7.20.6  EO Touch-and-Go Determination Case Procedures

7.20.6.1  (01-01-2007)
Overview

  1. EO Touch-and-Go (TAG) is a program designed to identify cases handled by Exempt Organizations (EO) Determinations early in the process that may involve an abusive tax avoidance transaction, fraud, or terrorism. A TAG issue may develop from any type of case, including an exemption application; a foundation status determination; or an amendment case (a notification by an exempt organization of a change in activities, organization, or purposes).

7.20.6.1.1  (01-01-2007)
TAG Program

  1. Determination agents and managers in EO Rulings and Agreements identify and report organizations that may be involved in exempt organizations abusive tax avoidance transactions (ATAT), fraud, or terrorism to the TAG group. The TAG group evaluates the issue and takes one of the following actions:

    • ATAT issues are referred to the EO ATAT Program Manager.

    • Fraud issues are coordinated with the Financial Investigative Unit (FIU) before referral to Criminal Investigation (CI).

    • Terrorism issues are coordinated with the EO Rulings and Agreements designated contacts for anti-terrorism.IRM 7.20.6.7.for procedures.

  2. If an issue involves an ATAT and fraud or terrorism, the TAG group will coordinate with the EO ATAT Program Manager and the FIU or EO Rulings and Agreements designated contacts for anti-terrorism.

  3. The manager of the EO Determinations TAG group assigns referrals to designated coordinators.

  4. A flow chart of the TAG case process is included as an exhibit. Exhibit 7.20.6-1.

  5. See IRM 4.75.35 (to be published) for EO ATAT procedures.

7.20.6.1.2  (01-01-2007)
Established Compliance Project Teams

  1. Cases for which there are established compliance projects are not part of the TAG program and should be returned to the submitting office for appropriate coordination with the compliance project team.

  2. Where an EO Determinations agent uncovers a possible promoter involving a case that is part of an established compliance project, a courtesy copy of relevant information regarding the promoter should be shared with the TAG group.

7.20.6.1.3  (01-01-2007)
Objectives

  1. The objectives of the TAG program are to:

    • Identify potential abusive tax avoidance transaction, fraud, and terrorism cases that may arise in EO Determinations for prompt consideration by the TAG group and coordination with an appropriate office, and

    • Establish a TAG database that will compile information about TAG issues.

7.20.6.2  (01-01-2007)
TAG Case Characteristics

  1. This subsection discusses the types of cases that should be handled according to the TAG case procedures.

7.20.6.2.1  (01-01-2007)
Abusive Tax Avoidance Transaction Cases

  1. Tax-exempt organizations are exempt from federal income tax under various provisions of the Internal Revenue Code. However, some are directly involved in abusive tax avoidance transactions. In addition, because they are tax-indifferent, tax-exempt organizations are, at times, used by for-profit entities as accommodation parties in these transactions.

  2. The Service has observed an increase in the use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur, for example, when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund, but maintains control over the assets or income, thereby obtaining a tax deduction without transferring a commensurate benefit to charity. A "contribution" of a historic facade easement to a tax-exempt conservation organization is another example where a tax-exempt organization may be used to generate inappropriate contribution deductions. In many cases, local historic preservation laws already prohibit alteration of the home’s facade, making the contributed easement superfluous. Even if the facade could be altered, the deduction claimed for the easement contribution may far exceed the easement’s impact on the value of the property.

7.20.6.2.2  (01-01-2007)
Find ATATs

  1. Abusive tax avoidance transactions are listed at www.irs.gov under Charities & Nonprofits by clicking on the heading "Abusive Transactions. "

7.20.6.2.3  (01-01-2007)
Elevating ATAT Issues

  1. ATAT issues are sent through the TAG group as discussed in the subsection on Elevating TAG Issues. IRM 7.20.6.4.

7.20.6.2.4  (01-01-2007)
EO ATAT Committee

  1. Within EO, an EO ATAT Committee serves as a forum to analyze potential abusive transaction referrals and to make recommendations concerning their disposition. An EO ATAT Program Manager manages the referrals on behalf of the Committee.

