22.7.4  (11-06-2012)
Original Return Received After TC 150 Posts

  1. When a return is received after a substitute for return TC 150 has posted or a Form 990-N has been electronically filed, incorporate the amounts on the secured return into a report and assess as a TC 300 via RCCMS. Do not forward the original delinquent return to the FAST or the Campus for posting of the delinquent return.

  2. Send a copy of the return to the FAST, stamped with the earliest IRS return received date. FAST will post a TC 971 AC 282 upon receipt of the return from the agent for cases involving Substitutes for Return. For cases other than Substitutes for Return, FAST will post a TC 971 AC 013. FAST will image for inclusion in the Online SEIN database all Forms 990, 990-EZ, 990-PF, 990-BL, 990-T, and 4720.

    Note:

    The FAST will not make any adjustments to what is already on file on IDRS.

  3. Posting of the TC 971 AC 282 on Master File does the following:

    • Updates Master File to show that Examination secured a delinquent return

    • Causes a TC 976 to post to Master File

    • Sets the Assessment Statute Expiration Date (ASED)

    • Avoids setting the duplicate return freeze on Master File

    • Avoids generating an AIMS weekly update

  4. Posting of the TC 971 AC 013 on Master File does the following:

    • Updates Master File to show that Examination secured a delinquent return

    • Cause a TC 976 to post to Master File

    • Sets the duplicate return freeze (-A) on Master File

    Note:

    ESS removes the duplicate return freeze when the case is closed by ESS.

  5. If after reviewing the delinquent return, you decide to accept the returns as filed:

    1. Use the amounts shown on the delinquent return in the final exam report.

      Reminder:

      Use a starting tax value of $0 in the Form 4549 (or equivalent).

    2. Complete the appropriate entries on RCCMS.

      Note:

      Do not complete the delinquent return indicator or delinquent return amount fields.

    3. In RCCMS, update the statute to reflect the received date of the return.

    4. In RCCMS, eliminate the EE alpha code.

    5. Attach the signed delinquent return to the report.

    6. Close the case using disposal code 03 (102).

  6. If after reviewing the delinquent return, you decide not to accept the returns as filed:

    1. Prepare the report of examination.

    2. On the Form 4549, use the starting value of $0 tax.

    3. In the Form 886-A, reference receipt of the delinquent return, include the amounts reported in the fact section, but make the final computations using a starting value of $0 tax.

    4. Issue the report. For agreed cases, see IRM 4.75.22.7.2. For unagreed cases, see IRM 4.75.22.7.3.

4.75.22.8  (08-01-2010)
Delinquent Return Under Other Operating Division Jurisdiction

  1. Situations may arise where delinquent returns will be requested that will not be examined by EO. These include Forms 1120, 5330, and 5500. Secure delinquent returns regardless of which division has jurisdiction.

  2. If encountered:

    1. Secure the delinquent return.

    2. Scan (or photocopy, if a scanner is not available) the delinquent return.

    3. Forward the return for processing. See IRM 4.75.22.4.

    4. Prepare Form 5666, TE/GE Referral/Information Report, if you are not sure the return information is substantially correct.

    5. Forward the referral to management via secure e-mail for a digital signature.

    6. Send the referral and scanned copy of the return via secure e-mail to *Manager EO Classification. (For those without scanners, send the signed Form 5666 and photocopy of the return to EO Classification.)

    7. Continue with the examination as normal.

    Note:

    Processing secured converted returns (Form 1120 or 1041) for revoked organizations are addressed in IRM 4.75.31.

  3. See IRM 4.75.16 for relevant EO closing procedures.

4.75.22.9  (08-01-2010)
Treatment of Timely but Unsigned Returns

  1. Per Policy Statement P-2-11, the Service does not assert a delinquency penalty if an unsigned tax return is timely filed on the prescribed form and if applicable, accompanied by proper payment, provided that:

    1. The taxpayer, upon request, subsequently files a valid (signed and dated) return.

    2. The facts surrounding the failure to sign the return clearly indicate there was no willful intent to violate the statute.

    3. Gross negligence is not involved.

4.75.22.10  (11-06-2012)
Forms W-2, 1099-MISC and Other Information Returns

  1. Before requesting delinquent Forms W-2, Wage and Tax Statement, and 1099-MISC, Miscellaneous Income, perform the research outlined in IRM 4.75.12.6.

  2. Review the taxpayer's records. Inspect:

    • Cancelled checks

    • Check registers

    • General and subsidiary ledgers

    • Invoices

    • Receipts

    • Contracts and agreements

    • Forms W-4, Employee's Withholding Allowance Certificate and W-9, Request for Taxpayer Identification Number and Certification

  3. Track the amounts paid to various parties and compare to the transcripts obtained from IRPTRR. Identify any discrepancies.

