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Part 7. Rulings and Agreements

Chapter 20. Exempt Organizations Determination Letter Program

Section 2. Determination Letter Processing of Exempt Organizations

7.20.2  Determination Letter Processing of Exempt Organizations

7.20.2.1  (11-01-2004)
Determination Processing

  1. Determination requests are processed in the following offices:

    • Cincinnati Submission Processing Center (CSPC)

    • EP/EO Determinations Processing Office (Processing Office)

    • Work groups in EO Determinations

    • Work groups in EO Technical

  2. The Cincinnati Submission Processing Center (CSPC) at the Covington, Kentucky, address shown in the instructions to Form 1023 receives all determination requests.

  3. No determination requests will be accepted by the Director, EO Examinations, in Dallas, Texas, or the Director, EO Technical, in Washington, DC. The organization seeking to submit an exemption application should be informed that the application needs to be submitted to the CSPC in Covington, Kentucky.

  4. The CSPC is responsible for establishing the determination request on the EP/EO Determination System (EDS) and processing the user fee, if required. See IRM 7.22.1, Exempt Organizations EDS User Manual, which provides procedures for processing determination applications on EDS from establishment to closing.

  5. CSPC will then forward the determination request to the Processing Office located in Cincinnati. See IRM 7.22.1.1.

    1. The case is held until requested for technical screening. See IRM 7.20.2.3.

    2. If the case is not closed by technical screening (or transferred to EO Technical based on criteria in IRM 7.20.2.2.3), then the Processing Office holds it as unassigned inventory.

  6. Each week the Processing Office sends cases in order of receipt to the work groups located in PODs outside of Cincinnati. The Cincinnati POD work groups can receive work up to three times a week. The number of cases sent to each group is based on a case request.

  7. When the Processing Office transfers a case to a work group, the group manager assigns it to an agent using the appropriate case assignment guidelines.

  8. A case closed in a work group (not requiring mandatory review) is forwarded to the group manager for review/signature/approval.

    1. If the group manager approves a proposed favorable case closing, the case is closed on EDS and mailed at the group level. The date on the letter is the date the case is closed on EDS.

    2. If the favorable case closing approved by the group manager is not selected for mandatory or sample review, it is forwarded to the Records Unit and microfiched. The case file is not stored. For further discussion, see IRM 7.20.2.13.

    3. If the group manager does not approve the proposed agent's recommendation for case closing, the case will be returned to the agent in status 53 for correction or comment. The manager should include written guidance identifying items the agent needs to address if the case requires more than a minor correction. If the agent does not agree with the manager’s reasons for returning the case, then the agent will prepare a memo to the group manager explaining why the manager’s changes are not necessary before resubmitting the case to the manager. For a further discussion see IRM 7.20.2.13.

    4. If the group manager approves a proposed adverse closing, the case is forwarded to EO Determinations Quality Assurance for mandatory review. See IRM 7.20.5.

7.20.2.1.1  (11-01-2004)
EO Returns Processing

  1. Exempt organizations, other than private foundations or excepted organizations, must file an annual information return on Form 990 or Form 990-EZ if their gross receipts normally exceed $25,000.

  2. All private foundations exempt under section 501(c)(3) must file Form 990-PF.

  3. Regardless of their annual gross receipts, all exempt organizations that incur unrelated business income in excess of $1,000 are required to file Form 990-T.

  4. Returns are not generally solicited through the determination process. However, if an original return is received, it should be date stamped and forwarded to the Ogden Campus for processing. The contol date should be the postmark date on the envelope or the IRS received date if there is no postmark evident or legible. See IRM 7.4.3 Chapter 3. The agent will:

    1. Complete a routing slip (Form 1725) and forward the date-stamped return to: Ogden Campus, Ogden, UT 84201-0027.

    2. Keep a copy of the return if it contains vital information not found elsewhere in the open application under consideration. It is not necessary to keep a copy if there is no open case.

7.20.2.1.2  (11-01-2004)
Establishing and Reestablishing Cases on EDS

  1. EDS is the computer system used by TE/GE to track and manage determination cases. Cases are assigned individual case numbers. See IRM 7.21.3, Screening, Controlling and Case Closing.

  2. Cases must be established or reestablished on EDS before agents may properly charge time to them. Agents need to be aware of these special situations:

    Note:

    For case-type definitions, see IRM 7.20.1.2.2.

