4.75.32  Declaratory Judgment Cases And The Administrative Record

Manual Transmittal

January 27, 2012

Purpose

(1) This transmits revised IRM 4.75.32, Declaratory Judgment Cases and the Administrative Record.

Material Changes

(1) This IRM is being revised to include changes identified by Area Counsel to include, the order of the information, and how it is identified in the Administrative Record. All sections other than the contents of 4.75.32.4.1 have been changed substantially. The title of 4.75.32.4.1 has been changed.

(2) Information presented in the IRM has been rewritten in active voice.

(3) IRM 4.75.32.5(3) is now paragraph (4), and corrected to reflect that an agreed IRC 7428 case will be one in which the taxpayer has signed Form 6018. References to verbal agreements or agreements by written correspondence is removed.

(4) Exhibit 4.75.32–1 featuring the sample Index to the Administrative Record has been modified to correspond to the Index template currently in use.

(5) Information previously contained in IRM 4.75.32.4(4) has been removed. Exhibit 4.75.32–2 has been renumbered to 4.75.32–3.

(6) A step list has been introduced at Exhibit 4.75.32–2 that explains documents that are part of the administrative record and actions to take to properly index them into the record.

Effect on Other Documents

This manual supersedes IRM 4.75.32, Declaratory Judgement Cases and the Administrative Record dated August 11, 2010.

Audience

Tax Exempt/Government Entities (TEGE)

Effective Date

(01-27-2012)

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

4.75.32.1  (01-27-2012)
Introduction

  1. The instructions provided in this manual apply to all unagreed examination cases subject to IRC section 7428 declaratory judgment actions. Such cases involve primarily examinations where the Service proposes to revoke an organization’s exempt status (qualification) under IRC 501(c)(3) or to adversely modify an organization’s foundation status (classification).

  2. The examination case file for unagreed revocation and foundation status modification cases must include a separate and complete administrative record file and index.

  3. For an agreed case involving revocation or foundation status modification, the examination file need not include an administrative record or index.

  4. All revocations and modifications are subject to Mandatory Review.

4.75.32.2  (01-27-2012)
Background Information

  1. IRC 7428, Declaratory Judgments Relating to Status and Classification of Organizations under Section 501(c)(3), etc., was enacted by Congress in 1976 (Public Law 94-455) to enable certain organizations to gain speedy review of the Commissioner’s determinations as to their exempt status qualifications or foundation classifications.

  2. A declaratory judgment action permits an organization to challenge a revocation or foundation status modification in court before the assessment of any income taxes that might result from the loss of exemption or any excise taxes that might result from the reclassification of foundation status.

  3. The U.S. Tax Court, the U.S. District Court for the District of Columbia, and the U.S. Court of Federal Claims have jurisdiction over declaratory judgment actions regarding initial or continuing qualification or classification of IRC 501(c)(3) organizations and foundations.

  4. The administrative record is used by the courts in cases involving declaratory judgments. Cases can be decided by the courts entirely on the contents of an administrative record.

  5. When one or both parties desires a trial in lieu of a determination based solely on the administrative record, additional evidence may be developed and submitted in accordance with ordinary trial procedures.

  6. The specific rules for declaratory judgment actions, including the content of the administrative record, are found in Tax Court Rules 210-218. The rules may be accessed at www.ustaxcourt.gov.

4.75.32.3  (01-27-2012)
Cases Subject to Declaratory Judgment Actions

  1. Declaratory judgment actions apply to cases involving an organization’s initial or continuing qualification or classification as:

    1. An organization described in IRC 501(c)(3) or IRC 170(c)(2).

    2. A private foundation defined in IRC 509(a) .

    3. A private operating foundation defined in IRC 4942(j)(3) .

    4. A farmers' cooperative under IRC 521(b).

  2. LB&I has examination jurisdiction over exempt farmers' cooperatives described under IRC 521.

  3. An adverse foundation status determination is one in which the qualification or classification determined by the Service is less beneficial to the organization than the status originally claimed by the organization, or as determined by either EO Rulings and Agreements or EO Examinations.