  4. Explain the discrepancies to the taxpayer. Determine whether the taxpayer is liable for either an amended or delinquent Form W-2 or 1099-MISC or other information return.

  5. Secure the appropriate forms, if liable. See the table below for a list of forms to secure:

    If requesting: Then secure:
    Delinquent Form(s) W-2 One Form W-3, Transmittal of Wage and Tax Statements with all of the delinquent Forms W-2
    Delinquent Form(s) 1099-MISC One Form 1096, Annual Summary and Transmittal of U.S. Information Returns with all of the delinquent Forms 1099-MISC
    Amended Form(s) W-2 One Form W-3c, Transmittal of Corrected Wage and Tax Statements and a Form W-2c, Corrected Wage and Tax Statement for each correction to be made
    Amended Form(s) 1099-MISC One Form 1096 and a Form 1099-MISC for each correction to be made. The taxpayer checks the Corrected box at the top of the Form 1099-MISC.

    Note:

    If securing 250 or more Forms 1099-MISC, the taxpayer must file electronically. Forms 1096 are not used for electronic submissions.

  6. Annotate in red "Delinquent Wage Statement Secured by TE/GE - Penalty Considered" across the bottom of Form W-3/W-3c.

  7. Make a copy of the Forms W-2 and 1099-MISC. Send the original Forms W-2 and 1099-MISC to the FAST via USPS or UPS. Ensure that these are accompanied by completed Forms W-3 and 1096.

  8. FAST will forward the Forms W-2 to the Social Security Administration, and will forward the Forms 1099-MISC to the appropriate campus for processing.

  9. For other types of information returns, such as the Forms W-2G, 1097, 1098, 1099 (other variants), and 5498, follow the instructions in IRM 4.75.22.10 (5) through IRM 4.75.22.10 (7) for Forms 1099-MISC, substituting the form name for the Form 1099-MISC.

4.75.22.10.1  (11-06-2012)
Secured Forms W-2 - Employment Tax Examination

  1. Advise employers to prepare Form W-2 or Form W-2c, whichever is applicable, to report the amount of wage adjustments for each individual who was affected by the exam. Since no income taxes were actually withheld from the employee's wages, no withheld income tax should be reported on delinquent Forms W-2 or Form W-2c statements. Where the names and the Social Security Numbers of the reclassified workers are unknown, the employer will report the total amount of wages paid to these workers on one Form W–2.

  2. Secure Forms W-2 or W-2c, and Form W-3 or W-3c, from the employer at the completion of an agreed employment tax examination. Give the employer a reasonable deadline, i.e., 30 days, to prepare the wage statements.

    Note:

    Forms W-2/W-3 are not secured for CSP cases. See IRM 4.23.6, Classification Settlement Program (CSP), for more information.

  3. In agreed cases, delinquent Forms W-2 or W-2c for prior year exams are due upon request. The wage statements were due to be filed by the last day of February following the year in which the wages were paid. Consider penalties for Failure to File and Failure to Furnish. Note in the case workpapers if reasonable cause exists. See IRM 4.23.9.12.2, Wage and Tax Statements, for penalty information.

  4. If there are no reasons for a waiver of the penalties, propose and process the penalties at the same time as the employment tax exam. See IRM 4.75.22.11 for instructions on preparing an Information Return Penalty Case File.

  5. Enter on Form 4668, Employment Tax Examination Changes, the number of employees who should receive wage statements, the date to file and furnish the wage statements, and the address of where to send the wage statements. The ET Report Writing Program template, available at http://mysbse.web.irs.gov/Specialty/et/examreturns/write/default.aspx automates this process.

  6. When Forms W-2/W-2c are secured during the examination (received directly from the organization):

    1. Reconcile the FICA wages on Form W-3/W-3c to the FICA wages on Form 4668.

    2. Resolve any discrepancies with the employer.

    3. Annotate, "Wage Statements Secured By Examiner" in the Form 4668 block regarding the filing of Forms W-2/W-2c and in the other instructions section of Form 3198-A.

    4. Annotate in red "Delinquent Wage Statement Secured by TE/GE - Penalty Considered" across the bottom of Form W-3/W-3c. This alerts the Social Security Administration that the area office has taken appropriate action concerning the assertion of penalties under IRC 6721 and IRC 6722.

    5. Include copies of the forms in the workpapers section of the employment tax case file and the penalty case file, if applicable.

    6. Send the original Forms W-2/W-3 and W-2c/W-3c to the FAST.

  7. Conversion of independent contractor to employee:

    1. Annotate "Reclassification - self-employed/employee status" on Form 3198-A and on top of Form 4668. This assists ESS in identifying for Social Security Administration any Forms W-2 that are subsequently filed by the employer.

    2. Advise the employer to take prompt action in notifying their employees so that the workers will have the opportunity to file a claim for refund if they did pay self-employment tax on the same wages.

