4.75.32 Declaratory Judgment Cases And The Administrative Record

Manual Transmittal

January 18, 2017

Purpose

(1) This transmits revised IRM 4.75.32, Exempt Organizations Examination Procedures, Declaratory Judgment Cases and the Administrative Record.

Material Changes

(1) This IRM is being revised to include changes brought about by passage of the PATH (Protecting Americans From Tax) Act of 2015, resulting in the expansion of cases subject to declaratory judgment and requiring preparation of the administrative record.

(2) Changed terms such as examiner, examination, and examine to agent, audit, and audit, in connection with the Plain Writing Act. The term agent includes revenue agents and tax compliance officers.

(3) IRM 4.75.32.1(1): Amended the introductory paragraph to expand the focus on IRC 501(c)(3) revocations to all revocations as expanded by the PATH Act.

(4) IRM 4.75.32.1: In paragraphs (2), (3) and (4), introduced the enactment of the new law and its expansion of existing laws concerning declaratory judgment rights.

(5) IRM 4.75.32.2(1): In Background Information, added the fact that the PATH Act added an extra subparagraph to IRC 7428.

(6) IRM 4.75.32.3: Expanded the scope of cases which now qualify for declaratory judgment rights.

(7) Moved IRM 4.75.32.4.2 to IRM 4.75.32.4.1- Preparation of the Administrative Record File. Changed the language to include all IRC 501 (c) and (d) organizations.

(8) Moved IRM 4.75.32.4.1 to 4.75.32.4.2 and renamed it Exchange of Documents to improve the flow of information.

(9) IRM 4.75.32.5(4): Expanded the fourth paragraph to reflect the agent’s expanded role in the preparation of the administrative record due to the PATH Act.

(10) IRM 4.75.32.8: Expanded the paragraphs to reflect Review Staff’s enhanced role due to the PATH Act.

(11) Introduced a step list at Exhibit 4.75.32–2 that explains documents that are part of the administrative record and actions to take to properly index them into the record.

Effect on Other Documents

This manual supersedes IRM 4.75.32, Declaratory Judgment Cases and the Administrative Record, dated January 27, 2012. This revision incorporates Interim Guidance Memorandum TEGE-04-0216-0003, PATH Act-Impact on Revocations and Modifications of Exempt Status, Effective December 18th, 2015.

Audience

Tax Exempt and Government Entities (TE/GE)
Exempt Organizations (EO) Examination Agents, Tax Compliance Officers and Managers

Effective Date

(01-18-2017)

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

Introduction

  1. The instructions in this IRM apply to all audit cases subject to IRC section 7428, declaratory judgment actions. These include audits in which the IRS proposes to either:

    1. Revoke an organization’s exempt status (qualification).

    2. Adversely modify an organization’s foundation status (classification).

  2. The audit case file for these cases must include a separate and complete administrative record file:

    • Unagreed revocation

    • Foundation Status modification

      Note:

      If the case is unagreed, an index is also required.

  3. With the enactment of the PATH Act of 2015, declaratory judgment rights for IRC 501(c)(3) organizations have been extended to all 501(c) & (d) organizations.

  4. If an organization is not exempt under the code section for which it was granted exempt status or is filing their return under another code section, we no longer modify its exempt status.

Background Information

  1. Congress enacted IRC 7428, Declaratory Judgments Relating to Status and Classification of Organizations under Section 501(c)(3), etc., (Public Law 94-455) allows certain organizations a swift review of their exempt status qualifications or foundation classifications. The PATH Act of 2015:

    1. Added a new subparagraph to IRC 7428(a)(1).

    2. Section 406 now expands those declaratory judgment rights to all other IRC 501(c) and (d) organizations.

  2. An IRC section 501(c) or (d) case means a case with a Form 990 series return or e-Postcard or Form 1065 under audit. Form 990 series returns do not include a case consisting only of Form 990-T returns. It also does not include a Form 990 series return filed by a political organization. Form 1065 is filed by IRC section 501(d) religious and apostolic associations.

  3. A declaratory judgment action permits an organization to challenge a revocation or foundation status modification in court before the assessment of any:

    1. Income taxes that might result from the loss of exemption.

    2. Excise taxes that might result from the reclassification of foundation status.

  4. These courts have jurisdiction over declaratory judgment actions:

    1. U.S. Tax Court

    2. U.S. District Court for the District of Columbia

    3. U.S. Court of Federal Claims

  5. The courts use the administrative record in cases involving declaratory judgments. Cases can be decided by the courts entirely on the contents of an administrative record.

  6. When one or both parties desires a trial in a revocation case in lieu of a determination based solely on the administrative record, additional evidence may be developed and submitted per ordinary trial procedures.

  7. Find the specific rules for declaratory judgment actions, including the content of the administrative record, in Tax Court Rules 210-218. Access the rules at www.ustaxcourt.gov.

Cases Subject to Declaratory Judgment Actions

  1. Declaratory judgment actions apply to cases involving an organization’s initial or continuing qualification or classification as:

    1. An organization described in IRC 501(c) or (d).

    2. An organization described in IRC 170(c)(2).

    3. A private foundation defined in IRC 509(a).

    4. A private operating foundation defined in IRC 4942(j)(3).

    5. A farmers' cooperative under IRC 521(b).

      Note:

      Large Business and International (LB&I) has audit jurisdiction over exempt farmers' cooperatives described under IRC 521.

  2. An adverse foundation status determination is one in which the qualification or classification determined by the IRS is less beneficial to the organization than:

    1. The status originally claimed by the organization.

    2. As determined by either EO Rulings and Agreements or EO Examinations.

  3. Modification of an organization’s foundation status occurs when the IRS determines, for example, that an organization is:

    1. A private non-operating foundation, though it claims to be or is currently classified as a public charity, or is currently classified as a private operating foundation.

    2. A private operating foundation, though it claims to be or is currently classified as a public charity.

    3. An IRC 509(a)(3) organization, though it claims to be, or is currently classified as, a IRC 509(a)(1) or IRC 509(a)(2) organization.

    4. An IRC 509(a)(2) organization, though it claims to be, or is currently classified as, a IRC 509(a)(1) organization.

    5. An IRC 509(a)(1) organization, but it should be classified differently under IRC 170(b)(1)(A) than it is currently classified; i.e., a IRC 170(b)(1)(A)(ii) school reclassified as a IRC 170(b)(1)(A)(vi) publicly-supported charity.

  4. An adverse determination also includes any organization that claims to be described in IRC 170(c)(2) that the IRS determines is not.

  5. The issue of whether non-adverse modifications of foundation status are subject to declaratory judgment procedures is not specifically treated by statute. Because these cases are unlikely litigated, they aren’t subject to this IRMs procedures.

  6. With the enactment of the PATH Act of 2015, all revocations are treated the same, with declaratory judgment rights being conferred upon all revoked exempt organizations. Accordingly:

    1. All revocations of IRC 501(c) or (d) organizations follow the same procedures and processes as those previously used for IRC 501(c)(3) organizations.

    2. The IRS will revoke (or treat as revocation for declaratory judgement purposes) any organization that no longer qualifies under the code section for which tax-exemption was granted or self-declared.

    3. This includes self-declarer organizations (Status 36 entities) determined not to qualify under the code section for which they filed a return.

      Note:

      The self-declaring PF that has indicated on schedule A that they are a PF does not trigger a declaratory judgment action under IRC 7428. Only upon a subsequent examination by the Service would that right apply.

Administrative Record

  1. The administrative record is the written record of the administrative proceedings between the IRS and the exempt organization.

  2. Tax Court Rule 210(b)(12) defines the administrative record as including:

    • The request for determination.

    • All documents submitted to the IRS by the applicant for the request for determination.

    • All protests and related papers submitted to the IRS.

    • All written correspondence between the IRS and the applicant about those protests.

    • All pertinent returns filed with IRS.

    • The notice of determination by the Commissioner.

  3. Agents must include all documents exchanged between the IRS and the organization in connection with the audit in the administrative record for audits on:

    1. Continuing qualification (such as revocation of exempt status).

    2. Classification (such as modification of foundation status).

  4. Although not documents, items such as electronic disks or all other media are considered physical evidence and fall within the intent of Tax Court Rule 210(b)(12) when transmitted between the parties.

    1. If a disk is transmitted by letter, the disk is deemed part of that written document.

    2. If a disk is received at a conference, the disk is then appropriately stamped and marked and then referenced in a summary of the conference transmitted to the taxpayer.

  5. For documents to be considered exchanged with the IRS, the material(s) must go to or from the organization or its representative by:

    1. Hand-delivery

    2. Mail

    3. E-mail

    4. Fax

    Note:

    Documents reviewed on site are not included in the administrative record unless the agent is either given copies or makes copies of the documents that are retained for the exam files.

    Caution:

    Don’t send Sensitive but Unclassified (SBU) information to the organization via e-mail.

  6. The administrative record does not include any internally generated and used materials, such as:

    • Exam workpapers.

    • AIMS documents (Forms 5588, 5595, 5596, 5597, 5598, or 5599).

    • IDRS prints.

    • Reviewer memoranda.

  7. The administrative record does not include materials obtained from third-party sources, such as:

    • Referral packages.

    • Claims (normally not shared under any circumstances).

    • Summoned records from third parties.

    • Summoned third-party testimony.

    • Records obtained from city, county, state or federal agencies.

  8. You can include any document that is generated for internal use or obtained from a third-party in the administrative record by giving a copy of the document to the organization. For materials you obtained from outside sources, consult your group manager and Area Counsel as to what parts of the document(s), if any, you may share, and which method of sharing to use.

  9. Any statements made in correspondence (by either side) is deemed true if there is no conflicting or clarifying evidence. Therefore, if the organization sends or otherwise provides something that doesn’t appear to be correct, get written clarification. Confirm clarification you receive by telephone either by requesting the information in writing or by sending a letter which explains what was discussed on the phone.

Maintaining the Administrative Record File

  1. It is a best practice to create an administrative record file or folder at the beginning of every IRC 501(c) and (d) audit. If the administrative record file is maintained contemporaneously, it will be much easier to assemble after you finish the audit, and make it easier for Mandatory Review to review the case.

  2. This file will contain all items exchanged between the IRS and the organization throughout the audit.

  3. Keep the contents of this file in one of these locations, until you determine the outcome of the audit involving exempt status (or foundation status):

    1. An electronic folder or file

    2. A box or paper folder

    3. Combination of both

  4. Record the date each document was exchanged.

  5. Organize the administrative record file in chronological order, based on when the documents were exchanged. The first document exchanged is Exhibit #1, and all succeeding information should follow accordingly. See Exhibit 4.75.32-1.

    Note:

    Typically, the first document in the administrative record is the determination application, which includes Form 1023, Application for Recognition of Exemption under section 501(c)(3) of the Internal Revenue Code, as well as Form 1024, Application for Recognition of Exemption under section 501(a), with all of the original attachments (articles, bylaws, financial statements, and expanded explanations of proposed activities) indexed as of the date the IRS received the application through to the date the determination letter was issued.

    Exception:

    When organizations have claimed exemption without submitting an application, the first document is typically the earliest Form 990, Return of Organization Exempt From Income Tax, under audit.

  6. For any deviation from strict chronological order, consult Area Counsel as to alternative assembly considerations, and document the discussion in the case chronology record.

    Example:

    You secure half of the year’s bank statements at the initial audit, a few more by IDR a month later, and the rest by bank summonses two months later. You subsequently exchang the summoned bank statements with the organization to include them in the administrative record. Counsel advises you to keep all bank statements for a given year and as one exhibit. Index the dates and methods describing the documents that were exchanged. Identify the number of pages of each set of documents in the description of the documents.

  7. For a listing of documents included in the administrative record, and instructions as to how to index those documents into the record, see Exhibit 4.75.32-2.

Exchange of Documents

  1. In general, if a document is related to the continuing qualification or classification of an organization, and it is a document that has not been exchanged with the organization, mail, or otherwise provide a copy of the document to the organization with a cover letter asking for any comments or clarification the organization may wish to provide.

  2. Refer to Exhibit 4.75.32-3 for examples of documents which might not otherwise be included in the administrative record and for solutions for getting the documents or information included.

  3. Even if a document is not related to an issue potentially subject to declaratory judgment relief, if it has been exchanged it should be included in the administrative record file with an explanation in the administrative record index.

Including the Determination Application as Part of the Administrative Record in Unagreed Audit Cases

  1. Exchange a copy of the determination application (received from Cincinnati) with the organization during the audit, and request comments as to any changes in methods of operation from what was described in the application.

  2. Get a copy of the determination application from the EO Files and Records Unit in Cincinnati. Ask the unit to ship, send a disc or secure e-mail the records.

  3. When exchanging the application with the organization, send only the documents labeled as public. Any PDF files listed as private are internal records that were never exchanged during the application process.

  4. If Cincinnati doesn’t have a copy of the determination, request it from the organization.

  5. For cases in which you got the application from Cincinnati and sent it to the organization, index it twice, (with any cover letter and enclosures) once at the start of the record, and again as of the date you sent to the organization. For cases in which you got the application from the organization, index the application (and any cover letter and attachments) only as of the date you received it because the document won’t have been date stamped as of the initial application.

    Note:

    The organization's copy of the application can’t be proven as being the true confirmed copy of the application.

Index to the Administrative Record

  1. Prepare an index to the administrative record that will allow users to easily locate documents.

  2. Index each exhibit in order (i.e., 1, 2, etc.). Generally, number tabbed folder dividers or write the corresponding number of each exhibit on a Post-It note affixed to the first page of each document.

  3. In preparing the index, list:

    1. The exhibits by number.

    2. A description of each document, including how it was exchanged, followed by the number of pages for each exhibit in parentheses.

  4. Clearly describe all attachments to correspondence in the index. If it helps to clarify the index, give multiple attachments sub-numbers in an outline format (i.e., 4a, 4b, 4c).

  5. If the organization ultimately agrees to revocation (e.g., a Form 6018, Consent to Proposed Adverse Action, is secured), an administrative record is required, but an index is not.

Agent's Responsibility

  1. Always track documents exchanged with the taxpayer, as well as the dates the documents are exchanged. Be careful you don’t deface any documents (e.g., by making notes or highlighting text using highlight markers).

    Caution:

    If a document is defaced, it might have to be exchanged with the organization again, with the markings on it. Discuss this situation with your group manager or Area Counsel.

  2. By carefully tracking all documents exchanged by date, it is easier to compile the administrative record and prepare the index if the case goes unagreed. It’s recommended you compile an administrative record file contemporaneously with the various exchanges so that when items are exchanged, you make a copy of that item and put in the administrative record file/box.

  3. Tax Court Rule 217 imposes short deadlines for filing the administrative record. Further, Counsel reviews all adverse determinations subject to declaratory judgment before IRS issues the final adverse letter. The administrative record must be well-organized and complete when Counsel receives it.

  4. Creating the administrative record file at the beginning of every 501(c) and (d) audit upon indications of revocation and maintaining it contemporaneously is recommended even if the revocation turns out to be agreed. An "agreed" case is one in which the taxpayer has communicated to the agent its agreement to the proposed action by signing Form 6018, Consent to Proposed Adverse Action. Even if the agreement to the revocation was never in doubt, you’re required to prepare the administrative record, but not an index.

    Note:

    A signed Form 6018 agreement is not binding for cases subject to declaratory judgment, as the taxpayer may still exercise their declaratory judgment rights under IRC 7428. Form 6018 is required to substantiate that the taxpayer has agreed to the proposed action.

  5. When photocopying documents, make sure that the copy is a pristine identical copy of the original (aside from being in black and white versus color). This requires that you:

    1. Lay the document flat on the glass pane in lieu of using an auto feeder if the document is folded or bent.

    2. Remove staples, paper clips, or other fasteners before copying.

    3. Copy the front and back of a document if information is present on the back.

    4. Check that no portions of the document are eliminated or missing in the copy.

    5. Double check each page copied to ensure that it is a pristine identical copy of the original.

    Note:

    When photocopying double-sided documents, create two single-sided pages: one for the front, and one for the back.

    Caution:

    Copies must be of high quality and resolution, as Counsel will redact the documents and submit copies of the redacted documents to court. The newer the copier, the better the result.

  6. When mailing correspondence, date the letter with the actual date you mail fax or hand deliver it.

  7. Staple a Form 3198 A, TEGE Special Handling Notice, to the front of the file folder or box. Write Administrative Record in the top margin and include the following information on it:

    1. Organization's name

    2. Organization's TIN

    3. MFT

    4. Year(s)

  8. Name the EO Administrative Record Index using the Reporting Compliance Case Management System (RCCMS), Naming Convention and save it in the RCCMS Office Documents folder.

Documents Received from the Organization

  1. Do not deface documents received from the organization in any way (writing, highlighting, noting or scribbling, etc.). If you need to write information on a document, make a copy for that purpose.

  2. Do not write the exhibit numbers from the "Administrative Record Index" on the documents, other than via tabbed folder dividers or Post-It notes, because Area Counsel prepares the final index and will place the final exhibit numbers on the documents.

  3. Date stamp documents and other items received from the taxpayer as received on the cover memo or first page. Use the same date stamp kept by the group secretary or manager for stamping incoming mail.

  4. Keep any "original" documents, such as original signed Forms 990, Forms 872, Consent to Extend the Time to Assess Tax, and Forms 2848, Power of Attorney and Declaration of Representative, should be kept in the workpaper file. Copies should be made for the administrative record file.

Documents Provided to the Organization by the Service

  1. Outgoing correspondence and enclosures included in the administrative record file will inevitably be copies, because the originals have already been returned to the organization.

  2. Copies must be verified for exactness against their originals including the same dates and signatures. Make a copy of the signed letter before you mail it and keep the copy in the administrative record file.

  3. Do not forget to make copies of enclosures or attachments you sent with correspondence (or delivered by hand) and keep the copies in the administrative record file.

    Note:

    If the case goes to litigation years later, it may be impossible to recreate missing attachments (which might include court cases, rulings, media articles, etc.) at a future date.

  4. Copies must be identical to the correspondence or attachments sent to the taxpayer. In the opening appointment letter, for example, IRS Pub. 1, Your Rights as a Taxpayer must be enclosed. Include a photocopy or another preprinted version of the Pub. 1 provided to the taxpayer (same revision) in the administrative record file.

  5. Clarify incorrect computations, misinterpretations of law (IRC, Regulations, Revenue Rulings, etc.) or incorrect conclusions made in writing to the taxpayer in subsequent correspondence.

    1. Any information you previously shared with the taxpayer becomes a part of the administrative record; therefore, include incorrect information that you put in writing and sent to the taxpayer/representative in the administrative record.

    2. To correct a mistake, Do not remove the document from the administrative record. Rather, acknowledge the mistake and send a corrected statement or revised calculation to the taxpayer/representative.

Verbal Communications

  1. Case chronology records (CCR) and other workpapers may contain details of conversations with the officers or representative of an organization; however, these do not constitute a part of the administrative record. Thus it is important to take steps to make this information part of the administrative record. It should not be referred to in the revenue agent’s report if it has not been made part of the administrative record.

  2. To place information into the admin record that was communicated orally, create a transcript or summary of the discussion using Form 4564, Information Document Request, or Form 886-A, Explanation of Items. If you useForm 886-A, prepare a Form 4564 to reference the Form 886-A.

    1. Send Form 4564 (using the Letter 3606 as a cover letter) to the organization and ask the organization to confirm that the summary is an accurate representation of the information it contains, and if not, to provide specific clarification.

    2. Document the Form 4564 or 886-A with the date and time of the conversation, with whom the conversation was held, and the matters discussed.

    3. You may copy/paste the contents of an initial interview workpaper and other interview workpapers into either the Form 4564 or the 886-A and send in the same manner.

Shipping and Logistics

  1. Before closing the case, we ship the audit case file and administrative record to a number of destinations. The case goes from:

    1. The agent to the manager.

    2. The manager to Mandatory Review.

    3. Mandatory Review to Counsel.

    4. Counsel to Mandatory Review to issue the Final Adverse Determination Letter.

  2. Each person with custody of the flesmust ship the case file and administrative record together in the same shipping container, so that they form a single parcel.

  3. To ensure the administrative record is not lost or destroyed in transit, keep either an electronic scanned or hard copy of the file in the group.

    Note:

    The group manager (in consultation with Area Counsel) has discretion over compliance with this requirement.

Group Manager's Responsibility

  1. The group manager must ensure the following:

    1. The administrative record is properly prepared and indexed according to the procedures in this IRM.

    2. The case is flagged for Mandatory Review.

    3. All processing delays are fully explained on the CCR.

Review Staff's Responsibility

  1. Mandatory Review responsibilities:

    1. Review the administrative record to ensure its properly prepared and contains all of the required documents.

      Note:

      An administrative record index will be required only for unagreed revocations

    2. Send the entire administrative file, which includes the workpaper file and administrative record, to the appropriate Area Counsel office.

    3. Prepare a 90-day adverse determination letter, containing the language providing declaratory judgment rights, for all revocations and adverse modifications of foundation status without protest.

Sample Administrative Record Index

Administrative Record Index
Taxpayer: ABC Charity Inc. TIN: 00–0000000
Address: 123 Any Street
Any Town, Any State Zip Code
Form: 990
Tax Year(s): 200712
Index # Created by/ Received from Description of documents
(Mailed/e-mailed/faxed/handed to/received from the EO/POA)
Letter dated, Date received # of pages
1 POA James Esquire Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, Articles of Incorporation, Bylaws, attached schedules describing proposed activities and financial statements 4/12/1989 - 11/7/1989 45
2 Revenue Agent J Letter 947, determination letter recognizing exemption under §501(c)(3), from the Internal Revenue Service to ABC Charity, Inc. 11/7/1989 4
3 EO Treasurer John Taxpayer Form 990, Return of Organization Exempt from Tax, for the year ended December 31,2007 5/15/2008 25
4 Revenue Agent K Letter 3613, Publication 1, and Form 4564, Information Document Request, scheduling initial appointment from the Internal Revenue Service to ABC Charity, Inc. 1/9/2009 2
5 POA Jane Rep Letter from ABC Charity, Inc. to the Internal Revenue Service, with attachment Form 2848, Power of Attorney 1/14/2009,
1/16/2009
2
6 POA Jane Rep Minutes of the Board of Directors of ABC Charity, Inc. dated January 5, 2007; February 1, 2007; March 10, 2007; April 5, 2007; May 3, 2007; June 7, 2007; June 25, 2007; July 12, 2007; August 2, 2007; September 2, 2007; October 4, 2007; November 8, 2007; December 6, 2007, received in person by Revenue Agent K from POA Jane Rep 2/6/2009 30
7 POA Jane Rep Copies of ABC Charity's cancelled checks numbered: 20013; 20022; 20045; 20046; 20047; 21055; 20156; 20157; 20158; 20203; 20204; 20205; 20288; 20289; 20335; 20421; 20551; and 20611, received in person by Revenue Agent K from POA Jane Rep 2/6/2009 18
8 POA Jane Rep Brochure entitled: "Summer Performances 2007" , received in person by Revenue Agent K from POA Jane Rep 2/9/2009 8
9 Revenue Agent K Letter 3606, and Form 4564, Information Document Request, from the Internal Revenue Service to ABC Charity, Inc. 2/9/2009 2
10 EO Treasurer John Taxpayer Letter from ABC Charity, Inc. to the Internal Revenue Service with 2 attachments as follows: Forms 941, response to questions. 2/23/2009,
2/26/2009
16
11 POA Jane Rep Letter from ABC Charity, Inc.'s representative to the Internal Revenue Service 3/2/2009,
3/5/2009
14
12 Revenue Agent K Letter to ABC Charity, Inc. scheduling a date for a group manager's conference. 3/10/2009 1
13 Revenue Agent K Letter to ABC Charity, Inc. summarizing the items discussed at the group manager's conference on March 26,2009, with a copy of the Form 1023 and the attachments to the Form 1023. 3/27/2009 47
14 Revenue Agent K Letter from the Internal Revenue Service to ABC Charity, Inc., with 4 attachments: Form 4621-A, Report of Examination - Exempt Organizations, Forms 886-A, Explanation of Items, Form 6018, Consent to Proposed Adverse Action, and Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues 4/9/2009 30

Documents that Are Part of the Administrative Record

How to include documents that should be part of the administrative record:
Letters to the organization (mailed)
1. Make a copy of the letter at the time of issuance showing the original signature as signed or stamped.
2. Print a copy of any enclosures such as information document requests, reports of audit, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
3. Make a copy of any return envelopes that were included with the letter.
4. If certified, make a copy of the certified mail receipt, PS Form 3800, and a copy of the front and back of the domestic return receipt (green card,) PS Form 3811.
5. List the letter as of the date of the letter in the admin record index.
Letters to the representative (mailed)
1. Make a copy of the cover letter to the Power of Attorney (Letter 3597) at the time you mailed it showing the original signature as signed or stamped.
2. Make a copy of the letter at the time you mailed it showing the original signature as signed or stamped.
3. Print a copy of any enclosures such as information document requests, reports of audit, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
4. Make a copy of any return envelopes that were included with the letter.
5. If certified, make a copy of the certified mail receipt, PS Form 3800, and a copy of the front and back of the domestic return receipt (green card,) PS Form 3811.
6. List the letter as of the date of letter in the admin record index.
Letters to the organization (faxed)
1. Make a copy of the fax cover sheet. If you are using efax, you will not have a cover sheet. Instead, retrieve the efax from your Sent Items folder and print a copy of the sent efax to place in the administrative record.
2. Make a copy of the letter at the time you faxed it showing the original signature as signed or stamped.
3. Print a copy of any enclosures such as information document requests, reports of audit, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
4. Do not include the fax transmittal confirmation journal, as this document is the fax machine's record of transmission and was not sent to the organization. Keep the fax transmittal confirmation, however, in the audit case file. If you are using efax, the efax transmittal e-mail you receive is also not part of the administrative record.
5. List the letter as of the date of fax transmission in the admin record index.
Letters to the representative (faxed)
1. Make a copy of the fax cover sheet. If you are using efax, you will not have a cover sheet. Instead, retrieve the efax from your Sent Items folder and print a copy of the sent efax to place in the administrative record.
2. Make a copy of the cover letter to the Power of Attorney (Letter 3597) at the time you faxed it showing the original signature as signed or stamped.
3. Make a copy of the letter at the time you fax it, showing the original signature as signed or stamped.
4. Print a copy of any enclosures such as information document requests, reports of audit, any forms, (such as waivers, agreement forms, statute extensions, etc.) and any publications.
5. Do not include the fax transmittal confirmation journal, as this document is the fax machine's record of transmission and was not sent to the organization. Keep the fax transmittal confirmation, however, in the audit case file. If you are using efax, the efax transmittal e-mail you receive is also not part of the administrative record.
6. List the letter as of the date of fax transmission in the admin record index.
E-mail sent to the organization or representative (no SBU data permitted)
1. At the time of transmission, retrieve the e-mail from the Sent Items folder in Outlook. (If archived, retrieve from the archive.)
2. Print a copy of the sent e-mail.
3. List the e-mail as of the date of transmission.
Letters from the organization or representative (mailed)
1. Use the group secretary or manager's received date stamp to stamp the first page of the correspondence with the date the mail was received.
2. Make a copy of the letter, all enclosures, and the envelope that the package came in.
3. List the letter in the admin record index as of the date of the letter, and include the date the letter was received.
Letters from the organization or representative (faxed)
1. Make a copy of the entire fax transmittal, including the fax cover sheet, letter, and enclosures.
2. If properly set up, the fax machine will list on the fax the phone number from which the fax was received, as well as the time and date of receipt. If not present, date stamp as described above.
3. List the letter in the admin record index as of the date of the letter, and include the date the fax was received.
E-mails from the organization or representative
1. Print out the e-mail as received.
2. After virus scanning any attachments, print out any attached documents.
3. List the e-mail in the admin record index as of the date received.
Documents handed to the organization's officers or representative
1. Make a copy of the document.
2. Prepare a transmittal memo, which can be signed by an officer of the organization to acknowledge receipt and thenkept by the IRS.
3. Mention in the description of documents that the document was handed over.
4. Index the document as of the date the document was handed over.
Documents received by the agent while at the audit site or representative's office
1. If the document is to be retained, do not make any marks on the document.
2. Make a note of receipt in your CCR and describe what was received.
3. Upon return to the office, date stamp the document as received as of the date noted in the CCR.
4. After date stamping, you may make a separate copy of the document that can be modified or marked up as a workpaper.

Note:

Any document reviewed on site that is left at the audit site won’t be included in the administrative record.

The determination application
1. See IRM 4.75.32.4.3 for determination application procedures.
The determination letter
1. Follow the directions as listed above for the determination application.
2. If the determination application is available from Cincinnati, list it as the second item in the index.
Forms 990, 990-EZ, 990-PF, 990-T
1. Make a copy of the return.
2. List the return in the index as of the date of filing.
Form 990-N
1. Retrieve the Form 990-N information from http://www.irs.gov/app/ePostcard/.
2. Print the information retrieved from the website.

Note:

As with any information or tax return secured internally, make sure they are mailed to the taxpayer with an individually designed letter so that they can be included in the administrative record.

3. Index the Form 990-N as of the date of filing.
Statute extensions
1. Print a copy of the unsigned statute extension.
2. Index the unsigned statute extension with the cover letter used to issue the extension request. See the procedures for Letters to the organization (mailed.)
3. Upon receipt of the signed extension, make a copy before your manager signs it. Follow the procedures for Letters from the organization (mailed.)
4. Make a copy of the signed statute extension. Follow the procedures for Letters to the organization (mailed.)
5. Do not index or include the statute extension with the Form 990 series return. (The statute extension will be stapled to the return for the workpaper file only.) Index the statute extensions as separate entries if received without a cover letter.
Forms 2848 or 8821
1. Make a copy of the signed Form 2848/8821 as received (by mail, fax, hand, or e-mail) before you complete the upper right corner of the form and fax it to the appropriate campus.
2. Index the Form 2848 as of the date of receipt.
3. Do not index or include the Form 2848/8821 with the Form 990 series return. (The Form 2848/8821 is stapled to the return for the workpaper file only.)
Undelivered mail
1. Date stamp the envelope and the letter with the date of receipt (when returned to the Service as undeliverable.)
2. Make a copy of the letter, all enclosures, and the envelope that the package came in.
3. List the letter in the admin record index as of the date of the letter, and include the date the letter was returned to the Service.

Examples of Documents Not Included in the Administrative Record and Solutions for Getting the Documents or Information Included

Documents Not Included In the Administrative Record Solutions For Inclusion in the Administrative Record If Needed
1. Agent's case chronological record. If the CCR reflects information such as notes from a telephone call that are relied on in the decision process, create a transcript or summary of the discussion and send it to the organization with a request for confirmation or comment.
2. Notes taken by the agent during interviews or conferences with the organization. Reduce the interview or conference to writing and provide a copy to the organization with a cover letter or Information Document Request (IDR) requesting confirmation of the contents. If hand- delivered to the organization with an IDR, ask the receiving person to acknowledge receipt by signing a copy of the IDR to be retained by the IRS.
3. Newspaper articles concerning the organization provided to the agent by a third party. Provide copies of the newspaper articles to the organization with a cover letter or IDR requesting comments on the accuracy of the articles. If copies are sent by letter to the organization, send it certified. If hand-delivered to the organization with an IDR, ask the receiving person to acknowledge receipt by signing a copy of the IDR to be retained by the IRS. Be sure to attach copies of the newspaper articles to the copy of the IDR retained by the IRS.

Note:

For all documents secured from third parties and provided to the organization, be very careful to avoid disclosing a confidential source or making an unauthorized disclosure.

4. Newspaper articles concerning the organization clipped from the paper by the agent. Same as in item number 3.
5. Internet articles or information concerning the organization downloaded from the Internet by the agent. Provide copies of the downloaded information to the organization with a cover letter or IDR requesting comments on the accuracy of the information. If copies are sent by letter to the organization, send it certified. If hand- delivered to the organization with an IDR, ask the receiving person to acknowledge receipt by signing a copy of the IDR to be retained by the IRS. Make certain that copies of the downloaded information are attached to the copy of the IDR retained by the IRS.
6. Copies of the organization's cancelled checks provided to the agent by a former employee of the organization. To protect the identity of the former employee, make a written request for the organization to provide copies of the cancelled checks.
7. A copy of a rental agreement between the organization and a related IRC 501(c)(3) organization for the use of the organization's facilities provided to the agent by the related organization. Request a copy of the contract from the organization or provide a copy to the organization with a written request that the organization confirm that it is a true copy of the contract.
8. A letter sent to the Internal Revenue Service by the organization a week after the final adverse determination letter was mailed to the organization. None. There is no way to include documents received after the issuance of the final adverse determination letter in the administrative record. However, send the letter for association with the files in the case.
9. Documents that substantiate the revocation and enhance the Service's chances of sustaining the issue that were submitted to the Internal Revenue Service by a third party the day after a final revocation letter was mailed to the organization. None. There is no way to include documents received after the issuance of the final adverse determination letter in the administrative record. Collect the information and call attention to it by memo or otherwise.
10. Workpapers and computations prepared by the agent. Use either of two methods to include workpapers in the administrative record:
(a) Mail a copy of the workpapers to the organization with a cover letter requesting comments.
(b) Provide a copy of the original workpaper to the organization during the audit and request a receipt of acknowledgment.

Caution:

If shared, do not further modify the workpaper. If later modified, share the workpaper again.

11. Agent’s notes concerning records the organization failed to produce. Write to the taxpayer, reminding the taxpayer of what had been said, and note the failure to produce the documents. The letter with the taxpayer's verbal representations and failures to produce is then part of the record. Of course, any written response from the taxpayer is also a part of the record.