4.75.17 Mandatory Review

Manual Transmittal

June 08, 2017

Purpose

(1) This transmits revised IRM 4.75.17, Exempt Organization Examination Procedures, Mandatory Review.

Material Changes

(1) As of the publication of this manual, TE/GE is undergoing a restructure which will affect titles, authorities, and offices.

  • All references to The Examination Program and Review (EPR) and the authorities granted to the manager of that office will be changed, pending announcement for the authorized replacement.

  • All references to Examination Special Support (ESS) are changed to "EO Closing Unit," EGC 7997.

  • All references to "EO Classification-Referrals" are changed to "EO Referrals Group."

(2) IRM 4.75.17.1, Program Scope added to comply with internal control requirements. Discussed the purpose of the IRM and who would be using it.

(3) IRM 4.75.17.1.1, Background added to explain what goes into the case review work product.

(4) IRM 4.75.17.1.2, Authority added to show that we have the legal authority to examine the taxpayer’s records.

(5) IRM 4.75.17.1.3, Responsibilities added to show what is expected from the Reviewer.

(6) IRM 4.75.17.1.4, Program Controls added to mention a technical source of knowledge.

(7) Revised IRM 4.75.17.1.6 to update list of cases subject to mandatory review, as stated in IRM 4.75.16.6, Cases Subject to Mandatory Review.

(8) IRM 4.75.17.2 (5): Added the Alpha Code "PP" requirement when submitting MR cases.

(9) IRM 4.75.17.2.1 (3): Added the PATH Act requirements.

(10) IRM 4.75.17.2.5 (2) and (3): Added the PATH Act requirements on 90 day letter procedures.

(11) IRM 4.75.17.2.6 (2): Path Act changes added to redaction requirements.

(12) IRM 4.75.17.3 (2): Mentioned the impact of the Knowledge Networks (K-Net) on responding to agents questions.

Effect on Other Documents

This supersedes IRM 4.75.17, Exempt Organizations Examination Procedures, EO Examinations Review Responsibilities and Procedures, dated January 30, 2015.
This revision incorporates Interim Guidance Memorandum TEGE-04-0216-00, PATH Act Impact on Revocations and Modifications of Exempt Status, Effective December 18, 2015.
This revision incorporates Interim Guidance Memorandum TEGE-04-0515-0011, ASED Alpha Code "PP" , Effective May 5, 2015.

Audience

Tax Exempt and Government Entities
Exempt Organizations
Examinations

Effective Date

(06-08-2017)

Margaret Von Lienen
Acting Director, Exempt Organizations
Tax Exempt and Government Entities

Program Scope and Objectives

  1. Purpose: This manual focuses on the unit in Exempt Organizations responsible for reviewing the EO field agent’s cases and providing technical services to the field. Topics addressed include:

    1. Final reviews of cases for technical accuracy

    2. Preparation and issuance of 90 day letters (including statutory notices of deficiency)

    3. Closing agreements

    4. Publishing activities (such as the IRM)

    5. Providing coordinators on various issues

  2. Audience: The procedures in this manual apply to Exempt Organizations Examination employees in the following series:

    • GS-512

    • GS-526

    • GS-987

  3. Policy Owner: Director, Exempt Organizations

  4. Program Owner: Exempt Organizations

Background

  1. Ensuring technical accuracy for the agent’s field audits is essential for the mission assigned to Exempt Organizations. Producing an accurate work product includes:

    1. Technical positions are well thought out and accurate.

    2. The facts were properly developed.

    3. Audit conclusions were fully supported.

    4. The case follows current procedures and legislation

    5. The case file was complete and in proper order.

Authority

  1. Policy Statement 4-119 states that the primary objective of the EO audit program is regulatory, with emphasis on continued qualification of exempt organizations. IRM 1.2.13.1.36

