7.29.3  Exempt Organizations Technical Procedures

7.29.3.1  (07-14-2008)
Introduction

  1. This section provides procedures to be used by Exempt Organizations Technical (EO Technical) for the processing of exemption applications, requests for private letter rulings, requests for technical advice or technical assistance, and correspondence. This section also includes procedures for case review, closing action, and, when applicable, coordination with other offices.

7.29.3.1.1  (07-14-2008)
References

  1. The following references should be used on an as-needed basis when processing cases:

    1. IRM 1.10.1 – The IRS Correspondence Manual

    2. IRM 1.54.1 – TE/GE Division Organization and Management, TE/GE Roles and Responsibilities

    3. IRM 7.1– TE/GE Administrative Procedures and Programs

    4. IRM 7.20– Exempt Organizations Determination Letter Processing

    5. IRM 7.25– Exempt Organizations Determinations Manual

    6. IRM 7.26– Private Foundation Manual

    7. IRM 7.27– Exempt Organizations Tax Manual

    8. IRM 7.28.2– Exempt Organizations Disclosure Procedures, Disclosure of Information About Exempt Organizations to Appropriate State Officials as Described in IRC 6104(c)

    9. IRM 7.28.4– IRC 6110 Public Inspection of Written Determinations (to be issued)

    10. Rev. Proc. 80-27,1980-1 C.B. 677, as modified by Rev. Proc. 96-40, 1996-2 C.B. 301, sets forth procedures under which a group exemption may be obtained

    11. Rev. Proc. 80-28, 1980-1 C.B. 680, provides the manner in which an exemption letter will be issued when a court determines that an organization qualifies for exemption

    12. Rev. Proc. 2008-4, 2008-1 I.R.B. 121 (or its annual update) provides the procedures for the issuance of ruling letters
      Appendix A provides a sample format for a letter ruling request
      Appendix B provides a checklist to be used by taxpayers to insure that essential information and documents are submitted with a ruling request

    13. Rev. Proc. 2008-5, 2008-1 I.R.B. 164 (or its annual update) contains guidelines for furnishing technical advice

    14. Rev. Proc. 2008-8, 2008-1 I.R.B. 233 (or its annual update) provides instructions on user fees

    15. Rev. Proc. 2008-9, 2008-2 I.R.B. 258 (or its annual update) provides procedures for issuing determination letters and rulings on the exempt status of organizations

7.29.3.2  (07-14-2008)
Processing of Cases by Tax Law Specialists (TLS)

  1. Generally, cases are worked in a first in – first out manner, except for approved expedite cases.

  2. Upon receipt of a case, the TLS should quickly review the case file to determine if any of the following situations are present:

    1. If the organization is under examination by the IRS when starting an exemption application or private letter ruling request, the TLS should consult with his/her Group Manager.

    2. If the organization has requested expedited processing of an exemption application or private letter ruling request, the TLS should consult with his/her Group Manager. The TLS will advise the organization in writing about whether the expedite request has been approved or disapproved.

    3. If the case is unique or significant, the TLS should notify his/her Group Manager and prepare a short memorandum for the Group Manager summarizing the relevant information that makes it unique or significant. The Group Manager will decide whether to have a sensitive case report that is initiated by the TLS to advise upper managements because the case:
      i. Is likely to attract media or Congressional attention,
      ii. Presents unique or novel issues,
      iii. Affects large numbers of taxpayers,
      iv. Potentially involves large dollar amounts ($10 million or greater), or
      v. Has another issue that warrants attention. See IRM 1.54.1.4(2).

  3. If the case involves an issue under the jurisdiction of the Office of Chief Counsel, the TLS should:

    1. Draft a memorandum to the appropriate Chief Counsel Office,

    2. Photocopy the relevant portions of the case that need to be sent to Chief Counsel, and

    3. Submit the memorandum with the copied case to review.

  4. Cases under active consideration.

    1. In processing a case, the TLS will:
      i. Develop the facts, issues and legal authorities,
      ii. Solicit any additional information from the organization that is required to resolve the issues,
      iii. Develop a position upon which to make a recommendation to complete the case, and
      iv. Take the next appropriate action to bring the case to a conclusion.