  4. Modification of an organization’s foundation status occurs when the Service determines, for example, that an organization is:

    1. A private non-operating foundation, though it claims to be, or is currently qualified as, a public charity, or is currently classified as a private operating foundation.

    2. A private operating foundation, though it claims to be, or is currently qualified as, a public charity.

    3. An IRC 509(a)(3) organization, though it claims to be, or is currently classified as, a IRC 509(a)(1) or IRC 509(a)(2) organization.

    4. An IRC 509(a)(2) organization, though it claims to be, or is currently classified as, a IRC 509(a)(1) organization.

    5. An IRC 509(a)(1) organization, but it should be classified differently under IRC 170(b)(1)(A) than it is currently classified; i.e., a IRC 170(b)(1)(A)(ii) school reclassified as a IRC 170(b)(1)(A)(vi) publicly-supported charity.

  5. An adverse determination also includes any organization that claims to be described in IRC 170(c)(2) that the Service determines is not so described.

  6. The issue of whether non-adverse modifications of foundation status are subject to declaratory judgment procedures is not specifically treated by statute. Because litigation of such cases is unlikely, these cases are not subject to the procedures in this manual.

  7. Declaratory judgment actions do not apply to any other type of adverse action.

    Example:

    If the case involves the revocation of an organization's exempt status under IRC 501(c)(4), IRC 501(c)(5), etc., the taxpayer does not have the right to pursue declaratory judgment relief. The taxpayer's remedy, if it wants to contest the Service’s determination as to its exempt status, is to litigate the issue in the context of a deficiency or refund case, e.g., in a routine income tax, excise tax, or employment tax case.

4.75.32.4  (01-27-2012)
Administrative Record

  1. The administrative record is the written record of the administrative proceedings between the Service and the exempt organization.

  2. Tax Court Rule 210(b)(12) defines the administrative record as including:

    • The request for determination

    • All documents submitted to the Internal Revenue Service by the applicant regarding the request for determination

    • All protests and related papers submitted to the Internal Revenue Service

    • All written correspondence between the Internal Revenue Service and the applicant regarding such protests

    • All pertinent returns filed with Internal Revenue Service

    • The notice of determination by the Commissioner

  3. With respect to examinations regarding the continuing qualification (i.e., revocation of exempt status) or classification (i.e., modification of foundation status) of a 501(c)(3) organization, the examiner must also include in the administrative record all documents exchanged between the Service and the organization during the examination which gave rise to the proposed revocation or modification.

  4. Although not documents, items such as videotapes or all other media are considered physical evidence and fall within the intent of Tax Court Rule 210(b)(12) when transmitted between the parties. If a tape is transmitted by letter the tape is deemed part of that written document. If a tape is received at a conference, the tape should be appropriately stamped and marked and then referenced in a summary of the conference transmitted to the taxpayer.

    Caution:

    Any statements made in correspondence (by either side) will be considered true if there is no conflicting or clarifying evidence. Therefore, if the organization sends or otherwise provides something that does not appear to be correct, the examiner must get written clarification. Clarification received by telephone should be confirmed either by requesting the information in writing or by sending a letter which sets forth what was discussed.

  5. For documents to be considered exchanged with the Service, the material(s) must be hand-delivered, mailed, e-mailed, or faxed to or from the organization or its representative.

    Note:

    Documents reviewed on site are not included in the administrative record unless the examiner is either provided with or makes copies of the documents that are retained for the exam files.

    Caution:

    Do not send Sensitive- but -Unclassified (SBU) information to the organization via e-mail.

  6. The administrative record does not include any internally generated and used materials, such as:

    • The exam workpapers

    • AIMS documents (Forms 5588, 5595, 5596, 5597, 5598, or 5599)

    • IDRS prints

    • Reviewer memoranda

  7. The administrative record does not include materials obtained from third party sources, such as:

    • Referral packages

    • Whistle-blower claims (normally not shared under any circumstances)

    • Summonsed records from third parties

    • Summonsed third party testimony

    • Records obtained from city, county, state or federal agencies

  8. Any document that is generated for internal use or is obtained from a third party can be included in the administrative record by providing a copy of the document to the organization. For materials obtained from outside sources, you are to consult the group manager and Area Counsel as to what portions of the document(s), if any, should be shared, and which method of sharing should be used.