  2. IRC 7602 gives agents the authority to:

    1. Examine any books, papers, records or other data necessary to complete an audit.

    2. Take testimony under oath to secure additional information needed.

    3. Issue a summons for information necessary to complete an audit.

    4. Inquire into any offense connected with the administration or enforcement of the Internal Revenue laws.

  3. Reviewers are also responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3).

Responsibilities

  1. After the audit, the Reviewers, Mandatory Review are responsible to determine if the organization:

    1. Meets the requirements for continued tax exempt status.

    2. Filed all required tax and information returns.

    3. Reported information and tax liabilities correctly.

    4. Prepared 90 day and Stat Notices properly.

  2. Other Review Staff members are responsible for publishing matters including:

    1. Writing, editing and updating the IRM

    2. Preparing memoranda and alerts

    3. Preparing and publishing EO Examinations standard letters

    4. Preparing classroom presentations and CPE materials

  3. One or more members of review staff are delegated the responsibility of redacting final adverse determination letters for disclosure purposes for IRC 6110 purposes.

Program Controls

  1. Agents should consult the K-Net Knowledge Management Network to ensure proper issue development and consistent application of the law.

Acronyms

  1. The table lists commonly used acronyms and their definitions.

    ACRONYM DEFINITION
    AIMS Audit Information Management System
    EO Exempt Organizations
    EPR Examination Program and Review
    K-NET Knowledge Management Network
    SME Subject Matter Expert
    RAR Revenue Agent Report
    RCCMS Reporting Compliance Case Management System
    TAM Technical Advice Memorandum
    TE/GE Tax Exempt/Government Entities

Introduction

  1. Mandatory Review provides technical services for EO examination field agents to enhance the technical quality of their work. The services Mandatory Review performs are analogous to those performed by Small Business/Self Employed (SB/SE) Technical Services. For information on SB/SE Technical Service procedures, see IRM 4.8.

  2. A specific list of cases subject to Mandatory Review are listed in IRM 4.75.16.6. In summary, Mandatory Review handles these types of cases:

    • Church tax audits

    • Church tax inquiries

    • Revocations (other than by IRC 6033(j))

    • Modifications of foundation status

    • Unagreed issues with protest

    • Unagreed issues without protest, in general.

    • Whistleblowers

    • Worker classifications

    • Joint Committee Claim Cases

  3. Mandatory Review performs the final review of the case before it closes to Appeals (in the case of protests) or to the EO Closing Unit (formerly Examination Special Support (ESS)). When necessary, Mandatory Review prepares and issues 90-day letters (final adverse determination letters, statutory notices of deficiency, and notices of determination of worker classification). Mandatory Review also handles requests for:

    • Closing agreements

    • Continuing professional education presentations

    • Forms 1254, Examination Suspense Report, suspense

    • Published instructions (IRM and interim guidance memoranda)

    • EO letter revisions

    • Redactions of final audit reports, 90-day letters, and corresponding cover letters

    • Responding to procedural questions via mailbox *TEGE EO Review Staff

    • Non-standard unpublished letters assistance

    • Technical advice memoranda

  4. Mandatory Review also has coordinators for various issues. These include:

    • Church Coordinator (IRM 4.76.7, Church Tax Inquiries and Examinations - IRC § 7611)

    • Closing Agreement Coordinator (IRM 4.75.25, Exempt Organizations Examinations Closing Agreements)

    • EO Examinations IRM Coordinator (IRM 1.11.1.6.6.2, IRM Coordinator)

    • Letters Rewrite Coordinator (IRM 25.13.1.2.1, Requests for New and Revised Taxpayer Correspondence Products)

    • Technical Advice Coordinator (IRM 4.75.36, Procedures For Processing Technical Advice Cases)

    • Whistleblower Coordinator (IRM 4.75.4.7, Category B Whistleblower Form 211 Claim Procedures)

  5. Mandatory Review has subject matter experts (SMEs) for various procedural topics discussed in IRM Chapter 4.75, Exempt Organization Examination Procedures. SMEs answer questions sent to the *TEGE EO Review Staff mailbox, normally within 3 business days.

  6. The term agent in this IRM refers to the individuals assigned to EO Examination cases, regardless of whether the employee is in the General Series (GS) 0512, 0526, 0592, or 0987 occupational series.