    2. The TLS will document his/her action(s) and time in processing cases on the case history sheet ( Form 9504) and change the status of the case on the appropriate reporting system.

7.29.3.2.1  (07-14-2008)
Development of Cases

  1. (1) The TLS will contact the organization in writing (Development Letter) to obtain any additional information or analysis of the issues or law necessary to complete the case.

  2. In deciding on the need for a Development Letter, the TLS will balance the need for additional factual information or analysis of the issues or law with the burden such request places upon an organization. Accordingly, the TLS will take into consideration the amount of information requested and the number of Development Letters issued. If more than two Development Letters are needed, the TLS must obtain concurrence from his/her Group Manager before issuing a third Development Letter.

  3. The Development Letter should be a written communication for purposes of preserving the administrative record. It is a violation of IRS policy to send e-mails to taxpayers. E-mails to or from taxpayers should not be used to request or to obtain information, even if necessary to process a case. See IRM 1.10.3 – Standards for Using E-mail.

  4. When rapid communication is necessary, a Development Letter may be sent by facsimile transmission (FAX). The organization (or authorized representative) should be advised by telephone that a FAX is being sent. Steps must be taken to protect confidential tax information that is transmitted by FAX. At a minimum, a cover sheet should be used that identifies for whom the letter is intended and how many pages are being faxed. See also IRM 7.29.3.3.

  5. When a case involves an exemption application described in IRC 501(c)(3), a Development Letter must contain the appropriate IRC 7428paragraphs that advise an organization about the consequence with respect to filing a declaratory judgment of not replying. Exemption applications other than IRC 501(c)(3) do not need such paragraphs.

  6. If the TLS believes that the organization is not described in the paragraph of the Code under which it applied, but might qualify under another paragraph, the TLS should confer with the Group Reviewer and, if agreed, the organization should be advised.

    1. If an organization appears to qualify under a paragraph of IRC 501(c) other than the one under which it had applied, it may agree to have its qualification considered under that alternate paragraph. Depending on the situation, the organization may need to submit the appropriate application to the TLS to finish processing the application, or the organization may need to provide a signed statement that it requests to be described in the alternate paragraph, if the appropriate application was correctly filed. In either case, if the original request was subject to declaratory judgment under IRC 7428, the applicant must submit a written statement withdrawing its original request. Generally, a new user fee will not be required since the new exemption application is considered a continuation of the same case.

    2. When the new application or statement is received, the TLS should advise the organization in writing that the original application has been closed and that the new application is being considered.

    3. Before a TLS suggests to an organization that it request recognition of exemption under a paragraph other than the one originally applied for, he/she should have done sufficient research, including a referral to another group if appropriate, to be reasonably sure that the organization does in fact qualify under that alternate paragraph.

    4. The TLS should update the type of application (e.g., 501(c)(3), 501(c)(4), etc.) on the appropriate reporting systems.

  7. The TLS will sign the Development Letter over his/her signature. The case file does not have to be sent to the Group Reviewer for review or signature on the outgoing letter. The TLS will also enter on the file copy (previously called the yellow copy) of the Development Letter his/her surname, organizational symbols, and the date signed. The TLS will retain the file.

  8. The organization should be given twenty-one days to respond to the Development Letter. If the twenty-one days pass without a reply from the organization, the TLS contacts the organization to determine whether the organization intends to respond. The TLS may approve one thirty-day extension, which should be confirmed in writing by the TLS. Any request for an extension of time over the additional thirty days must be submitted by the organization in writing, along with an explanation of the need for the extension, and must be approved by the TLS’s Group Manager. The decision of the Group Manager is final. The TLS will inform the organization in writing of the decision.

  9. If the organization does not respond to the Development Letter within the time provided, the TLS will prepare a Failure To Establish (FTE) Letter as described in IRM 7.29.3.2.2.2.