    1. An A, F, P and/or T case needing to be worked simultaneously may require the establishment of a new case number for each determination. For example, an organization at the end of its advance ruling period states that it wants to terminate its operations; therefore, an F case would be worked simultaneously with a T case.

    2. The establishment of another I case is required for a change in subsection request when Form 1023 is submitted to replace the original Form 1024, or vice versa. For example, an organization that is applying for exemption under IRC 501(c)(4) withdraws its request and substitutes a Form 1023. No new case needs to be established when an organization is changing subsections on Form 1024.

    3. Replies received in "Failure to Establish" (FTE) cases require reestablishment of an S case under the original subsection based on the original Form 1023 or Form 1024.

    4. An I case should be established in conjunction with an S case if a reply includes a request for a change in subsection based on a new Form 1023 to replace the original Form 1024, or vice versa. See IRM 7.20.2.4.2, Processing Withdrawals, for procedures on closing the S case in this situation. For example, this situation would arise when an organization, which had originally submitted a Form 1024 and its application was closed as an FTE, then requests exemption under IRC 501(c)(3) and submits a Form 1023. No new case needs to be established when an organization is only changing subsections on Form 1024

  3. The agent will prepare the "Establish on EDS" form to secure a new case number.

  4. The agent will research EDS and print case status information. If the case is in an open status (e.g., 55), the file must be retrieved by the group secretary and controlled back to the agent in status 52 (Case Assignment).

  5. Offices located in PODs other than Cincinnati may fax forms to the Processing Office at 513-263-3522 or e-mail their requests using secure messaging. The forms to be faxed will be a transmittal form, original fee source documents, "Establish on EDS" forms, and EDS print. See IRM 7.20.2.2(1) - Additional Fees.

  6. If the agent receives a reply on a previous FTE case with no user fee payment, then the agent will:

    1. Print a copy of the closed FTE case's Screen #1 from EDS—this should reflect status 11 or 12—and attach it to the top of the response.

    2. If the case is in an open status (e.g., 55), request the group secretary to retrieve the file and control it back to the agent in status 52.

    3. Place the above information in the designated bin in the group for case establishment and/or reestablishment.

  7. If an agent is assigned a case that was not established correctly and no time has been put on the case, then the agent will close the case using status 30 (Correction Disposal) and prepare an "Establish on EDS" form to correctly establish the case. If time has been charged to the case, then it should be closed status 12. The status 30 closure should be turned into the manager immediately so the case can be closed out on EDS. If not, the case may inadvertently remain in status 55 indefinitely.

  8. An organization may submit additional information after a case has been closed for failure to establish on EDS. The following procedures apply in handling these types of cases.

    IF THEN the agent will
    1. The organization's case was originally worked in the Cincinnati POD and the organization requests extensions to submit the requested information and the user fee within the 90-day period Prepare the necessary form and forward it to the user fee unit.
    2. The organization's case was originally worked in a POD other than Cincinnati and the organization requests extensions to submit the requested information within the 90-day period Pull the closed case, determine whether the extension should be granted, and document the Case Chronology Record (CCR).
    3. The organization is providing a status report Call the organization to acknowledge receipt and then forward the information to be associated with the file.
    4. The organization is providing previously requested information Prepare the "Establish on EDS" form and all applicable information as outlined in items (2) through (6) above.

7.20.2.1.3  (11-01-2004)
IDRS Research

  1. IDRS is the acronym for the Integrated Data Retrieval System. It is a computer system used to retrieve/change data on the Individual Master File (IMF), the Business Master File (BMF), and the Exempt Organizations Master File (EOMF). See Document 6209, ADP and IDRS Information 2001, and Document 6379, EO Management Information Systems Codes, for a description of the various codes contained on each Master File.

    1. The EOMF contains the EO submodule of exempt organizations or applicants. The EO submodule contains information regarding the name, address, status code, date, foundation status, organization type, etc.

    2. Generally, the EO submodule is created and updated by the preparation of Form 8670 on EDS when closing a case; however, Form 2363 or Form 2363-A may be required in some instances.

    3. The actual print of the research is commonly referred to as " research."

  2. The various types of Master File research that may be needed are as follows:

    EINAD: To secure the employer identification number.
    NAMEE: To secure the employer identification number (preferred).
    ENMOD: To verify that an employer identification number has been assigned and is active.
    INOLE: To verify the name and address of the organization and to determine information reflected on Master File.
    BMFOLO: Similar to INOLE, but more extensive EO submodule information (most common type of research requested).