Cases Submitted to Mandatory Review

  1. Groups closing cases subject to Mandatory Review follow the directions in IRM 4.75.16.9, Shipping From the Group, and IRM 10.2.13.4.4.1, Shipping Personally Identifiable Information (PII). To determine whether to close a case to Mandatory Review, agents and group managers refer to IRM 4.75.16.6, Cases Subject to Mandatory Review.

  2. Mandatory Review Statute Coordinator- When you receive a case from a group:

    1. Acknowledge receipt of Form 3210, Document Transmittal.

    2. Return one copy of the Form 3210 to the group.

    3. Upload it to the Reporting Compliance Case Management System (RCCMS).

    4. Verify the assessment statute of expirations date (ASED). Notify the Manager, Mandatory Review if statute procedures (including proper use of alpha code "PP" ) aren’t followed.

    5. Hand the case file to the Manager, Mandatory Review to assign to a reviewer.

    Caution:

    If the case file lacks Form 3210 or the group didn’t close the module(s) to Mandatory Review on RCCMS, prepare Form 3210, double package the file, and ship back to the group.

  3. Statute Coordinator- If the case does not belong in Mandatory Review:

    1. Prepare a transmittal (Form 3210).

    2. Complete Form 9814, Request for Mail/Shipping Service (if sending the case outside of Dallas).

    3. Double package the file (if sending the case outside of Dallas).

    4. Transfer the case on RCCMS.

    5. Send the case to the appropriate unit.

  4. Statute Coordinator, Mandatory Review - When you prepare the case to send to the reviewer:

    1. Prepare a case closing check sheet, noting the name and employer identification number (EIN). See IRM Exhibit 4.75.20-1, Mandatory Review Cover Sheet.

    2. On the check sheet, indicate the date of case assignment.

    3. On the check sheet, list each tax module assigned to the reviewer by master file type (MFT), tax period, and ASED.

    4. Research the Integrated Data Retrieval System (IDRS) and generate AMDISA, BMFOLI, BMFOLT, and INOLES prints.

    5. Include the IDRS prints in the file or secure e-mail them to the assigned reviewer.

    6. Get the Manager, Mandatory Review’s signature on the case closing cover sheet.

    7. Place the check sheet on the outside of the case file folder.

    8. Transfer the modules in RCCMS to the assigned reviewer's inventory.

    9. Prepare Forms 3210 and 9814.

    10. Double package the file per the instructions at IRM 10.2.13.4.4.1.

    11. Put the package into the outgoing mail.

  5. Review Function - Note the following timeframes when you receive an unagreed case with protest:

    • Don’t accept protested cases subject to Appeals if there are less than 455 days (15 months) remaining on the statute of limitations for assessment.

    • Appeals won’t accept protested cases if less than 365 days remain until the expiration of the statute of limitations for assessment.

  6. For cases returned to Appeals after consideration of a new issue or information:

    • Don’t accept a protested case if there are less than 270 days (9 months) remaining on the statute of limitations for assessment.

    • Appeals won’t accept cases if less than 180 days remain until the expiration of the statute of limitations for assessment.

  7. If Appeals returns a case to EO Examinations, there must be at least 210 days remaining on the statute of limitations when Review receives it.

  8. Manager, Mandatory Review- Upon receipt of the case file:

    1. Inspect the case file.

    2. Determine the issue(s).

    3. If the case belongs in Mandatory Review, assign to a reviewer.

    4. Give the case to a tax examining assistant indicating to whom and where to send it.

    Note:

    The Manager, Mandatory Review assigns cases based on reviewer workload and doesn’t normally consider geographical location, unless the closed case comes from a reviewer's post of duty, in which case they assign it to another reviewer. Reviewers also do not review cases they worked on before joining Mandatory Review.