  10. Replies to Development Letters from the organization must be in writing and added to the administrative file on a case. The TLS should not make any written marks or comments on any part of correspondence between the IRS and the organization. If a TLS wishes to comment on particular information, it should be in the form of a memorandum that can be included in the case file.

  11. In certain circumstances, a TLS may determine, with the concurrence of the Group Reviewer, that a Development Conference with the organization is necessary in order to fully understand facts or issues that could affect the case. Such a conference is at the discretion of the Service, and is not a conference of right of the organization. See section 12 of Rev. Proc. 2008-4(or its annual update) and section 9 of Rev. Proc. 2008-9(or its annual update). The procedures for such conference are the same as in IRM 7.29.3.5.1.

7.29.3.2.2  (07-14-2008)
Case Review Responsibilities

  1. Except for Development Letters and Acknowledgement Letters, a Group Reviewer serves as the initial reviewer for all written communications initiated in the group.

  2. If the Group Reviewer concurs with the proposed ruling letter and the case does not require review outside the Technical Group, the Group Reviewer will sign the letter and arrange for the case to be closed.

  3. If the Group Reviewer concurs with the proposed ruling letter and the case requires review outside the Technical Group, the Group Reviewer will initial the letter and arrange for the case to be forwarded to the appropriate level of review. The following cases will be forwarded to EO Technical Guidance and Quality Assurance for review before closing:

    1. Cases involving relief under IRC 7805(b),

    2. Final Adverse Rulings subject to IRC 7428,

    3. Cases subject to IRC 6110, including letter rulings and technical advice memoranda,,

    4. Cases seeking concurrence of the Office of Chief Counsel,

    5. Assistance requests to other areas of Chief Counsel, and

    6. Other cases agreed upon between the Manager, EO Technical and the Manager, EO Technical Guidance and Quality Assurance

7.29.3.2.2.1  (07-14-2008)
Review Process

  1. The TLS and Group Reviewer are expected to work in a professional and collegial manner to develop a strategy that will resolve the case by reaching a correct technical result in the most efficient manner possible.

  2. A case submitted to review will be returned to a TLS if:

    1. The case file is assembled incorrectly,

    2. Some portion of the letter ruling needs to be revised, or

    3. The reviewer disagrees with the proposed position of the TLS.

  3. The TLS will give priority consideration of the returned file to complete the recommended action.

  4. If the TLS does not agree with the Group Reviewer’s recommendation, the TLS should discuss the proposed changes with the Group Reviewer to clarify the problem. If the issue is not resolved, the Group Reviewer will arrange for a meeting with the Group Manager and the TLS in a timely manner.

  5. The TLS shall prepare the written communication according to the Group Manager's decision. The TLS or Group Reviewer may prepare a dissenting memorandum for the file if there is disagreement with the decision. In addition, the dissenter should circle his/her name on the file copy of the ruling letter.

  6. If the group manager is unable to resolve the conflict, the EO Technical Manager should be consulted.

7.29.3.2.2.2  (07-14-2008)
Failure to Establish (FTE) Procedures

  1. If the organization does not submit additional information requested in a Development Letter in a timely manner, the TLS should contact the organization by telephone. The TLS should determine whether the organization intends to submit the information.

  2. If the organization has filed an exemption application or a ruling letter request and states that it intends to submit the information, see IRM 7.29.3.2.1(9). If the organization states that it does not intend to submit the information, the TLS will prepare an FTE letter where the case is a request for exemption or presents an issue to which IRC 7428applies. If the exemption application is not subject to IRC 7428, or is a private letter ruling request, and the organization states that it does not intend to submit the information, the TLS will prepare a letter informing the organization that the case has been closed since the organization declined to provide information necessary to process the request.

  3. The completed FTE letter, and the case file, should be submitted to the Group Reviewer for processing. The TLS will report the status change on the appropriate reporting systems.

7.29.3.2.3  (07-14-2008)
Withdrawal of Applications

  1. An application for recognition of exemption under IRC 501(c) may be withdrawn upon the written request of a principal officer or authorized representative of the organization at any time in the application process prior to the issuance of a proposed adverse letter. An application cannot be withdrawn after the issuance of a proposed adverse letter. The TLS will prepare a letter that will be issued to the organization, with a copy to the authorized Power of Attorney, to acknowledge that the application has been withdrawn. See section 6.01 of Rev. Proc. 2008-9(or its annual update).

  2. Even though the application is withdrawn, the application and all the supporting documents will be retained by the IRS and will not be returned to the organization.

  3. The organization’s user fee will not be refunded. See Rev. Proc. 2008-8(or its annual update).

  4. Exempt Organization personnel should not solicit a withdrawal of an application.

7.29.3.3  (07-14-2008)
Favorable Letter Rulings

  1. If a TLS recommends issuance of a favorable letter ruling on an exemption application, the TLS will prepare an exemption letter. The TLS will also prepare a supporting File Memorandum that states the relevant facts, cites pertinent legal authorities, and explains his/her rationale for making that recommendation. Before submitting a case for review, the TLS will assemble the case file in accordance with IRM 7.20.2.6.

  2. If a TLS recommends a favorable letter ruling on a request for a private letter ruling or a request for technical advice, the TLS will prepare a proposed favorable letter ruling in draft and submit the draft to the Group Reviewer. The proposed favorable private letter ruling should be in the format as shown in Exhibit 7.29.3-1. If there is relevant information that does not appear in the draft, the TLS should prepare a File Memorandum.

  3. In a situation where EO Technical is providing language for a ruling request being prepared by another office, such as Chief Counsel, the document is treated as Technical Assistance. See IRM 7.29.3.8(9).

  4. When the case file is submitted to the Group Reviewer, the TLS should update the status of the case on the appropriate reporting systems.

  5. When the Group Reviewer returns the draft letter, with recommendations, if any, the TLS will prepare a final favorable letter, incorporating the changes noted by the Group Reviewer. The TLS will process the ruling in accordance with IRC 6110procedures in IRM 7.28.4 (to be issued) and IRM 7.29.3.2.2(3). If the TLS disagrees with the Group Reviewer, see IRM 7.29.3.2.2.1(4), (5) and (6).

  6. An organization that desires to have an advance copy of a letter ruling faxed to the organization or its authorized representative must make such request in writing, either as part of the original ruling request or prior to the approval of the letter ruling. The request must contain the FAX number and the name of the person to whom the faxed copy is to be sent. Generally, requests for an advance faxed copy will be approved only in situations where the organization has requested expeditious handling of the request for ruling, and such request has been approved. If a faxed copy is approved, the TLS must do the following:

    1. Follow Case Closing Procedures ( See IRM 7.29.3.7. ), which includes the mailing of an original ruling.

    2. The cover sheet should not identify the specific organization by name or EIN, and should be faxed in an order in which it will become the first page covering the faxed tax information. In addition, the following caveat should be used on the cover sheet:
      This communication is intended for the sole use of the individual to whom it is addressed and may contain information that is privileged, confidential, and exempt from disclosure under applicable law. If the reader of this communication is not the intended recipient or the employee or agent for delivering the communication to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication may be strictly prohibited. If you have received this communication in error, please notify the sender immediately by telephone, and return the communication at the address above via the United States Postal Service. Thank you.

    3. The FAX cover sheet will be prepared by the TLS, and the actual faxing will be done by the TLS or his/her designee.

7.29.3.4  (07-14-2008)
Proposed Adverse Letter Rulings on Exemption Applications

  1. If a TLS processing a letter ruling relating to an exemption application believes that an organization does not qualify for exemption under IRC 501(c), then a proposed adverse letter ruling should be prepared for review. The letter should state the relevant facts, pertinent legal authorities, and fully explain the rationale for the decision. The TLS should prepare the letter for purposes of IRC 6110as described in IRM 7.28.4 (to be issued) and prepare the letter in accordance with IRC 6104(c)procedures. See IRM 7.28.2.4.1 (to be issued). The TLS will prepare the proposed adverse letter ruling in draft form and submit the draft to the Group Reviewer.

