EO includes two primary operational areas: Rulings and Agreements (R&A) and Examinations.

EO Rulings and Agreements (EO R&A) is responsible for issuing determination letters on exempt status, private foundation classification, and other determinations related to exempt organizations.

Organizations submit Form 1023, Form 1023-EZ, Form 1024-A, and Form 1024 electronically at Pay.gov. Organizations submit other applications for tax-exempt status and other miscellaneous determinations (Form 1028, Form 8940, and other letter applications) to the Cincinnati Accounts Management Campus Support (Campus Support).

Campus Support processes the user fee payments in the Letter Information Network and User Fee System (LINUS) and scans the applications/requests into the Modified EO-EP Determination System (MEDS). MEDS transmits the information to the Employee Plans/ Exempt Organizations Determination System (EDS).

Campus Support sends open hard copy case files to an IRS facility in Ogden, UT.

Cases are generally processed electronically in MEDS. See IRM 7.22.4, Modified EO-EP Determination System (MEDS) User Manual, including how to process cases.

Rev. Proc. 2022-5, updated annually, sets forth procedures for issuing determination letters on issues under the jurisdiction of the Director, EO R&A. It explains the procedures for issuing determination letters on exempt status in response to applications for recognition of exemption from federal income tax under Section 501 or 521 (other than those subject to Rev. Proc. 2022-4, updated annually), private foundation classification, and other determinations related to exempt organizations. Rev. Proc. 2022-5 also provides guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under IRC 7428 and guidance on applicable user fees for requesting determination letters.

EO R&A is responsible for issuing determination letters on exempt status, private foundation classification, and other determinations related to exempt organizations.

Exempt Organizations Determinations Quality Assurance (EODQA) reviews determination cases to ensure:

Commonly used abbreviations include:

Use the following IRMs in conjunction with this manual when processing requests for determination letters:

A determination case request is established as one of the following types of cases:

For cases requiring corrective actions, discuss with your manager.

Automatic revocation considerations under IRC 6033(j) generally apply when determining the effective date of exemption. IRM 7.20.4, Automatic Revocation and Other Special Determination Issues, provides effective date guidelines for automatic revocation reinstatement requests as well as certain initial requests for exempt status (for example, when an organization changes legal form). In general, to be recognized as exempt from its date of formation, an organization applying for exemption must:

Special rules may apply to an organization applying for exemption under IRC 501(c)(3), (9), (17), or (29). (See IRC 505 and 508, and Treas. Reg. 1.505(c)-1T, 1.508-1(a), and 301.9100-2(a)(2)(iii) and (iv). See also IRC 501(c)(29), Treas. Reg. 1.501(c)(29)-1 and Rev. Proc. 2015-17.)

In its application for recognition of exemption under IRC 501(c)(3), (9), (17), or (29), an organization that has not filed its application within the required time period may request relief under Treas. Reg. 301.9100-3 in order to be recognized and treated as tax-exempt effective as of a date earlier than the date of application. EO R&A may grant such relief if the requirements for relief are met and consistent with Rev. Proc. 2022-5 (updated annually).

Rev. Proc. 2022-5 provides that:

Request information, as necessary, to determine whether to grant relief to an organization that requests consideration under Treas. Reg. 301.9100-3 in its application.

In all instances where the request for exemption is being approved but relief under Treas. Reg. 301.9100-3 isn’t being granted, call the organization and explain why relief isn’t being granted. Prepare and send the correct determination letter along with Letter 6392, 9100 Effective Date. These cases are not processed as proposed adverse determinations or proposed approvals with an adverse issue.

An organization that doesn’t file for exemption within 27 months of formation or doesn’t request and meet relief requirements is recognized as exempt from the date it files its application (see Rev. Proc. 2022-5, updated annually, IRC 508(a) and IRC 505(c) and related regulations, and Treas. Reg. 301.9100-2).

Recognize exempt status in advance of operations if the organization can describe its proposed operations in sufficient detail to permit you to conclude that it meets the particular requirements of the section under which it’s requesting exemption.

An organization that wasn’t described in any IRC 501(c) from the time it was formed is recognized as exempt as of the date the organization is first described in IRC 501(c). In this case, explain the issue to the organization and secure a signed written statement agreeing to a specific effective date.