4.75.32.4.1  (01-27-2012)
Inclusion of Documents in the Administrative Record

  1. As a general rule, if a document is related to the continuing qualification or classification of an organization that may invoke declaratory judgment relief under IRC 7428 and it is not clear whether it can be included in the administrative record, mail or otherwise provide a copy of the document to the organization with a cover letter asking for any comments or clarification the organization may wish to provide.

  2. Even if a document is not related to an issue potentially subject to declaratory judgment relief, if it has been exchanged it should be included in the administrative record file with an explanation in the administrative record index. Area Counsel will ultimately determine whether the document should be included or excluded.

  3. Refer to Exhibit 4.75.32-3 for examples of documents which might not otherwise be included in the administrative record and for solutions for getting the documents or information included.

4.75.32.4.2  (01-27-2012)
Preparation of the Administrative Record

  1. As a best practice, begin preparing the administrative record as soon as there are indications of a proposed revocation of exemption or adverse foundation status change. Operate under the assumption that the case will not go agreed, until agreement is secured. Compile the administrative record in a separate file folder, or box (banker's, copy paper, record retention, small cardboard, etc.,) depending on the size.

    Note:

    At the time of case closure, there should be one fully printed workpaper file (i.e., the "case file" ) that contains the organization's formal protest (if applicable,) the organization’s tax return(s), the exam workpapers, all correspondence with the organization, and all documents exchanged between the parties. Regardless of the type of unagreed adverse action, print out the exam workpaper file in its entirety and assemble per IRM 4.75.16.

  2. Take care to record the date each document was exchanged. Place the original document in the workpaper file and a duplicate of the unmarked, clean, intact original in the administrative record folder/box.

  3. In preparing the administrative record, staple a Form 3198 A, TEGE Special Handling Notice, to the front of the file folder or box. Label it "Administrative Record" in the top margin. The following information must be included on the special handling notice:

    1. Organization's name

    2. Organization's TIN

    3. MFT

    4. Year(s)

  4. Organize the administrative record in chronological order, based on when the documents were exchanged. The first document exchanged is exhibit #1, and all succeeding information should follow accordingly. See Exhibit 4.75.32-1

    Note:

    Typically, the first document in the administrative record is the determination application, which includes Form 1023, Application for Recognition of Exemption under section 501(c)(3) of the Internal Revenue Code, with all of the original attachments (articles, bylaws, financial statements, and expanded explanations of proposed activities) indexed as of the date the application was received by the IRS through to the date the determination letter was issued.

    Exception:

    Where exemption has been claimed without submission of an application for exemption, the first document typically will be the earliest Form 990 under examination.

  5. For any deviation from strict chronological order, consult Area Counsel as to alternative assembly considerations, and document the discussion in the case chronology record.

    Example:

    The examiner secures half of the year’s bank statements at the initial audit, a few more by IDR a month later, and the rest by bank summonses two months later. The examiner subsequently exchanges the summonsed bank statements with the organization to include them in the administrative record. Counsel advises the examiner to keep all bank statements for a given year and account as one exhibit. The examiner will explain in the index the dates on which, and the methods by which, the documents were exchanged. The examiner will identify the number of pages of each set of documents in the description of the documents.

  6. For a listing of documents that are included in the administrative record, and instructions as to how to index those documents into the record, see Exhibit 4.75.32-2

4.75.32.4.3  (01-27-2012)
Including the Determination Application as Part of the Administrative Record in Unagreed Examination Cases

  1. Exchange a copy of the determination application (received from Cincinnati) with the organization during the audit, and request comments as to any changes in methods of operation from what was described in the application.

  2. A copy of the determination application can be obtained by faxing a request to the EO Microfiche Unit in Cincinnati. Request the records to be shipped on a disc or sent via secure e-mail.

  3. When exchanging the application with the organization, send only the documents labeled as public. Any PDF files listed as private are internal records that were never exchanged during the application process.