    3. Provide the employer with a letter that explains to the workers why they are receiving the wage statement and Notice 989. See IRM 4.23.10.10.1, Non-CSP Procedures.

  8. In some circumstances, permit the employer to delay the submission of the forms. Where it is determined that reasonable cause exists, allow the employer an extension of time to prepare the Forms W-2 or W-2c. The employer must file Form W-2c by the last day of February following the calendar year in which the employer agrees to the employment tax assessment.

    Example:

    For an agreed examination completed in September 2011, the Forms W-2c are to be filed by the last day of February 2012. Instruct the employer to mail Forms W-2 or W-2c to ESS (Mail Stop 4980 DAL).

4.75.22.10.1.1  (11-06-2012)
Special Procedures For Failure to File Form W-2 - Unagreed Case

  1. When recommending assessment of penalties for failure to file and failure to furnish Forms W-2 on an unagreed employment tax case involving reclassification of workers to employee status prepare the appropriate Information Return Penalty Package.

  2. When neither Form 1099 nor Form W–2 were filed:

    1. Prepare two Forms 8278, Assessment and Abatement of Miscellaneous Civil Penalties, to reflect Form W–2 penalty assessments.

    2. Prepare two Forms 3645, Computation of Penalty for Failure to File Information Returns or Furnish Statements to reflect Form 1099 penalty assessments. Do not provide a copy of Form 3645 to the taxpayer.

    3. Staple the Forms 8278 to the inside front cover.

    4. Staple the Forms 3645 to the inside back cover.

    5. Attach a Post-It Note indicating "Primary Examiner Position" to the Forms 8278.

    6. Attach a Post-It Note indicating "Alternate Examiner Position" to the Forms 3645.

    7. Prepare two explanations on Form 5773, in Section I, Penalties, Subsection 1, IRC 6652(c): Failure to File Information Returns. Title the first explanation "Primary Examiner Position" and the second "Alternate Examiner Position" .

    8. Enter in the "Other" section of Form 3198-A, "Suspend assessment of information return penalties until the taxpayer's request for appeal period has expired."

    9. Associate the penalty file with the examination case file

    Note:

    If an Appeals conference is not requested, the civil penalty recommendation shown in the penalty package as the "Primary Examiner Position" (attached to the inside front cover) will be processed. If an Appeals Conference is requested, the civil penalty package with the examination case file will be closed to Appeals by Mandatory Review, where a final penalty determination will be made.

4.75.22.10.2  (11-06-2012)
Secured Forms W-2 - Compliance Check, CAWR Cases

  1. When Forms W-2/W-2c are secured:

    1. Reconcile the FICA wages on Form W-3/W-3c to the FICA wages on Forms 941/941X.

    2. Resolve any discrepancies with the employer.

    3. Annotate, "Wage Statements Secured By Examiner" in the other instructions section of Form 3198-A.

    4. Annotate in red "Delinquent Wage Statement Secured by TE/GE - Penalty Considered" across the bottom of Form W-3/W-3c. This alerts the Social Security Administration that the area office has taken appropriate action concerning the assertion of penalties under IRC 6721 and IRC 6722.

    5. Include copies of the forms in the workpapers section of the case file and the penalty case file, if applicable.

    6. Send the original Forms W-2/W-3 and W-2c/W-3c to the FAST.

4.75.22.10.3  (11-06-2012)
Secured Forms 1099

  1. Secure any delinquent and amended Forms 1099 that were required to be filed during the audit years.

  2. Prepare Form 1096 if it is not furnished with the Forms 1099.

  3. For delinquent returns, write "Delinquent Returns - Secured by TE/GE - Penalty Considered" in red ink in the space at the bottom of the Form 1096. Enter "E" (Exam) in the first box under "Official use only." Stamp the earliest IRS received date in the space above "Official use only." This will alert the Campus that the area office has taken the appropriate action concerning assertion of penalties under IRC 6721 and IRC 6722.

    Note:

    Do not make any markings in the top margin of Form 1096. This will interfere with the processing of these documents.

  4. On Form 3198-A, indicate in the Other Instructions field to not assess the failure to file and/or failure to pay penalties. Write "Do not assess the failure to file and/or failure to pay or other penalties, still in processing" .

  5. If there is more than one type of information return, prepare a separate transmittal Form 1096 for each type of information return.

  6. Send the Forms 1096 and 1099 to the FAST, via Form 3210, and retain a copy in the penalty case file.

  7. Attach copies of the forms, including transmittals, to the workpapers.

4.75.22.11  (11-06-2012)
Information Return Penalty Case File

  1. When a determination is made that penalties for failure to file and failure to furnish Form W–2, Form W–2c, or Form 1099 apply to the examination, prepare an information return penalty case file. However, if you grant an extension to file Form W–2c, the Form W–2c penalties do not become assessable under IRC 6721 and IRC 6722 until March 1st of the year following the examination. See IRM 4.75.22.10.1 (8). Also see IRM 4.23.9.12, Penalties for Failure to File Certain Information Returns or Furnish Certain Statements, for additional information.