  2. If the Group Reviewer agrees with the adverse position, and returns the draft letter, with recommendations, if any, the TLS will prepare the proposed adverse letter, incorporating the changes noted by the Group Reviewer. The TLS will also prepare the IRC 6110 copies as described in IRM 7.28.4 (to be issued). See IRM 7.29.3.2.2(3). After the letter is issued, see IRM 7.29.3.4.1.

  3. If the TLS disagrees with the recommendations of the Group Reviewer, see IRM 7.29.3.2.2.2.1 (4), (5), and (6)

7.29.3.4.1  (07-14-2008)
Proposed Adverse Private Letter Ruling

  1. If the TLS believes that, based on the information submitted, that a favorable ruling cannot be issued on a proposed transaction, the TLS should prepare a Memorandum for Conference. The memo should explain why an adverse ruling should be issued. The TLS should submit the Memorandum for Conference and the case file to the Group Reviewer.

7.29.3.4.2  (07-14-2008)
No Rule

  1. If the TLS believes a ruling is not appropriate based on the criteria for declining to rule set forth in section 8 of Rev. Proc. 2008-4(or its annual update), the TLS should prepare a "No Rule" letter. The TLS should also prepare a memorandum explaining why it is appropriate to decline to rule.

7.29.3.4.3  (07-14-2008)
Submitted Protests

  1. When a proposed adverse ruling relating to an exemption application is issued, the organization is permitted to protest the conclusions reached in that letter.

  2. The organization has 30 days from the date of the proposed adverse ruling letter to protest the conclusions in that letter.

  3. If a protest is received, the TLS should review it to determine whether the organization has been able to refute the conclusions that it does not qualify for exemption under the section applied for.

  4. If the TLS determines that the information submitted refutes the conclusions in the proposed adverse ruling, and that the organization does qualify for exemption under the section applied for, then the TLS prepares a favorable ruling for review. The favorable ruling letter will state that it supersedes the adverse ruling letter.

  5. If the TLS reviews the protest and determines that the organization has not successfully refuted the conclusions in the proposed adverse ruling, and still does not appear to qualify for tax-exempt status under the section applied for, then the TLS will prepare a Memorandum for Conference in the same manner as described in IRM 7.29.3.4.1 for a letter ruling on a proposed transaction.

7.29.3.5  (07-14-2008)
Case Conferences

  1. Case conferences will be held with the applicant organization when:

    1. A proposed adverse position is being taken on an exemption application, on a ruling request on a proposed transaction, or on technical advice (Conference of Right).

    2. Facts need to be clarified or more information needs to be received from an organization (Development Conference).

    3. A pre-submission conference is granted (see section 12.07 of Rev. Proc. 2008-4, 2008-1 I.R.B. 4 (or its annual update).

  2. Depending on the issues, conferences may be held by EO Technical or by EO Technical Guidance and Quality Assurance.

  3. When preparing for conferences, reviewers need to follow the procedures set forth in section 12 of Rev. Proc. 2008-4(or its annual update).

7.29.3.5.1  (07-14-2008)
Conference of Right

  1. A taxpayer is entitled to only one conference of right. However, at the discretion of the Service, an organization may be allowed an additional conference. See section 12 of Rev. Proc. 2008-4 (or its annual update) and IRM 7.29.3.5.1 (9). The person in charge of this conference is the Conferee, who is either the Group Reviewer in EO Technical or a TLS in EO Technical Guidance and Quality Assurance. The TLS initiating the case is also in attendance. The Conferee may consider requesting that other IRS employees or representatives from the office of Chief Counsel attend to bring their expertise.

  2. The Conferee notifies the organization, or its authorized representative, of the time and place of the conference. The conference may be in person or over the telephone.

  3. The Conferee ensures that the organization’s representatives are authorized to represent the organization.

  4. The Conferee will explain that this is the organization’s conference of right and that if subsequent conferences are needed, they are held at the discretion of the IRS.