  9. Reviewer, Mandatory Review- When you receive the case file:

    1. Sign the Form 3210.

    2. Prepare a fax cover sheet, attention: (tax examining assistant), using the Mandatory Review group e-fax number.

    3. Fax the cover sheet and Form 3210 to the group e-fax.

    4. In MS Outlook, transfer the incoming e-mail to your inbox.

    5. Forward the e-mail as a secured e-mail to the tax examining assistant.

    6. Archive the e-mail message that’s in your inbox.

    7. Review the case file to verify the statute of limitations.

    8. Document in a new Form 5464 the completion of steps 1 through 7 above.

Reviewing a Case

  1. The Reviewer, Mandatory Review, performs the actions throughout this subsection.

  2. When reviewing the case, keep in mind that the focus is on technical and procedural accuracy. Special Review performs quality reviews of closed cases, so no need to duplicate by doing a quality review on a Mandatory Review case.

  3. Focus on these key areas:

    • Verify the statute(s) of limitations.

    • Secure statute extensions for protested cases.

    • Verify the proper use of alpha code "PP" for consistency.

    • Collect sufficient facts.

    • Identify direct applicable law.

    • Explain the law as applied both clearly and plainly.

    • Compute the correct amount of tax, penalties, and interest (if applicable).

    • Prepare the correct forms.

    • Review the administrative record for completeness (if applicable).

    • Determine if the case is PATH Act compliant (if applicable).

    • Help to develop the package audit.

    • Obtain missing schedules and attachments (if applicable).

  4. During the review, check that the case contains properly:

    • Executed Forms 872, Consent to Extend the Time to Assess Tax or 872-A, Special Consent to Extend the Time to Assess Tax, if needed.

    • Completed Forms 895, Notice of Statute Expiration, if applicable.

    • Assembled tax returns for all years on the Audit Inventory Management System (AIMS)/RCCMS.

    • Signed and executed Forms 2848, Power of Attorney and/or Forms 8821, Tax Information Authorization.

    • Documented Forms 5772, EP/EO Workpaper Summary, Forms 5773, EP/EO Workpaper Summary Continuation Sheet, and Forms 5464, Case Chronology Record.

    • Developed workpapers documenting the audit and supporting the agent's determinations.

    Note:

    For cases with 990 series returns or Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the IRC, a scanned copy downloaded from the Statistics of Income EO Image Net (SEIN) suffices. For other types of issues, the original return needs to be in the file.

  5. Not all cases reviewed are sent to to Appeals or issued 90-day letters. See IRM 4.75.16.6 for the list of types of cases subject to mandatory review. See these IRMs for procedures:

    • IRM 4.75.4.7, Category B Whistleblower Form 211 Claim Procedures

    • IRM 4.76.7, Church Tax Inquiries and Examinations - IRC § 7611

    • IRM 4.75.37, Claims, Requests for Abatement and Audit Reconsiderations

    • IRM 4.75.25, Exempt Organizations Examinations Closing Agreements

    • IRM 4.75.24, Organizations Covered by a Group Ruling

Preparing a Memorandum

  1. The Reviewer, Mandatory Review, performs the actions throughout this subsection.

  2. You may contact groups informally via e-mail, Office Communications Server (OCS), phone calls, or in person. When providing formal guidance or feedback, prepare Form 5456, Reviewer's Memorandum - EP/EO.

  3. In preparing the form, determine the type of feedback to provide:

    1. Advisory: Errors don’t require agent action(s).

    2. Inquiry: Errors require agent action(s), based on your initial review of a case.

    3. Correction: Errors still require agent action(s), based on your subsequent review of a case you previously returned to the group.

  4. Advisory memoranda may also be commendatory. You may prepare a commendatory advisory memo if you believe the agent has performed exceptionally well on a case. Group managers may place these memos in the agent's employee personnel folder.

  5. Before determining which memo to prepare, determine whether the error involves an agreed issue. In general, don’t instruct the agent to reopen an agreed issue, or create a new issue, unless your grounds to do so are substantial and/or the potential effect upon the tax liability is material.

    Example:

    You review an unagreed case involving employment taxes for a CEO's compensation. The agent proposed full rates, explaining that the organization failed to treat the CEO as an employee and issue a Form W-2, Wage and Tax Statement. You research the CEO's records in IDRS and discover the CEO filed a Form 1040 Schedule C, Profit or Loss From Business (Sole Proprietorship), and received a Form 1099-MISC, Miscellaneous Income, from the organization. This case involves worker reclassification, using the reduced IRC 3509(a) rates. This case would merit a return to the group.