7.20.2.2  (11-01-2004)
User Fees

  1. CSPC and the tax examiners in the Processing Office process all user fees. See IRM 7.21.2. However, as requests are being processed in EO Determinations, screeners and agents need to determine if the correct user fee was paid based upon information received. The user fee schedule and rules for when to refund, waive, or request additional fees are set forth in Rev. Proc. 2004-8 (updated annually).

  2. Rev. Proc. 2004-8 provides guidelines on the types of determinations to be issued and the amount of the user fee required for each. Payments are recorded on the LINUS system. All organizations making an initial request for exemption under IRC 501(c) must pay a user fee.

    1. If an organization is newly formed, the user fee will normally be based on a two-year projected budget.

    2. User fees are not due in F, T or P cases. Fees are also generally not due in A cases, unless the organization is applying for a group ruling or seeking reclassification under another section of 501(c).

  3. If the application is received without a user fee, then the applicant will be requested to pay the fee. If the fee is not paid after the request is made, then the application will be returned to the applicant.

  4. Situations may arise when it is necessary for an agent to secure an additional fee during case processing.

  5. The screener in EO Determinations will initially identify problems with user fees and will designate those cases reserved for inventory. It is ultimately the agent's responsibility to ensure that the correct user fee is paid.

  6. The user fee paid is reflected on Form 8718 and on EDS. Research may be obtained from the LINUS system. This research may be requested from the group secretary located in the Cincinnati POD or by calling the Processing Office at 513-263-3430.

    Note:

    Form 1023 is undergoing revisions and will incorporate Form 8718.

  7. User fees must be paid in advance for all determination letters. The agent is responsible for verifying that the correct user fee was paid. An agent may determine whether a fee has been paid by reviewing Form 8718.

  8. EO Determination personnel should be aware of the following issues relating to user fees, which are discussed in this subsection:

    • Dishonored Personal Checks

    • Additional Fees

    • Refund of User Fees

    • Waiver of User Fees

  9. Extensions: If an organization's file is closed based on "failure to establish," it has 90 days in which to submit the additional information without incurring an additional fee.

    1. If a request for extension is received in the Cincinnati POD, it should be forwarded to the user fee adjuster. Use an extension request form; calls should not be forwarded for extensions of the user fee date to the user fee adjuster.

    2. If a request for extension is received in a POD other than Cincinnati, the agents may grant extensions as long as the 90-day period has not yet expired. A letter should be sent to the organization confirming the extended due date.

    Note:

    In the interests of good customer service, use every opportunity to remind organizations in FTE status of their need to request an extension if they cannot meet the 90-day period. If taxpayers call for any reason during the 90-day period and do not specifically ask for an extension, agents should remind them to do so.

  10. An applicant that submits an incorrect application form, but pays the correct user fee, does not need to pay an additional fee if the correct application is submitted while the case based on the incorrect application form is open.

    1. Close the incorrect application form case on EDS as 04 (Withdrawal).

    2. Establish the correct application form case on EDS.

  11. Use the following procedures when processing user fees.

    IF THEN
    a. A Form 1023 applicant that does not qualify for relief under Regs. 301.9100 submits Page 1 of Form 1024 while the Form 1023 is still under consideration No additional fee is required to process the Form 1024.
    b. In a case closed FTE, the applicant responds and submits a user fee after the 90-day period has expired Follow the procedures described in paragraph (1) above to process the fee.
    c. In a case closed FTE, the applicant responds after the 90-day period has expired but does not submit a second user fee Determine from the facts of the case if an additional fee is due.

  12. In rare circumstances, an initial determination request may be incorrectly mailed to a work group rather than to the CSPC. If this situation arises, the group secretary will:

    1. Prepare User Fee Check Transmittal—
      • Indicate " Initial application(s)" in Remarks section of transmittal
      • Complete all applicable columns on the transmittal for each fee received

    2. Forward transmittal(s), original fee, source document(s), and initial application(s) to appropriate area, as follows—
      • Cincinnati POD: Hand carry to user fee adjuster
      • PODs other than Cincinnati: Send to the CSPC daily via overnight mail

    3. Retain a copy of the completed transmittal to monitor and follow up acknowledgment by CSPC within 7 days.

7.20.2.2.1  (11-01-2004)
Dishonored User Fee Checks

  1. During the processing of a determination request, it may occur that a user fee paid by a personal check may be dishonored by a bank and returned for insufficient funds.