7.20.6.2.5  (01-01-2007)
"Cookie Cutter" Applications

  1. Multiple exemption or foundation status filings, sometimes referred to as "cookie cutter" applications, by organizations with similar tax law issues, factual descriptions, or other common features may indicate that such organizations are involved in an abusive tax avoidance transaction. The following characteristics help identify cases involving multiple filings:

    • Same address

    • Same officers/governing body

    • Same contact person

    • Same representative

    • Same financial data (e.g., income, expenses)

    • Same/similar activities

    • Same foundation status information

7.20.6.2.6  (01-01-2007)
Other Characteristics

  1. Fictitious exemption letter (i.e., an exemption letter that was not issued by the Internal Revenue Service) – These letters may be presented through correspondence from contributors or inquiries from the organization itself that does not realize that it does not hold a bona fide exemption.

  2. Misrepresentation (e.g., erroneously representing that an organization is exempt or is qualified to receive tax-deductible contributions) – A misrepresentation may appear on an organization’s web site, in its written solicitations for contributions, or in other material provided during the determination process.

  3. References to news articles or seminars touting the benefits of obtaining tax exemption – This material may appear on an organization’s web site, in its written solicitations for contributions, or in other material provided during the determination process.

  4. An organizational address located at a penal institution.

  5. Unusual activity offering a tax benefit that seems "too good to be true."

7.20.6.2.7  (01-01-2007)
Promoters

  1. Abusive transactions may be marketed through seminars, the internet, direct marketing, or other advertising media by organizers, sellers, or advisors to the organization. These persons are also referred to as promoters.

  2. Promoter cases may be identified through information previously developed or internet research connecting a case to a particular organizer, seller, or advisor who is promoting a potentially abusive scheme. The subject area may also provide a clue that a promoter may be involved. When a TAG issue appears to involve a promoter, the specialist to whom the case is assigned will seek to develop the following information about the promoter:

    • How did the organization learn about the promoter?

    • Has a written prospectus or advertising material been developed? Obtain a copy.

    • What services are provided by the promoter?

    • What fees are paid to the promoter?

    • Has a written agreement been executed between the promoter and the organization? Obtain a copy.

    • What is the promoter’s role relative to the organization?

    • Did the promoter instigate the creation of the organization and the request for tax-exempt status?

7.20.6.2.8  (01-01-2007)
Fraud Cases

  1. Fraud cases involve potential attempts to evade federal tax laws by willfully and intentionally violating a legal duty to voluntarily file returns and pay the correct amount of income, employment, or excise taxes.

  2. The TAG group will seek assistance from the FIU to help EO Determinations create a well documented referral to CI.

  3. If a referral involving an ATAT issue also involves fraud issues, the TAG group should seek advice from both the EO ATAT Program Manager and the FIU.

7.20.6.2.9  (04-28-2009)
Terrorism Cases

  1. A terrorism case involves a situation where an organization has been designated as supporting or engaging in terrorist activities or demonstrates an intention or likelihood to undertake this type of activity.IRM 7.20.6.7.for procedures to be used in such cases.

  2. IRC 501(p) suspends the exemption and prohibits tax-deductible contributions to designated terrorist organizations that are described in IRM 501(p)(2). Designated organizations are also prohibited from applying to the IRS for recognition of exemption. Organizations that have been suspended under IRM 501(p) are listed at www.irs.gov.

  3. The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury administers and enforces an economic sanctions program against persons engaged in or supporting terrorism. Individuals and organizations that are identified by OFAC are listed on an accessible web site at www.treas.gov/offices/eotffc/ofac/index.html.

  4. The TAG group will seek assistance from the EO Rulings and Agreements designated contacts for anti-terrorism.IRM 7.20.6.7.for procedures.

  5. If a referral involving an ATAT issue also involves potential terrorism issues, the TAG group should seek advice from both the EO ATAT Program Manager and the designated EO Rulings and Agreements anti-terrorism contacts.

  6. See IRM 7.20.6.6 for procedures for monitoring terrorist designations under IRC 501(p)(2) and guidelines for preparing announcements of the suspension of the IRC 501(a) tax-exempt status of organizations designated as terrorist organizations or supporters of terrorism.