An organization formed as a for-profit corporation that changes to a non-profit entity is generally granted exemption as of the date it met the requirements (for example, organizational and operational) for the requested exempt status.

An applicant for exemption under IRC 501(c)(3) formed as a mutual benefit organization is generally granted exemption as of the date it is re-formed as a public benefit organization, if it meets all other exemption requirements. Discuss and secure acknowledgement of the effective date in writing from the organization.

A non-exempt corporation operating in an exempt manner as an unincorporated association prior to incorporating may also be recognized as exempt for the period it operated in an unincorporated status (see Rev. Rul. 54-134). If the organization wants recognition for the unincorporated period:

A tax-exempt organization must submit a new application for exemption to request a change in subsection.

A tax-exempt organization that changes legal form may need to submit a new application for exemption.

If you have to secure an agreement to the effective date and the organization disagrees with your proposed effective date of exemption, process the request as a proposed adverse determination or proposed approval with an adverse issue (IRM 7.20.2.4, Adverse Determinations). See IRM 7.20.2.2.1 (6), Effective Date of Exemption, regarding cases involving Treas. Reg. 301.9100-3 relief issues.

See Rev. Proc. 2022-5, updated annually, for guidelines on the effective date of exemption.

The Service uses an EIN to identify business entities for federal tax purposes. All organizations applying for exemption must have an EIN that is uniquely theirs (Rev. Rul. 73-526).

Conduct IDRS research on all applications to verify the EIN. If the EIN that the organization provided doesn’t appear to be correct, conduct additional IDRS research to determine whether the organization has been assigned an EIN.

Don’t approve or deny an application until the organization provides a valid EIN. If not provided:

If an organization without a valid EIN doesn’t respond to a 1312 Letter, FTE the case as usual, but remove the EIN from the letter.

If an organization was assigned more than one EIN in error:

A tax-exempt organization that changes legal form may have to secure a new EIN. See Pub. 1635, Understanding Your EIN, and Rev. Rul. 73-526.

An organization must get a new EIN if one of these legal changes apply:

Ensure EDS, MEDS, and LINUS reflect the correct EIN for the organization. If necessary:

EO Determinations cases are graded based on the case’s primary activity/issue and are set based on MEDS Business Rules (IRM 7.22.4). The Case Assignment Guide (CAG) Case Grading Criteria Matrix, Exhibit 7.20.2-1, lists case complexity factors and grade level distinctions to determine the correct case grade. Due to the extensive variety of issues encountered in determination requests, the CAG, Exhibit 7.20.2-2, lists common case issues and their case grades.

Secure Messaging (SM), a feature within Taxpayer Digital Correspondence (TDC), is a platform for TE/GE employees to communicate online with their taxpayers. This program is similar to a web-based email service and encrypts files when transmitting sensitive or confidential tax-related information. Messages sent to or from taxpayers are securely exchanged and can include attachments. See Publication 5295, Secure Messaging for Tax Exempt and Government Entities, for more information.

For all cases with control dates on or after June 23, 2022, all employees with taxpayer contact must:

For cases with control dates before June 23, 2022, if you have already made initial contact, discuss with your manager whether using TDC SM would improve your ability to develop the case and close it more efficiently. If you and your manger determine TDC SM would be beneficial, invite the taxpayer and their representative to use TDC SM.

When you receive a signed Form 15314, TE/GE Secure Messaging Taxpayer Agreement Authorization of Disclosure to Designated Users, submit it to the BSP shared mailbox *TEGE TDC Provisioning.

Upon case closure, send a message to the taxpayer that you are closing their case. Inform them that future communications within TDC will not be possible for this case. Follow TDC SM case closing procedures.

An organization may submit a written request for expedited handling (proposed expedite).

Expedited handling is granted to applications that meet the criteria in Rev. Proc. 2022-5, updated annually. Organizations must include a compelling reason for the Service to process their application ahead of others. Expedited handling is generally granted to organizations when one of the following applies:

The Service has discretion to grant requests for expedited handling when a factor outside an organization's control creates a real business need to obtain a determination letter to avoid serious business consequences.