    Example:

    The agent's Form 5772 doesn’t match the entries on Form 5773 and the time entered on the Form 5599, TE/GE Examined Closing Record, doesn't match either the amounts reported on the Form 5772 or Form 5464. Other errors on the Form 5599 include the wrong disposal code and principal issue codes. This case does not merit a return to the group. Make the corrections and close the case.

  6. Complete the Form 5456 as follows:

    1. Check advisory, correction, or inquiry.

    2. Box 1: insert the group number after the group manager salutation.

    3. Box 2: identify the last agent to work the case.

    4. Box 3: enter the date of completion of the memo.

    5. Box 4: indicate whether the case has a short statute.

    6. Box 5: list the name, EIN, and tax modules.

    7. Box 6: enter the year, using hyphens if multiple periods.

    8. Box 7: check examination.

    9. Box 8: check mandatory review.

    10. Box 9: check the applicable box.

    11. Box 10: enter a date and initials if indicating an error in the agent's computations.

    12. Box 11: list the pages of the agent's report that have computational errors.

    13. Box 12: write the text of the memo, indicating a continuation on Form 886-A, Explanation of Items, if necessary.

    14. Box 13: electronically sign (e-sign) the memo (3 times) after completing the remaining boxes.

    15. Box 14: leave blank.

    16. Box 15: check the type of error(s).

    17. Box 16: check the specific error, if applicable.

  7. When writing an inquiry or correction memo:

    1. Use plain language.

    2. Provide a brief history of why Mandatory Review has the case.

    3. Outline the errors identified in the case file.

    4. Outline a course of action for the agent to complete.

    5. Provide corrected computations, if applicable.

    6. Give directions on how to prepare Form 5457, Response to Reviewer's Memorandum - EP/EO.

    7. List your mailing address.

    Note:

    Reviewers would reference an attachment on Form 5456 and write all additional comments on a word file which can be converted to a PDF file if necessary.

  8. For advisory memos, identify the error(s). Show where to find directions to avoid the errors in the future. (Cases without errors may merit a commendatory advisory memo).

  9. For inquiry and correction memos, continue to IRM 4.75.17.2.3, Returning a Case. For advisory memos, skip to IRM 4.75.17.2.4, Closing a Case.

Returning a Case

  1. The Reviewer, Mandatory Review, performs the actions throughout this subsection.

  2. When you complete the memo and insert any additions to a word file, e-sign the memo three times. Each page of the Form 5456 contains a separate signature field in Box 13.

  3. Secure e-mail the memo to the Manager, Mandatory Review. In the e-mail identify the group manager and area manager.

  4. When you receive a digitally signed memo from the Manager, Mandatory Review:

    1. Print the memo.

      Caution:

      You may need to separately print various pages of the memo if your printer prints double sided by default.

    2. Place the memo on the front of the file.

    3. Upload a copy of the memo to RCCMS.

    4. Prepare Form 3210, using the most recent organizational chart to find the group manager's address.

    5. Complete Form 9814, checking the appropriate UPS/Fed Ex option.

    6. Double package the file per IRM 10.2.13.4.4.1.

    7. Request a transfer of the files in RCCMS.

    8. Place the case in the mail.

    9. E-mail a copy of the Form 3210 to the Mandatory Review Statute Coordinator. In the e-mail, provide the group number and request a transfer of the case.

    Note:

    Some managers prefer for you to ship the case directly to the agent. When preparing the transmittal, consult the manager as needed to determine where to ship the case.

Group's Response
  1. The group manager considers the reviewer’s memorandum. The group must submit their reply within 60 days of receipt.

    1. If the group manager considers the reviewer's memorandum inappropriate, refer to IRM 4.75.17.2.3.2, Dispute Resolution.

    2. Otherwise, forward Form 5456 via secure e-mail to the agent. Return the case to the agent via RCCMS, and maintain appropriate AIMS controls.