7.20.6.3  (01-01-2007)
TAG Database

  1. The TAG group maintains a TAG database. The purpose of the TAG database is to list issues identified by the TAG group for the purpose of identifying trends, similarly situated organizations, and similar issues in other cases.

7.20.6.3.1  (01-01-2007)
TAG Categories

  1. The TAG database will contain the following categories:

    1. Issue (key words summarizing reason for potential tax avoidance abusive scheme, fraud, or terrorism)

    2. Abusive transaction, fraud, or terrorism name (name assigned to group of potential tax avoidance abusive scheme cases; if one case, the name may be the name of the organization)

    3. Name of organization(s)

    4. Address(es)

    5. Power of Attorney (POA) name

    6. Promoter name

    7. Injunction against promoter (Yes/No)

    8. Person to contact (organization)

    9. Related organization(s)

    10. Group contact

7.20.6.3.2  (01-01-2007)
TAG Database Update

  1. The TAG group manager will ensure that information is entered onto the TAG database by an authorized person(s) within the TAG group when an issue is accepted by the TAG group as a potential EO ATAT, fraud, or terrorism issue.

  2. Access to the TAG database will be determined by the TAG group manager based on input from the Manager, EO Determinations.

  3. The TAG group will update the TAG database.

  4. The TAG group will also be responsible for issuing a monthly alert via electronic mail to the managers in EO Determinations, EO Determinations Quality Assurance, EO Technical Guidance and Quality Assurance, and EO Technical to advise them about newly listed EO ATAT issues. The purpose of the alert is to provide information to managers for further dissemination, as appropriate. Alerts serve to provide a "heads up" about evolving issues.

7.20.6.4  (01-01-2007)
Elevating TAG Issues

  1. A TAG issue may be found during any stage of processing.

7.20.6.4.1  (01-01-2007)
Referring TAG Issues

  1. When a TAG issue is identified, a TAG referral as described below ( IRM 7.20.6.4.7.) must be completed and sent to the TAG group along with applicable documents.

    Note:

    With the exception of cases identified by EO Determinations Processing or Technical Screening, the TAG case file is retained by the originator of the referral and should continue to be developed to the extent possible, without issuance of a favorable or adverse letter, while waiting for a specific recommendation from the TAG group.

7.20.6.4.2  (01-01-2007)
Determinations Processing Employees

  1. Within EO Determinations, a Determinations Processing employee refers a possible TAG case to the group manager, who in turn determines whether the case will be referred to the TAG group.

7.20.6.4.3  (01-01-2007)
Determinations Technical Screening Specialists

  1. Within EO Determinations, a Determinations Technical Screening Specialist refers a possible TAG case to the group manager, who in turn determines whether the case will be referred to the TAG group. Technical Screening Specialists also complete the TAG Referral Form.

7.20.6.4.4  (01-01-2007)
Determinations Quality Assurance Reviewers

  1. Within EO Determinations Quality Assurance (EODQA), a Determinations Quality Assurance (DQA) reviewer refers a TAG issue to the TAG group. The DQA reviewer provides an informational copy of the referral to the Manager, EODQA, concurrently.

7.20.6.4.5  (01-01-2007)
Determinations Specialists

  1. Within EO Determinations, a Determinations specialist refers a TAG issue to the group manager, who in turn determines whether the issue will be referred to the TAG group. The group manager provides an informational copy of the referral to the group’s area manager concurrently.

7.20.6.4.6  (01-01-2007)
Check Before Referral

  1. Before making a referral to the TAG group, the following items must be checked by the originator:

    • Review the organization’s web site to find information about activities, promoters, or affiliated organizations

    • Review the TAG database for previously identified issues or promoters

7.20.6.4.7  (01-01-2007)
Preparation of a TAG Referral

  1. The referral of a TAG issue will include the following information:

    • Name of case

    • Employer Identification Number (EIN)

    • Name(s) of Power(s) of Attorney, if applicable

    • Name(s) of promoter(s), if applicable (promoters may be found in information provided by the organization or through internet research)

    • Promoter information (information about the promoter would include a description of the promoter’s profession, company affiliations, and other information relevant to the activities of the promoter in assisting the organization to engage in an abusive transaction or fraud)

    • Brief description of relevant facts that raise concerns

    • Indication of whether concern is with an abusive transaction, fraud, terrorism, or a combination of these concerns

    • Copies of key documents that may help identify potential abusive transaction, fraud, or terrorism concerns (Technical Screening and EO Determinations Processing refer the entire case file)

    • Name and function of originator of the referral

    • Name of manager of originator of the referral

  2. IRM 7.20.6.7. for procedures for referring cases involving organizations suspected of involvement in terrorism or at heightened risk of diversion of funds to terrorism.

