Promote the highest degree of voluntary compliance with the tax laws on plan qualification.

Determine qualified plans’ extent of compliance and the causes of noncompliance with the tax laws.

Determine whether such plans meet the applicable qualification requirements in operation.

Given broad authority to consider and weigh conflicting information, data, and opinions.

To use professional judgement according to exam standards to make findings of fact and apply the IRS’s position on issues of law to determine the correct tax liability.

To exercise this authority to obtain the greatest number of tax determination agreements without sacrificing the quality or integrity of those determinations and to dispose of tax differences at the lowest level.

Mandatory Review, see IRM 4.71.14, Employee Plans Examination of Returns, EP Mandatory Review.

Special Review, see IRM 4.70.7, Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures.

Investing as a limited partner in a partnership carrying on an unrelated trade or business

Purchasing securities on margin

Investing in a partnership set up to invest in securities

When an S Corporation maintains an ESOP and the ESOP fails IRC 409(p), Schedule K-1 income flowing to the ESOP is UBI

Use "Soft Contact Procedures" when communicating with affected taxpayers. Soft Contact Procedures include being considerate and sensitive to personal circumstances such as stress and fatigue even if the taxpayer didn’t experience any personal, monetary, or physical damage from the declared disaster.

If an initial contact letter was sent to the taxpayer prior to the postponement period, send Letter 6017 to notify the taxpayer that you’re suspending the examination and postponing any scheduled appointment until after the end of the postponement period. You don’t have to return documents you received from the taxpayer. Offer the taxpayer an opportunity to continue with the examination. If the taxpayer chooses to continue with examination activity, document the substance of your conversation or the taxpayer’s correspondence in the CCR and contact the FAST Unit (*TEGE FAST) to replace the –O freeze should with a –S freeze.

If you have all the necessary information to work the case and you don’t need to contact the taxpayer, continue working the case (in status 12). If the result is favorable to taxpayer, even if the case contains a written advisory (with or without Form 5666), close the case as you normally would.

If you have an appointment scheduled, you must cancel the appointment with the taxpayer/POA, subject to the provisions in (f) and (g) below.

If you have an IDR outstanding, you must postpone the due date to the end of the postponement period, subject to the provisions in subparagraphs (f) and (g) below.

If you don’t have all the necessary information to work the case and you previously spoke with the taxpayer, call the taxpayer/POA to inform them that examination activity will be suspended unless they choose to continue with the exam. Discuss the contents of Letter 6017 and document your CCR of the material discussed.

If you don’t have all the necessary information and you can’t reach the taxpayer by phone, or you never spoke with the taxpayer before, send the taxpayer/POA Letter 6017, Taxpayer Contact After Disaster – TE/GE.

If the taxpayer opts out of the postponement period after receiving Letter 6017, you must document the taxpayer’s oral or written request to bypass the postponement period and continue with the examination before taking action. Document the substance of the conversation and/or the taxpayer’s correspondence in the CCR. For cases with a –O freeze in effect that can’t be worked, contact the FAST Unit (*TEGE FAST) to replace the –O freeze with a –S freeze.

If you are unable to continue work on the case, place the case in status 21 suspense, cease all activity until the first business day after the close of the postponement period and document the CCR.

If you’re working on a closing agreement and the taxpayer has signed the agreement and made the payment, post the payment, make the assessment to balance the module, and close the case.

If a summons was issued prior to the postponement period and the period for the taxpayer to quash expired before the beginning of the postponement period, you may proceed with summons enforcement if the bank or third party record-keeper does not reply. Consult Division Counsel about enforcement of the summons. No other summons may be issued or enforced during the postponement period.

If a 30-Day Letter is pending, notify the taxpayer that the response date may be extended until the last day of the postponement period.

If a taxpayer provided a valid protest to Appeals before the postponement period, contact the taxpayer to confirm that the taxpayer is still prepared to continue with Appeals. If yes, update the CCR and contact the FAST Unit (*TEGE FAST) to change the –O freeze to a –S freeze. Forward the case to the Closing Unit.

Any correspondence (such as IDRs used to cancel an appointment, postpone an IDR deadline or to request additional information when the taxpayer opts out of the postponement period) to the taxpayer/POA sent during the postponement period must included Notice 1155, Disaster Relief from the IRS.

An organization involved in real estate construction and development invests some of its retirement plan trust assets in land adjacent or near its own development projects. After the subdivision and improvement of the land, it’s sold with the belief that any gains will not be subject to taxation. If these sales are carried on in a regular and continuous manner, the trust could be in the real estate business and therefore subject to UBI taxation under IRC 511.

Rental of personal property (other than personal property leased with real property) is another example of UBI. The leasing of automobiles, office machines, computers, signs and vending machines are some examples of personal property that would constitute UBI.

