7.21.5 Determination Case Processing Assistance

Manual Transmittal

February 16, 2018

Purpose

(1) This transmits revised IRM 7.21.5, Exempt Organizations Determinations Processing, Determination Case Processing Assistance.

Material Changes

(1) Updated case closing procedures, modifying the guidance as listed below:

Section Modification
IRM 7.21.5.5 Removed paragraph (2) and the two notes, which contained guidance on closing time frames and transaction code 590.
IRM 7.21.5.5.1 Removed information pertaining to EDS specialist number 31748.
IRM 7.21.5.5.2 Added new step on the Update Master Record screen in EDS.
IRM 7.21.5.6.1 Removed instruction to discard purge material.
IRM 7.21.5.6.2 Removed directions to discard purge material.
IRM 7.21.5.6.3 Added new guidance with respect to Form 1023-EZ and non-Form 1023-EZ cases.

(2) Incorporated procedures in Interim Guidance Memorandum TEGE 07-0516-0011, Interim Guidance on Preventing Erroneous Revocations, at IRM 7.21.5.9.

(3) Added new program, scope and objectives content at IRM 7.21.5.1 , as per IRM 1.11.2.2.5.

(4) Edited the document for plain language, as required per the Plain Writing Act of 2010.

Effect on Other Documents

This supersedes IRM 7.21.5 dated October 2, 2015.

Audience

Tax Exempt and Government Entities
Exempt Organizations

Effective Date

(02-16-2018)

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

Program, Scope, and Objectives

  1. Purpose: This IRM provides instructions for certain aspects of processing Exempt Organizations (EO) determination letter requests.

  2. Audience: The procedures in this manual apply to EO Rulings and Agreements (R&A) employees such as tax examining technicians, secretaries, and clerks who process EO and Employee Plans (EP) determination cases.

  3. Policy Owner: Director, Exempt Organizations.

  4. Program Owner: Exempt Organizations.

Background

  1. EO R&A Employees, including tax examining technicians, secretaries, and clerks, help with EO and EP determination cases processing including:

    • Case establishment

    • Case assignment

    • Letter processing

    • File maintenance

Authority

  1. Rev. Proc. 2018-5, updated annually, lists procedures for issuing determination letters on exempt status (in response to applications for recognition of exemption from federal income tax under Section 501 or 521 other than those subject to Rev. Proc. 2018-4, updated annually, private foundation status, and other determinations related to exempt organizations). The determination letters are under the jurisdiction of the Director, EO Rulings and Agreements.

Responsibilities

  1. Within EO R&A, the Processing & Support Unit establishes and maintains cases.

Program Controls

  1. The manager of the Files & Records Unit completes quality reviews on doc prepped cases.

Acronyms

  1. This manual uses the following acronyms.

    Acronym Definition
    AIS Application Identification Sheet
    BMF Business Master File
    BOBJ Business Objects
    CSPC Cincinnati Submission Processing Center
    DLN Document Locator Number
    DTS Data Transcription System
    EDS EP/EO Determination System
    EIN Employer Identification Number
    EO Exempt Organizations
    EP Employee Plans
    FRC Federal Records Center
    ICS Inventory Control System
    IDRS Integrated Data Retrieval System
    R&A Rulings and Agreements
    TEDS Tax Exempt Determination System
    TRAC TE/GE Rulings and Agreements Control

Case Establishment

  1. The Cincinnati Submission Processing Center (CSPC) receives EO determination letter requests, processes user fees, and establishes cases. See IRM 3.45.1, Processing Employee Plan and Exempt Organization Determination Applications and User Fees.

  2. CSPC establishes EO determination letter request cases electronically in the Tax Exempt Determination System (TEDS).

  3. Occasionally, an EO Determinations employee needs to establish a case.

    Example:

    An initial case was established incorrectly or an organization changes from Form 1023 to Form 1024 or Form 1024-A as part of the determination process.

  4. The Processing and Support - Files & Records Unit establishes an EO Determinations employee’s case in the EP/EO Determination System (EDS). Employees process EDS established cases as hard copy case files.

  5. See IRM 7.22.1, Determination Letter Automation Systems Overview, for TEDS and EDS system information.

EDS Case Establishment

  1. To request an EDS case establishment, prepare and email Form 14263, Request for Case Establishment, to *TEGE Determinations Processing.

  2. A Files & Records Unit employee will:

    1. Monitor the email box for submitted forms.

    2. Establish EDS cases based on Form 14263 submissions.

      Note:

      See IRM 7.22.8.2, Data Transcription System (DTS), for specific procedures.

    3. Ask the employee who submitted the request for additional information/clarification, if needed.

    4. Email the EDS case number to the requesting employee.

    5. Print and keep a copy of Form 14263.

Case Assignment

  1. The Files & Records Unit assigns cases to EO Determinations groups (and/or specialists) based on instructions from EO Determinations area managers and specific requests.

    Note:

    Employees email specific requests to *TEGE Determinations Processing.

    Note:

    Assign TEDS cases in TEDS and hard copy cases in EDS.

  2. To assign a case in TEDS:

    1. Complete a search based on the request criteria.

    2. Ensure no older EDS cases are awaiting assignment (if assigning non-specific cases).

    3. Highlight the appropriate number of cases to assign to the group/specialist.

    4. Select File, then Change Status.

    5. Select appropriate status from the drop-down menu.

    6. Click OK for the Assignment menu.

    7. Click on assignee.

    8. Create a screen print screen of the completed case assignment request to email to the requestor.

    9. Email the screen print showing assigned cases to the requestor (if assigning based on a specific request).

    Note:

    See the TEDS user manual, IRM 7.22.4.10.1, Case Assignment, for more information.

  3. To assign a case in EDS, on the Inventory Control System Menu:

    1. Select Option 03 (Multiple Case Assignment - Status 52), Option 10 (Multiple Status 51/58/60/75 Updates), or Option 12 (Multiple Merit Closure Assignment - Status 62).

    2. Hit F1.

    3. Enter employee number of the requesting specialist or group (and status if Option 10).

    4. Enter up to 14 case numbers.

    5. Hit F1.

    6. Match the case names to the names listed on the screen.

      Note:

      If an incorrect case is listed, reenter correct case number.

    7. Hit F5 (Assigned should appear on screen).

    8. Email case numbers to specialist or print three copies of Form 3210, Document Transmittal, or other acceptable documentation (keep one copy; attach two copies to case file(s)).

    9. Deliver paper files to specialist (if appropriate).

    Note:

    See the EDS user manual, IRM 7.22.8.3, Inventory Control System, for more information.

Letter Processing

  1. EO Determinations specialists and tax examiners generally prepare/generate their own case letters.

  2. Other R&A employees may be required to prepare EDS letters.

  3. See IRM 7.22.8.4, Letter Generation System, for specific procedures on generating and printing letters in EDS.

Case Closing

  1. EO Determinations specialists and tax examiners prepare their determination letter request cases when they close a case.

Processing Special Handling Notice Actions

  1. Tax examiners: Review the Special Handling Notice for the following procedures.

  2. If the "Unlisted" box is checked:

    1. Hold the case until BMF/IDRS reflects a Current Status of 97, usually within two weeks.

    2. Check IDRS weekly to determine if Unlisted profiles have updated to Current Status of 97.

    Note:

    Unlisted cases are cases ready for closure when the organization is automatically revoked but BMF hasn’t updated yet to Status 97 (automatically revoked).

    Note:

    If the status of the case isn’t updated on BMF/IDRS to Status 97 within 2 weeks of receiving the case for closing, return the case to the closing employee’s manager.

  3. If the "Input TC 590" box is checked, input TC 590 entries before you close the case on EDS (see IRM 7.21.5.5.2) unless specifically noted otherwise.

    1. If case isn’t an auto revocation reinstatement, ("Auto rev case" not checked on the Special Handling Notice), email *TE/GE-EO-Correspondence Unit with the subject line "Non-AR TC 590 Requested." Include the EIN, name of organization, effective date, and FYM in body of email. Hold case until you receive instructions from Correspondence Unit on when to close the case.

    2. See IRM 7.21.10, Processing EO Correspondence, for instructions on inputting TC 590s.

    3. If unable to complete a TC 590 for any reason, email *TE/GE-EO-Correspondence Unit with the subject line "AR TC 590 Needed After Closing." Include the EIN and name of organization in body of email. Proceed with case closing.

    4. After inputting TC 590s, hold case for closing until the following Thursday.

    Caution:

    Updates you make after close of business on Wednesday are considered made on Thursday for processing purposes. Hold any cases with TC 590 inputs on Thursday until the following Thursday.

  4. If the form indicates any "Forms/Letters to be mailed," mail the items to the appropriate address using the pre-addressed self-stick labels including:

    • Form 14271

    • Form 5666

    • Form 5768

    • Form 990 series

      Note:

      In red pen, write "RV" below the entity information (in other words, next to "Part I Summary" ) of each Form 990 to prevent assessment of penalties due to reasonable cause.

  5. If the form indicates "Forms to Processing Section," pull and place the items in the designated basket in the Processing Section including Form 2363-A and Operation Assistance Requests (OAR).

    Note:

    Stamp and date the copy of letter attached to the OAR.

  6. If the form indicates transfer to "Mandatory Review," place the case file in the designated basket in the Processing Section after closing.

  7. If the form indicates "User fee refund," review Form 14268, User Fee Refund Request, for the manager’s signature. If not signed, return it to the group manager for signature. After closing, place the case file in the designated basket in the Processing Section.

Closing Cases on EDS

  1. After completing any necessary pre-closing actions from the Special Handling Notice, close the case on EDS. See IRM 7.22.8.3, Inventory Control System (ICS), for additional EDS system information.

  2. For a TEDS case, once EDS reflects Status 57, in EDS:

    1. From the UPDATE MASTER RECORD - EXEMPT ORGANIZATION screen, select Update Status, Master Record or Closing Data, enter case identifier and hit F1.

    2. Enter today’s date on the Update Master Record - EO Case Control screen.

    3. Update the Status using the closing code located on the upper right corner of the top document on the case file (01, 06, or 09); hit F2.