  2. If the user fee check is dishonored while the application case is open, the user fee adjuster will notify the agent of the dishonored check. The letters "BBBB" will appear as the name control on EDS. The agent will advise the applicant of the requirement to pay the user fee by certified check or money order and allow a reasonable period for payment based on the facts of the case. The case cannot be approved or denied until the correct fee is paid.

  3. If a case is closed on merit, but is still in the group when the user fee adjuster notifies the agent of the dishonored check, the agent will attempt to secure the user fee.

    1. If the applicant does not pay the user fee within 3-5 days, the agent will update the case to status 52 and contact the applicant again to determine whether the applicant intends to pay the fee.

    2. If the applicant does not pay the user fee, the case will be closed on EDS with a status 03 (No Remittance).

  4. An agent should consult with his or her group manager if an applicant appears to have intentionally misrepresented its character or nature to qualify for the reduced user fee.

7.20.2.2.2  (11-01-2004)
Additional Fees

  1. Group secretaries are responsible for opening incoming mail within a work group. The following table lists the responsibilities of the group secretary when an additional user fee check is received in the work group's mail:

    IF THEN the group secretary will
    1. A fee is secured on an open case a. Record receipt of the fee on the Form 5464 (Case Chronology Record)
    b. Process receipt of the fee
    • Research EDS and print case status information
    • Prepare a "dummy" Form 8718: Enter the payment amount, your initials, and the organization's name and EIN in the appropriate spaces.
    • Stamp Form 8718 with IRS received date
    c. Copy fee source document (personal check, money order, or cashier's check), "dummy" Form 8718, add EDS print, and associate with respective case file

    d. Prepare User Fee Check Transmittal
    • Indicate "Additional Payments" in "Remarks" section of the transmittal
    • Complete all applicable columns on the transmittal for each fee received

    e. Forward transmittal(s), original fee source document(s), "dummy" Form(s) 8718, and EDS print(s) to appropriate area:
    • Cincinnati POD: Hand carry to the User Fee Adjuster
    • PODs other than Cincinnati: Send to the CSPC daily via overnight mail
    f. Keep a copy of each completed transmittal to monitor and follow up acknowledgment by CSPC within 7 days
    IF THEN the group secretary will
    2. A fee is received on a closed "failure to establish" (FTE) case a. Research EDS and print case status information
    • If the case is in an open status (e.g., 55), retrieve the file
    b. Prepare User Fee Check Transmittal
    • Indicate " Case Reestablishment" in "Remarks" section of the transmittal
    • Complete all applicable columns on the transmittal for each fee received
    c. Prepare the "Establish on EDS" form
    • PODs other than Cincinnati: If a new case was established prior to submitting the user fee for processing, enter "Case Established in Area Office—Process Payment Only" in " Remarks" section and indicate new case number so payment may be properly applied
    d. Forward transmittal(s), original fee source document(s), " Establish on EDS" form(s) (if appropriate), and EDS print(s) to appropriate area:
    • Cincinnati POD: Hand carry to user fee adjuster
    • PODs other than Cincinnati: Send completed transmittal(s), fee source document(s), "Establish on EDS" form (if appropriate), and EDS print(s) to the CSPC daily via overnight mail
    e. Keep a copy of completed transmittal to monitor and follow up acknowledgment by CSPC within 7 days

  2. If the applicant’s activities are inconsistent with its financial data and an additional user fee is due, the agent will ask the applicant to clarify the inconsistency.

    If the applicant Then the agent will
    a. Does not respond and the application can be otherwise approved Close the case, Failure to Establish (FTE), and caveat the letter to request the payment of the additional fee. The caveat will clearly state the basis for the additional fee.
    b. Requests to withdraw the application Follow the procedures in IRM 7.20.2.4.2.
    c. Pays the additional fee Process the case as usual and process the payment as described in paragraph (1) above.
    d. Responds but does not agree to the increased fee Discuss the case with the group manager and consider forwarding the case to the EO Determinations Quality Assurance Office for resolution of the fee issue.

7.20.2.2.3  (11-01-2004)
Refunds of User Fees

  1. The user fee is not refundable if an organization withdraws its exemption application. However, the user fee is refundable if the application was filed based on erroneous advice from IRS personnel, or the application is withdrawn solely because the organization is unwilling to pay a higher user fee than that originally paid. Procedures for processing withdrawals are in IRM 7.20.2.4.2.