  2. Create a paper file to accompany the electronic case file.

    Establish the penalty file on RCCMS:
    1. Select File, New, Compliance Activity.
    2. In the Validate for: drop down box, select Establish.
    3. Deselect the Update AIMS check box.
    4. On the General (1 of 2) tab, select Non-Return in the Type: drop down box.
    5. In the Activity code: drop down box, select 507 - Form 8278.
    6. In the Tax period: field, enter the calendar year, i.e. 200912, 201012, etc.
    7. In the Return due: field, enter the due date of the Form W-2 or 1099.
    8. In the Statute: field, enter the due date plus three years.
    9. Select EE in the Alpha day: drop down box.
    10. On the Codes tab, complete the normal required entries. The MFT: is 99. The Return requisition code: is 3 - Return, Chargeout & Labels Not Requested.

  3. The information return penalty package is used to compute and assess on the Master File the penalties for failure to file correct information returns, IRC 6721, and failure to furnish correct payee statements, IRC 6722. See IRM 20.1.7, Information Return Penalties, of the Penalty Handbook for additional information.

  4. Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties, is an assessment document which is required for the completion of an information return penalty case file. Prepare a Form 8278 for each tax year. Instructions for preparation of Form 8278 are found on page 2 of the form. Refer to IRM Exhibit 4.23.9–1 for instructions on determining the civil penalty statute of limitations.

    Note:

    Do not send a copy of Form 8278 to the taxpayer.

  5. Prepare a Form 3645, Computation of Penalty for Failure to File Information Returns or Furnish Statements, for each tax year. Form 3645 stays in the penalty case file.

  6. On the Form 3645, show the applicable code section and penalty rate for each form number. Provide the following in the explanation portion at the bottom of the form:

    • the reason for the penalty

    • whether the filer agreed or disagreed with the penalty

    • a statement addressing reasonable cause

  7. Record on Form 886-A all pertinent information including the issues, facts, law, taxpayer’s position, and conclusion. Attached the Form 886-A to Form 3645.

  8. If the taxpayer agrees with the penalty, request payment. Prepare Form 3244-A, Payment Posting Voucher - Examination, to post payments received.

    Note:

    Do not secure an agreement on Form 2504 or Form 4549. The information return penalty case file is separate from an employment, income tax, or other case file.

  9. Consider the penalty relief provisions. When denying penalty relief:

    1. Assess the penalty. Complete the entry in the amount assessed column.

    2. Give the filer written appeal rights.

    3. Note the on Form 8278 that the relief provisions were considered.

    4. Identify the relief requested using the penalty reason codes in IRM Exhibit 20.1.1-3. Enter the penalty reason code in the last column on Form 8278.

  10. When penalty relief is granted, document the non-assessment of the penalty on Form 5773. Secure a copy of the written penalty relief request.

  11. Consider the applicability of backup withholding under IRC 3406. See IRM 4.23.8.13.

  12. Guidance on penalties is in IRM 20.1.7, Information Return Penalties.

  13. If possible, close the penalty case concurrent with related employment or income tax case file.

  14. Charge the time spent reviewing books and records to determine if taxpayers are in compliance with various filing requirements to the key case. Once it is determined that miscellaneous penalties should be applied, charge the time spent from that time forward to the activity code for miscellaneous penalties.

4.75.22.11.1  (11-06-2012)
Information Return Penalty - Front Of Folder

  1. On Form 3198-A:

    1. Check the "Other" block.

    2. Add "Assess Civil Penalty as Indicated on Form 8278 & Form 3645."

4.75.22.11.2  (11-06-2012)
Information Return Penalty - Inside Of Folder

  1. Assembled on the inside of the folder Forms 8278, 3645, 5773, and 5464.

  2. In Form 5773:

    1. Document the actions completed.

    2. Include an explanation of why the taxpayer did not file the forms in a timely manner. Any defense by the taxpayer should be in writing and signed under penalties of perjury.

    3. Explain why the failure was not due to reasonable cause.

    4. Attach supporting workpapers.

  3. For secured Forms 1096/1099, W–3/W–2, or W-3c/W-2c:

    1. Attach the previously made copies of the forms including the transmittals to the workpapers.

      Note:

      For reference, see IRM 4.75.22.10.2 and IRM 4.75.22.10.3

      .

    2. Include transcripts or copies of the Forms 941, if audited.

    3. Prepare and include a Form 5666, TE/GE Referral/Information Report for any Forms W-2/1099 that are not either adjusted through an employment tax exam or through a discrepancy adjustment.

Exhibit 4.75.22-1 
Definitions

Delinquent return is a return, that was not filed by the due date, including extensions thereof, and is subsequently filed by the taxpayer (Use Push Code 020 for AIMS establishments).