  4. If no copy of the determination application is available from Cincinnati, request a copy of the application from the organization.

  5. For cases where the application obtained from Cincinnati is sent to the organization, index it twice, once at the start of the record, and again as of the date sent to the organization, along with any cover letter and enclosures. For cases where the application is obtained from the organization, index the application only as of the date received from the organization, along with any cover letter and attachments.

    Note:

    For situations where Cincinnati no longer has the determination file and a copy of the application is obtained from the organization, the application is indexed only once because the document will not have been date stamped as of the date of the initial application. The organization's copy of the application cannot be ascertained as being the true conformed copy of the application.

4.75.32.4.4  (01-27-2012)
Index to the Administrative Record

  1. Prepare an index to the administrative record that will allow users to easily locate documents.

  2. Index each exhibit serially, i.e., 1, 2, etc. Generally, this should be done by numbering tabbed folder dividers or writing the corresponding number of each exhibit on a Post-It note affixed to the first page of each document.

  3. In preparing the index, list the exhibits by number. The index will contain a description of each document, including how it was exchanged, followed by the number of pages for each exhibit in parenthesis.

  4. Clearly describe all attachments to correspondence in the index. If it helps to clarify the index, multiple attachments may be given sub-numbers in an outline format (i.e., 4a, 4b, 4c).

4.75.32.5  (01-27-2012)
Examiner's Responsibility

  1. Keep track of which documents have been exchanged, and when. Take care not to deface any documents (e.g., by making notes or highlighting text using highlight markers).

    Caution:

    If a document is defaced, it might have to be exchanged with the organization again, with the markings on it. Discuss such a situation with the group manager or Area Counsel.

  2. By carefully tracking what documents have been exchanged, and when, it is easier to compile the administrative record and prepare the index should the case go unagreed. An administrative record file should be compiled contemporaneously with the various exchanges such that when items are exchanged, a copy of that item is made and put in the administrative record file/box.

  3. Tax Court Rule 217 imposes short deadlines for filing the administrative record. Further, all adverse determinations subject to declaratory judgment are reviewed by Counsel prior to issuance of the final adverse letter. The administrative record must be well-organized and complete when Counsel receives it.

  4. For purposes of determining when an administrative record must be formally prepared by the examiner, an "agreed" case will be one in which the taxpayer has communicated to the examiner its agreement to the proposed action by signing Form 6018, Consent to Proposed Adverse Action. In these cases, the formal preparation of an administrative record is not necessary. (But see IRM 4.75.32.4.2(1) regarding best practice regarding preparation of an administrative file.)

    Note:

    A signed Form 6018 agreement is not binding for cases subject to declaratory judgment, as the form does not waive the 501(c)(3) organization’s right to seek Appeals consideration or file a petition under IRC 7428. However, for written agreements Form 6018 will be required to substantiate that the taxpayer has agreed to the proposed action.

  5. When photocopying documents, make sure that the copy is a pristine identical copy of the original (aside from being in black and white versus color.) This requires that you:

    1. Lay the document flat on the glass pane in lieu of using an auto feeder if the document is folded or bent

    2. Remove staples, paper clips, or other fasteners before copying

    3. Copy the front and back of a document if information is present on the back

    4. Check that no portions of the document are eliminated or missing in the copy

    5. Double check each page copied to ensure that it is a pristine identical copy of the original

    Note:

    When photocopying double-sided documents, create two single-sided pages: one for the front, and one for the back.

    Caution:

    Copies must be of high quality and resolution, as Counsel will redact the documents and submit copies of the redacted documents to court. The newer the copier, the better the result.

  6. When issuing outgoing correspondence, date the letter with the actual date it is mailed, faxed or hand delivered.

4.75.32.5.1  (01-27-2012)
Documents Received from the Organization

  1. Documents received from the organization should not be defaced in any manner (writing, highlighting, noting or scribbling, etc.). If information is to be written on a document, make a copy for that purpose.

  2. Do not enter the exhibit numbers from the "Administrative Record Index" on the documents, other than via tabbed folder dividers or Post-It notes, as the final index will be prepared by Area Counsel and the final exhibit numbers will be placed on the documents at that time.