7.20.6.4.8  (01-01-2007)
Assignment of TAG Referrals to Coordinators

  1. Upon assignment by the TAG group manager, the designated coordinator will evaluate the referral to determine the presence of a TAG issue, how many cases with this issue may be in the system, and whether additional information is needed to support the referral. To accomplish these tasks, the coordinator will:

    1. Perform EP/EO Determination System (EDS) research or have EDS research performed for any organization, power of attorney, or promoter connected with the organization;

    2. Review the EO ATAT database for organizations, issues, power of attorneys, or promoters that are connected with the organization; and

    3. Complete additional internet or other appropriate research.

7.20.6.4.9  (01-01-2007)
Elevating TAG Issues for Informal Coordination

  1. A TAG coordinator may seek informal advice from the Program Manager for the EO ATAT Committee, including the need for coordination with the FIU or the EO Rulings and Agreements anti-terrorism contacts. A coordinator may also seek informal advice from the leader of an established compliance project team concerning the handling of an issue for which the team has responsibility.

7.20.6.4.10  (01-01-2007)
Promoter Information

  1. If a coordinator receives information concerning a promoter, the coordinator shall work with the Program Manager for the EO ATAT Committee to determine if the promoter is already under investigation and determine how to refer information to the appropriate office charged with investigating the promoter.

7.20.6.4.11  (01-01-2007)
What if TAG Referral is Declined?

  1. If a coordinator does not believe that a TAG issue should be referred to the EO ATAT Committee, coordinated with the FIU, or coordinated with an EO Rulings and Agreements contact for anti-terrorism, the coordinator will obtain concurrence from the TAG group manager to return the referral. The TAG issue referral will be returned through the referring employee’s group manager with an explanation as to why the referral was not accepted.

  2. If the group manager disagrees with the coordinator’s determination not to refer or coordinate the TAG issue, the group manager will request reconsideration through the Area Manager.

7.20.6.4.12  (01-01-2007)
Monitor Referrals

  1. A coordinator will monitor assigned TAG issues that have been referred to the EO ATAT Committee or coordinated with the FIU or an EO Rulings and Agreements contact for anti-terrorism at 30-day intervals to inquire about recommendations. If a recommendation is not sent within 45 days of a referral, the initiating coordinator will notify the TAG group manager, who will advise the Manager, EO Determinations.

7.20.6.4.13  (01-01-2007)
Confirming electronic mail

  1. Once the Program Manager of the EO ATAT Committee, the FIU, or the EO Rulings and Agreements contact for anti-terrorism receives a referral or request for assistance, he or she shall send a confirming electronic mail to the initiating coordinator.

7.20.6.4.14  (01-01-2007)
ATAT Referral

  1. If the EO ATAT Committee determines that a TAG issue is an ATAT matter, the Program Manager will inform the initiating TAG coordinator about the status of the referral, including any recommendation.

  2. If the EO ATAT Committee determines that a TAG issue referral is not an ATAT matter, the Program Manager will inform the initiating TAG coordinator that the referral was not accepted for EO ATAT. The Program Manager will also provide any information developed during the EO ATAT Committee consideration that would be helpful in resolving the underlying case.

  3. The TAG coordinator will inform the referring manager that the TAG issue was not accepted as an EO ATAT matter and will provide an explanation as to why the issue was not accepted, together with any information that may be helpful in resolving the underlying case. If the initiating group manager or the TAG group manager disagrees with the decision of the EO ATAT Committee, he or she will inform the EO Determinations manager, who may decide to ask for reconsideration through the Director, Rulings and Agreements.