Substitute for return is used to establish an account for a taxpayer, who refuses to file, or is unable to file a required return (Use Push Code 036 for AIMS establishments).

Incomplete return is a filed return in which material information is omitted and the omission of such would hinder or preclude the Service from being able to perform the duties and responsibilities placed upon it by Congress. This type of return is treated in the same manner as if no return had been filed when considering whether to impose penalties.

Campus is the term formerly referred to as service center.

FAST is the Field Agent Support Team located in Ogden.

Exhibit 4.75.22-2 
Reasonable Cause Criteria

Reasonable Cause Criteria
Reasonable cause is based on all of the facts and circumstances in each situation and allows the Service to provide relief from a penalty that would otherwise be assessed. Reasonable cause relief is generally granted when the taxpayer exercises ordinary business care and prudence in determining their tax obligations but is unable to comply with those obligations. When determining whether there was reasonable cause for the delinquent filing, the examiner should carefully consider the factors described in IRM 20.1.3.2.
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≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡


≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡


≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡


≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡


≡ ≡

Exhibit 4.75.22-3 
Computer Condition Codes

CCC MEANING USE IF FOR FORM(s)
A No Estimated Tax Penalty Form 2220 or acceptable substitute statement is attached which shows no liability for the Estimated Tax Penalty on Line 43, (or Line 17 if Page 2 is missing). 990-PF
990-T
 
B Termination of Installment Sale Form 6252, Computation of Installment Sale Income, is attached and there is an indication the organization is terminating its installment plan. 990-T  
D Reasonable Cause for Failure to Pay Taxes Timely Untimely paid return and reasonable cause is established. If prepaid penalty is included, DO NOT use Condition Code 0. See Figure 3.11.12-6. 990-PF
990-T
4720
 
F Final Return Note such as "Final, "Out of Business," etc. is on the return or attachments. See IRM 12.1.31. 990
990-EZ
990-PF
990-T
1041-A
4720
5227
I Futures, Contracts, & Tax Straddles Form 6781 is attached Identifying income or loss from futures, contracts, and tax straddles. 990-T  
L   Form 8833 is attached and/or Section 6114 Election on face of return. 990
990-EZ
990-T
 
O Module Freeze Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax is attached. 990-PF
990-T
 
R Reasonable Cause for Failure to File Return Timely The filer has attached reasonable cause for failure to file timely or FTP not applicable. See Figure 3.11.1 990
990-EZ
990-PF
990-T
1041-A
4720
5227
T Tax Shelter Registration Form 8271, Investor Reporting of Tax Shelter is attached. 990
990-EZ
990-PF
990-T
U Unprocessable You cannot perfect a numbered document from Information present. 980-PF
990-T
1041-A
4720
5227
5578
5768
V Suppress Daily Delinquency Penalty The return is delinquent and the filer has attached reasonable cause. See Figure 3.11.12-6 990
990-EZ
990-PF
1041-A
W Cleared by Statute Statute has cleared the return and it is a true statute return. See IRM 12.1.44. 990
990-EZ
990-PF
990-T
1041-A
4720
5227
X Module Credit Freeze The filer wants the over payment to be applied to another account (i.e. Information for two tax years on the same return. 990-PF
990-T
4720
 
Y   Short Period for Change of Accounting Period The return had a short year because of a change in accounting period but not on an initial or final return. See IRM 12.1.41 990
990-EZ
990-PF
990-T
 
7 Reasonable Cause Was Considered and Denied The Reasonable Cause statement was not acceptable. See IRM 3.11.12 Figure 3.11.12-6. 990
990-EZ
990-PF
990-T
1041-A
4720
5227
8 Estimated Tax Penalty Exception The filer meets the exception by annualizing income. (May be claimed in a letter with an attached worksheet or Form 2220 with Part 1 Box 1 checked.) Also used when Form 990-T, Line 37, Proxy Tax, contains an amount 990-PF
990-T
 
9 Low Income Housing The following Form(s) is attached: Form 8611, 8693, 8609/Schedule A, 8586 with a credit on line 4. (Exception: If credit Is shown only on Line 5 of Form 8586 DO NOT enter CCC 9.) See IRM 3.11.12 Figures 3.11.12-15 or 16. 990-T  