  5. The Conferee will explain the tentative position of the IRS on the issues and afford the organization an opportunity to explain its views.

  6. The Conferee will advise the organization that it needs to provide any additional information, reasoning, or precedents that were discussed at the conference but were not previously presented in writing in order to complete the administrative file. This information should be submitted within twenty-one days from the date of the conference. The Conferee will generally not make a commitment regarding the conclusion that the IRS will finally adopt since the organization’s presentation at the conference and any additional information that it may submit would need to be considered. In addition, the conclusion may be made as a result of coordination with others within the Internal Revenue Service or office of Chief Counsel. The Conferee should advise the organization that if no additional information is sent on the matter, the Service will make its decision based on the information in the administrative file.

  7. After the conference, the TLS will prepare a conference report that summarizes relevant information that was discussed at the conference, including any additional information the taxpayer stated that it would submit.

  8. The TLS will issue a post conference letter reminding the organization that it must submit information within twenty-one days from the date of the conference. If requested, the TLS can approve an additional thirty days to submit additional information, which must be confirmed in writing. Additional time beyond the thirty days requested by an organization to submit post-conference information must be made in writing and approved by the TLS’ Group Manager.

  9. A Development Conference is not considered to be the organization’s conference of right. The organization should be advised of this fact. Beyond this fact, the procedures for a Development Conference are the same as IRM 7.29.3.5.1.

7.29.3.6  (07-14-2008)
Post-Conference Submission

  1. If the Conferee concludes, after post-conference information is received and reviewed, that a change in the proposed position is warranted, the Conferee will prepare a memorandum explaining the IRS position and return the case to the TLS for preparation of a favorable letter ruling. If the TLS does not agree with this change, the procedure to be followed is the same as discussed in IRM 7.29.3.2.2.1.

  2. In the case of a private letter ruling that does not relate to an exemption application or to a matter to which IRC 7428applies, if there is no change to the proposed adverse position after the conference and review of the post-conference submission, the Conferee should advise the taxpayer by telephone of the adverse position prior to preparation of the final adverse letter.

  3. In the case of a letter ruling that does relate to an exemption application or to a matter to which IRC 7428 applies, if the Conferee concludes that a change in position is not warranted, then the case will be returned to the TLS for preparation of a final adverse ruling. The Conferee should not advise the taxpayer by telephone or otherwise that a final adverse ruling will be issued. If the adverse ruling is under IRC 501(c)(3) , it is subject to IRC 7428. See IRM 7.29.3.7(4).

7.29.3.7  (07-14-2008)
Closing Procedures for Adverse Rulings

  1. In the case of a ruling that does not relate to an exemption application or a matter to which IRC 7428 applies, if the organization does not modify or withdraw its request for a private letter ruling, after exhausting all the procedures in IRM 7.29.3.6 (2), the TLS will prepare a final adverse letter. The letter should state the relevant facts, pertinent legal authorities, and fully explain the rationale for the decision. The TLS should prepare the letter for purposes of IRC 6110 as described in IRM 7.28.4 (to be issued). The TLS will prepare the letter in draft form and submit the draft to the Group Reviewer. See IRM 7.29.3.2.2(3).

  2. In the case of a ruling that relates to an exemption application or a matter to which IRC 7428 applies, after exhausting all the procedures in IRM 7.29.3.6 (3), the TLS will prepare a final adverse letter. The letter should state the relevant facts, pertinent legal authorities, and fully explain the rationale for the decision. The TLS should prepare the letter for purposes of IRC 6110 as described in IRM 7.28.4 (to be issued). The TLS will prepare the letter in draft form and submit the draft to the Group Reviewer.

  3. When the Group Reviewer returns the draft letter, with recommendations, if any, the TLS will prepare the final adverse letter. The TLS will also prepare the IRC 6110 copies as described in IRM 7.28.4 (to be issued). See IRM 7.29.3.2.2(3).

  4. If the TLS disagrees with the Group Reviewer’s recommendations, follow the same procedures in IRM 7.29.3.2.2.1 (4), (5), and (6).