7.20.6.5  (01-01-2007)
Advisory Role

  1. The TAG group is responsible for advising the manager of EO Determinations of appropriate action that may be needed to address issues that arise during the processing of a TAG issue. For example, the TAG group may recommend training, guidance, form changes, or compliance initiatives.

7.20.6.6  (04-28-2009)
Procedures for Announcement Regarding IRC 501(p) Suspension

  1. EO Guidance is responsible for monitoring terrorist designations and preparing Announcements of IRC 501(p) suspensions. This subsection describes the procedures for such activities. For a detailed discussion of IRC 501(p), see IRM 7.25.45, Suspension of Exempt Status Under IRC 501(p) .

  2. One or more designated staff members of EO Guidance will monitor changes to the OFAC list of SDNs and Blocked Persons and to the State Department Terrorist Exclusion List. OFAC and the State Department each send updates by electronic mail; free subscriptions are available at:

    • http://www.treas.gov/offices/enforcement/ofac/

    • http://www.state.gov/s/ct/list/

  3. The designated staff member checks the names of organizations added to the list against the EO Business Master File to determine whether any of the designations involves an exempt organization. EO Guidance will also coordinate with EO Determinations, Ogden Service Center, EO Examination, and other offices within the IRS if they discover that an exempt organization appears to be listed. See IRM 7.20.6.2.9.

  4. If an apparent match is discovered, EO Guidance will consult with TEGE Counsel and with OFAC or the State Department to verify the match and ascertain that the designation is described in IRC 501(p)(2).

  5. EO Guidance will prepare a draft announcement modeled on prior announcements. The announcement will include --

    1. a discussion of IRC 501(p);

    2. a description of the terrorist designation(s) under IRC 501(p)(2) underlying the suspension;

    3. the name, city and state, and effective date of suspension of each organization whose suspension is being announced;

    4. federal tax filing information; and

    5. contact information.

  6. EO Guidance will coordinate with Tax Forms and Publications and Media Relations on the publication of the announcement.

  7. The announcement will be circulated for ultimate approval by the Deputy TEGE Commissioner and the Division Counsel/Associate Chief Counsel, TEGE. The administrative file will include --

    1. the draft announcement;

    2. pertinent background materials;

    3. a routing sheet;

    4. Forms 12971 and 12972; and

    5. the Request for Advance Release of IRB Item to the News Media.

  8. Pertinent officials in Criminal Investigation and the Treasury Department will be provided advance notice of the announcement.

  9. Upon release to the media, EO Guidance will forward the announcement to the National Association of State Charity Officials for circulation among state officials and will update the EO/BMF by filling out Form 2363-A.

7.20.6.7  (10-22-2010)
Procedures for Cases Involving Organizations Suspected of Involvement in Terrorism or at Heightened Risk of Diversion of Funds to Terrorism

  1. Intentionally left blank.

7.20.6.7.1  (10-22-2010)
Overview

  1. An organization that conducts activities that are illegal such as supporting terrorism, does not qualify for exemption from federal income tax under IRC 501(a).

  2. EO Determinations is responsible for identifying cases early in the determination process where an organization may be involved in supporting terrorism. These procedures provide guidance for dealing with organizations suspected of involvement in terrorism or where there is a heightened risk of a diversion of funds to terrorism.

  3. Determination Specialists must review names referenced in their cases against the names of persons designated as involved with or supporting terrorism in the OFAC list of Specially Designated Nationals (�SDNs�) and Blocked Persons (�OFAC SDN List�). They must also consider whether the facts and circumstances otherwise suggest that the organization or its employees, officers or board members are involved with or at risk of involvement with terrorism or terrorist activities. Cases identified under these procedures must be referred to the TAG Anti-Terrorism Coordinator, who coordinates with EO Rulings & Agreements, Washington, D.C. (R&A DC) and with Criminal Investigation.

7.20.6.7.2  (10-22-2010)
TAG Anti-Terrorism Coordinator

  1. Cases with organizations suspected of involvement in terrorism and cases where there is heightened risk of a diversion funds to terrorism are coordinated through TAG Anti-Terrorism Coordinator.

  2. The Coordinator serves as a liaison between EO Determinations and Criminal Investigations, Lead Development Center (CI-LDC) and EO R&A DC.