Exhibit 4.75.22-4 
Computer Condition Code Locations

If Form is The FAST will edit the computer condition code (CCC)
11-C Middle of the page, to the right of the address
730 To the right of the EIN
940 In the middle of the bottom of the page
941 Near the bottom of the form to the right of "You must complete both pages of Form 941 and SIGN it"
943/945 In the middle of the bottom of the page (below the privacy act statement)
944 On the bottom of the return at the end of "You must fill out both pages of the form 944 and sign it" line
990
(2007 and Prior)
In Part I on the dotted line on line 1a
990
(2008 Revision)
In Part 1 on the dotted line on line 4
990-EZ In Part 1 on the dotted line on line 1
990-PF In Part I on the dotted line on line 9
990-T In Part I on the dotted line on line 3
1041 In the middle of the dotted line on line 2a
1041-A In the Entity section above the Employer identification number and below the OMB No.
1065 In the middle of the dotted line on line 1b
1120 In the middle of the dotted line on line 3
1120-C In the middle of the dotted line on line 9
1120-POL In the middle of the dotted line on line 2
1120-S In the middle of the dotted line on line 3
4720 To the right of the tax year
5227 Part 1 on the dotted line on line 2a
8038 Part II, in the middle of the dotted line on Line 11a
8038-CG Part II, in the middle of the dotted line on line 9a
8038-G Part II, in the middle of the dotted line on Line 12
8038-T Part II, on the dotted line on line 12
8872 On line B, to the right of "final report"

Exhibit 4.75.22-5 
Form 3244-A, Payment Posting Voucher - Examination

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

Exhibit 4.75.22-6 
Delinquent Return Checksheet

Delinquent Return Checksheet
__Liable For Return __Present on the delinquent return:
__Filing Requirement __Name of taxpayer
__Already on INOLES/BMFOLO __Address of taxpayer
__Not present on INOLES/BMFOLO __Taxpayer Identification Number
__Form 2363-A completed __Taxable period
__Sent Form 2363-A to the FAST __Original dated signature
__Payment received: __Received date stamp
__One Form 3244-A for each tax period __Written on the top margin of delinquent return:
__Copies of check remittance "Delinquent Return Secured by TE/GE on MM/DD/YYYY, sent to FAST on (date)"
__Sent originals to the FAST in 24 hours __Copy of return package retained for case file
__Overnight delivery __Scanned and uploaded to RCCMS
__Form 3244-A: __Established on RCCMS (if examining)
__EIN / SSN __Form 13133:
__MFT / Form number __Agent name/Address/Phone number
__Tax period __CCC Code D (if applicable)
__Received date (remittance) __CCC Code J (if applicable)
__Taxpayer name and address __CCC Code R (if applicable)
__TC 610 / TC 670 __CCC Code X (if applicable)
__TC 570 for .00 __Form 3198-A:
__Total payment __Agent name / ID # / Phone # / PBC # / Group #
__Prepared by agent name, group info, and phone number __TIN / MFT / Period(s) ended
__Remarks: Split Remittance (if applicable) __Earliest ASED (of all modules)
__Remarks: Check # and amount __Taxpayer name / Name control
__Stapled to the front of each delinquent return: __Form 2363-A date sent to the FAST
__Form 13133 __Delinquent return (if applicable)
__Form 3198-A __Other instructions: Assess penalties
__Copy of Form 3244-A & remittance (assuming payment was processed before submitting delinquent return) __Other instructions: Waive Penalties
__Delinquent Return Package sent to FAST

Exhibit 4.75.22-7 
Payment Processing Flowchart

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

Exhibit 4.75.22-8 
Letter 854C, Penalty Waiver or Abatement Disallowed/Appeals Procedure Explained

The Letter 854C is normally generated via IDRS command code LETER. As LETER is not in the Revenue Agent profile of command codes, please copy and paste the following information into a blank Word document. Select the applicable paragraphs. Input any necessary entries.

Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
[Insert Examiner's Street Address]
[Insert Examiner's City, State and Zip Code]
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Tax Period(s) Ended:
[Insert tax periods]
Form:
[Insert form number]
[Insert name of entity]
[Insert street address]
[Insert city, state, and zip code]
Kind of Penalty:
[Insert name of penalty]
[Insert name of penalty (if needed)]
 