  2. The user fee should be refunded if the agent discovers the applicant is already exempt (other than under a group ruling) before completing an application under the same paragraph of IRC 501(c). The user fee will not be refunded if the previous exempt status is not discovered until the determination is completed. The user fee should be refunded if the agent discovers the applicant is covered by a group exemption and it wishes to remain in the group exemption. Procedures for processing withdrawals are in IRM 7.20.2.4.2.

  3. An agent outside the Processing Office should forward the refund authorization forms to the Processing Office for processing if the CSPC deposited the original fee.

  4. A partial refund of the user fee will be issued if the organization paid $500, but its gross receipts will not exceed $10,000.

  5. A partial refund of the user fee will be issued if the organization paid an incorrect dollar amount, one other than the appropriate $150 or $500.

  6. If the applicant claims a refund is due but the agent does not agree, the applicant may request reconsideration of the user fee by the Manager, EO Determinations Quality Assurance. Refer to IRM 7.20.5.8.

  7. If it is determined that a user fee was overpaid, the agent will:

    1. Prepare a routing slip addressed to the user fee adjuster stating the amount and briefly explaining the reason for the refund.

    2. Submit the routing slip to the group manager for review and approval.

    3. If the manager approves the refund, prepare Form 3198-A, TE/GE Special Handling Notice, and notate "User Fee Refund."

    4. If the case is being closed favorably, notify the applicant (after the manager approves the refund) that the refund will be issued separately. Notification may be by telephone or correspondence.

    5. Document the contact in the Case Chronology Record.

    Note:

    If a screener forwards a case to unassigned inventory for more development, the screener should note possible refund on the screener checksheet, but should not notify the applicant of the potential refund.

7.20.2.2.4  (11-01-2004)
Waiver of User Fee

  1. An organization may request a waiver of any additional fee. A request that a user fee be waived is approved or denied by the Manager, EO Determinations Quality Assurance (Quality Assurance) after reviewing a case forwarded by an agent.

    Exception:

    The following situation does not constitute a waiver request and is not subject to review: A resubmitted exempt organization's FTE case may clearly show that the initial user fee was correctly paid. The screener or agent to whom the case is reassigned may conclude that a second user fee is not required because the applicant either complied with the 90-day deadline, or failed to do so because of a Service error. To determine if Service error has occurred, the organization should be requested to provide chronological details as to the circumstances surrounding the request.

  2. The agent will secure the additional information necessary to determine whether there was Service error.

  3. In preparing a case for review by Quality Assurance, the agent will:

    1. Develop the facts of the case. If necessary, the organization needs to provide chronological details of the circumstances surrounding its request for waiver.

    2. Prepare a summary of the facts, and recommend whether the request should be approved or denied on Form 1725.

    3. Based on the recommendation, prepare a letter to notify the organization of the decision.

    4. Forward the entire case file to the group manager for review and approval. If the group manager agrees that the request is complete and the summary is accurate, then the manager will initial and date the Form 1725, and the case file will be forwarded via Form 3210 to the Manager, Quality Assurance, for assignment to a reviewer. EDS will be updated to status 31. Refer to IRM 7.20.5.8 for processing of the request by Quality Assurance.

    5. Based on the recommendation from Quality Assurance, the applicable approval or denial letter will be mailed to the applicant.

7.20.2.3  (11-01-2004)
Technical Screening

  1. Technical screening is a process of identifying and reviewing determination requests from organizations with historically demonstrated high levels of compliance and of closing them quickly on their merit as approvals, based on the information submitted. EO Determination agents work the technical screening cases. These agents are referred to as screeners.

  2. Determination requests that are subject to technical screening include:

    • Requests for determination letters

    • Foundation follow-ups

    • Terminations

    • Amendments established on EDS

  3. The variety of IRC 501(c) subsections, as well as the variety of organizations exempt under IRC 501(c)(3), makes categorizing the kinds of organizations that can be merit-closed very difficult. Thus, to ensure the quality of the merit screening process, only the most experienced determination agents will be assigned to technically screen applications. These agents will use sound reasoning based on training and experience to determine if the information in the application meets the organizational, operational, and other technical requirements of the Code and regulations.

  4. The screener will review the application.

    IF THEN
    1. The exemption application can be granted upon initial submission The screener may close the case as an approval.
    2. The application lacks only minimal, relatively non-complex items The screener may request additional information by telephone from the organization. Additional information letters will not be written on screening cases. See (7) below for further guidance.
    3. The additional information completes the application and the organization qualifies The screener may close the case as an approval.
    4. The screening agent cannot approve the case, and securing the information to approve the case would be time-consuming or would require research of issues The case must be returned to unassigned inventory for processing.

  5. If a determination request cannot be closed by the screener, the screener will:

    1. Enter the case grade per the case assignment guide on the input sheet.

    2. Notate the input sheet if the case should be classified as reserved inventory per IRM 7.20.1.2.3.

    3. Complete the Exempt Organizations Technical Screening Checksheet.

    Note:

    Forwarding a case to unassigned inventory means that the case file needs to be reviewed further. It does not necessarily mean that the applicant must be contacted.

  6. If a case can be approved in technical screening, the screener will process the case per IRM 7.20.2.13 with the following differences:

    1. Complete only Form 6038; no attachments are required in this instance. However, the Case Chronology Record should be documented in unusual or borderline cases.

    2. Use disposal code 06 (rather than 01) when closing the case.

  7. If the screener decides to request additional information by telephone, up to five days may be allowed for a response. A longer period may be granted based on the group manager's discretion. If the applicant does not submit the information, the screener will telephone the applicant to explain that the case will be forwarded to an agent for further development. The applicant will be advised that the case may be worked in another office. The screener will forward the case to unassigned inventory.

  8. The items on the Exempt Organizations Technical Screening Checksheet are not intended to be all-inclusive, but identify the issues that preclude the application from being approved by the screener.

7.20.2.4  (11-01-2004)
Case Processing

  1. EO Determination agents manage their inventory in a first-in first-out (FIFO) manner, (oldest date first) with the exception of approved expedite requests. Where an organization responds to an information request, that case takes precedence over cases that have not been started.

  2. The agent will review the determination request to ensure that no items are missing. The following is a list of items which should be submitted with the determination letter request:

    • Correct user fee, if applicable

    • Application Form 1023/1024 signed by an authorized person

    • Power of Attorney or other authorization form, if applicable, signed by an authorized person

    • An Employer Identification Number (EIN) or a completed Form SS-4, Application for Employer Identification Number

    • All applicable pages and schedules of the respective applications

    • A conformed organizing document

    • Bylaws, if adopted

    • Financial data as described in the Form 1023/1024 instructions

    • A narrative describing the organization’s past, current, and planned activities

  3. The agent will contact the organization to obtain any additional information or amendments necessary to process the application. See IRM 7.20.1.5 for authorized persons.

  4. The agent will determine, based on the facts of the case and clearly established rules in the statute, a tax treaty, the regulations, a revenue ruling, opinion or court decision, how the case should be closed (approved, adverse, failure to establish, other) and the proper EDS letter to be issued.

    • If technical advice or technical assistance is required, see IRM 7.1.3.

    • If an adverse closing, see IRM 7.20.2.9.

    • For case closing, see IRM 7.20.2.13.

    • For case file assembly, see IRM 7.20.2.6.

  5. The agent will submit the case for managerial review/signature. In addition, some cases may be subject to mandatory or sample review, TEQMS, or post-review by EO Technical. See IRM 7.20.5.

  6. No document submitted by an applicant should be marked or written on by anyone processing a determination request. If there is litigation with respect to the case, then the court may construe unnecessary markings on documents as inappropriate.

  7. If an application is being processed under IRC 501(c)(3) and the application does not contain all of the necessary information to allow a determination to be made under IRC 501(c)(3), then the 270-day period referred to in IRC 7428(b)(2) begins with—

    • the postmark date on the incomplete application, or

    • if no postmark, the IRS stamped received date.

  8. Any missing information necessary to process an application to which IRC 7428 applies must be requested in writing from the organization to demonstrate that the IRS did not unreasonably delay processing the application. For example, information from a website will not become part of the administrative file on adverse determinations unless submitted in writing by the organization or shared in writing with the organization.

  9. Agents will provide identifying information about themselves so taxpayers will know whom to contact if they should have questions relating to their determination request. This requirement is mandatory, as provided in section 3705 of the IRS Restructuring and Reform Act of 1998 (RRA 98). See IRM 21.3.3.4.19.1, Preparation of Outgoing Correspondence.

7.20.2.4.1  (11-01-2004)
Amendments

  1. An "amendment" or an A-type case is a case in which a recognized exempt organization informs the Service of organizational or operational changes.