  3. Coordinator is also responsible for accessing the OFAC website to secure updated information regarding the OFAC SDN List. The Coordinator will disseminate on a monthly basis, and whenever OFAC changes the OFAC SDN List of those identified with terrorism, the updated information in the form of an EXCEL spreadsheet to EO Determinations employees and other designated persons. The spreadsheet also includes other names and addresses which are the subject of criminal investigations, added at the request of CI. The spreadsheet is posted to a Terrorist List folder in Outlook. The OFAC SDN List is also available online at www.treas.gov/ofac.

7.20.6.7.3  (10-22-2010)
Potential Terrorist Connection Checksheet

  1. Specialists working a case shall initiate a Potential Terrorist Connection Check sheet if any of the following circumstances exist:

    • A name in the case file appears on the OFAC SDN List

    • The organization will engage in foreign grants or activities

    • Other facts & circumstances indicate possible involvement in terrorism

  2. The Specialist and TAG Anti-Terrorism Coordinator shall notate the checksheet as discussed below during processing of the case.

  3. Specialists are required to maintain the checksheet and any other supporting information as workpapers in the non-disclosable portion of the administrative file. The TAG Group maintains a file of completed checksheets for recordkeeping purposes.

  4. Exhibit 7.20.6-2. for a copy of the check sheet.

7.20.6.7.4  (10-22-2010)
Case Processing – OFAC List Name Checking

  1. The OFAC SDN List includes, among others, Specially Designated Terrorists (SDTs), Specially Designated Global Terrorists (SDGTs), and Foreign Terrorist Organizations (FTOs).

  2. For each case handled, all EO Determinations Specialists and Screeners must check the names of organizations and individuals referenced in the case against the EXCEL spreadsheet containing the OFAC SDN List of Terrorists, and the name and addresses added at the request of CI. This includes all case types (A, F, I, P, S). Case Chronology Records (CCRs) must be documented for each case to show that the OFAC review/check was completed and to record the results of the review/check.

  3. A name match may be exact or a near match due to a variant spelling. A match of a surname (ordinarily, last name) is considered a partial match unless the name is a common one. Even an exact match frequently involves a �false positive� match, because many people share the same name. Also, few persons on the OFAC SDN List have a reported residential address in the United States. Therefore, other identifying details may help to confirm identity. Where a match (or near or partial match) of a board member, officer, or employee is identified, the Specialist should request resumes for all board members, officers, and employees including the person with the matching name. If the match is that of a donor, grantee, or other person, the person’s address information should be requested. Social Security numbers should not be requested.

  4. When the requested information is received, the Specialist must complete the Potential Terrorist Connection Check sheet by summarizing the information secured and notating whether or not the individuals or organizations appear to be the same or different from those contained in the Excel spreadsheet. The summary must also include any other relevant information, including the home address of the matched individual(s). The Check sheet must be sent using secure messaging electronic mail to the TAG Anti-Terrorism Coordinator after it has been elevated pursuant to the procedures set forth in IRM 7.20.6.4.2. IRM 7.20.6.4.3. IRM 7.20.6.4.4. IRM 7.20.6.4.5. Refer to Exhibit 7.20.6-2. for a copy of the Check sheet.

  5. Upon receipt, the TAG Anti-Terrorism Coordinator will review the referral and complete additional research, as necessary. Based on the findings, the Coordinator will submit the referral and any additional information secured to either the TAG Group Manager, EO R&A DC, CI-LDC, or return the referral to the specialist. The TAG Anti-Terrorism Coordinator will consult with his or her manager if uncertain.

  6. If the Coordinator or manager determines that the TAG referral should not be pursued, the Coordinator will complete the "Recommended Disposition" section of the Potential Terrorist Connection Check sheet and will return it using secure messaging electronic mail to the Specialist with a copy to the Specialist’s manager. Any information developed during the consideration of the referral will be provided to the Specialist to help resolve the underlying case. If the Specialist and his/her manager disagree with the Coordinator, the manager may elevate the case to the Area Manager.

  7. If the Coordinator or manager determine that referral to CI-LDC is warranted, they will coordinate with CI-LDC to try to confirm identity.