  3. Documents and other items received from the taxpayer may be date stamped as received on the cover memo or first page. The date stamp used should be the one retained by the group secretary or manager for stamping incoming mail, and should be of the same format as the ones used by the Service Campus to stamp returns received via regular processing.

  4. Documents in the administrative record will always be copies. Any "original" documents, such as original signed Forms 990, Forms 872, and Forms 2848, are kept in the workpaper file.

4.75.32.5.2  (01-27-2012)
Documents Provided to the Organization by the Service

  1. Outgoing correspondence and enclosures that are included in the administrative record file will inevitably be copies, because the originals will have been sent to the organization

  2. Copies must be exact copies of the correspondence or attachments sent to the taxpayer, including dates and signatures. Make a copy of the signed letter prior to mailing the letter and retain the copy in the administrative record file. Similarly, make copies of all enclosures or attachments sent with correspondence (or delivered by hand) and retain the copies in the administrative record file.

  3. Copies must be identical to the correspondence or attachments sent to the taxpayer. In the opening appointment letter, for example, IRS Pub 1, Your Rights as a Taxpayer is (or should have been) enclosed. A photocopy or another preprinted version of the Pub 1 provided to the taxpayer (make sure it is the same revision) should be included in the administrative record file.

4.75.32.5.3  (01-27-2012)
Verbal Communications

  1. Case chronology records and other workpapers may contain details of conversations with the officers or representative of an organization; however, these are not part of the administrative record.

  2. To place information into the record that was communicated orally, create a transcript or summary of the discussion using Form 4564, Information Document Request, or Form 886-A, Explanation of Items. If Form 886-A is used, prepare a Form 4564 to reference the Form 886-A.

  3. Send the information document request (using the Letter 3606 as a cover letter) to the organization and request any comments or clarifications the organization may have about the transcript/summary.

  4. The Form 4564 or 886-A must document the date and time of the conversation, with whom the conversation was held, and the matters discussed.

  5. The contents of an initial interview workpaper and other interview workpapers can be copied and pasted into either the Form 4564 or the 886-A and sent in the same manner.

4.75.32.5.4  (01-27-2012)
Shipping and Logistics

  1. The examination case file and administrative record are to be shipped to a number of destinations prior to the final closure of the case. Frequently, the case is shipped from the examiner to the manager, then to Mandatory Review, and then to Counsel, before being shipped back to Mandatory Review for issuance of the Final Adverse Determination Letter.

  2. Every effort must be made by each person who has custody of the files to ship the case file and administrative record together in the same shipping container, so that they form a single parcel.

  3. To ensure the administrative record is not lost or destroyed in transit, retain a copy of the file in the group, whether an electronic scanned version, or a backup hard copy. Compliance with this requirement is at the discretion of the group manager, in consultation with Area Counsel.

4.75.32.6  (06-01-2006)
Group Manager's Responsibility

  1. The group manager is to ensure the following:

    1. The administrative record is properly prepared and indexed according to the procedures in this IRM

    2. The case is flagged for Mandatory Review

    3. All processing delays are fully explained on the case chronology (CCR).

4.75.32.7  (06-01-2006)
Review Staff's Responsibility

  1. Mandatory Review is to review the administrative record to ensure it is properly prepared and contains all of the required documents.

  2. Mandatory Review is to transfer the entire administrative file, which includes the workpaper file and administrative record, to the appropriate Area Counsel office.