CERTIFIED MAIL
Dear [Sir/Madam/Taxpayer],
Thank you for your inquiry [of (phone call/in person)/dated (correspondence)] [insert date].
[Optional: This is in response to the inquiry of [insert date], from [insert your accountant/your representative/your attorney/individual's name]. We have no record that you authorized [insert him/her/them] to act for you in this matter. Please notify [insert him/her/them] that we have replied directly to you. If you wish to authorize a third party to represent you, please complete Form 2848, Power of Attorney and Declaration of Representative. If you wish an appointee to inspect and/or receive confidential tax information, please complete Form 8821, Tax Information Authorization. For more information about these forms, visit our website at www.irs.gov or call the telephone number listed at the end of this letter.]
We are sorry, but the information submitted does not establish reasonable cause or show due diligence. Therefore, we must deny your request for penalty adjustment.
[Optional: You should have requested an extension of time to file your return. We include information about extension requests in the filing instructions for that return.]
[Optional: A review of your account history shows that we have charged similar penalties in the past. We find no indication that you have taken steps to correct this situation.]
[Optional: Year-end or vacation bonuses should have been anticipated and timely deposits made.]
[Optional: To qualify as reasonable cause, the death, serious illness or unavoidable absence must be that of:
1) the person who is responsible for filing the return or paying the tax if the return is an individual return, or
2) the person who has sole authority to execute the return or pay the tax if the return is a corporate, estate, or trust return.
The death, serious illness or unavoidable absence of a member of the immediate family of the person described in 1) or 2) above will also qualify as reasonable cause. However, the death, serious illness or unavoidable absence of the person responsible for preparing the return or writing the check does not qualify for reasonable cause.]
[Optional: We don't consider cash flow problems or lack of funds reasonable cause for not paying taxes on time. Employment taxes are considered a "trust fund" account. The money, when withheld from the employees' pay, should be placed in that "trust fund" immediately.]
[Optional: The filing delay is considered excessive since so much time elapsed between the events you mentioned and the due date(s) of the return(s).]
[Optional: You didn't establish that you relied on written advice from IRS given in response to a specific written request or that you provided adequate and accurate information when requesting the advice.]
[Optional: The duties of filing tax returns and paying taxes may be delegated. However, it is the responsibility of the taxpayer to ensure that all returns are filed and all taxes are paid timely and correctly.]
[Optional: A reporting agent's system failure does not constitute reasonable cause. Reporting agents are required to have a backup system in place to ensure timely deposits are made.]
[Optional: Insert applicable basis for denial of relief]
[Optional: We have charged your account a penalty of $[insert amount]. You will receive a balance due notice in two to three weeks. Interest will begin to accrue on the balance due if it isn't paid within 10 days of the balance due notice date. Interest will continue to build until you pay the amount due in full.
We've provided a general explanation of the possible penalties and/or interest included in the current balance due on your account. If you would like a specific explanation of how the amounts were computed on your account, please contact us at the toll-free number shown in this letter and we will send you a detailed computation.
  Paying Late -- IRC Section 6651(d)
  Initially, the penalty is 1/2% of the unpaid tax for each month or part of a month the tax isn't paid.
  If we issue a Notice of Intent to Levy and the balance due isn't paid within 10 days from the date of the notice, the penalty increases to 1% a month.
  The penalty can't be more than 25% of the tax paid late.
  Filing and Paying Late -- IRC Section 6651
  We charge a 5% combined penalty of 4 1/2% for filing late and 1/2% for paying late when a return is filed late and the tax is not paid by the due date of the return. The combined penalty is 5% of the unpaid tax for each month or part of a month the return is late, but not more than 5 months, which would total 25% (22 1/2% late filing and 2 1/2% late paying).
  In addition to the 22 1/2% late filing penalty for the first 5 months a return is late, we continue to charge the 1/2% late paying penalty for each month or part of a month for as long as the tax is unpaid, but not for more than 25%.
  The maximum penalty we can charge is 47 1/2% (22 1/2% late filing plus 25% late paying).
  Partnership Late Filing -- IRC Section 6698(b)
  The penalty is $85.00 for each partner, for each late month (including part of a month), for up to 12 months (effective for returns required to be filed after 12/20/2007). For returns required to be filed after 12/31/2008, the penalty amount is $89.00. The Hokie Act adds $1.00 to the penalty amount for returns with a taxable year beginning in 2008.
  Interest -- IRC Section 6601
  We charge interest when tax is not paid on time. We figure interest from the due date of the return (regardless of extensions) to the date we receive full payment or the date of the notice.]
[Optional: We are sorry, but we are unable to waive the penalty for underpayment of estimated tax based on the explanation you gave. We can only waive the penalty if you failed to pay because:
1) a casualty, disaster, or other unusual circumstance occurred, and the imposition of the penalty would be against equity and good conscience,
  OR
2) you retired during the tax year after reaching age 62
  OR
3) you became disabled during a tax year that estimated payments were due or during the previous tax year,
  AND
4) the underpayment was due to reasonable cause and not to willful neglect.]
If you want to appeal or give us more information, the following will be helpful.
Appeals Procedures
If you have additional information and want your case to receive further consideration by the Office of Appeals, please provide a detailed written statement of the dispute issues, along with supporting documentation, to the Service Center Appeals Coordinator within 60 days from the date of this letter. It should include:
1) Your name and address
2) Your Social Security Number or Employer Identification Number
3) A statement that you want to appeal the findings
4) A statement of facts supporting your position on the issues you are appealing
5) If possible, a statement outlining the law or other authority on which you rely
6) A copy of your original request, if available
7) A copy of this letter
The statement of facts, in 4 above, should be detailed and complete, including specific dates, names, amounts, and locations. You must declare the statement true under penalties of perjury. You may do this by adding to your statement the following signed declaration:
"Under penalties of perjury, I declare that the facts presented in my written protest, which are set out in the accompanying statement of facts, schedules, and other statements are, to the best of my knowledge and belief, true, correct, and complete."
If your authorized representative sends us the protest for you, he or she may substitute a declaration stating that he or she prepared the statement and accompanying documents and whether he or she knows that the statement and accompanying documents are true and correct.
Please send your response to:
Internal Revenue Service
Service Center Penalty Appeals Coordinator
Attn: Penalty Appeals Coordinator
P.O. Box 9941 TPR M/S 6731
Ogden, UT 84409
The Service Center Appeals Coordinator will review your appeal information to determine whether the penalty should be removed or reduced. If your appeal can't be resolved immediately with the additional information, the coordinator will send your written statement to the Appeals Office serving your district.
Representation
An attorney, certified public accountant, or person enrolled to practice before the Internal Revenue Service may represent you. To have someone represent you, attach a Form 2848, Power of Attorney and Declaration of Representative, (or similar written authorization) to your written statement.
Forms, instructions, and Treasury Department Circular 230, Regulations Governing the Practice of Attorneys, Certified Public Accountants, and Enrolled Agents Before the Internal Revenue Service, are available from any Internal Revenue Service office.
Other Information
If taxes are overdue on your account, you will continue to receive bills even if you appeal the penalty. If you decide to appeal, you may pay the penalty to avoid further interest charges on the penalty amount. If you appeal the penalty and the Appeals Officer determines that you are not required to pay it, we will adjust your account and send you a refund.
If you don't appeal, you may file a claim for refund after you pay the penalty. If you want to take your case to court immediately, you should request in writing that your claim for refund be immediately rejected. Then you will be issued a notice of disallowance. You have two years from the date of the notice of disallowance to bring suit in the United States District Court having jurisdiction or in the United States Claims Court.
If you have any questions, please call us toll free at 1-877-829-5500.
If you prefer, you may write to us at the address shown at the top of the first page of this letter.
Whenever you write, please include this letter and, in the spaces below, give us your telephone number with the hours we can reach you. Keep a copy of this letter for your records.
Telephone number: (___) ___-____ Hours: __________________
  Sincerely,
 