The Processing & Support Unit generally assigns proposed expedite cases equally among the individual groups’ Status 75 inventories. Managers should assign proposed expedited handling requests to a designated specialist in the group within two workdays of the Status 75 date.

The manager will assign approved expedite cases ahead of non-expedite cases to specialists in the group to work.

Once assigned, the designated specialist will:

The Service will issue a Declaration Notice (see IRM 25.16.1.5.3, Internal and External Notification Process) to identify a covered disaster area. All IMF and BMF accounts with addresses in the area affected by the federally declared disaster designated by the Federal Emergency Management Agency as qualifying for “individual assistance” are frozen (-O Freeze) systemically for the period specified in the Declaration Notice (the “postponement period”).

Search for declared areas by zip code on the IRS Disaster Assistance Program page.

For cases in your inventory affected by a federally declared disaster:

All Form 1023 applications will have the Form 1023 Case Closing Guide Sheet applied through either MEDS business rules or tax examiner review. If a case can be approved using the Guide Sheet, the approval letter and closing documents will be generated using the information submitted in the application. If it can’t be approved using the Guide Sheet, the case will be returned to unassigned inventory to be assigned to an EOD Specialist in control date order.

Time frames for cases assigned to tax examiners for Guide Sheet review are as follows:

Carefully review the case to ensure your additional information request is complete, appropriate, and necessary to make the requested determination. Prepare additional information requests so they are:

Don’t ask for information already in the case file or that you don’t need to make a determination.

Prepare Letter 1312, Additional Information Request, using appropriate approved streamline questions, pre-written questions, and/or individually composed questions.

Complete the letter using:

If you prepare an additional information request with individually composed questions, your manager must review and approve it before you send it. Managers should review and return the letter to you within three workdays.

When requesting additional information, follow the procedures for TDC SM, as described in IRM 7.20.2.2.4, Taxpayer Digital Communications Secure Messaging.

Mail the letter. For a quicker response, you can also fax a copy of the letter to the organization (IRM 10.5.1.6.9.4, Faxing). Additionally, through October 31, 2023, you may use the encrypted email process:

Import the letter, any attachments, and/or copies of the email into the MEDS Disclosable folder.

Two weeks before the response due date, call an authorized contact for the organization (IRM 7.20.1.6, Disclosure) to ask if there are any questions about the information requested, remind them of the upcoming due date, case closing, and potential loss of user fee if it doesn’t respond by that time. Explain that the case may be closed without a determination or a proposed adverse determination may be issued. If no answer, leave a message with the information (disclosure rules apply, IRM 10.5.1.6.7.2, Answering Machine or Voicemail).

If the organization requests an extension prior to the response due date, grant an extension of 14 days or less. Base an extension on the facts and circumstances. Document extensions and due dates in the CCR.

When you receive a response, complete all necessary actions (see IRM 7.20.2.3.5 (4) below) within five workdays of receipt (unless otherwise specified). "Receipt" is the received date stamped on the response or on the fax receipt.

Review the response.

If the organization doesn’t respond by the due date (including all approved extensions), close the case as FTE (IRM 7.20.2.5.5, Failure to Establish).

During case processing, an organization may request to replace the pending application with an application for exemption under a different subsection of IRC Section 501 using a different form (for example, withdraw Form 1023 and submit Form 1024-A). Each application is a request for a determination letter. IRC Section 7528 requires the Service to establish user fees for requests for determination letters. The electronic application process through Pay.gov requires a user fee to be submitted with an application. Accordingly, the specialist will process the request as a withdrawal under IRM 7.20.2.5.6, including the following steps:

Don’t establish a new I case when an organization that submitted Form 1024 wants to change its requested subsection to another one listed on Form 1024 (for example, originally requested IRC 501(c)(5) but wants to change to IRC 501(c)(6)). The organization must submit a revised Form 1024, only page 1, and any applicable schedule. Update the case in MEDS (or EDS) to reflect the correct subsection.

If you need to establish a new case:

The Files & Records Unit establishes the case in MEDS.

Transfer the user fee after both cases are closed:

Close the original case or continue processing it as a related case, as appropriate. Close the incorrectly established case using closing code 30 (correction disposal) if you didn’t charge time to it. If you charged time to the case, close it using closing code 12 (other closure).