  2. Examples of changes that would be considered amendments include:

    • Change in purposes

    • Change in sources of financial support

    • Name change

    • Change in operations

  3. When an organization is recognized as exempt under IRC 501(a), the determination letter instructs it to report changes in name, address, purposes, operations, or sources of financial support to the TE/GE Customer Account Services Office (CAS).

  4. CAS receives and screens most amendments. CAS will only process amendments that do not affect an organization's exempt status, such as the number of directors, accounting period, name or address of the organization, or other amendments which CAS can review and determine that the change will not jeopardize the organization's exempt status. See IRM 21.3.8 for additional information.

  5. If the amendment cannot be processed by CAS, it will be forwarded to the Processing Office to have an A case established. Some specific determination requests that are treated as amendment cases are:

    • Group exemption requests

    • Requests for advance approval of grantmaking under IRC 4945(g) (see IRM 7.20.3.7.8)

    • Requests by organizations to be reclassified as private foundations (see IRM 7.20.3.3.7)

    • Requests where changes have been completed

  6. The amount of development necessary in processing cases depends on the facts and circumstances of each situation. In general, there should be enough information to determine whether the new request may be granted and whether the changes affect the exemption or the foundation status of the organization. Information can be requested from the organization to obtain details about changes in its purpose, character, or method of operation by using a composed development letter. Following are examples of the information needed for various requests:

    1. If an organization has added or changed activities, sufficient detail about the activities should be secured so that it is clear the new activity is conducted in an exempt manner and is allowable under the applicable Code section.

    2. If the organization's sources of support have changed and the organization is a public charity, financial data for the last four years should be secured to verify that the organization continues to meet the public support test. Sufficient information should be secured to determine whether the organization's sources of support affect exempt status and whether they subject the organization to unrelated business income tax.

    3. If the organization requests a change in subsection, and is currently exempt, a new application must be submitted, and it should be worked as if it were an initial application. See IRM 7.20.2.2(b) for user fee issues.

    4. If an IRC 501(c)(9) organization submits an amendment to its plan document or trust agreement, information should be secured to ensure that the plan remains nondiscriminatory.

  7. Once an amendment case is assigned to an agent, it should be developed and processed based on all of the facts and circumstances. Additional information may be requested by the agent to obtain details about the changes in the organization’s purposes and methods of operation.

    IF the agent is working a(n) THEN the agent will
    Request for advance approval under section 4945(g) Issue the appropriate determination letter
    Private foundation reclassification Issue the appropriate determination letter
    Group ruling request Issue the appropriate determination letter
    Amendment case where the organization has made completed changes that will have an adverse impact on the organization Complete Form 5666 (see IRM 7.20.2.5.3) and write an acknowledgment letter to the organization informing it that there has been a referral of its submission to EO Exam
    Amendment case where the completed changes are based upon established rules, guidelines, and published tax law that will not jeopardize exempt status Issue the appropriate determination letter
    Amendment case not described above Consult his/her manager. Where sufficient information has not been provided about a completed change or the completed change is not clearly covered by the Internal Revenue Code, Income Tax Regulations, or other established rules and guidelines, a letter acknowledging receipt of the information may be appropriate along with a statement that it is not in the interest of the Service to issue a determination letter.

  8. Generally, if an organization described in IRC 501(a), but not in IRC 501(c)(3), requests a termination of its exempt status, then the agent should acknowledge the organization’s request. The acknowledgment should inform the organization of its future responsibilities. The agent should update EDS and EOBMF to change the organization’s filing requirements.

  9. Generally an organization described in IRC 501(c)(3) may not voluntarily relinquish its exempt status. If an agent reviews such a request, then a Form 5666 should be filled out and referred to EO Examinations.

  10. When an organization submits information about changes to its organizing documents, it should provide conformed copies of amendments to its articles of organization (such as corporate charter, trust instrument or constitution) or internal regulations (such as bylaws).

  11. EO Technical refers amendments it receives to EO Determinations.

  12. If a Federal credit union submits an amendment, the agent should return it and advise the credit union that the information should be submitted to the National Credit Union Administration (NCUA). The NCUA is the independent federal agency that makes an annual report to the Service, incorporating all the changes affecting all Federal credit unions. See IRM 7.25.1.4.4.

  13. Amendments filed by group exemption organizations are discussed at IRM 7.20.2.7.1.

7.20.2.4.2  (11-01-2004)
Processing Withdrawals