Exhibit 4.75.32-1 
Sample Administrative Record Index

Administrative Record Index
Taxpayer: ABC Charity Inc. TIN: 00–0000000
Address: 123 Any Street
Any Town, Any State Zip Code
Form: 990
Tax Year(s): 200712
Index # Created by/ Received from Description of documents
(Mailed/e-mailed/faxed/handed to/received from the EO/POA)
Letter dated, Date received # of pages
1 POA James Esquire Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, Articles of Incorporation, Bylaws, attached schedules describing proposed activities and financial statements 4/12/1989 - 11/7/1989 45
2 Revenue Agent J Letter 947, determination letter recognizing exemption under §501(c)(3), from the Internal Revenue Service to ABC Charity, Inc. 11/7/1989 4
3 EO Treasurer John Taxpayer Form 990, Return of Organization Exempt from Tax, for the year ended December 31, 2007 5/15/2008 25
4 Revenue Agent K Letter 3613, Publication 1, and Form 4564, Information Document Request, scheduling initial appointment from the Internal Revenue Service to ABC Charity, Inc. 1/9/2009 2
5 POA Jane Rep Letter from ABC Charity, Inc. to the Internal Revenue Service, with attachment Form 2848, Power of Attorney 1/14/2009,
1/16/2009
2
6 POA Jane Rep Minutes of the Board of Directors of ABC Charity, Inc. dated January 5, 2007; February 1, 2007; March 10, 2007; April 5, 2007; May 3, 2007; June 7, 2007; June 25, 2007; July 12, 2007; August 2, 2007; September 2, 2007; October 4, 2007; November 8, 2007; December 6, 2007, received in person by Revenue Agent K from POA Jane Rep 2/6/2009 30
7 POA Jane Rep Copies of ABC Charity's cancelled checks numbered: 20013; 20022; 20045; 20046; 20047; 21055; 20156; 20157; 20158; 20203; 20204; 20205; 20288; 20289; 20335; 20421; 20551; and 20611, received in person by Revenue Agent K from POA Jane Rep 2/6/2009 18
8 POA Jane Rep Brochure entitled: "Summer Performances 2007" , received in person by Revenue Agent K from POA Jane Rep 2/9/2009 8
9 Revenue Agent K Letter 3606, and Form 4564, Information Document Request, from the Internal Revenue Service to ABC Charity, Inc. 2/9/2009 2
10 EO Treasurer John Taxpayer Letter from ABC Charity, Inc. to the Internal Revenue Service with 2 attachments as follows: Forms 941, response to questions. 2/23/2009,
2/26/2009
16
11 POA Jane Rep Letter from ABC Charity, Inc.'s representative to the Internal Revenue Service 3/2/2009,
3/5/2009
14
12 Revenue Agent K Letter to ABC Charity, Inc. scheduling a date for a group manager's conference. 3/10/2009 1
13 Revenue Agent K Letter to ABC Charity, Inc. summarizing the items discussed at the group manager's conference on March 26,2009, with a copy of the Form 1023 and the attachments to the Form 1023. 3/27/2009 47
14 Revenue Agent K Letter from the Internal Revenue Service to ABC Charity, Inc., with 4 attachments: Form 4621-A, Report of Examination - Exempt Organizations, Forms 886-A, Explanation of Items, Form 6018, Consent to Proposed Adverse Action, and Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues 4/9/2009 30

Exhibit 4.75.32-2 
Documents that Are Part of the Administrative Record

How to include documents that should be part of the administrative record:
 
Letters to the organization (mailed)
1. Make a copy of the letter at the time of issuance showing the original signature as signed or stamped.
2. Print a copy of any enclosures such as information document requests, reports of examination, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
3. Make a copy of any return envelopes that were included with the letter.
4. If certified, make a copy of the certified mail receipt, PS Form 3800, and a copy of the front and back of the domestic return receipt (green card,) PS Form 3811.
5. List the letter as of the date of the letter in the admin record index.
 
Letters to the representative (mailed)
1. Make a copy of the cover letter to the Power of Attorney (Letter 3597) at the time of issuance showing the original signature as signed or stamped.
2. Make a copy of the letter at the time of issuance showing the original signature as signed or stamped.
3. Print a copy of any enclosures such as information document requests, reports of examination, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
4. Make a copy of any return envelopes that were included with the letter.
5. If certified, make a copy of the certified mail receipt, PS Form 3800, and a copy of the front and back of the domestic return receipt (green card,) PS Form 3811.
6. List the letter as of the date of letter in the admin record index.
 
Letters to the organization (faxed)
1. Make a copy of the fax cover sheet.
2. Make a copy of the letter at the time of issuance showing the original signature as signed or stamped.
3. Print a copy of any enclosures such as information document requests, reports of examination, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
4. Do not include the fax transmittal confirmation journal, as this document is the fax machine's record of transmission and was not sent to the organization. The fax transmittal confirmation should be retained, however, in the examination case file.
5. List the letter as of the date of fax transmission in the admin record index.
 
Letters to the representative (faxed)
1. Make a copy of the fax cover sheet.
2. Make a copy of the cover letter to the Power of Attorney (Letter 3597) at the time of issuance showing the original signature as signed or stamped.
3. Make a copy of the letter at the time of issuance showing the original signature as signed or stamped.
4. Print a copy of any enclosures such as information document requests, reports of examination, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
5. Do not include the fax transmittal confirmation journal, as this document is the fax machine's record of transmission and was not sent to the organization. The fax transmittal confirmation should be retained, however, in the examination case file.
6. List the letter as of the date of fax transmission in the admin record index.
 
E-mail sent to the organization or representative (no SBU data permitted)
1. At the time of transmission, retrieve the e-mail from the Sent Items folder in Outlook. (If archived, retrieve from the archive.)
2. Print a copy of the sent e-mail.
3. List the e-mail as of the date of transmission.
 
Letters from the organization or representative (mailed)
1. Use the group secretary or manager's received date stamp to stamp the first page of the correspondence with the date the mail was received.
2. Make a copy of the letter, all enclosures, and the envelope that the package came in.
3. List the letter in the admin record index as of the date of the letter, and include the date the letter was received.
 
Letters from the organization or representative (faxed)
1. Make a copy of the entire fax transmittal, including the fax cover sheet, letter, and enclosures.
2. If properly set up, the fax machine will list on the fax the phone number from which the fax was received, as well as the time and date of receipt. If not present, date stamp as described above.
3. List the letter in the admin record index as of the date of the letter, and include the date the fax was received.
 
E-mails from the organization or representative
1. Print out the e-mail as received.
2. After virus scanning any attachments, print out any attached documents.
3. List the e-mail in the admin record index as of the date received.
 
Documents handed to the organization's officers or representative
1. Make a copy of the document.
2. Prepare a transmittal memo, which can be signed by an officer of the organization to acknowledge receipt and then retained by the Service.
3. Mention in the description of documents that the document was handed over.
4. Index the document as of the date the document was handed over.
 
Documents received by the examiner while at the audit site or representative's office
1. If the document is to be retained, do not make any marks on the document.
2. Make a note of receipt in your case chronology and describe what was received.
3. Upon return to the office, date stamp the document as received as of the date noted in the chronology.
4. After date stamping, a separate copy of the document can be made that can be modified or marked up by the examiner as a workpaper.
 

Note:

Any document reviewed on site that is left at the audit site will not be included in the administrative record.

 
The determination application
1. See IRM 4.75.32.4.3 for a discussion of the determination application procedures.
 
The determination letter
1. Follow the directions as listed above for the determination application.
2. If the determination application is available from Cincinnati, the determination letter is listed as the second item in the index.
 
Forms 990, 990-EZ, 990-PF, 990-T
1. Make a copy of the return.
2. List the return in the index as of the date of filing.
 
Form 990-N
1. Retrieve the Form 990-N information from http://www.irs.gov/app/ePostcard/.
2. Print the information retrieved from the website.
3. Index the Form 990-N as of the date of filing.
 
Statute extensions
1. Print a copy of the unsigned statute extension.
2. Index the unsigned statute extension with the cover letter used to issue the extension request. See the procedures for Letters to the organization (mailed.)
3. Upon receipt of the signed extension, make a copy prior to signature by the manager. Follow the procedures for Letters from the organization (mailed.)
4. Make a copy of the signed statute extension. Follow the procedures for Letters to the organization (mailed.)
5. Do not index or include the statute extension with the Form 990 series return. (The statute extension will be stapled to the return for the workpaper file only.) Index the statute extensions as separate entries if received without a cover letter.
 