User fees generally apply to all EO determination letter requests. Rev. Proc. 2022-5, updated annually, lists the user fee schedule and guidelines, including refunds and user fee reconsideration requests.

Campus Support processes initial user fee payments submitted with paper application forms and subsequent user fee payments. User fee payments for electronic forms are submitted through Pay.gov. User fee payments are processed through LINUS and transmit to MEDS and EDS. Payment amounts are noted on the request or other required form.

Ensure the organization paid the correct user fee (verify on LINUS as necessary). If he organization didn’t pay the correct user fee:

Don’t approve or deny a case unless the organization paid the required user fee.

Refund overpaid user fee amounts if the organization paid too much, regardless of how you close the case (IRM 7.20.2.3.8.2). See Rev. Proc. 2022-5, updated annually, for additional refund situations.

If you approve a case (closing code 01, 06, or 09) after resolving user fee issues and the MEDS user fee field still shows an overpayment, underpayment, or dishonored check:

See IRM 7.21.2, User Fees, for general user fee information.

Prepare the appropriate proposed adverse letter:

Follow the general drafting rules and procedures in IRM 7.28.4, Public Inspection of Written Determinations under IRC 6110.

Generally, follow the format below for the body of the letter. (Some sections may not apply based on the case’s facts and circumstances.)

To close a proposed adverse determination:

If the EODQA reviewer makes changes to the proposed adverse letter and is not otherwise returning the case to the specialist, after the EODQA manager has approved the proposed adverse letter, the reviewer will:

If EODQA sends the case back for corrections with an Inquiry Reviewer’s Memo, make the agreed upon changes (see IRM 7.20.5.4, Reviewer’s Memorandum and Response to Reviewer’s Memorandum) and complete, digitally sign, and import a Response to Reviewer’s Memo into the MEDS Non-Disclosable folder. The group manager will digitally sign the Response to Reviewer’s Memo and return the case to EODQA.

If the organization submits a protest to the adverse determination letter, forward the protest to EODQA and notify the reviewer. After reviewing the protest, the reviewer may return the case to you if the protest presents new or revised facts or raises arguments you haven’t addressed. If the reviewer returns the protest to you, review the protest to determine whether it changes the initial determination and take the following actions:

When you process determination letter requests, you may need to review or secure an administrative file. Open cases are stored at a Service facility in Ogden. Closed EO Determinations case files are stored:

Research MEDS to determine whether the file is available electronically. If not, prepare and email Form 14264, Request for Exempt Organizations Administrative File, to *TEGE Determinations Processing.

Exempt organizations, unless specifically excepted, must file an annual information return or notice on Form 990-PF, Form 990, Form 990-EZ, or Form 990-N.

Don’t solicit an annual return during the determination process. However, if you receive one, check IDRS. If you can verify the return was posted, no additional action is needed. If you can’t verify the return was posted:

The Taxpayer Advocate Service (TAS) uses the Operations Assistance Request (OAR) process to refer cases to EO Determinations when TAS lacks either the statutory or delegated authority to resolve an organization’s problem. TAS uses Form 12412, Operations Assistance Request, to initiate the OAR process.

A designated EO TAS Liaison receives, reviews, and processes OARs. If an OAR relates to an assigned open application, the TAS Liaison assigns the OAR to the employee assigned the case, by emailing him/her Form 12412 and other pertinent information.

If you receive an OAR on a case:

When you close a case with an OAR:

Follow these procedures in addition to case closing actions in IRM 7.20.2.5, Case Closing.

For a case closed in any status where a risk is taken and not resolved in the Disclosable section of the file, complete Form 14261, Memorandum to File-EO Determinations Case Closing, and import it into the MEDS Non-Disclosable folder. Documentation should include a full description of the issue, the risk, and rationale for accepting the risk.

For an I case, generally, prepare Letter 947, 948, or 1076. See IRM 7.20.3.3.13, Commonly Used Letters, for approval letters for A and P cases.

Enter closing information (filing requirements, closing code, etc.) in MEDS. In the rare instance that there is a paper case, enter closing information in EDS.