The trust could invest in real estate and use the land for farming, but income from the farmed land would be considered UBI. Such income is often part of the "other income" as shown on the 5500 return.

Dividends, interest and annuities. All dividends, interest and annuities from regularly carried on trade or business and all deductions connected are not unrelated business income.

Royalties. An example of an exempt royalty would be if a trust owns real estate and another person drills for oil on the site. The other person incurs all of the costs for the drilling and excavation and pays a royalty to the trust. Such royalties would not be UBI to the trust. However, if the trust had paid 50% of the development cost for a 50% ownership in the regularly carried on trade or business, the income would be deemed UBI to the trust.

Gains or losses from the sale of property. Gains and losses from the sale, exchange, or disposition of property are generally not unrelated business income to the trust. This exception does not apply to stock in trade or other property of a kind which would be includible in inventory if on hand at the close of the taxable year, or property held primarily for sale to customers in the ordinary course of the trade or business.

Rents. Income derived from the rental of real property, as part of a regularly carried on trade or business, is excluded from UBI to the trust. Rental income from personal property is subject to UBI. When both real and personal property are rented there are specific rules that apply. See 26 CFR 1.512(b)-1(c).

Net operating losses. The net operating loss deduction provided in IRC 172 is allowed as a deduction when calculating unrelated business taxable income.

For example, assume the trust is a partner in a partnership that specializes in REITs. The partnership's business is to research and then buy shares of REITs. Therefore, the income to the trust derived from the investment in the partnership is deemed to be income from an investment in a REIT. As noted below, a trust’s investment income from a REIT is not considered to be UBI. In this example, any income the trust receives from the partnership would not be UBI.

A taxpayer may argue that an investment in a limited partnership is a passive investment and that any income would not be UBI since the trust has no active involvement in the management of the partnership. Rev. Rul. 79-222 explains that an investment by a trust in a limited partnership carrying on an unrelated trade or business will result in UBI.

Additional information on partnership investments can be found in Rev. Rul. 74-197 and 26 CFR 1.512(c)-1.

Debt-financed income that has already been taxed as a regularly carried on unrelated trade or business is not UBI. This is to prevent double taxation to the trust.

Debt-financed income related to the use of an Exempt Loan made to an ESOP is not UBI. Per IRC 514(b)(1)(A)(i), any income derived from property which is substantially related to the purpose of the trust’s exemption would not be debt-financed income. Rev. Rul. 79-122 clarifies the exclusion of ESOP plans from being subject to debt-financed income.

Acquisition indebtedness incurred by a qualified plan in acquiring or improving any real property is not UBI, provided that all of the conditions of IRC 514(c)(9) are satisfied. Refer to the conditions contained in IRC 514(c)(9) to see if this exemption applies.

The indebtedness incurred by the trust in acquiring or improving property;

The indebtedness incurred before the acquisition or improvement of property if such indebtedness would not have been incurred but for such acquisition or improvement; and

The indebtedness incurred after the acquisition or improvement of property if such indebtedness would not have been incurred but for such acquisition or improvement and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition or improvement.

Ensure that the EIN listed on the return is a valid EIN for the trust. Obtain an INOLES print to make sure the EIN is for the trust and that the trust entity is present on AIMS.

Ensure that the trust year matches the plan year.

Ensure that the correct amount of tax is reported on the return.

Ensure that the taxpayer signed the return.

Ensure that the correct tax year is listed.

Make sure the check is made out to the "United States Treasury" . If the payee line is blank or the check is made out to "IRS," overstamp the check with the "United States Treasury" stamp.

The check information (date of check, the check number, amount, payer, IRS recipient name and date received) must be entered into the logbook required to be maintained by the group.

After preparation of Form 3244-A and Form 3210, a group manager must review the Form 3210, compare it to the Form 3244-A and sign the Form 3210. The person who prepares the Form 3244-A cannot be the same person who signs the Form 3210.

Include, both your telephone number and your e-fax number on the "Originator Telephone Number" line at the bottom of Form 3210.

Send the check along with the Form 990-T package via express mail (next day) to the Ogden Submission Processing Campus by the end of the next business day after receipt.

If the check cannot be mailed to Ogden the same day it’s received, secure it in a locked file overnight.

Place the check along with the completed Form 3244-A in a separate addressed envelope inside the express mail envelope.

If the acknowledgement copy of Form 3210 is not received back from the Ogden Service Campus within 10 days after mailing, contact the Service Campus to follow-up receipt of the check. Document these actions in the group logbook.

Form 3210.

Any payments received (e.g., check) with Form 3244-A (placed in a separate addressed envelope per IRM 4.71.10.4.3 (4) f) above). See IRM 4.71.10 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3244-A.

Form 13133, Expedite Processing Cycle. See IRM 4.71.10 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 13133.

Form 3198-A, TE/GE Special Handling Notice. See IRM 4.71.10 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3198-A.

Original Form 990-T.

UPS tracking number

Dollar amount of the remittance

The city/state the package is being shipped from

Locate the designated remittance liaison on the Submission Processing Field Office Payment Processing page website athttp://win.web.irs.gov/SP/Programs_Information/Standard_Proce_Webpages/Field_Office_Pymt_Proc.htm to obtain the Ogden Campus liaison's email address provided in the "Phone" column.

Call, email, or e-fax the liaison that you will be sending a single remittance of $1 million or more and provide the tracking number for the overnight package containing the remittance. See IRM 5.1.2.6.1.1, Remittance Over $1M.

The recipient name should be "Mail Supervisor" with the recipient phone number of (801) 620-3750. This is the case whether or not payment is remitted.

The address listed on Form 9814 should match the address on Form 3210. Make sure the proper mail stop is used.

Form 990-T is secured from the taxpayer reflecting the correct amount of tax, or

A signed Form 870-EP is secured reflecting an agreed upon change to the tax previously reflected on a filed Form 990-T return, or

The agent determines that no additional tax is due on a previously filed Form 990-T return that he or she examined.

Prepare Letter 2085-A when the examination results in no change to the tax reported on a filed Form 990-T. See IRM 4.71.10 Exhibit 7 at IRM 4.71 - Employee Plans Examination Exhibits for an example.

Prepare Letter 2087-A when a signed Form 870-EP is secured reflecting agreed upon change to the tax previously reflected on a filed Form 990-T return.

All Form 990-T closing letters will be mailed out by the exam group.

Save a copy of the closing letter in the RCCMS Office Documents folder. If the group has a scanner, scan the signed and dated closing letter into RCCMS.

P7-18: Enter the EIN.

P21-22: The MFT is 34.

P24-29: Enter the tax period.

P31-34: Enter the name control.

C: Enter the name of the taxpayer.

Item 12 – Tax Liability Adjustment: Enter a transaction code of 300 and $0 if no additional tax is being assessed above what is reflected on the return secured by the agent. If additional tax is being assessed above what was reported on a previously filed Form 990-T by utilization of Form 870-EP, enter a transaction code of 300 and the additional amount of tax being assessed.

Item 12 – Penalties (+): If Form 870-EP is signed by the taxpayer and the agent wants IRC 6651(a) penalties to be assessed, enter transaction code 160 and the amount of penalties that are being assessed. If a delinquent return is secured and the agent wants penalties to be assessed, penalties will be assessed by Ogden Service Campus when the delinquent return is processed, so no penalties should be listed on Form 5599 for a secured delinquent return.

Item 12 – Penalties (-): If IRC 6651(a) penalties on a secured return are assessed by mistake by the Service Campus, they can be abated on Form 5599 by entering, on this line, transaction code 161 and 271 (as applicable) and the dollar amount penalties are to be decreased and by entering transaction code 300 and $0 on the Tax Liability Adjustment line (item 12 - Tax Liability Adjustment).

Item 13: Enter the applicable disposal code as follows:

Item 14: If the statute of limitations has been extended, enter the statute expiration date.

Item 15: This item will be left blank if the dollar amount in item 12 is $0. If line 12 contains a dollar amount (i.e., additional tax is being assessed on a previously filed return), then reference number 886 should be listed here with the additional amount of tax being assessed (additional tax being assessed is listed in both items 12 and 15). If accuracy related penalties are being assessed, list reference number 680 and the penalty amount.

Item 28: Enter the agent’s time on the case.

Item 30: Enter the technique code: 4 – Field exam; 2 – OCEP.

Item 31: Enter the agent’s grade.

Item 32: Enter the grade of the case in the blocks from left to right as two digits (i.e., Grade 9= 09).

Item 33: Enter the agent’s last name; leave a space and then first initial.

Item 37: Enter the delinquent return code. If there is only one delinquent return, enter a "T" . If there is more than one delinquent return, enter a "T" in the latest year and an "R" in all prior years.

Item 40: Enter the project code if there is one. If not enter 0000.

Item 42: Enter the ARDI Code, if applicable.

Item 50: Enter the agent’s group code.

Item 414: For delinquent returns, enter the amount of tax assessed for the year.

Filing an amended Form 990-T. Write "Amended Return Secured by TEGE Employee Plans" at the top of the return.

Filing Form 870-EP (See IRM 4.71.10 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example).

Keep the original Form 870-EP in the case file.

Do not send a copy to the Service Campus.

Tax is assessed by Support Processing when the case is closed from Form 5599 when the additional tax is listed in item 12 (Tax Liability Adjustment) with a code of 300. Additional penalties should be listed in item 12 (Penalties) with a code of 160.

If payment is received, prepare Form 3244-A in accordance with IRM 4.71.10 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits. Send Form 3244-A, along with the check and Form 3210 to the applicable address listed in paragraphs (8), (9), or (10) of IRM 4.71.10.4.3, Processing Forms 990-T Received from the Taxpayer.

Otherwise, process the case per IRM 4.71.10.4.3, Processing Forms 990-T Received from the Taxpayer.

Letter 2005-A (See IRM 4.71.14 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits)

Pub 1

Pub 594

Pub 1020

Form 870-EP

RAR

Return Envelope

Complete the applicable lines in the "Required Entries" section of the form.

Select the SFR entry in the "Special Features" section of the form.

Include the following notation in the Special Instructions section of Form 3198-A: "Substitute for Return; Please process immediately."

Review the protest letter received from the taxpayer or POA to insure that it’s a valid protest and notify the group manager (or designee) that a protest was received.

All cases moving to Appeals require a minimum of 12 months remaining on the statute of limitations.

Update the RAR to address the protest and send a copy to the taxpayer and POA, if applicable.

Complete the Appeals routing slip (Form 1725) for the case to go to the Appeals Office in Boston, MA (Office Code 121). See IRM 4.71.14 Exhibit 11 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 1725 for a case going to Appeals.

If the return is a SFR Form 990-T and IRC 6651 penalties are being asserted, complete Form 13496 in accordance with IRM 4.71.10.5.3 (3). Attach Form 13496 to the back of the SFR. See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496.

Complete Form 3198-A selecting the box, "Forward to Appeals" .

Save all of the prepared forms and letters in the RCCMS Office Documents folder using the RCCMS Naming Convention, see IRM 4.71.1 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits.

Assemble the case file in accordance with IRM 4.71.12, Case File Assembly Guidelines.

The SFR package includes Form 13496, the SFR (Form 990-T sent to the Service Campus) and the RAR (Form 886-A).

Form 13496 must be completed with a live signature and be dated on or after the date the 30-Day Letter is signed and dated and before the 90-Day Letter is signed and dated.

The completed Form 13496 must identify the taxpayer by name and contain the taxpayer identification number, purport to be a valid IRC 6020(b) return, and must be signed and dated.

Form 13496 requires the number of pages in the SFR package be noted. List the total number of pages in the SFR package.

Whenever the agent revises a report of proposed adjustments that increases the total tax liability of the taxpayer, a recertification is required on another Form 13496 signed and dated on (or after) the date of the revised report.

When the report of proposed adjustments involves more than one tax year, a separate Form 13496 must be prepared for each year.

The disposal code in item 13 should be 07 (601 in RCCMS), Appealed—Protest to Appeals.

Do not make an entry on item 12 of Form 5599.

Enter Appeals Office Code 121 in RCCMS and on item 16 of Form 5599.

Enter the tax and failure to file penalties in item 18 of Form 5599 and on the "Unagreed Amount" line in tab 3 in the Closing Records tab in RCCMS.

Dated 30-Day Letter to the taxpayer with all attachments

Taxpayer’s valid protest letter with all attachments (scanned)

RAR revised to address Taxpayer’s Protest including rebuttal to Taxpayer’s Position with individually-designed letter used to send the RAR with rebuttal to the Taxpayer (and POA, if applicable)

Completed Form 1725

Completed Form 5599, (as applicable)

Copy of the return

Dated 30-Day Letter to the taxpayer with all attachments

Taxpayer’s valid protest letter with all attachments (scanned)

RAR revised to address Taxpayer’s Protest including rebuttal to Taxpayer’s Position with individually-designed letter used to send the RAR with rebuttal to the Taxpayer (and POA, if applicable)

Completed Form 1725

Completed Form 5599

Copy of the return

The taxpayer fails to timely file a valid Protest to Appeals.

The Form 990-T is related to a plan that is being disqualified, the Form 990-T should be closed to Mandatory Review to issue the 30-Day Letter.

If the statute of limitations on the Form 990-T will expire within six months and the taxpayer refuses to extend the statute of limitations, the case should be closed to Mandatory Review to issue a 90-Day Letter.

Leave the disposal code blank on Form 5599, but use disposal code 601 on RCCMS.

Do not make an entry on item 12 of Form 5599.

Enter the tax and failure to file penalties in item 18 of Form 5599 and on the "Unagreed Amount" line in tab 3 in the Closing Records tab in RCCMS.