  2. The agent: Upon receipt of the returned case:

    1. Reopen the case on Web ETS.

    2. Flip the Form 5456 over to see if there is a word file printed on the back.

    3. Review the memo.

    4. Note all of the directions provided in the memo.

    5. Contact the reviewer if you have any questions about the directions.

  3. Confer with your manager about the requested actions. If you and your manager disagree with the course of action, proceed to IRM 4.75.17.2.3.2, Dispute Resolution. Otherwise, perform the actions requested.

    Caution:

    If you don’t do all of the actions requested, you may receive the case back again, with a correction memo attached.

  4. If unable to complete all of the actions requested, ask the reviewer for an alternative course of action.

  5. Request and secure a statute extension, if needed.

  6. Before you close your case to your manager:

    1. Fully document your actions taken in your Form 5464 and on Form 5457.

    2. Verify that the hours on your Form 5464 agree with the time input on Web ETS.

    3. Update and print your Forms 5599, 5772, 5773 and related workpapers.

    4. Electronically sign and print the Form 5457.

    5. Upload the Form 5457 and the other updated documents to RCCMS.

    6. Reassemble your case file. See IRM 4.75.16.7, Case File Assembly.

  7. Close the case file to your manager.

    Note:

    If located in a different post of duty than your manager, prepare a transmittal package (Forms 3210 and 9814) to ship the case via UPS/Fed Ex to your manager. Double package the case file using approved materials. See IRM 10.2.13.4.4.1.

  8. Reply to Mandatory Review within 60 days of receipt of a reviewer's memo.

Dispute Resolution
  1. The group manager has two options for resolving disputes with a reviewer's recommended course of action:

    1. Contact the reviewer to discuss the case. Document the outcome of the discussion in the Form 5457. Have the agent complete any agreed upon actions. Sign the Form 5457 and return the case to the reviewer.

    2. Complete the Form 5457 documenting the disputed items and why the group won't take the course of action. Sign the Form 5457 and return the case to the reviewer.

  2. Reviewer: Upon receipt of the case file:

    1. Review the Form 5457 and the case file.

    2. Determine whether to agree with the group manager.

    3. Sign the Form 5457, checking the applicable entries in boxes 8 and 9.

  3. Reviewer: If in disagreement with the group, contact the Manager, Mandatory Review. Provide a copy of the Form 5457. Discuss the case.

  4. Manager, Mandatory Review: Schedule a call with the group manager, his/her area manager, and the Manager, Exam Programs and Review (EPR). Document the discussion and any resolution agreed upon by the area manager and the Manager, EPR. If the parties can't agree upon a course of action, elevate the issue to the Director, Exempt Organizations (EO) Examinations who makes the final decision on the issue.

  5. Manager, Mandatory Review: Convey the directions to the reviewer, who either prepares a correction memorandum to return the case, or proceeds to make any necessary corrections before closing the case.

  6. Reviewer: If issuing a correction memorandum, see IRM 4.75.17.2.2, Preparing a Memorandum. If correcting any errors and closing the case, see IRM 4.75.17.2.4, Closing a Case.

Closing a Case

  1. Reviewer: Prepare the case for closure:

    1. Complete and sign the closing check sheet.

    2. Sign and date the Forms 5599 and 5772.

    3. Upload the 90-day letter package and any workpapers you've created to RCCMS.

    4. For revocations, send the redaction package to the Mandatory Review Senior Tax Analyst.

    5. If available as an option, scan and upload the Area Counsel memorandum to RCCMS.

    6. Print your Form 5464 and place it behind the case closing check sheet.

  2. Reviewer: Prepare the case to ship to Dallas:

    1. Prepare Forms 3210 and 9814. See IRM 4.75.16.9 for where to mail the file and the method of mailing.

    2. Double package the file per IRM 10.2.13.4.4.1.

    3. Place the package in the mail, as per local procedures.

    4. Complete the closing record on RCCMS and close the case.

90-Day Letter Preparation and Issuance

  1. The Reviewer, Mandatory Review, prepares and issues 90-day letters in general for unagreed without protest cases.

  2. If you concur with the agent's proposed course of action and you determine that case file has no errors, and if the case was not protested, prepare a 90-day letter for these situations:

    • Foundation status modification of an IRC 501(c)(3) organization

    • Revocation of any tax-exempt organization

    • Disqualification of a status 36 organization

    • Year to year disqualification of a IRC 501(c)(12) or (c)(15) organization

    • Unagreed tax deficiencies (not including non-worker classification employment taxes and miscellaneous excise taxes)

    • Worker classification determination

  3. For guidance on preparing the 90-day letter, consult the following manuals:

    • For all foundation status modifications not protested: IRM 4.75.20, Final Case Processing

    • For all IRC 501(c) or (d) revocations not protested: IRM 4.75.20

    • For unagreed without protest tax deficiencies (income tax): IRM 4.8.9, Statutory Notices of Deficiency

    • For unagreed without protest tax deficiencies (Chapter 41 and 42 excise taxes): IRM 4.75.20 and IRM 4.76.4, Private Foundations

    • For unagreed without protest worker classification determinations: IRM 4.8.10, Notice of Determination of Worker Classification

    • For issuing 30-day letters where no worker classification issues are present: IRM 4.23.10.9, 30 Day Letters

  4. Don’t prepare 90-day letters for unagreed employment tax deficiencies - non-worker classification, and for miscellaneous excise taxes, such as gaming excise taxes. In these situations, the 30-day letter serves as the final letter if not protested.

  5. When you've finished creating the 90-day letter package:

    1. Print one copy of the proposed 90-day letter package, along with any power of attorney cover letters.

    2. Place the letter in front of the case file.

    3. Reassemble the file, if necessary, in the proper order. See IRM 4.75.16.7, Case File Assembly.

    4. Reassemble and re-index the administrative record, if necessary. See IRM 4.75.32.4, Preparation of the Administrative Record.

  6. Prepare a brief memo to Area Counsel requesting pre-issuance review of the 90-day letter. See IRM 4.75.20-2, Memorandum to Area Counsel. Consult Chief Counsel's website for the appropriate Area Counsel office: http://ccintranet.prod.irscounsel.treas.gov/OrgStrat/Offices/TEGE-DC/General%20Documents%20and%20Links/Area%20Counsel%20Geographic%20Jurisdiction%20Map.pdf

    Note:

    It is recommended that the reviewer first review the file to see if Area Counsel had previously been involved in advising Exam in the case. The file should be sent to that Area Counsel office based on geographic area, as the proper destination is the Area Counsel attorney who originally worked on the case.

  7. After consulting the map, prepare a Form 3210 and Form 9814 to ship the case to the identified Area Counsel office. For a list of Area Counsel office addresses, see http://ccintranet.prod.irscounsel.treas.gov/OrgStrat/Offices/TEGE-DC/Pages/AreaCounselOffices.aspx.

  8. Double package the file per IRM 10.2.13.4.4.1. Send the file to Area Counsel per the time frames listed at IRM 4.75.16.9.

  9. When Area Counsel returns the file, acknowledge receipt on the Form 3210 and return the form to Area Counsel. Retain a copy of the Form 3210 as per local procedures.

  10. Review the memorandum from Area Counsel. Make any corrections to the 90-day letter package as directed by Area Counsel. If you have questions, consult the attorney who wrote the memo.

  11. For final adverse determination letters, send the 90-day letter via secure e-mail to the Manager, Mandatory Review, who secures the signature of the Manager, EPR and returns three signed 90-day letters by mail. If needed, make copies of the letters for distribution to powers of attorney.

  12. Print and date stamp the completed final 90-day letter package. Use the method provided in IRM Exhibit 4.8.9-2, Computation of Last Day to File a Petition With United States Tax Court and Computation of Default Date, to determine the last day for filing a petition.

  13. For statutory notices of deficiency and notices of worker classification determination, signature stamp the letter with the Director, EO Examinations signature.

  14. Make additional copies of the 90-day letter as indicated in the enclosure statements at the end of the letter. Make a copy of the 90-day letter package for the case file, and one for the administrative record if necessary. If available as an option, scan the 90-day letter and upload it to RCCMS.

  15. Prepare the 90-day letter package for mailing, either certified for domestic addresses, or registered for foreign addresses:

    1. Follow local procedures for obtaining postage and mailing the package.

    2. Obtain a stamped certified or registered mail receipt. (For countries that don't permit registered mail, get a certificate of mailing).

    3. Complete Postal Service (PS) Form 3877, Firm Mailing Book for Accountable Mail.

    4. Copy the receipt and staple the photocopy to the back of the retained 90-day letter package. (Make two photocopies if an administrative record is involved).

    5. Staple the original receipt to the PS Form 3877 and place the form in the front of the case file.

  16. See IRM 4.75.17.2.4, Closing a Case.

    Note:

    Remember to verify the last known address prior to sending the notice. See IRM 4.8.9.8.2.1, Last Known Address.

Redaction Procedures

  1. Reviewer: After you issue the final adverse determination letter to the taxpayer, prepare an electronic redaction package with copies of the following documents:

    1. 30-day letter issued by the group.

    2. Explanation of items (Form 886-A or its equivalent).

    3. Final adverse determination letter sent to the taxpayer with its issuance date.

    4. Form 4194, Revocation of IRC § 170(c) Status, (if contributions are deductible under IRC 170).

    Note:

    Other attachments to the 30-day letter, such as Forms 4621-A, Report of Examination-Exempt Organizations, and 6018, Consent to Proposed Adverse Action, do not need redaction.

  2. For 501(c) "Other" revocations, we now issue a 90 day final letter which is included in the redaction package.

  3. Send the redaction package via secure messaging to the Mandatory Review Senior Tax Analyst. Do not use personally identifiable information in the subject line of the e-mail.

  4. See IRM 4.75.20.5.1, Publication of the Determination for further procedures.

Responding to Questions

  1. Mandatory Review encourages all EO Examination employees to submit their procedural questions to the *TEGE EO Review Staff mailbox.

  2. Examination employees first consider submitting their technical questions by clicking on "ask a question" on the relevant Knowledge Network (K-Net) site on the KM portal.

  3. Before you submit a question, review the available materials on the topic, such as:

    • Internal Revenue Code sections

    • Treasury Regulations

    • Applicable court cases

    • Other legal guidance

    • Continuing professional education materials

    • Internal Revenue Manuals

    • Interim guidance memoranda

    Reminder:

    See IRM 4.10.7.2, Researching Tax Law for a comprehensive listing of available legal resources.

  4. Please list the resources you researched when submitting your question.

  5. The mailbox coordinator either answers or forwards the question to a SME, with an expected response of three business days. SMEs are not limited to members of Mandatory Review.

  6. When an agent or manager directly contacts a reviewer, whether by OCS, in person, or by phone, the reviewer documents the question (such as copying the conversation from OCS to e-mail) and forwards the question with the reviewer's response to the mailbox.

  7. Mandatory Review maintains a table of previously asked questions and responses. The reviewer may access this table to see if a previously provided answer is available and applies it to the current question.

Form 1254 Suspense Procedures

  1. For guidance on suspending cases using Form 1254 see IRM 4.2.1.4, 1254 Suspense and IRM 4.8.2.10, Suspense Cases. Examination Technical Services is the SB/SE counterpart to EO Examinations Mandatory Review.

  2. When preparing Form 1254, replace the salutation from "SB/SE, Technical Services Group Manager" to "Manager, Mandatory Review" .

  3. When following IRM 4.8.2.10.1.1, Placing the Case in Suspense, put the case into status 38 in lieu of status 30.

Table of Collateral Duties of Review Staff

Duties Special Review Mandatory Review
Audit hour presentations X
Churches X
Claims X
Closing agreements X
CPE and group presentations X X
Develop operating procedures X X
Fraud X
Internal Revenue Manual updates X X
Newsletters X
Notices of worker classification determination X
Restricted Interest X
Statute of limitations X X
Statutory notices of deficiency X
Technical advice memoranda X
*TEGE EO Review Staff mailbox questions X
Whistle blowers X