 
  [Insert name]
Director, EO Examinations
Enclosure:
Copy of this letter

Exhibit 4.75.22-9 
90-Day Demand Letter for Form 990

Internal Revenue Service   Department of the Treasury
TE/GE Exempt Organizations Examinations
[Insert Examiner's Street Address]
[Insert Examiner's City, State and Zip Code]
 
 
Date: [Insert date]   Taxpayer Identification Number:
[Insert TIN]
Form:
[Insert form number]
Tax Period(s) Ended:
[Insert tax periods]
Person to Contact/ID Number:
[Insert name and badge number]
[Insert name of entity]
[Insert street address]
[Insert city, state, and zip code]
Contact Numbers:
Phone: [Insert phone number]
Fax: [Insert fax number]
 
Dear Sir or Madam:
We have not received the information requested in previous letters about the Form 990. This letter is a request for your organization to file its Form 990, Return of Organization Exempt from Income Tax, for the period[s] ending [insert tax period(s)]. You have 90 days from the date of this letter to either file your Form 990 or to give us a reason in writing for not filing the return.
This letter serves as your Notice and Demand as required by Internal Revenue Code ("the Code" ) Section 6652(c)(1). If you fail to file the Form 990 or to respond in writing, you have failed to comply with the conditions required for your continued exempt status under Code Section [501(c)(_)]. If we do not receive a response from you, we will revoke the organization’s tax-exempt status effective the 1st day of [insert first month of tax year] of [insert year of revocation]. In addition to revocation of exempt status, failure to file the Form 990 or respond in writing may result in the following actions:
1. Imposition of the Code Section 6652(c)(1) penalty of $20 a day ($100 per day for organizations having gross receipts exceeding $1,000,000 for the subject tax year) for each day the return is late.
2. Imposition of the Code Section 6652(c)(1)(B) penalty against the responsible persons, which may include any officer, director, trustee, employee, or other individual under a duty to file the Form 990. Any responsible person that fails to comply with such demand to file the Form 990 shall pay $10 for each day after the expiration of the time specified in such demand not to exceed $5,000.
Along with each return, submit a separate written statement explaining the reason for filing the form late. The statement must be declared true under penalties of perjury. This may be done by adding to the statement the following signed declaration: "Under penalties of perjury, I declare that the above statement, to the best of my knowledge and belief, is true, complete, and correct."
If you have any questions, please contact the person listed above. When you send the information we requested or if you write to us with questions about this letter, please provide your telephone number and the most convenient time for us to call if we need more information.
Send all requested information and related correspondence to:
Internal Revenue Service
TE/GE Exempt Organizations Examinations
[Insert Examiner's Street Address]
[Insert Examiner's City, State and Zip Code]
Thank you for your cooperation.
  Sincerely,
 
 
  [Insert name]
Director, EO Examinations

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