  8. The Coordinator is responsible for monitoring referrals to CI-LDC from EO Determinations. If a response is not received from CI-LDC within 60 days of the referral, the Coordinator will contact CI-LDC. If no response is received within 5 business days from this follow up inquiry, the Coordinator will elevate the issue to the TAG group manager, who will in turn follow up with the CI-LDC manager. The TAG group manager will simultaneously elevate the case to the Manager, EO Determinations.

  9. Based on CI-LDC’s response, the Coordinator will note the recommended disposition on the Potential Terrorist Connection Check sheet and return it using secure messaging electronic mail to the specialist with a copy to the Specialist’s manager

  10. If the name is confirmed by CI as a probable match, then the case shall be transferred to EO R&A DC for processing. If CI is unable to determine whether there is a probable match, the TAG Anti-Terrorism Coordinator may coordinate with EO R&A DC regarding processing.

7.20.6.7.5  (10-22-2010)
Case Processing – Facts and Circumstances

  1. In all applications and requests processed by EO Determination Specialists (whether the case is an exemption application or other type of case, such as foundation reclassification, advance approval of 4945(g) procedures, 4942 set-aside, etc.), the Specialist shall consider whether the facts and circumstances suggest that the organization promotes terrorism or whether there is a heightened risk of a diversion of assets to terrorism.

  2. In cases involving issues discussed below, and in other cases where the facts and circumstances suggest an involvement in terrorism, Specialists shall complete the Potential Terrorist Connection Check sheet and a written summary of their concerns (including relevant names, relevant parts of the application, and the organization’s Web site address) and, after elevating the issue pursuant to the procedures set forth in IRM 7.20.6.4.2. IRM 7.20.6.4.3. IRM 7.20.6.4.4. IRM 7.20.6.4.5., forward them to the TAG Anti-Terrorism Coordinator.

7.20.6.7.5.1  (10-22-2010)
State Sponsors of Terrorism

  1. OFAC regulations prohibit certain dealings in countries designated as state sponsors of terrorism. The Department of State (Office of the Coordinator for Counterterrorism) maintains the official list of state sponsors of terrorism on its Web site (www.state.gov). The designated countries (as of April 2010, Cuba, Iran, Sudan, and Syria) are listed in the Potential Terrorist Connection Check sheet. Exhibit 7.20.6-2. These sanctions may prohibit an organization’s operations in the country, or the making of grants benefiting persons in the country, or dealings with the country’s citizens or residents. The organization may need to apply to OFAC for a license to conduct charitable operations in the country. See www.treas.gov/ofac for more information on these sanctions programs.

  2. If the organization will make grants to (or operate in) a country designated as a state sponsor of terrorism, the Specialist must document that the organization knows about and will comply with OFAC sanctions, including whether it has acquired or will acquire any necessary license.

  3. The Specialist must also complete the Potential Terrorist Connection Check sheet (addressing these points) and, after elevating the issue pursuant to the procedures set forth in IRM 7.20.6.4.2. IRM 7.20.6.4.3. IRM 7.20.6.4.4. IRM 7.20.6.4.5., submit it to the TAG Anti-Terrorism Coordinator.

7.20.6.7.5.2  (10-22-2010)
Foreign Grants or Activities

  1. Cases involving grants or activities in some foreign countries (whether state sponsors or terrorism or not) present a higher risk of terrorism, as terrorist acts are more common where there is war and civil unrest. See Country Reports on Terrorism, published by the Department of State, for a discussion of trends in terrorism or go to http://www.state.gov.s.ct.rls.crt.index.htmthe DOS Country Reports.

  2. Therefore, in processing exemption applications and other requests involving foreign grants or activities where grant making or operational procedures are relevant to the determination (such as advance approval of grant procedures under IRC 4945(g)), the Determination Specialist should inquire into the organization’s grant making and operational practices, including the following:

    • Assessment of the risks of diversion for each area in which the organization operates, especially for grants to high-risk areas

    • Whether the organization will conduct pre-grant background checks of foreign grantees and agents, including checking names against the OFAC List of SDNs and Blocked Persons

    • Whether the organization will enter into written grant agreements that cover how grant funds may be used

    • Whether the organization will require periodic feedback reports from foreign grantees or agents

    • Whether the organization will seek to verify the feedback reports, such as through on-site visits by U.S. personnel or independent persons, or documentation such as photos or receipts

  3. Specialists should also confirm that the organization will exercise discretion and control over funds contributed to it, as required for deductibility under section 170, and will not act as a mere conduit of contributions earmarked for foreign individuals or organizations. Rev. Rul. 63–252, 1963–2 C.B. 101Rev. Rul. 66–79, 1966–1 C.B. 48 Rev. Rul. 76–65, 1975–1 C.B. 79.

  4. If the information received about grant making and operational procedures with regard to foreign grants and activities indicates a heightened risk of a diversion of assets to terrorism, the specialist must complete the Potential Terrorist Connection Check sheet (addressing these points) and, after elevating the issue pursuant to the procedures set forth in IRM 7.20.6.4.2. IRM 7.20.6.4.3. IRM 7.20.6.4.4. IRM 7.20.6.4.5., submit it to the TAG Anti-Terrorism Coordinator.

7.20.6.7.5.3  ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

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

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

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

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

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

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

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

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

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

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

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

7.20.6.7.6  (10-22-2010)
Transfers to EO Rulings & Agreements

  1. The TAG Anti-Terrorism Coordinator shall transfer to EO R&A DC the following types of exemption applications:

    • Acknowledged terrorist activity. Applications in which the applicant organization says that it has conducted or supported terrorist activity (or has such plans).

    • Information regarding terrorist activity. Applications in which the Service has credible information that the applicant organization has conducted or supported terrorist activity (or has such plans).

    • OFAC list match. Applications in which CI has confirmed that the applicant organization, or individuals or organizations associated with the organization (such as officers, directors, trustees, employees, contributors, and grantees) are designated as SDTs, SDGTs, or FTOs in the OFAC List.

7.20.6.7.7  (10-22-2010)
Coordination with EO Rulings & Agreements

  1. The TAG Anti-Terrorism Coordinator shall coordinate with EO R&A DC the following types of cases:

    • Involvement with State Sponsor of Terrorism. Cases in which the applicant organization is associated with a country that is designated as a State Sponsor of Terrorism. The organization is associated with such a country if it is located there; has an officer or director located there; plans to conduct activities there; or plans to send funds or materials there, whether directly or through another organization.

    • Suspicious facts and circumstances. Cases in which the facts and circumstances suggest a risk of terrorism. The TAG Anti-Terrorism Coordinator shall exercise his or her judgment. For instance, conduct of activity in a foreign country does not in itself indicate a sufficient risk of terrorism to warrant coordination with EO R&A DC in all cases.

    • Other types of cases. Cases other than exemption applications with any of the problems described in IRM 7.20.6.7.6. above (such as OFAC List match).

Exhibit 7.20.6-1 
TAG Case Process

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Exhibit 7.20.6-2 
Potential Terrorist Connection Checksheet

EDS Case Number:__________

Case was identified in (select one): ___screening ___full development inventory

1. Specialist—List reason case is referred to TAG Anti-Terrorism Coordinator

(Name of Specialist): _____________________________

___ name appears listed in OFAC List

___ organization acknowledges terrorist involvement

___ evidence of terrorist involvement

___ connections with State Sponsor of Terrorism:

___ Cuba ___ Iran ___ Sudan ___ Syria

___ foreign grants or activities

___other facts & circumstances--list: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

On Form 3198-A, write �Potential Terrorist Connection.� Make two copies of this check sheet. Rubber band one copy to the outside of the file folder. electronic mail the other to the TAG Anti-Terrorism Coordinator.

2. Coordinator—List action taken

(Name of Coordinator): ____________________________

___ screened, returned to Specialist—comments: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

___ coordinated with CI—outcome: (Name of CI Contact): _______________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

___ coordinated with EO R&A DC—outcome: (Name of EO R&A DC Contact:): ___________________________

___ return to Specialist for further development

___ return to Specialist, no further development needed

___ transfer to EO R&A DC for processing

___ other: __________________________________________________________________________________________________________________________________________________________________________________________

3. Recommended Disposition:


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