  5. In the case of a final adverse letter relating to an exemption application under IRC 501(c)(3), it is subject to section 7428 of the Code and EO must receive concurrence on the final adverse from the office of Chief Counsel. The TLS will prepare the final adverse letter and a Transmittal Memorandum, and submit the memo, the letter, and the file to the Group Reviewer. See IRM 7.29.3.2.2(3).

7.29.3.8  (07-14-2008)
Technical Advice and Technical Assistance Cases

  1. Technical Advice involves a formal request from a field component of Exempt Organizations or from an Appeals Office for guidance regarding the application or interpretation of the internal revenue laws, related statutes, and regulations to a specific set of facts regarding a particular organization. The advice is furnished to help Internal Revenue Service personnel close cases and maintain consistent holdings.

  2. With respect to Technical Advice, the TLS makes an analysis of the case based on the facts presented. If the TLS develops other information that will be used in the Technical Advice, such as from the organization, it must be shared for comment with the office that requested the Technical Advice. Similarly, if the TLS develops other information from sources other than the office that requested the Technical Advice or the taxpayer that will be used in the Technical Advice, it must be shared for comment with both the office that requested the Technical Advice and the taxpayer.

    Note:

    If significant factual information is needed to address the issues presented by the Technical Advice, or if the taxpayer was not afforded its procedural rights as provided by Rev. Proc. 2008-5(or its annual update), the TLS and Group Reviewer should consult with the TLS’ Group Manager to consider whether to return the Technical Advice request by a memorandum that points out these matters. Generally, the Group Manager will contact the requesting office to explain the concerns before returning the Technical Advice request without having addressed the issues.

    Note:

    If resolution of the issues requested by Technical Advice can be better resolved by the requesting office than through the issuance of Technical Advice, the TLS’ Group Manager will contact the requesting office to explain the concerns with issuing Technical Advice so that a decision can be made by both offices concerning whether to return the Technical Advice request to the requesting office without having issued Technical Advice.

  3. If the TLS determines that Technical Advice will be favorable to the taxpayer’s position, the TLS will prepare Technical Advice in draft and submit it to the Group Reviewer with the case file. Relevant information that does not appear in the draft Technical Advice should be provided by the TLS in a File Memorandum.

  4. The reply to a request for Technical Advice is prepared in two parts – a Transmittal Memorandum and a Technical Advice Memorandum. See Exhibit 7.29.3-2 for a format of a Transmittal Memorandum, and Exhibit 7.29.3-3 for a format of a Technical Advice Memorandum.

    1. The Technical Advice Memorandum provides the facts in the case, the question(s) asked, the applicable law, an analysis of the law to the facts, and the conclusion of the Service. A copy of the Technical Advice is usually given to the organization by the office that requested the advice.

    2. The Transmittal Memorandum is a cover sheet designed to transmit the Technical Advice Memorandum back to the office that requested the advice. It may also contain information about the organization that is not disclosed to the organization.

  5. If the Group Reviewer agrees with the proposed position of the TLS, the case file and the draft Technical Advice, with clarifications if necessary, will be returned to the TLS for the preparation of the final ruling. The completed Technical Advice is submitted to the Group Reviewer for processing. See IRM 7.29.3.2.2(3).

  6. If the Group Reviewer does not agree with the proposed position of the TLS, the Group Reviewer will discuss the matter informally with the TLS. The procedures in IRM 7.29.3.2.2.1 should be followed to resolve the matter. See also section 16 of Rev. Proc. 2008-5(or its annual update).

  7. If the Group Reviewer and the TLS agree on a position that is adverse to the organization, the TLS will prepare a Memorandum for Conference. This will be the organization’s Conference of Right and the procedures in IRM 7.29.3.5.1 and 7.29.3.6 should be followed.

  8. If the case involves a question of retroactive relief of the effect of a ruling (i.e., such as a revocation of an organization’s exempt status effective in the past), a separate memorandum must be prepared. See Exhibit 7.29.3-4 for a format of a memorandum requesting the application of relief under IRC 7805(b). IRC 7805(b) provides that the Commissioner or the Commissioner’s delegate has the sole discretion to prescribe the effect, if any, to which a ruling will be applied without retroactive relief. See section 19 of Rev. Proc. 2008-5(or its annual update). See IRM 7.29.3.2.2(3).

  9. When the case file is submitted to the Group Reviewer, the TLS should update the status of the case on the appropriate reporting systems

  10. Technical assistance is provided in response to requests from Chief Counsel for assistance with a private letter ruling that comes within the jurisdiction of Exempt Organizations. Technical assistance is also provided in response to requests for assistance from EO Examinations or EO Determinations with respect to clarification and guidance on technical or procedural issues that do not involve a specific organization. If a specific organization is the subject of a request for a technical assistance request from EO Examination or EO Determinations, technical advice procedures set forth in Rev. Proc. 2008-5 (or its annual update) should be utilized. See IRM 7.1.2.3and IRM 4.75.33.3.3, which discuss requests for technical assistance submitted by EO field offices. See IRM 7.29.3.2.2(3).

7.29.3.8.1  (07-14-2008)
Time Frames for Processing Technical Advice Cases

  1. Reserved.

7.29.3.9  (07-14-2008)
Issuing Rulings Pursuant to Court Decisions

  1. If a court overturns an IRS ruling (i.e., exemption determination or determination to which IRC 7428applies) that was unfavorable to an organization, the organization will be issued a favorable ruling under the guidelines set out in Rev. Proc. 80-28. In preparing the letter, the TLS should follow IRM 7.29.3.3, subject to the following modifications.

  2. Upon completion of the suit, Chief Counsel will obtain the documents necessary to complete the file. These documents and a copy of the judgment will be submitted to EO Technical with a request that a favorable letter be issued.

  3. The TLS assigned to the case will prepare a standard letter ruling consistent with the type of ruling and Code section under which the organization is exempt. The first paragraph, however, will cite the court decision which recognized exemption, using the correct pattern paragraph. If the issue litigated was only with respect to the organization’s foundation classification, the first paragraph should contain the pattern paragraph relating specifically to foundation status.

  4. The TLS will submit the ruling letter in accordance with the case closing Procedures in IRM 7.29.3.7.

7.29.3.10  (07-14-2008)
Correspondence

  1. Correspondence includes both Information Letters described in Section 3.04 of Rev. Proc. 2008-4(or its annual update) that consists of written responses to requests for information about exempt organization matters submitted by taxpayers, and congressional correspondence that consists of referrals from the Treasury Executive, Secretariat, and Legislative Affairs, and Routine Congressional Correspondence.

  2. Information Letters call attention to a well-established interpretation or principle of tax law without applying it to a specific set of facts. Information letters are generally prepared by a TLS, reviewed by a Group Reviewer, and prepared for the signature of the TLS’ Group Manager. See IRM 1.10.1– IRS Correspondence Manual for information about preparing and handling correspondence.

    Note:

    Correspondence received through E-mail should be controlled on the appropriate system and answered in the same manner as any correspondence.

  3. Congressional Correspondence is generally coordinated with the office of Director, Legislative Affairs. Congressional Correspondence is generally prepared by a TLS, reviewed by a Group Reviewer and the Manager, EO Technical Guidance and Quality Assurance, and prepared for the signature of the Director, EO Rulings and Agreements. See IRM 11.5.3– Guide to Congressional Correspondence.

    Note:

    i-trak is a correspondence web based tracking system. If correspondence is controlled on i-trak, the TLS must ensure that the correspondence is closed on i-trak.

Exhibit 7.29.3-1  (07-14-2008)
Format for Private Letter Ruling

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Exhibit 7.29.3-2  (07-14-2008)
Format for Transmittal Memorandum

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Exhibit 7.29.3-3  (07-14-2008)
Format for Technical Advice Memorandum

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Exhibit 7.29.3-4  (07-14-2008)
Format for IRC 7805(b) Application for Relief Memorandum

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