Forms 2848 or 8821
1. Make a copy of the signed Form 2848/8821 as received (by mail, fax, hand, or e-mail) prior to completing the upper right corner of the form and faxing it to the appropriate campus.
2. Index the Form 2848 as of the date of receipt.
3. Do not index or include the Form 2848/8821 with the Form 990 series return. (The Form 2848/8821 will be stapled to the return for the workpaper file only.)
 
Undelivered mail
1. Date stamp the envelope and the letter with the date of receipt (when returned to the Service as undeliverable.)
2. Make a copy of the letter, all enclosures, and the envelope that the package came in.
3. List the letter in the admin record index as of the date of the letter, and include the date the letter was received.

Exhibit 4.75.32-3 
Examples of Documents Not Included in the Administrative Record and Solutions for Getting the Documents or Information Included

Documents Not Included In the Administrative Record Solutions For Inclusion in the Administrative Record If Needed
1. Examiner's case chronological record. If the CCR reflects information such as notes from a telephone call that are relied on in the decision process, create a transcript or summary of the discussion and send it to the organization with a request for confirmation or comment.
2. Notes taken by the examiner during interviews or conferences with the organization. Reduce the interview or conference to writing and provide a copy to the organization with a cover letter or Information Document Request (IDR) requesting confirmation of the contents. If hand- delivered to the organization with an IDR, ask the receiving person to acknowledge receipt by signing a copy of the IDR to be retained by the Service.
3. Newspaper articles concerning the organization provided to the examiner by a third party. Provide copies of the newspaper articles to the organization with a cover letter or IDR requesting comments on the accuracy of the articles. If copies are sent by letter to the organization, send it certified. If hand-delivered to the organization with an IDR, ask the receiving person to acknowledge receipt by signing a copy of the IDR to be retained by the Service. Make certain that copies of the newspaper articles are attached to the copy of the IDR retained by the Service.

Note:

In all instances when documents secured from third parties are provided to the organization, use extreme care to avoid disclosing a confidential source or making an unauthorized disclosure.

4. Newspaper articles concerning the organization clipped from the paper by the examiner. Same as in item number 3.
5. Internet articles or information concerning the organization downloaded from the Internet by the examiner. Provide copies of the downloaded information to the organization with a cover letter or IDR requesting comments on the accuracy of the information. If copies are sent by letter to the organization, send it certified. If hand- delivered to the organization with an IDR, ask the receiving person to acknowledge receipt by signing a copy of the IDR to be retained by the Service. Make certain that copies of the downloaded information are attached to the copy of the IDR retained by the Service.
6. Copies of the organization's cancelled checks provided to the examiner by a former employee of the organization. To protect the identity of the former employee, make a written request for the organization to provide copies of the cancelled checks.
7. A copy of a rental agreement between the organization and a related IRC 501(c)(3) organization for the use of the organization's facilities provided to the examiner by the related organization. Request a copy of the contract from the organization or provide a copy to the organization with a written request that the organization confirm that it is a true copy of the contract.
8. A letter sent to the Internal Revenue Service by the organization a week after the final adverse determination letter was mailed to the organization. None. There is no way to include documents received after the issuance of the final adverse determination letter in the administrative record. However, forward the letter for association with the files in the case.
9. Documents that substantiate the revocation and enhance the Service's chances of sustaining the issue that were submitted to the Internal Revenue Service by a third party the day after a final revocation letter was mailed to the organization. None. There is no way to include documents received after the issuance of the final adverse determination letter in the administrative record. Collect the information and call attention to it by memo or otherwise.
10. Workpapers and computations prepared by the examiner. There are two methods that can be utilized to include workpapers in the administrative record:
(a) Mail a copy of the workpapers to the organization with a cover letter requesting comments.
(b) Provide a copy of the original workpaper to the organization during the examination and request a receipt of acknowledgment.

Caution:

If shared, do not further modify the workpaper. If later modified, share the workpaper again.

11. Examiner’s notes concerning records the organization failed to produce. Write to the taxpayer, reminding the taxpayer of what had been said, and note the failure to produce the documents. The letter with the taxpayer's verbal representations and failures to produce is then part of the record. Of course, any written response from the taxpayer is also a part of the record.

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