Enter a National Taxonomy of Exempt Entities (NTEE) code as selected by the applicant on the application or based on the primary activity of the organization. Use the NTEE code provided by the applicant unless it is invalid. Select the next best NTEE code if the code they selected is invalid. See the Urban Institute or the Instructions for Form 1023 for an NTEE code list. NTEE code format is a letter generally followed by two numbers (for example, B82).

Enter the six-digit North American Industry Classification System (NAICS) code associated with the selected NTEE code. Generally, use the first three digits followed by 000. NAICS codes are listed with the related NTEE codes on the MEDS Closing Worksheet located on SharePoint.

Continue to work MEDS cases with EDS blocks. For MEDS cases with an EDS block, when a status changes in MEDS, update the EDS status to match.

Follow these procedures in addition to case closing actions in IRM 7.20.2.5, Case Closing.

If you’ve attempted to secure additional information from an organization and haven’t received it, close the case as failure to establish (FTE).

For all cases (I, A, and P), generally, prepare Letter 1314 using the appropriate selective paragraph(s).

Enter the appropriate filing requirements in the letter and enter closing information (filing requirements, closing code, etc.) in MEDS. Common filing requirement entries include:

Use closing code 11 (Failure to Establish). If case is closed in closing code 11, generally, enter 71 for the Determination Code and 09 for the Form 990 Filing Requirement. Enter closing information on the MEDS EO Closing Data tab by completing the Type of Organization, Accounting Period End, NAICS Code, NTEE Code, Affiliation Code (3, 6, or 8), Classification Code, Pension Plan (2), Ruling Date, and Effective Date.

Complete Form 12412, Sections V and VI if there’s an OAR on the case, indicating the case has been closed FTE.

Move any documents in the MEDS Disclosable folder to the Non-Disclosable folder.

If a specialist receives correspondence on a case after it’s closed as an FTE, the specialist will send it to the group manager for review. The manager will determine whether the case should be reopened and worked by the specialist, or if a call should be made to the applicant to explain why the case won’t be reopened (for example, they failed to respond timely or completely to our request). If the manager determines that the case should be reopened, they will reopen it in MEDS and assign it to the specialist.

An organization may withdraw its determination letter request (in writing) at any time before a determination letter or proposed adverse determination letter is issued. An authorized person must sign the request. The Service keeps the application and all supporting documents.

Don’t directly or indirectly say or do anything that may be interpreted as coercing or compelling a withdrawal of an application. However, you can discuss withdrawal as an option when appropriate (for example, when proposing an adverse determination, see IRM 7.20.2.4, Adverse Determinations). Document the discussion in the CCR. When discussing, advise the organization that we don’t refund the user fee (if applicable) and will stop processing the request.

Prepare Letter 2244 (I case) or Letter 4785 (A or P case). Add an addendum if refunding the user fee.

If the organization withdraws its application because it’s already exempt under that subsection, prepare Letter 5239, close using closing code 12 (Other), and initiate a user fee refund.

If the organization is currently exempt and withdraws its request for a change in subsection, add an addendum to Letter 2244 indicating its exemption under IRC 501(c)(X) is still in effect.

If the organization withdraws one form to submit another (for example, from Form 1023 to Form 1024), prepare Letter 2244. The user fee will not be refunded. See IRM 7.20.2.3.6.

Prepare Form 2363, Master File Entity Change, to establish the appropriate filing requirement(s) if the withdrawing organization isn’t exempt and has been or is operational and appears to have taxable income. Import the form into the Non-Disclosable folder and name it Form 2363-A - Request for IDRS Input. Select the Case Category *Forward Form 2363-A.

On the MEDS EO Closing Data tab, enter the Type of Organization and Accounting Period. Move all documents in the Disclosable folder to the Non-Disclosable folder.

Close withdrawals in closing code 04. Don’t enter NAICS/NTEE codes.

The group manager has three workdays to review additional information requests and provide any feedback on the letter.

The group manager has five workdays from submission (10 workdays for adverse determinations) to review a proposed case closing and either:

Group manager: if returning the case, identify corrections or needed development on a feedback comment sheet and return the case in Status 73/53.

Specialist: