4.75.10  Exempt Organization Pre-Audit Procedures (Cont. 1) 
Initial Analysis 
Requesting Assistance from Specialists  (08-12-2014)
SB/SE Excise Tax Assistance

  1. Prepare a referral requesting SB/SE Excise Tax assistance using the Specialist Referral System (SRS) for:

    • All Team Examination Program (TEP) audits

    • Any General Program (GP) audits of hospital or college/university cases

  2. SRS referrals are mandatory for these cases.

  3. Referrals are not required for limited scope audits of TEP taxpayers conducted by one agent. Referrals for all other general program cases are optional.

  4. If SB/SE Excise Tax accepts the referral, the excise tax agent will be part of the EO audit team. If SB/SE Excise Tax rejects the referral, the EO agent may request assistance, after consultation with his/her manager, by contacting the Manager, Compliance Strategies and Critical Initiatives (CSCI).

  5. EO agents will be notified of the acceptance or rejection of the referral within 30 days. For TEP cases, the excise tax will be part of the planning process.  (08-12-2014)
Collateral Examinations

  1. For information on requesting a collateral examination, refer to IRM  (08-12-2014)
Initial Form 4564, Information Document Request (IDR)

  1. Prior to making the initial contact with the organization, prepare an initial IDR (Form 4564). Modify the request during the phone conversation with the organization's contact person (or representative).

  2. The Form 4564 is used to identify the requested items for inspection. The requests are to be specific to items that are pertinent to the audit, and limited to only information that is necessary to complete the audit.

  3. The IDR must be tailored to the specific organization. "Shotgun" requests are not to be used. A shotgun request is one based on a pre-set template that asks for every possible record, regardless of whether it is pertinent to the audit.

  4. When preparing the request, include explanations as to why items are being requested. This helps to decrease customer dissatisfaction with the audit process.

  5. Use the phone call as an opportunity to understand the contact person's (or representative's) tax knowledge and business operations. By developing a rapport with the organization, this knowledge can be used to further tailor the request to ask for specific documents as identified and described by the organization.


    When mentioning the phrase adjusted trial balance or transaction journal, and the contact person asks questions as to what those documents are, ascertain the type of accounting system and records generated by the organization. If the organization only has a check register, kept in a check book, modify the request to match.

  6. If the documents are available internally, such as copies of the Forms 941, 940, and other tax returns, only request them if necessary. Such information should only be requested if it contains information not readily available on an IDRS printout.

  7. Depending on the size of the organization and whether the records are available electronically, request that the organization mail certain documents to the agent in advance. These documents can include financial statements (balance sheet and income statement), accountant’s workpapers, chart of accounts and the general ledger. Specify that the organization may make these available to the agent via electronic means (CD, thumb drive, flash drive) if too voluminous. Request the organization mail these documents 10-14 days in advance of the initial appointment.


    This should only be done if the agent plans to review the material prior to the appointment date.

  8. The contact person may prefer to email these documents. Make sure it is made clear that email is not a secure method of communication but the Service accepts information provided by this means.


    Service employees may not send confidential tax information to anyone outside of the IRS via email.

  9. See Exhibit 4.75.10-3 for a sample IDR.  (08-12-2014)

  1. The initial IDR must identify the books, records, papers, or other data with the particular activity and time period to which they relate. Phrase the request in terms understandable to the taxpayer.

  2. In addition to physical documents, written answers to questions and/or the completion of questionnaires can be requested.

  3. Suggestions for documents to consider requesting:

    • Organizational documents (articles of incorporation, bylaws, etc.) including amendments

    • Minutes of meetings for the board and committees (executive, finance, audit, governance, nominating, etc.)

    • Correspondence (letters to and from the organization)

    • Accountant's workpapers (tax reconciliation, audit, representation letter)

    • Internally generated accounting records (chart of accounts, trial balance, statement of cash flows, income statement, balance sheet statement, general ledger, subsidiary ledgers, transaction journals)

    • Third party generated records (bank statements, brokerage statements, invoices, receipts)

    • Financial contracts (employment contracts, mortgages, leases, notes payable, notes receivable, pledge agreements, other contracts)

    • Publications (newsletters, pamphlets, brochures, maps, flyers, calendars, directories, program guides, etc.)

  4. When requesting documents such as invoices, vouchers, and receipts, tailor the request to a specific account, period of time, or set of documents, in lieu of requesting all invoices, vouchers, and receipts.


    In auditing a live performance theater, the agent asks to review invoices for all sound and lighting services.


    An agent, who is auditing a fraternal organization that has a bar, asks to inspect the invoices for all liquor purchases for the months of May, August, and October.


    The agent requests all travel vouchers submitted by the top five officers of the organization.


    The agent asks for the Z tapes for the admissions cash registers at a museum, for the weeks of February 10th, April 10th, June 10th, August 10th, October 10th, and December 10th.

  5. If the list of records requested includes copies, specify if:

    • The organization's copies are being requested for review during the on site examination.

    • The organization is being asked to make copies the examiner can keep.

  6. It is advisable to include a statement on the initial IDR indicating additional records will probably be requested as the examination progresses.

  7. For all information documents, include the following information in the header of the request:

    1. The sequence number of the request (0001, 0002, etc.).

    2. The name of the organization.

    3. The contact person to whom the request is addressed.

    4. The subject of the request.

    5. The tax periods being audited.

  8. Include the following information in the bottom of the request:

    1. Method of delivery (by mail, in person).

    2. Due date (either the appointment date or received by date).

    3. Name of the requester.

    4. Address of the requester.

    5. Contact numbers (phone and fax).

    6. Employee identification number.

    7. The date of the request.  (08-12-2014)
Accountants' Workpapers

  1. The following is a discussion of workpapers that are typically prepared by independent accountants:

    1. Tax Reconciliation Workpapers: Workpapers used in assembling and compiling financial data in preparation for placing it on a return. Typically, these include a final trial balance and/or a schedule of adjusting entries. They include information used to trace financial information to the return.

    2. Audit Workpapers: Documentation retained by an independent accountant as to the procedures followed, tests performed, information obtained, and conclusions he/she reached. They support the accountant's opinion as to the fairness of the presentation of the financial statements, conformity and compliance with generally accepted accounting principles.

    3. Representation Letter: The 1998 Statement on Auditing Standards (SAS) No. 85 issued by the American Institute of Certified Public Accountants requires a CPA auditor to obtain client management's written representations for all financial statements and periods covered by the auditor's report. The statements include information concerning fraud, material errors, and the belief that the financial statements are fairly presented in conformity with Generally Accepted Accounting Principles (GAAP).


      The representation letter may be a privileged communication under IRC 7525.

  2. Tax reconciliation workpapers, unlike audit workpapers, should be requested at the beginning of an audit. These workpapers are needed since they include the final amounts that should tie the filed return to the general ledger.  (08-12-2014)
Electronic Accounting Records

  1. Using electronic records to conduct audits will make the audit more efficient.

  2. Determine during the initial contact if the organization uses an electronic records accounting system.

  3. If they do, modify the initial IDR. Examples of items to request are as follows:

    • Worksheet reconciling the electronic records to the return.

    • Electronic backup file or working copy of the books and records for the specified period, including any changes to the data entered after year-end. This can be submitted on a CD, DVD, or a flash/thumb drive. If the taxpayer wants to submit it via email, make it clear that email is not a secure method of communication but the Service will accept information provided by this means.

    • Electronic administrator's user name and password for the file.

    • Version and the edition used for the file.

  4. The legal authority for requesting records in electronic format is IRC 6001, Treas. Reg. 1.6001-1(a) and -1(e), Rev. Rul. 71–20, and Rev. Proc. 98-25. Rev. Proc. 98–25 does not exempt a taxpayer from providing electronic records, if such records exist.  (08-12-2014)
Initial Taxpayer Contact

  1. The term "initial contact" is defined as the first contact with the taxpayer after the pre-audit analysis and before the initial interview. Generally, the initial contact is for the purpose of arranging the initial interview and modifying the initial IDR.


    Complete a detailed pre-audit analysis of the information available from internal sources and the returns, as detailed above, before initial contact with the taxpayer.

  2. IRC 7605(a) gives the Service the authority to set the time and place of the audit under reasonable circumstances. Field audits are normally conducted at the taxpayer's place of business and/or where the books and records are maintained. The goal of the initial contact is to set the audit dates, to maximize convenience for the taxpayer, as well as efficiently administer the tax laws.


    Always determine where the books and records are located, even if the audit is not actually conducted at the location where the books and records are kept (such as the office of a representative).

  3. Whenever possible, call the organization's contact person or representative to schedule the initial appointment. Initial contact may be made by letter, but is not recommended.


    The Restructuring and Reform Act of 1998, §3705, requires agents working tax-related matters to provide the taxpayer upon contact by phone, personal contact or mail his/her title or first name, last name, employee identification number, and phone number. The employee identification number is the number displayed on their photo id badge (used in federal offices), or the last seven digits of the ten digit identification number listed on an HSPD-12 (Homeland Security Presidential Directive #12) compliant id badge.

  4. Before contacting the organization by phone to discuss the audit, determine the appropriate individual to contact. The individual contacted should have the authority to receive confidential tax information concerning the organization. The individuals who have the authority to receive confidential tax information are:

    1. A current officer of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group who has authority under the applicable state law to legally bind the entity.

    2. A fiduciary, for example, a trustee or receiver.


      If it is not attached to the assigned return, secure a Form 56, Notice Concerning Fiduciary Relationship.

    3. An individual, usually a director, officer, or an employee of the entity, specifically authorized to bind the entity in accordance with the entity's organizing documents, a resolution of the governing board, or other legally binding document.

    4. An individual who has a valid Power of Attorney or Tax Information Authorization on file with the Service for the type of return and year(s) included in the audit. See IRM


    To avoid making an unauthorized disclosure subject to the sanctions of IRC 7213, verify the identity of the individual contacted and determine whether he/she has an ongoing relationship with the organization entitling him/her to receive confidential tax information before discussing the audit. In the case of a corporation, if the corporate officer contacted is not an officer designated by state law to bind the corporation, ask the officer if he or she can legally bind the corporation before discussing the audit. If the person contacted does not have the proper authority to receive confidential tax information, limit the conversation to determining the name and phone number of an individual who does have the authority to receive confidential information. The questions asked and responses received must be documented in the workpapers.


    If there is a question as to whether the individual contacted has the authority to receive confidential information, generally a written statement by the individual, on stationary bearing the entity's letterhead, stating he or she has the authority to legally bind the corporation is sufficient to permit disclosure.

  5. When initial contact is made, either by phone call or letter, update the AIMS status on RCCMS to status 12 (audit opened). Prior to initiating the update request, make sure that the Update AIMS box is checked.  (08-12-2014)
Initial Contact by Telephone

  1. If there is a representative on file, as indicated on BMFOLT, the representative normally must be contacted before a call may be made to the organization. To verify whether the representative has authority to receive communications, use IDRS command code CFINK to check the representative's authorizations. See http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm for assistance with the CFINK command code.

  2. Plan the audit to be approximately 30 days from the date of contact but no later than 45 days (if possible), to allow time for the set of documents (requested in IRM (7)) to arrive 10 to 14 days prior to the audit. This will allow time to review to documents prior to the field visitation. Shorter time frames are permissible, with managerial approval.

  3. When initial contact is made by phone, immediately state the purpose of the call, in addition to the agent's name, employee identification number and phone number.

  4. Perform the following steps:

    During the conversation:
    1. Briefly explain the audit process.
    2. Identify the returns being audited and the tax period(s) involved.
    3. Ask if the organization is to be represented by a Power of Attorney and request Form 2848, Power of Attorney and Declaration of Representative, if applicable. See 1 below.
    4. Confirm whether the organization has been audited in prior years.
    5. Discuss the issues identified during the pre-audit. See 2,3 below.
    6. Explain that additional issues may be audited depending on the information obtained during the audit.
    7. Determine the type and location of the books and records.
    8. Determine if the organization uses an electronic records accounting system, such as QuickBooks, Quicken, etc. If they do, ask if they would be willing to provide a backup copy or the working copy.
    9. Discuss the contents of the IDR and revise it based on the responses received.
    10. Establish the date, time, and location where the audit is to take place. See 4 below.
    11. Ask for clear directions to the audit site.
    12. Explain that a letter confirming the scheduled appointment, along with the IDR, will be mailed.
    13. Explain that Pub 1, Your Rights as a Taxpayer, will be included with the letter. The agent is to answer any questions concerning Pub 1.
      1. If organization will be represented, take care not to begin the audit through questioning during the initial contact since this may give the impression of attempting to bypass the representative. If representation must be secured and the contact person does not want to schedule an appointment until after a representative is confirmed, allow a minimum of 10 business days to secure representation before taking any follow-up action to schedule the appointment. Extensions can be granted on a case-by-case basis.
    2. There may be extenuating circumstances, such as an informant report, that preclude the discussion of the issues prior to the audit. If the preplanned issues are not discussed prior to the audit, the specific reasons should be documented in the workpapers.
    3. Be straightforward and honest with the organization when asked why the organization was selected for audit. If the case is a referral, explain that information was provided to the Service, but we are prohibited by law from disclosing the source of the information. The organization is permitted to obtain the information through a Freedom of Information Act request, even though portions of it may be redacted by Disclosure.
    4. Field audits are normally conducted at the organization's place of business and/or where the books and records are maintained.
  5. Before ending the conversation, ask whether there are any questions.

  6. Confirm the appointment in writing using Letter 3613.

  7. Document all actions in the workpapers (Forms 5464, 5773 and initial contact workpaper).  (08-12-2014)
Initial Contact By Letter

  1. If unable to reach the taxpayer by phone, send the organization an appointment letter using Letter 3611. Set the date for a reasonable length of time to include mail handling and forwarding.


    The IDR sent with the letter must ask the taxpayer to confirm the availability and format of the books and records and identify the preplanned issues.

  2. If a response is received and a phone number provided, call the taxpayer to determine the availability of all records requested and discuss the preplanned issues.

  3. If there is no response, send by certified mail a follow-up letter with a copy of the initial Letter 3611 and IDR enclosed.  (05-01-2004)
Scheduling the Appointment

  1. Regardless of the method of contact, try to schedule the initial appointment and any follow-up appointments at a time agreeable to the taxpayer and/or representative. This helps reduce the number of rescheduled appointments and avoid case delays. Schedule the audit during normal business hours and without regard to seasonal fluctuations of the taxpayer's business hours. It is customary to accommodate the taxpayer in the case of religious or secular holidays.

  2. The taxpayer and/or representative may request to postpone the suggested initial appointment date. Allow up to an additional 45 days after the first action on the case. If the taxpayer or representative attempts to further postpone the appointment, discuss the situation with the group manager.

  3. Usually the initial appointment is scheduled with the taxpayer, but the taxpayer is not required to be present at the initial interview per IRC 7521(c). The interview can be conducted with anyone who is authorized by the taxpayer. However, that person must have firsthand knowledge of the information requested and confirm that the information obtained can be relied upon.  (08-12-2014)
Powers of Attorney and Tax Information Authorizations

  1. The information in this subsection relates to exempt organizations organized as corporations, associations, or trusts. It provides guidelines for situations encountered during the ordinary course of the audit of an exempt organization. If the audit involves other entities or individuals, unusual situations, or issues that are not addressed here or for additional information, refer to:

    1. IRC 6103

    2. Treas. Regs. 301.6103(a) through 301.6103(p)

    3. Treas. Regs. 601.501 through 601.509, republished as Pub 216, Conference and Practice Requirements

    4. IRM 11.3, Disclosure of Official Information

    5. IRM 1.25.1, Practice Before the IRS, Rules Governing Practice Before the IRS

    6. IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF)

    7. Pub 947, Practice Before the IRS and Power of Attorney

    8. Form 2848 Instructions  (08-12-2014)
When to Secure a Power of Attorney or Tax Information Authorization Form

  1. If at any time the contact person requests the audit be conducted with a person who does not have the authority to receive confidential tax information, request that proper authorization be provided before discussing any confidential tax information with the designated individual. Note:

    1. A Power of Attorney authorizes the designated individual to represent the taxpayer in certain circumstances.

    2. A written or verbal Tax Information Authorization authorizes the designated individual to file the taxpayer's tax information, but it does not authorize the designated individual to represent the taxpayer before the IRS.  (08-12-2014)
Comparison of Powers of Attorney and Tax Information Authorizations

  1. The following table shows the primary acts that can or cannot be performed by an individual holding a valid Power of Attorney (POA) or a written or verbal Tax Information Authorization (TIA) during the audit process.

    Act as a contact point for the organization during the audit YES YES
    Receive and inspect returns and return information YES YES
    Receive tax notices, correspondence and other communications YES YES
      If the check boxes are marked. Can receive copies if specifically authorized
    Discuss issues with the agent YES NO
    Represent the organization at conferences YES NO
    Sign agreements YES 1 NO
    Sign a closing agreement YES 1 NO
    File a protest in response to a 30-day letter YES 1 NO
    Record interviews YES NO
    Sign a tax return GENERALLY NO 2 NO
    1 An unenrolled preparer designated on a POA form cannot sign any document for the organization. See Rev. Proc. 81-38, 1981-2 C.B. 592. An unenrolled preparer’s representation is limited to practice before examining officers of TE/GE, LB&I, SB/SE, and W&I operating divisions and in the Office of International Operations, and may only encompass matters concerning the tax liability for returns the unenrolled preparer prepared for the taxpayer. An unenrolled return preparer may not represent the taxpayer before Appeals or Collection or any other IRS function other than the examination function.
    2 The return is an income tax return received within 60 days before the ASED in which case the assessment period is extended to 60 days after the receipt of the amended return. See IRC 6103.
  2. A POA may only sign a return on behalf of the taxpayer in very limited circumstances. Treas. Reg. 1.6012-1(a)(5) permits a recognized representative may sign the return on behalf of a taxpayer if it is specifically authorized in the POA (Form 2848), Power of Attorney and Declaration of Representative, and the taxpayer:

    1. Is unable to sign the return due to disease or injury.

    2. Is unable to sign the return by reason of continuous absence from the United States for a period of at least 60 days before the return is due.

    3. Requests permission, in writing, from the area director and the director determines that there is good cause for permission to be granted.

  3. Only individuals who are recognized to practice before the Service and are not under suspension or disbarment from practice can be designated as a recognized representative. Corporations, associations, partnerships and other persons who are not individuals cannot be appointed as a recognized representative. See the Form 2848 for a list of individuals who are permitted to practice before the Service.  (08-12-2014)
Power of Attorney and Declaration of Representative

  1. The IRS will accept a non-IRS form. A completed transmittal Form 2848 must be attached in order for the form to be processed to the Centralized Authorization File (CAF) system. See IRM, Power of Attorney and Form 2848, for a list of required information.

  2. A signed and dated statement made by the representative should also be attached to the non-IRS POA form. The statement must contain the same declarations contained in Part II of Form 2848.

  3. A specific use can be indicated on Form 2848 or Form 8821. An entry must be made on line 4 for a specific issue authorization to be valid. For examples of specific-use authorizations, see IRM, Specific Use Authorizations.

  4. If a specific-use POA form is received, a copy should be attached to the document to which it relates. The representative retains the original form. Specific-use forms are not recorded on the CAF system and therefore, do not have to be forwarded to a CAF unit. A specific-use form does not revoke any prior POA forms. The guidelines and instructions for POA forms other than this and the preceding paragraph apply to general POA forms only.

  5. The persons who can be designated as a POA, as listed and fully described on Form 2848, include:

    1. Attorneys

    2. Certified public accountants

    3. Enrolled actuaries

    4. Enrolled agents

    5. Enrolled retirement plans agents

    6. Family members (for individual income taxes only)

    7. Full-time employees of the organization

    8. Officers of the organization

    9. Student attorneys

    10. Student certified public accountants

    11. Unenrolled return preparers

    12. Registered tax return preparer


      The acts an unenrolled return preparer can perform are limited as discussed in Footnote 1 of the table in IRM (1). The acts the registered tax return preparer can perform is also limited.

  6. Taxpayers and representatives may not use signature stamps when signing POA forms. Original signatures are required.

  7. A faxed POA form is acceptable and generally should be recognized by the IRS. If there is some indication of forgery, the representative can be required to produce the original.

  8. A valid POA form submitted by a taxpayer is always required to be honored unless the criteria for bypassing the POA are met.  (08-12-2014)
Verifying a Power of Attorney

  1. Check to see if the representative has a current, active license. Some resources for making this check are listed below.

    1. A Certified Public Accountant's license can be checked visiting "State Information" section of the American Institute of Certified Public Accountants' web site at http://www.aicpa.org/Advocacy/State/StateContactInfo/Pages/StateContactInformation.aspx or by calling the appropriate state CPA board. The web site provides links to the various states, wherein the CPA can be checked in the state directory.

    2. An attorney's license may be checked by contacting the appropriate state bar association. This information may also be available on the state bar association's website. Alternatively, try the American Bar Association's search engine at http://apps.americanbar.org/legalservices/findlegalhelp/home.cfm. The ABA does not operate a lawyer referral service, but provides links to the state resources.

    3. To see if someone has Enrolled Agent status, check the Centralized Authorization File (CAF). If there is no Enrolled Agent indicator on the CAF, you may contact the Office of Practitioner Enrollment at http://irweb.irs.gov/AboutIRS/bu/opr/default.aspx. The Office of Professional Responsibility provides a search engine (for IRS employees) that can be used to search for disciplinary actions against various types of tax professionals by then clicking "Search for Disciplined Tax Professionals" .


      If the search shows that the representative has lost his or her license (or had it suspended, revoked, or classified as inactive), forward the POA form to the Area Return Preparer Coordinator.

  2. Review the form for completeness and validity. For a list of required elements, see IRM, Essential Elements for Form 2848 and Form 8821.

  3. Exhibit 4.75.10-10 provides a sample Form 2848, along with a list of acceptable entries. In addition, the instructions to the Form 2848, as well as Pub. 4245, Power of Attorney Preparation Guide, provide guidance as to how the form needs to be filled out. Pub. 4019, Third Party Authorization, Levels of Authority, provides guidance regarding the levels of authority.

  4. If the POA form received does not contain all of the required items, it is invalid. If the form does not include all of the types of tax, form numbers, and years or periods under audit, the POA will not be valid for the missing types of tax, forms and/or tax years or periods. If there is missing information, contact the organization or representative and discuss the missing information. If the missing information pertains to information:

    1. Requested in Part 1 of the Form 2848, contact the organization.

    2. Requested in Part 2 of the Form 2848, contact the representative.

  5. If the POA form is incomplete, return it to the organization or representative. The organization or representative, as applicable, may submit a new Form 2848 containing all of the essential information, newly signed and dated. Electronic, printed, and stamped signatures are unacceptable.

  6. If the scope of the audit is expanded to include additional tax periods or different returns, notify the taxpayer of this decision. Generally the taxpayer should be given time to secure a POA form to cover the additional periods or different return before any audit action is taken. A new Form 2848 should be submitted with the additional periods or different return, signed by both the taxpayer (or officer of the organization) and the representative. If the taxpayer chooses not to have the POA represent him for those additional periods/returns, then audit information for those periods/returns will not be disclosed to any person other than the taxpayer.


    Do not make any changes or add any information to the POA form other than completing the information requested in the box labeled, "For IRS Use Only" on Form 2848 or date stamping the front of a non-IRS form.  (08-12-2014)
Subsequent Power of Attorney and Declaration of Representative

  1. The filing of a subsequent POA form for the same periods as a previous form will automatically replace and revoke the previous POA unless specified otherwise by the organization on the subsequent form. If the POA form was submitted on Form 2848 and the organization does not wish to revoke the prior form, a copy of the prior Form 2848 must be attached to the subsequent Form 2848 before it is sent to the appropriate Campus.


    If the organization wishes to revoke an existing POA and does not want to name a new representative, follow the instructions in Treas. Reg. 601.505(a).  (08-12-2014)
Written Tax Information Authorization

  1. Treas. Reg. 301.6103(c)-1(c) authorizes the IRS to accept written consents authorizing the disclosure of return information to a designee of the taxpayer.

  2. Generally, the TIA received during the course of an audit is a general-purpose TIA and is recorded on the CAF system. However, a limited/specific TIA for a specific issue may be received.

  3. If a specific-use TIA is received, a copy should be attached to the document to which it relates. The appointee retains the original TIA. A specific-use TIA is not recorded on the CAF system and therefore, does not have to be forwarded to a CAF unit. A specific-use TIA does not revoke any prior TIA. The guidelines and instructions for a TIA in IRM 4.75.10 other than this and the preceding paragraph apply to a general TIA only.

  4. Any individual, trust, corporation, association, partnership, and federal, state, local, and foreign government agency or sub-units of such agency can be appointed to receive confidential tax information under a TIA.

  5. The organization can use Form 8821, Tax Information Authorization, or any separate written document meeting the requirements of Treas. Reg. 301.6103(c)-1(b)(1). For a list of required elements, see IRM, Essential Elements for Form 2848 and Form 8821.  (08-12-2014)
Verifying Tax Information Authorizations

  1. Review the form for completeness and validity.

  2. If the Form 8821 received does not contain all of the items listed in IRM, it is invalid.

    If the Form 8821 Then
    Does not include all of the types of tax, form numbers, and years or periods under audit The Form 8821 is not valid for the missing types of tax, forms and/or tax years or periods. Contact the organization and discuss the missing information. If the organization wishes to include the missing information, have them submit a new form.
    Is incomplete Return the Form 8821 to the organization.
    The organization may submit a corrected Form 8821 or enter the missing information on the returned Form 8821 and resubmit it.


    Do not make any changes or add any information to the TIA other than the information requested in the box labeled, "For IRS Use Only" on Form 8821.

  3. A faxed Tax Information Authorization is acceptable and generally should be recognized by the IRS. If there is some indication of forgery, the appointee could be required to produce the original.  (08-12-2014)
Processing the Power of Attorney or Written Tax Information Authorization Form

  1. If a POA on Form 2848 or Form 8821 is complete and valid, complete the block labeled "For IRS Use Only" with the agent's name, phone number, function, and date the form was received.


    If the TIA is not on Form 8821, enter the agent's name, phone number, function, and date the form was received on the fax cover sheet when sending the information to the CAF unit.

  2. If a non-IRS POA form is complete and valid, date stamp the front of the form.

  3. Fax a copy of Form 2848 or Form 8821 to the CAF unit of the appropriate Campus (Memphis, Ogden or Philadelphia) within 10 workdays of the date it was received.


    Form 2848 and Form 8821 are filed with the appropriate campus based on the taxpayer's location rather than on the type of return being audited. The appropriate campuses are listed in the instructions.

  4. Record the date the POA or TIA form was received and verified and the date it was forwarded to the appropriate campus on the CCR.

  5. If the CAF unit rejects the form, they will issue L861C to the taxpayer. IDRS command code ENMOD will indicate if a notice was sent.

  6. Attach the original to the back of the first page of the return. If the form covers more than one tax period, make copies and attach one to each return covered.

  7. The form should be readable without removing staples.

  8. Any subsequent POA or TIA form received should be stapled to the top of the prior forms in the same manner.

  9. In accordance with Treas. Reg. 601.506(a), correspondence and notices should be sent to the taxpayer and the authorized representative(s) as requested in Item 2 of Form 2848.

  10. Copies of correspondence and other written communications should be sent to the authorized appointee if item 5a of Form 8821, "If you want copies of tax information, notices, and other written communications sent to the appointee on an ongoing basis check this box," is checked or if the TIA is submitted in a document other than Form 8821, the document specifically requests copies be sent to the appointee(s).

  11. Use Letter 3597 to transmit the correspondence.  (08-12-2014)
Verbal Tax Information Authorization

  1. Treas. Reg. 301.6103(c)-1(c)(2) authorizes IRS employees to accept a taxpayer's verbal consent to disclose return information to parties assisting the taxpayer in resolving a federal tax matter. The regulation also clarifies that the taxpayer can verbally approve IRS disclosures to someone accompanying the taxpayer at in-person meetings with the IRS, or participating in a phone conversation between the taxpayer and IRS.

  2. For procedures to follow with respect to verbal authorizations, see IRM, Requirements for Oral Authorization.  (08-12-2014)

  1. The following examples illustrate situations that may arise during an audit when a POA or TIA form should be secured.


    1. The president of the organization advises that Mr. Monroe, the accountant who prepared the organization's returns, will be the contact point for receiving information and correspondence relating to the audit and providing information to and discussing issues. Mr. Monroe is an unenrolled return preparer. Secure a POA form for Mr. Monroe.


    2. The president of the organization advises that Mr. Carroll, the bookkeeper, will be the contact point for receiving tax information and correspondence relating to the audit and providing information. The organization does not wish to authorize Mr. Carroll to sign agreements, consents, or represent the organization as a POA. Secure a written or verbal TIA for Mr. Carroll.


    3. The president of the organization brings a number of employees to a meeting. The employees are not authorized to receive confidential tax information just because the president brought them to the meeting. In this situation, secure a verbal TIA for each of the employees attending the meeting. Record the pertinent information concerning the verbal TIA in the CCR or a separate workpaper as soon as possible.


    4. The organization's attorney has a valid POA form to represent the organization. He has his secretary call to determine the status of the audit. The secretary does not have the right to receive confidential tax information concerning the organization. Do not discuss the status of the audit with the secretary unless you secure a verbal or written TIA.  (08-12-2014)
Receipt of Documents Prior to the Audit

  1. Receiving certain documents or records prior to a field audit could make the overall audit process faster and more efficient.

  2. However, a taxpayer is not obligated to provide documents or records in advance of the appointment or opening conference. For example, some taxpayers may need the time to secure representation.

  3. Before receiving documents prior to the audit, ensure the taxpayer has received an advance copy of Pub 1.

  4. Record in the CCR the date of receipt of any documents, and the time spent reviewing documents, completing workpapers and analyzing records.

  5. When a workpaper has been completed, take the time to prepare a summary in the Form 5773, EO Workpaper Summary Continuation Sheet.

  6. Upload any completed workpapers on RCCMS. If available, use an office scanner to scan any relevant correspondence from the organization into PDF documents (no more than 600 dots per inch in black and white), if not provided electronically. Files to be uploaded to RCCMS that exceed 2 Mb require a help ticket to upload, and are limited to 18 Mb total. (To shrink a PDF file, try compressing the document, by selecting Reduce File Size under the Document menu.)

  7. Make note of any items that should be incorporated into the initial interview.  (08-12-2014)
Review of the Determination Administrative File

  1. Review of the determination administrative file should cover the following items:

    • Application for exemption, Form 1023, or Form 1024

    • Organization Document (Articles of Incorporation, Articles of Association, Charter, or Trust Document)

    • Bylaws

    • Publications

    • Exemption letter

    • Filing requirements

  2. Also review any technical advice memoranda and correspondence received from the organization.

  3. Review the organization’s governing instruments to identify the following:

    1. Any amendments or changes that would jeopardize the organization’s exempt status.

    2. Any committees with special responsibilities.

    3. Who controls the organization, both ultimately and in day-to-day operations?

    4. Duties of officers, especially noting which officials are authorized to disburse funds and make decisions affecting the operations of the organization.

  4. The focus of the review of the determination letter should verify that the code section recognized matches what is on IDRS, whether there was an addendum (caveats), and when the letter was dated. (In the event of a revocation to the date of exemption, the date will be required for input on either Form 6018, Consent to Proposed Action - Section 7428, or Form 6018-A, Consent to Proposed Action.)


    A caveat is an addendum to the determination letter. If there is an addendum, it will be noted in the heading of the letter, with a separate page attached listing the various addenda to the letter. Determination specialists include these as a warning about issues that were identified in the determination application.

  5. Verify that the subsection shown in the exemption letter is the same as the subsection shown on IDRS, AIMS and the return. If the organization was granted exemption under the Internal Revenue Code of 1939, see Exhibit 4.75.10-1 for cross-references to the Internal Revenue Code of 1986.

  6. In reviewing the determination application, note any descriptions of activities that were conducted or were planned on being conducted. Questions concerning the activities should be incorporated into the initial interview.

  7. Check for any change in address, accounting periods, activities, and income sources.  (08-12-2014)
Receipt of the Financial Workpapers

  1. Using the tax reconciliation workpapers, if any, reconcile the return to the books and records. If no tax reconciliation workpaper is provided, use the trial balance in conjunction with the income statement and balance sheet. A sample format (not required) is as follows:

    Item description Amount per 990 Amount per books Difference
  2. If unable to complete the reconciliation, or material differences are identified, whether by dollar amount or by percentage, make notes of questions to ask of the financial officers (or most knowledgeable person) of the organization.

  3. Scan the general ledger, and select additional LUQ items to sample and/or question the organization about upon arriving at the initial appointment. Particular attention should be paid to compensation and/or financial transactions with officers. The document should be reviewed for possible excise benefit transactions, sources of income that could give rise to UBIT, or other liabilities.

  4. Identify accounts or transactions to be sampled for the testing of the organization's internal controls. Prepare a second IDR, listing the items to be sampled. When at the audit site, the request can be used as a checksheet. As items are sampled, the items can be removed from the request, placed in the workpaper, and any items not available during the visitation would still be remaining on the document request, which should be issued to the organization prior to departing the audit site. (Suggested time frame of 14 days follow up by mail, or a scheduled follow up appointment.)

  5. Record summaries on the Form 5773 for the reconciliation of revenues and expenses, reconciliation of net worth, and method of accounting/internal controls. Additional summaries can be added for audit reports, sources of income, expenditure analysis, and nature of liabilities, as merited.  (08-12-2014)
Receipt of the Electronic Accounting Records File

  1. Scan the file for viruses while off the network.

  2. If there are no viruses, save the file to your SBU folder. Keep the file for the duration of the audit. Only include relevant items from the taxpayer's data in RCCMS. Return the CD, DVD, or a flash/thumb drive to the taxpayer. If the taxpayer does not want it returned, follow established guidelines for disposing of external media with PII.

  3. Contact one of the QuickBooks User Team Members in your Area to convert the file and create reports in Excel.  (08-12-2014)
Planning the Initial Interview

  1. IRC 7602 gives the agent the authority to take testimony as may be relevant to ascertain the correctness of any return, make a return where none has been made, and determine the liability for any internal revenue tax.

  2. As part of the pre-audit planning, questions should be formulated to ask in the initial interview. The primary reason for an initial interview is to help confirm the reliability of the books and records. It also provides knowledge about the organization's history, its activities, the type and source of income generated, the extent of its internal control, and types of books and records maintained.

  3. Planning and organizing questions to ask in the initial interview is as important as the initial IDR. Preparation gives freedom to listen more carefully and proceed efficiently with the audit.

  4. Use the information developed in the prior analysis, along with items noted in the documents received and processed in the days leading up to the interview. Be prepared to modify the interview at any point in time leading up to and during the interview.

  5. If the Service, taxpayer, or representative wants to audio record the in-person interview, employ the techniques stated in IRM, Requests to Tape Record Interviews. References to Area Director and Field Territory Manager shall denote for EO purposes the Director, EO Examinations, and the Area Manager respectively. The reference to Form 5344 shall denote for EO purposes Form 5599.  (08-12-2014)
Formulating the Questions

  1. Base the questions on observations during the pre-audit analysis and issues that will be developed. Write them down or outline them. Leave enough space to jot down brief notes during the interview. Keep in mind that this does not limit the ability to ask additional questions. Be ready to ask for clarification or to follow up on responses.

  2. Some main areas to be covered are:

    • Representation

    • Pub 1

    • History of the organization

    • Organizational document modifications

    • Activities (day-to-day and special events)

    • Governance

    • Internal controls

    • Package audit

    • Unrelated business income activities

    • Any issues identified by an informant

    • Any information requested for an examination project


    Pro forma interviews can be used, but they should be customized to fit the taxpayer under audit and open to follow-up questions.

  3. At the start of any interview, ask about representation (if not already represented), and determine the knowledge of the persons being interviewed with respect to Publication 1.

  4. Questions about the history of the organization can either be general, such as asking for a complete history, or more pointed, discussing any items noted in the determination application, website of the organization, or on the Forms 990.

  5. Plan to discuss whether any changes were made to the organizing documents that were not already identified in the initial analysis, and obtain explanations of any major changes.

  6. In discussing the activities, questions should be included for any activities that were not clearly explained on the Form 990. Additionally, follow up questions should be included to obtain an overview of any activities that have been identified as potentially being non-exempt.

  7. Governance questions can be found on the governance checksheet, available for download via RCCMS. The checksheet, Form 14114, Governance Check Sheet, is also available at http://www.irs.gov/pub/irs-tege/governance_check_sheet.pdf. The governance checksheet must be completed for specified project cases in accordance with project instructions.

  8. IRM, Internal Controls, discusses the internal controls portion of the initial interview.

  9. IRM 4.75.12, Required Filing Checks, provides information on package audit procedures.

  10. For any unrelated business activities, questions should focus on the six "W" questions: when, where, who, what, how and why.

  11. If requiring assistance in developing questions, consult an assigned mentor, on-the-job instructor, or the group manager.  (08-12-2014)
Additional Issues

  1. The following sections concern scenarios that can impair the agent's ability to conduct the audit.

  2. The first scenario discusses what is to be done when an organization can't be found, or the initial letter is returned undeliverable. This scenario can occur for several reasons:

    1. The organization may recently have gone out of business, and has not formally dissolved.

    2. The organization has no permanent physical address, with the address shifting to the address of a newly elected officer each year.

    3. The organization may have merged with another exempt organization, such as the forced mergers of lodges or posts, directed to do so by parent organizations.

    4. The address of an organization is intentionally misleading, referencing a mailbox as a suite.

    5. The officers of the organization are involved in tax avoidance transactions and are attempting to make locating the organization difficult.


      The last two examples are indicators of organizations that may not be operated for the exempt purposes outlined in the determination application. When such cases are encountered, assistance from a member of the Forensic Investigations Unit should be sought for suggestions.

  3. The second scenario involves those situations where requests are received to transfer the case to either another agent, to another office in the area, or to another area altogether. Some of these requests for transfers may be valid if the records are physically located other than where they are listed on the Form 990, or if a related audit is already being conducted by another agent in another office. Others of these requests may constitute attempts by the officers, trustees, employees, or representatives of the organization to delay, hinder, or derail the audit. In all such situations, management must be consulted.  (08-12-2014)
Locating the Taxpayer

  1. If unable to locate the taxpayer and/or the initial contact letter is returned by the Post Office as undeliverable, take the following steps to obtain the taxpayer's current address:

    1. Inspect any correspondence in the case file for any change of address noted by the U.S. Postal Service.

    2. Review the case file for possible sources of information that may lead to the taxpayer's whereabouts.

    3. Use Accurint™ to find the organization's or an officer's, director's, or trustee's current address and phone number.

    4. Check phone and/or city directories for names and addresses of officers, directors, or trustees as well as the organization.

    5. Check the current address by researching command code INOLES.

    6. Contact the Post Office for a current address using Form 4759, Address Information Request.

    7. Check internet resources for possible leads.

    8. If the organization is a corporation, check the state annual corporate registration for the name of the current corporate agent.

    9. Contact third parties such as current or former employees or return preparers.


      Be sure to follow all third-party procedures in Treas. Reg. 301.7602-2. See IRM, Third Party Contacts.


      See IRM 4.75.16, Case Closing Procedures, for the procedures to follow if the taxpayer cannot be located.

  2. If the taxpayer cannot be located after following the applicable procedures above, send audit letters by certified mail to the organization’s last known address and the last known officers, as reported to the state or to the Service, whichever was most recently reported.

  3. The letters should have a date by which a response is required, such as 30 days after the date of the letter.  (08-12-2014)
Request for Transfer

  1. In setting the initial appointment, a request for a transfer to another location may be received from the taxpayer. IRC 7602 gives the Secretary authority to reasonably set the time and place of an audit. Usually, the audit is conducted in the area where the taxpayer is physically located, has its principal office, carries out business transactions, and maintains its books and records.

  2. Treas. Reg. 301.7605-1(e)(2) gives guidance on requests by a taxpayer and/or representative to transfer the place of audit. Generally, the Service grants such a request under the following circumstances:

    • The taxpayer's address is no longer where an audit has been scheduled.

    • The taxpayer's books, records, and source documents are maintained at a location other than where the audit has been scheduled.

  3. A request for transfer should be evaluated on a case-by-case basis. Factors that must be considered are:

    • Organization's current address.

    • Location of the organization's business.

    • Location of the organization's books and records, including vouchers, invoices, cancelled checks, and other documents usually maintained at the business site.

    • Location where the Service can perform the audit most efficiently.

    • Availability of the Service's resources at the location to which the organization requests a transfer.

    • Other circumstances that indicate conducting the audit at a particular location would create undue inconvenience to the organization.  (08-12-2014)
Representative's Request for Transfer

  1. Treas. Reg. 301.7605-1(e)(3) provides that generally the Service will not transfer the location of an audit for the convenience of a taxpayer's representative, nor will the representative's place of business determine the place of the audit. However, the Service may consider the request by the organization or its representative to transfer the place of audit to the representative's office after weighing all factors.

  2. The representative must submit a valid Form 2848, Power of Attorney and Declaration of Representative, with the request for transfer. Such requests will not be approved for Form 8821, Tax Information Authorization.


    For the purpose of case transfers, "representative" means an attorney, certified public accountant, enrolled agent, officer, full-time employee, or actuary of the organization. It does not include an unenrolled tax return preparer.  (08-12-2014)
Written Requests

  1. Treas. Reg. 301.7605-1(e) requires the request to transfer the place of the audit to be in writing. It must include the following information:

    1. Reason the requested location is more efficient for the audit.

    2. Taxpayer's current address, phone number, and current principal place of business.

    3. Address/location of taxpayer's books, records, and source documents.

    4. Information as to who possesses the required records and is available to expediently resolve issues.

    5. Available resources in the area to which the taxpayer requests transfer, if known.

    6. Other factors that show how conducting the audit at a particular location poses undue inconvenience to the taxpayer.  (08-12-2014)
Transfer of Audit Initiated By the Service

  1. The agent may initiate a transfer of an audit if it promotes effective and efficient conduct of the audit. If the taxpayer requests that a transfer not be made, consider the request according to the required factors. IRM

  2. Management can initiate the transfer of an unopened audit to another group when requested. Examples include transfers of cases from groups with high case inventory levels to groups with low case inventory levels and related audits conducted by agents in another office.

  3. Management initiates a transfer of a case from one agent to another agent if for whatever reason the current agent cannot complete the work.  (08-12-2014)
Requirements To Transfer Audit Out of Area

  1. In addition to the written request, other requirements must be met in order to transfer an audit from one area to another.

  2. According to Treas. Reg. 301.7605-1(e)(4), a minimum of 13-months must remain on the statute of limitations at the time of the transfer request. If all other considerations are satisfied but the 13-month period is not met, obtain the taxpayer's written agreement to secure a one-year extension of the statute of limitations.

  3. Do not grant a transfer request if a statutory notice of deficiency, 90-day letter, has been issued.  (08-12-2014)
Procedures for Transfer of Audit

  1. If the transfer request is honored, contact the group manager so that he/she can call the receiving group manager for intra-area transfers or area manager for out-of-area transfers to discuss the transfer.

  2. Upon agreement for transfer:

    1. Secure a statute of limitations extension, as necessary.

    2. Complete Form 2363-A, Request for IDRS Input for BMF-EO Entity Change, if a transfer is due to a permanent change of address.

    3. Notify EO Examinations Planning and Programs if the case is a part of a project.

    4. Notify EO Examinations Classification if the case is the result of a referral.

  3. The manager transfers the case via RCCMS.  (08-12-2014)
Making Referrals

  1. While planning the audit, or at the earliest stage of the audit after receiving new information, determine whether referrals will be needed.

  2. Use the Specialist Referral System (SRS) at https://srs.web.irs.gov/default.aspx for all requests for assistance from various specialists throughout the Service, such as:

    • Art Appraisal Services (see http://appeals.web.irs.gov/art/default.htm)

    • Computer Audit Specialists (see http://lmsb.irs.gov/hq/fs/cas/index.asp)

    • Economists (see http://lmsb.irs.gov/hq/fs/economist/index.asp)

    • Employment Tax Specialists

    • Employee Plan Specialists

    • Engineers (see http://lmsb.irs.gov/hq/fs/engineers/index.asp)

    • Estate and Gift Specialists (see http://mysbse.web.irs.gov/Specialty/excise/default.aspx)

    • Excise Tax Specialists (see http://mysbse.web.irs.gov/Specialty/excise/default.aspx)

    • Federal State and Local Governments

    • Financial Products (see http://lmsb.irs.gov/hq/fs/financial_products/index.asp)

    • Indian Tribal Governments

    • International Specialists (see http://lmsb.irs.gov/international/index.asp)

    • Tax-exempt Bonds Specialist

    • Joint Committee (see http://lmsb.irs.gov/hq/pqa/4/home.asp)

    • TEFRA Specialists (see http://tefra.web.irs.gov/m1/1a_home.asp)

  3. For procedures for requesting a collateral examination, see IRM

Exhibit 4.75.10-1 
Cross Reference IRC of 1939 to IRC of 1986

Section of 1939 Code Section of 1986 Code Description of Organization
101(1) 501(c)(5) Labor, Agricultural, and Horticultural Organizations
101(2) N/A Repealed by Section 313(a) of 1951 Revenue Act
101(3) 501(c)(8) Fraternal Beneficiary Societies and Associations
101(4) 501(c) (14) State Chartered Credit Unions
101(5) 501(c) (13) Cemetery Companies
101(6) 501(c)(3) Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, or Prevention of Cruelty to Children or Animals Organizations or to Foster National or International Amateur Sports Competition
101(7) 501(c)(6) Business Leagues, Chambers of Commerce, Real Estate Boards, Etc.
101(8) 501(c)(4) Civic Leagues, Social Welfare Organizations and Local Associations of Employees
101(9) 501(c)(7) Social and Recreational Clubs
101(10) 501(c)(12) Benevolent Life Insurance Associations, Mutual ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, Etc.
101(11) 501(c)(15) Mutual Insurance Companies or Associations
101(12) 521 Farmer's Cooperatives
101(13) 501(c) (16) Cooperative Organizations to Finance Crop Operations
101(14) 501(c)(2) Title Holding Corporation for Exempt Organization
101(15) 501(c)(1) Corporations Organized Under Act of Congress (including federal Credit Unions)
101(16) and 101(19) 501(c)(9) Voluntary Employees' Beneficiary Associations (including Federal Employees' Voluntary Beneficiary Associations formerly covered by IRC 501(c)(10))
101(17) 501(c) (11) Teachers' Retirement Fund Associations
101(18) 501(d) Religious and Apostolic Associations

Exhibit 4.75.10-2 
Basic IDRS Information for the EO Revenue Agent

(1) Some of the most commonly used forms to request research from IRS's internal sources are listed below.
  Form 6882, IDRS/Master File Information
  Form 5644, TE/GE Inquiry Request
  Form 11377, Taxpayer Data Access Form
(2) Information Document Retrieval System (IDRS) is the Service's system that enables employees to have access to taxpayer accounts and information. Some of its capabilities are:
  Researching account information
  Requesting returns
  Entering transactions
  Entering collection information
  Generating notices and documents
(3) Different files comprise the IDRS database. Two of the most familiar files used by all IRS operating divisions are:
  a. Audit Information Management System (AIMS) - This file manages IRS's inventory of open returns (and closed returns for a limited time). For example, the agent can check the status of a return on AIMS by requesting command code AMDISA.
  b. Corporate Files On Line (CFOL) - This file provides Master File information on line immediately and is used for research only. No data can be entered on the account. For example, the agent can request account and return information through command codes BMFOLT and BRTVU.
(4) The agent must use the forms listed above to access information for various pre-audit planning purposes, such as verification of establishment on AIMS, statute of limitations date, penalties assessed (or not), POA on file, amount of tax paid, filing status and statute dates of related returns, exempt status of an organization and more.
(5) Command codes and their descriptions are listed in Document 6209 (ADP and IDRS Information). This book also contains exhibits and keys to the information displayed from research results, which helps the agent interpret the data obtained.
(6) Although IRS agents have a wide variety of information available to them and should use it when needed, the confidentiality of tax return information and the taxpayer's privacy are of utmost importance. Unauthorized access to taxpayer account information, browsing, is illegal, and offenders are prosecuted under the provisions of RRA 1998. See IRM 10.8.10, Information Technology (IT) Security, Linux and Unix Security Policy.
(7) It is important to document case files regarding the account and related account information accessed during the audit.


See IRM Part 2, Information Technology, for further information.

Exhibit 4.75.10-3 
Sample Initial Information Document Request

This exhibit illustrates a properly prepared initial IDR.


This is not intended to be nor should it be used as a pro forma initial IDR for an IRC 501(c)(7) or any other type of organization.

The background information for preparing the initial IDR is shown in the sample pre-audit and the initial contact workpapers. These workpapers are NOT all inclusive as to the information that should be reviewed during the pre-audit analysis or the topics to be discussed during the initial contact with the taxpayer.
The sample IDR is designed to meet TEQMS standards and to provide the taxpayer with the information necessary to comply with the request. Specific points to be noted are:
  The return and the year under audit are identified in the first paragraph.
  The preplanned issues and the "required filing checks" are listed on the IDR.
  The date the records are to be available is provided in the second paragraph.
  The specific periods the records are being requested for are clearly set forth.
  The information developed during the pre-audit analysis and the initial contact was used to tailor the IDR specifically to this taxpayer. It was not necessary to condition the records requested with phrases such as, "if available" or "if applicable." The description of the records requested was tailored to the description provided by the taxpayer during the initial contact.


1: The agent did not request Forms 990-T or pension plan returns and documents because she determined during the pre-audit analysis and the initial phone contact that the Club had not filed Forms 990-T and did not have a pension plan.



2: The agent did not request accounting records (ledgers, journals, adjusting entries, etc.), because she established during the initial contact that the only financial records maintained were bank records and monthly worksheets.

  Only records necessary to audit the preplanned issues were requested.
  The last paragraph notifies the taxpayer that additional records may be needed.


It was not necessary for the agent to request the employment tax returns or the Forms W-2/1099 because the information was secured through IDRS.

Form 4564 Department of the Treasury - Internal Revenue Service Request Number
(Rev. June 1988) Information Document Request 0001
To: (Name of Taxpayer and Company Division or Branch) Subject
Any Country Club Initial appointment
SAIN Number Submitted to:
004 Henry Bell
Dates of Previous Requests
Description of documents requested
Tax Period(s): 12/31/2010
The following information is being requested for the audit of the Club's Form 990, Return of Organization Exempt From Income Tax, for the year ended December 31, 2010. The information requested is used to verify the accuracy of the Form 990 and to determine whether:
  (a) The Club is properly organized and does not have a written discrimination policy.
(b) The Club has interest income and receipts from non-members for use of its facilities subject to the tax on unrelated business income under IRC §511.
(c) The Club has total receipts from investments and/or non-members use of its facilities that may jeopardize its exempt status.
(d) The Club has filed all required information and tax returns.
Please have the following books, records and other information available for review on May 7, 2012. All records requested are for the year ended December 31, 2010 unless otherwise indicated.
  (1) Articles of Incorporation and any amendments to date.
(2) Bylaws in effect during 2010 and any amendments to date.
(3) Membership rules including but not limited to guest policies.
(4) List of all members during 2010 and a sample membership application.
(5) Publications, such as newsletters, flyers, membership brochures, etc. printed by the organization.
Information due by: 5/7/2012 At next appointment X Mail in
From: Name and title of requester: Employee ID Number Date
Agent J, EO Agent 00–00000 4/27/2012
Office Location: 1100 Commerce Street MC 49XX Phone: (987) 654–3210
      Dallas, TX 75242 Fax: (987) 654–3211
Catalog No. 23145K Form 4564 (Rev. 6-1988)
Form 4564 Department of the Treasury - Internal Revenue Service Request Number
(Rev. June 1988) Information Document Request 0001
To: (Name of Taxpayer and Company Division or Branch) Subject
Any Country Club Initial appointment
SAIN Number Submitted to:
004 Henry Bell
Dates of Previous Requests
Description of documents requested
Tax Period(s): 12/31/2010
  (6) Guest register, reservation book, and activity calendar.
(7) Bank statements and cancelled checks for the Club's savings and checking accounts for December 31, 2009, through January 1, 2011.
(8) Monthly worksheets.
(9) Member and non-member accounts/statements for the months of July and December 2010.
(10) Any contracts or agreements entered into for personal services.
(11) Forms W-4, Employee Withholding Allowance Certificate, for the year ended December 31, 2010 to date.
It is not necessary for you to make copies of the records requested. If copies are needed they will be requested during the audit.
As a result of the audit of the above documents, additional records, invoices and expense items may be requested during the audit. If necessary, the audit may be expanded to include prior and/or subsequent years.
If you have any questions or concerns, please contact me at the phone number shown below prior to the date of the scheduled appointment.
Information due by: 5/7/2012 At next appointment X Mail in
From: Name and title of requester: Employee ID Number Date
Agent J, EO Agent 00–00000 4/27/2012
Office Location: 1100 Commerce Street MC 49XX Phone: (987) 654–3210
      Dallas, TX 75242 Fax: (987) 654–3211
Catalog No. 23145K Form 4564 (Rev. 6-1988)

Exhibit 4.75.10-4 
Sample Form 5772

EO Workpaper Summary
Exempt Organization Name and Address: Examination Results
Any Country Club
123 Main Street
Anytown, USA 00000
Year(s): Form(s): Disposal Code & Description: Letter(s):
201012 990    
201012 990-T    
Agent J
Date: Time:
Reviewer: Date:  
[X ] A. Preaudit [X ] G. Package Audit
[X ] 1. IDRS Research [Confirm T/P Information] [X ] 1. Prior and Subsequent Year Returns [990, 990-T, etc.]
[X ] 2. Form 5546 Return Charge-out and Classification Sheet Review [N/A] 2. Related/Controlled Organizations
[X ] 3. Statute of Limitations Expiration Date and Updates [X ] 3. Employment Tax Returns [Forms 940, 941, 945, etc.]
[X ] 4. Organizational Requirements [X ] 4. Information Returns [Forms W-4, W-2, 1099, 1042, etc.]
[X ] 5. Tax Return Information [N/A] 5. Section 530 Eligibility
[X ] 6. Initial Contact, Publication 1 [N/A] 6. Classification Settlement Program Eligibility
[N/A] 7. Other [X ] 7. Discrepancy Adjustments
[X ] B. Organizational Documentation [N/A] 8. Pension Plan Determination Letter and Return
[X ] 1. Articles of Incorporation [N/A] 9. Other
[X ] 2. Bylaws [X ] H. Other Tax Liabilities
[X ] 3. Determination Application [Date] [N/A] 1. Political Expenditure Tax
[X ] 4. Determination Letter [N/A] 2. Excess Lobbying Expenditure Tax
[X ] 5. Amendments [Organizational Documents and Rulings] [N/A] 3. Excise Taxes and Intermediate Sanctions
[N/A] 6. Other [X ] 4. Miscellaneous Taxes [e.g., Proxy, Wagering, etc.]
[X ] C. Operational [X ] 5. Collection of Tax
[X ] 1. Initial Interview [N/A] 6. Other
[X ] 2. Tour of Facility [X ] I. Penalties
[N/A] 3. Prior Examination Report [N/A] 1. IRC 6652[c]: Failure to File Information Returns
[X ] 4. Minutes [X ] 2. IRC 6651: Failure to File Tax Returns
[X ] 5. Publications [N/A] 3. IRC 6662: Accuracy Related Penalty
[X ] 6. Correspondence [X ] 4. Employment Tax Penalties
[X ] 7. Contracts/Leases [N/A] 5. IRC 6663: Imposition of Fraud Penalty
[N/A] 8. Legislative Activities [N/A] 6. Other
[N/A] 9. Political Activities [X ] J. Relevant Examination Considerations
[X ] 10. Private Interest Served [X ] 1. IRC 6104 Notifications and IRC 6113 Disclosures
[X ] 11. Activities to present [X ] 2. Power of Attorney
[N/A] 12. Private Foundation Status [X ] 3. Notice of Third Party Contact
[N/A] 13. Other [X ] 4. Fraud Considerations
[X ] D. Financial Examination [X ] 5. Specialist Involvement
[ X ] 1. Method of Accounting/Internal Controls [X ] 6. Inadequate Records Notice
[N/A] 2. Audit Reports [N/A] 7. Closing Agreements and Termination/Jeopardy Assessments
[X ] 3. Reconciliation of Return to Books and Records [N/A] 8. Other
[X ] 4. Sources of Income [X ] K. Special EO Examination Activities [e.g., Gambling, Bonds, etc.]
[X ] 5. Expenditure Analysis [N/A] 1. Claims for Refunds
[N/A] 6. Other [X ] 2. Gaming
[X ] E. Balance Sheet Analysis [N/A] 3. Tax Exempt Bonds
[X ] 1. Comparative Balance Sheet [N/A] 4. 1120-POL
[X ] 2. Asset Verification [X ] 5. Project Check Sheet
[X ] 3. Nature of Liabilities [N/A] 6. Other
[X ] 4. Reconciliation of Net Worth [X ] L. Audit Considerations
[N/A] 5. Other [X ] 1. Agreed and Unagreed Closings
[X ] F. Unrelated Business Income [N/A] 2. Administrative Record
[X ] 1. Sources of Unrelated Business Income [X ] 3. Case File Assembly
[X ] 2. Income and Expense Allocation/Tax Computation [N/A] 4. Other
[N/A] 3. Other  
Form 5772-EO [CG] [Rev. 7-2010] RGS Ver. Department of the Treasury – Internal Revenue Service

Exhibit 4.75.10-5 
Sample Form 5773

EO Workpaper Summary Continuation Sheet
Name of Plan or Organization Specialist Page Number
Any Country Club Agent J 1 of 7
Items to be verified
(Reminders or points
to be considered)
Examination procedures and conclusions W/P
  Preaudit Comments Review IDRS to verify information, and to correct if necessary. Review the classification sheet, referral package, and/or project checksheet to identify the issues noted for audit. Verify the statute of limitations date, and update as necessary. Determine if there are any specific organizational requirements under the Code that apply to the type of organization. Review the return to identify items for audit and completeness. Develop a pre-audit work plan, focusing on the classification issue(s), LUQ items. Perform a risk analysis.  
1. IDRS Research
[Confirm T/P
All necessary IDRS research was included in RCCMS when the case was assigned, or secured by the agent during the pre-contact review. Reviewed IDRS research and verified taxpayer information. Club did not file a Form 990-T. No other potential problems were identified. 3.A.1
2. Form 5546 Charge-
out and Classification
No Form 5546 attached. Reviewed classification sheet. There have been no prior audits. The club is a Form 1099-MISC filer. 3.A.2  
3. Statue of Limitations
Expiration Date and
Reviewed the BMFOLT, AMDISA, and the return received date stamp on the electronic copy of the return. On the upper left corner of the first page was stamped the return postmark date. Club had an extension to August 15, 2011. Statute date determined to be August 14, 2014 based on postmark date. 3.A.3  
4. Organizational
IRC 501(c)(7) must be operated for pleasure, recreation, and other non-profitable purposes. It must NOT have a written policy that contains a provision which provides for discrimination against any person on the basis of race, color, or religion. Exceptions do not apply to this organization. Reviewed the articles of incorporation and bylaws submitted with the Form 1024. They did not contain any discriminatory language. The Club was organized for social and recreational purposes. Review amendments during the audit. 3.A.4  
5. Tax Return
Reviewed the Form 990. Verified the correct address during initial contact. No unusual, unexplained increases or decreases in balance sheet items. Identified additional audit issue, interest income. No other LUQ entries were noted. 3.A.5  

Exhibit 4.75.10-6 
Sample Case Chronology Record

Case Chronology Record
Organization / Employer’s Name & Phone
Any Country Club
Plan Name / Number
Officer / Contact Person – Name & Phone
Mr. Bell, Treasurer, (123) 456-7890
Examiner’s Name
Agent J
Form Number Tax Period(s) Date Assigned/Opened
4/20/2012 / 4/27/2012
Representative’s Name & Phone
Date Individual Contacted Loc/Act Code Time 990 Time 990-T Time 941 Topics Discussed, Information Requested or Other Action Taken Follow-Up Date
4/20/2012   I/1 1     Case assigned limited scope audit. Requested determination administrative file.  
4/27/2012   I/1 3     Reviewed IDRS, AIMS, Form 990, classification sheet, determination administrative file, etc. Verified statute.
Researched offsetting interest income and interest expense.
Discussed expanding the audit to include interest income. GM approved. Manager Z
4/27/2012 Mr. Bell, Treasurer I/3       Provided my name, phone number and badge number. Discussed issues, books and records, etc. Scheduled an appointment for 5/7/2012.
Updated to status 12.
4/27/2012   I/2       Prepared IDR and letter - mailed. 5/5/2012
5/3/2012 Mr. Bell, Treasurer I/3       Mr. Bell called and said he has to go out of town due to an illness in his family. He will call and reschedule the appointment as soon as possible. 5/12/2012
5/7/2012 Mr. Bell, Treasurer I/3       Mr. Bell called and said he could meet with me Monday. Rescheduled appointment for Monday.  
5/7/2012   I/1 1     Reviewed case file and prepared for on site. 5/10/2012
Total time: 5 0 0  
Location Codes (Loc): Does this case meet Taxpayer Advocate Case Criteria? (Yes or No)
  T = Taxpayer Office/Place of Business
E = Employer/Administrator/Trustee Office
R = Representative’s Office
I = IRS Office or Flexiplace Location
O = Other (explain)
Activity Codes (Act): Remarks:
  1 = Review case
2 = Correspondence
3 = Telephone
4 = Examination or Conference
Form 5464 (Rev. 12-2003) Cat. No. 23990V Department of the Treasury - Internal Revenue Service
Page 1

Exhibit 4.75.10-7 
Risk Analysis Examples

Example 1:

As part of your risk analysis, you are going to explore the various sources of gross income to determine the extent of any possible unrelated business income. You discover that there is such an income stream of $100,000 from rents. You also find that there is debt on the property and the debt basis ratio is 10%. At this point, you determine that the taxpayer also has total rent expenses of $120,000.

Here is where you exercise your judgment and apply factors of materiality. The likelihood that there would be any material net income from rents is negligible. Because of the dollar value and the duration of this item even continuing to be UBI, you would not normally consider this material. However, if the dollar value is much higher, the debt ratio higher, and/or the duration for the UBI much longer, you might determine this item material.

Example 2:

You are assigned a return with assets of $10,000,000, and as part of your risk analysis you determine that the salary paid to the CEO is $500,000.

You are aware that there is currently a critical initiative exploring executive compensation, and in your judgment, you believe that the officer’s compensation is rather high. Because excess compensation is a significant compliance initiative of the Service, you determine that this area merits close consideration and that you are to audit the potential issue. If the CEO’s salary were only $100,000 perhaps this would not be significant even in light of the compliance initiative. Dollar value and compliance impact were factors of materiality used in this decision to audit. In addition, the duration of the CEO’s compensation should be another factor supporting your decision.

Example 3:

In looking at potential employment tax issues, you find that there were payments to employees of gift certificates as a Thanksgiving bonus amounting to $25 per employee. We ask ourselves whether this is an item that you would determine material and select to audit.

Dollar Value - It would seem to depend on the number of employees employed by the organization. If there were only 100 employees, perhaps you would judge this to be immaterial as the tax on $2,500 would be nominal. But what if there were 4,000 employees? As you can see, materiality changes from the size of an organization and the potential tax liability determined.

Duration – This could be a recurring item and should influence your decision as you consider all factors.

Hours needed to examine – This appears to be an item that would not require much time.

Example 4:

During your pre-audit planning, you access the IRC 501(c)(3) exempt organization’s web site and notice that taxpayer actively supports legislation in favor of the Patriot Act. In fact, there are several links on the site that point a person to various ways to write to their Congressman ensuring that the Act is to be extended. There is also a message denoting that contributions to this EO are used to ensure that this ACT is to be expanded.

Analysis: This is an issue of potential revocation. It is also a very sensitive compliance initiative issue. Further, there are also possible taxes to be applied to potential excess lobbying expenses. The Agent should select this as a material item. As the issue unfolds, perhaps the item is less of an issue and could be dropped later.

Duration – We should explore whether this was a one time occurrence or whether this activity appears on all open years of the taxpayer.

Resources needed – With the fact that this is a compliance initiative, we should not place much weight on resources.

Example 5:

You receive a Form 990-T claim for refund for audit. A review of the return and related transcripts make it clear that there was an error on the return and that the claim should be allowed. However, you noticed there was a large amount of revenue from security services reported on the Form 990-T. You secure the workpapers for the Form 990-T and determine that the expenses related to the security services are twice the revenue. You determine security services revenue was reported on prior and subsequent years’ returns.

You should determine whether the security services activity resulted in losses in prior years. If losses have been consistent, this is an indication that there is no intent to make a profit. There is a compliance impact here. There is also duration of the issue. Audit and resolve the issue.

Example 6:

You are auditing a Form 990-PF. A list of approximately 300 charitable distributions is attached to the return. Several distributions exceeded a million dollars. At the opening interview, you ask the organization what their policy is on charitable distributions. You are informed that all distributions are made only to public IRC 501(c)(3) organizations.

There is a potential problem with significant dollar impact, compliance impact, and duration of the issue. Time necessary to verify the exempt status of several of the larger organizations is minimal using Select Check, Guidestar, or IDRS. Consider making a selection of the larger distributions.

Example 7:

While auditing the balance sheet of a statewide business league described in IRC 501(c)(6), you find several airplanes listed. You determine the business league has only six members. Anywhere in the State can be reached within four hours by automobile from the business league’s central location. There are four pilots on the organization’s payroll.

Issues to consider include the use of the airplanes, the number of flights, personal use of the aircraft, UBI, or possible loss of exemption if a large number of flights constitute the primary activity of the organization.

Materiality factors to consider include a possible significant dollar impact, compliance impact, and duration of the issue and the estimated time to examine the issue. The estimated time may be negative factor depending on the volume and accessibility of records required to make a determination.

Exhibit 4.75.10-8 
Sample Risk Analysis Workpaper

Case Name: Any Country Club Form/Tax Period: 990/201012 Date(s) Updated: 5/10/2012
Agent: Agent J Date Prepared: 4/27/2012
WP # LUQ Description Materiality Factors Est. Comp. Date Priority
Threshold Pursue Further
3.F.1 Interest Income: 3/2010 - 12/2010 Compliance issue 5/30/2012 1 >$1K Y Y
3.F.1 Rental of clubhouse - community orgs, other clubs Compliance issue, dollar impact, duration of issue 6/30/2012 1 >$1K Y Y
3.F.1 Rev. Proc. 71-17: guest rules in restaurant Compliance issue, dollar impact, duration of issue 6/30/2012 2 Groups > 8 Y Y
3.F.1 Debt financed income - expansion of club house Compliance issued, dollar impact 6/15/2012 2 >$1K Y Y

Exhibit 4.75.10-9 
Request for EP or EO Determinations Administrative File

Request for EP or EO Determinations Administrative File
To:   EO Determinations Records Unit
Fax: 513-263-3780
E-mail: *TEGE DETERMINATIONS PROCESSING (email is for use with unsecured messages only, when fax is not available)
From:   Date:  
Business Unit/Function:   Group:   Phone Number:  
Check One: Attach one of the following:
_ EO _   EDS print
_ EP _ IDRS print - BMFOLO or INOLES (only if EDS is not available)
  _ Name / EIN / State: (only if EDS and IDRS are not available):
Return Address (Delivery Instructions - no PO Boxes please)/Comments:
Received Date: Preliminary Research:
  Closed Date:   Type of Request:  
_ Closed Date Prior to July 2004 (DVD or microfiche)
  _ DVD Database Research Completed. DVD #  
_ No DVD Found - search microfiche
_ Closed Date After July 2004 (TEDS case or hard-copy case)
Batch #    
Date Completed:   Completed By:  
Actions Taken:
Closed Date Prior to July 2004
_   Researched DVD Database Date Completed:   Completed By:  
  _   Copied administrative file from master DVD
_ Record not found on DVD
_   Researched microfiche Date Completed:   Completed By:  
  _   Copied administrative file from master microfiche
_ Record not found on microfiche
Closed Date After July 2004
_   Researched TEDS repository Date Completed:   Completed By:  
  _   Copied administrative file from TEDS repository
_ Record not found in TEDS repository
_ Researched EOCC Database and/or EOCC Transmittals
  Date Completed:   Completed By:  
  _   Pulled case from EOCC boxes
_ Record not found on EOCC database
_ Researched closed cases boxes (FTEs, ready for doc prep, ready to be scanned)
  Date Completed:   Completed By:  
  _   Pulled case from closed case boxes
_ Record not found in closed case boxes

Exhibit 4.75.10-10 
Sample Form 2848

Directions for processing Form 2848
  For IRS Use Only   Upon receipt of a valid Form 2848, the examining agent needs to complete the For IRS Use Only section at the top right corner of the form. The agent is to print their name, their phone number, function, and date. (The function is EO Exam.)
Received by:
Name (Your name here)
Telephone (Your office phone #)
Function EO Exam
Date (Date of receipt)
  1 Taxpayer Information   Ensure that the name of the organization and its address are provided on the Form 2848. This name should either be as listed on IDRS, or per the organizing document.
Taxpayer name and address
Exempt Organization
123 Main Street
Anytown, US ZIP Code
  Identifying number Verify that the employer identification number that has been entered is that of the organization under audit.  
  2 Representative(s)   The representative section allows 3 representatives on a single form. Valid names are those of the actual persons representing the organization, and not the firm itself.  
Representative #1
456 Side Street
Anytown, US ZIP Code
Check if to be sent notices and communications    
  Representative #2
456 Side Street
Anytown, US ZIP Code
Only the first two representatives can receive notices. The taxpayer must check the box to designate who will receive notices.  
Check if to be sent notices and communications X  
    CAF No. NINE-DIGITR Representatives need to include their Central Authorization file number (if applicable), their PTIN number (if applicable), along with their phone and fax number. The PTIN must be renewed each year.  
Telephone No. (TEN) DIG-ITNO  
Fax No. (TEN) DIG-ITNO  
Check if new: Address Telephone No. Fax No.  
If the person does not have a CAF number, one will be assigned when the Form 2848 is faxed to the appropriate service campus.  
All states west of the Mississippi process authorizations in Ogden; all states east of the Mississippi process authorizations in Memphis. Exceptions: Louisiana and Arkansas process in Memphis; international authorizations in Philadelphia. OSC: (855) 214-7522  
MSC: (855) 214–7519  
PSC: (855) 772–3156  
  3 Matters Enter a description of the matter to which the POA pertains, for example, exempt status / income / excise / employment / UBIT. List only one type of tax on each line.  
Description of Matter (Income, Employment, Excise, Whistleblower,
PLR, FOIA, Civil Penalty, etc.) (see the instructions for line 3)
Exempt Status  
Employment Tax  
  Tax Form Number
(1040, 941, 720, etc.) (if applicable)
List all returns included in the examination, for example, Forms 990, 990-T, 4720, 940, 941, 730. For forms such as 941 and 940, enter the forms on separate lines.  
  Year(s) or Period(s) (if applicable)
(see the instructions for line 3)
For multiple years or a series of inclusive periods, including quarterly periods, you may list 2008 through (thru or a hyphen) 2010. For example, "2008 thru 2010" or "2nd 2008 - 3rd 2009" . Using "2009 " would cover all quarters in 2009.  
Multiple Years Example Single Fiscal Year  
2008-2010 200809  
2008-2010 200809  
2008-2010 4th 2007 - 3rd 2008  
General references such as "All years" , "All periods" , or "All taxes" are not permitted. Any POA form with a general reference will be returned. Representation can only be granted for the years or periods listed on line 3.  
  6 Retention/revocation of prior power(s) of attorney. The filing of this power of attorney automatically revokes all earlier power(s) of attorney on file with the Internal Revenue Service for the same matters and years or periods covered by this document. If you do not want to revoke a prior power of attorney, check here.  
This box is used when the organization plans to have more than three representatives. As directed, a copy of a previously executed Form 2848 must be included. To revoke a POA without appointing a new representative, the taxpayer or the representative must write REVOKE on the top of the first page of the previously executed Form 2848, sign and date the form anew, and fax the form to the appropriate service campus.  
  Legible/Illegible Signature   9/11/2011   President  
  Signature   Date   Title (if applicable)  
  Officer's Name     Exempt Organization  
  Print Name PIN Number   Print name of taxpayer from line 1 if other than individual  
The Form 2848 is invalid if it is not signed and dated by an authorized individual (as well as by the representative, discussed further below). In addition to the signature, the title, the name of the individual, and the name of the organization must be provided. Employees, such as an office manager or bookkeeper are not authorized to sign the form.  
  Designation - Insert
above letter (a-r)
Licensing jurisdiction
(state) or other
licensing authority
(if applicable)
Bar, license, certification,
registration, or enrollment
number (if applicable).
See instructions for Part II for
more information.
Signature Date  
b US Any # POA's Signature 9/11/2011  
The representative must indicate authority to represent the organization, their state of jurisdiction, as well as signing and dating the Form 2848. If the representative is a CPA, attorney, enrolled agent/actuary/retirement plan agent, they also need to enter their CPA license, attorney bar number, or enrollment number. If the representative is an unenrolled return preparer or a registered tax return preparer, the PTIN is required.


The date between when the taxpayer signs and when the representative subsequently signs must be within 45 days for domestic authorizations and within 60 days for authorizations from taxpayers residing abroad. There is no time requirement if the taxpayer signs after the representative signs.


If securing a POA for a joint return, the spouse must execute his or her own POA on a separate Form 2848.


Exhibit 4.75.10-11 
Correspondence Rules

What Address Goes in the Heading of Letters?

  • All examination closing letters (except letters issued by Mandatory Review) must have MS 4900 DAL in the heading.

  • All examination closing letters issued by Mandatory Review, except NRP no-change closing letters, must have MS 4920 DAL in the heading.

  • NRP no-change closing letters will have MS 4900 DAL in the heading.

  • 30-day letters must have the mailing address of the examiner in the heading because they solicit a reply.

  • All other examination letters must have the mailing address of the sender in the heading.

What Goes in the Signature Block?

  • The Director, EO Examinations applies to all examination closing letters and 30-day letters

  • All other letters will have the signature block of the sender.

Letters that are issued by the "group" at "group level" are considered letters issued with the group manager's approval.

For letters issued by the examining group, the contact at the heading will reflect the examiner’s name.

For letters issued by a review function, the contact at the heading will reflect the reviewer's name (exception for NRP no-change closing letters).

For closing letters to be issued by Mandatory Review, indicate the letter number at the heading of Form 5772 and in the Mandatory Review section of Form 3198-A.

Examiners need not print letters to be issued by Mandatory Review, unless the statute date for assessment is imminent and the letter is a 90-day letter.

With respect to 30-day letters, examiners grade 11 and above in offices that do not have access to the director’s stamp may handwrite their signature in the signature block with the word “for” before the name of the Director with the group manager's approval.

If correspondence rules and procedures are issued which contain different guidance, such as specific project procedures, be sure to follow that guidance instead.

For church letters refer to refer to IRM 4.76.7, Church Tax Inquiries and Examinations – IRC § 7611.

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