    4. Input the Effective Date (YYYYMM) (also written on the top document on the case file) on EO Master File Data screen; hit F1.

    5. Print EDS Form 8670.

    Note:

    If problems occur during closing, return the case to the closing employee’s manager.

  3. For all cases, select Option 08 on the Inventory Control System Menu (ICS) screen in EDS; hit F1.

  4. On the Approval of Case Closing Screen (in EDS):

    1. Enter up to 14 EDS case numbers.

    2. Enter "X" on small line next to Case No if case is designated for mandatory review on the Special Handling Notice.

    3. Hit F1.

    4. Verify case numbers/names against case files (re-enter any incorrect case numbers, then hit F1 again).

    5. Hit F5.

    6. Print screen (three copies - place two copies banded on top of batch of closed cases; keep one copy for your records).

    Note:

    If problems occur during closing, return the case to the closing employee’s manager that day or the next workday.

Mailing Closing Letters

  1. Stamp and mail all closing letters after the cases are closed on EDS:

    1. Stamp all copies of letter with date closed on EDS.

    2. Stamp all copies of letter with signature stamp.

    3. Mail one copy of letter to each recipient.

    4. Place the second copy of letter behind a Final Letter Control Sheet (each recipient copy needs its own Final Letter Control Sheet).

    5. Place letters with scanning sheets in front of Disclosable Documents Control Sheet in the case file.

Preparing EO Closed Cases for Scanning and Storage

  1. Files & Records Unit:

    • Prepares and forwards EO case documents for scanning into TEDS (Forms 1023-series, 1024, and 1024-A approvals closed Status 01, 06, or 09).

    • Sends documents for association with hard copy case files (all other closures of cases established into TEDS).

      Note:

      After initial scanning into TEDS, hard copy case files are generally stored at an IRS facility in Florence, KY (Florence).

    • Sends cases for archival storage at the Federal Records Center (EDS only cases).

  2. After an EO Determinations case is closed, the Files & Records Unit prepares certain case file documents for back end scanning in TEDS, referred to as "doc prepping."

  3. The Files & Records Unit records and ships the cases and case documents for scanning or storage.

Doc Prepping EO Cases for Back End Scanning

  1. Ensure required control sheets are in the case file:

    • Document 12303, Final Letter Control Sheet (peach)

    • Document 12306, Disclosable Documents (yellow)

    • Document 12304, Non-Disclosable Documents (blue)

  2. Files & Records Unit employees review and doc prep the assembled case files.

    Reminder:

    Only approved (Status 01, 06, and 09) Form 1023-series, Form 1024, and Form 1024-A case documents are scanned into TEDS after closing.

  3. For cases with documents to be scanned into TEDS:

    Action Comments
    Remove the Application Identification Sheet (AIS) and Form 8670 from the front of case folder. On Form 8670, highlight the form number and closing code. On AIS, highlight the DLN.
    Check final letters for date and signature. Return entire case to originating group if not dated or signed.
    Remove items that can’t be scanned (non-page items). Remove items such as staples, paperclips, sticky-notes, envelopes, etc.
    Ensure all pages are straight with even edges. If possible, trim pages with ragged and uneven edges to make the edges even or photocopy as necessary.
    Photocopy documents as necessary. Photocopy:
    • Documents that are not on standard letter or legal size paper

    • Newspaper articles

    • Slick or shiny paper

    • Pages with ripped corners/edges that you can’t trim

    Remove any documents to be added to hard copy file. Highlight Document Locator Number (DLN) on the AIS if not already highlighted. Place aside to send to Florence.
    Ensure documents are in the correct order. Document order:
    1. Green separator sheet

    2. Closing sheet (Form 8670)

    3. Final Letter Control Sheet (peach)

    4. Final Letter

    5. Final Letter Control Sheet (if POA) (peach)

    6. Final Letter (POA copy)

    7. Disclosable Documents Control Sheet (yellow)

    8. Disclosable information to be scanned or sheet indicating "No Documents"

    9. Non-Disclosable Documents Control Sheet (blue)

    10. Non-disclosable information to be scanned or sheet indicating "No Documents"

    11. AIS (if TEDS case), print if necessary

Preparing All Other EO Case Files

  1. For cases with documents that are not back end scanned into TEDS but have existing hard copy files stored in Florence Files:

    1. Remove the AIS and Form 8670 from the front of the case file.

    2. Check final letters for date and signature, if applicable.

    3. Staple all case documents (including Form 8670) together with the AIS sheet as the font/lead document.

    4. Highlight the AIS DLN and put the documents in designated place to await shipment to Florence.

  2. For cases that are not established in TEDS but have existing hard copy files stored in Florence Files (for example, a hard copy "I" case closed Status 11 or a Form 1023-EZ case closed Status 03):

    1. Check final letters for date and signature.

    2. Place Form 8670 on the top inside of the case file.

    3. Put the case file in the designated place to for shipping to the Federal Records Center (FRC).

Recording and Shipping EO Cases

  1. Form 1023-EZ cases and cases not scanned into TEDS are stored on databases for retrieval. New accession numbers are requested for approved Form 1023-EZ cases at the start of the fiscal year. Non-approved Form 1023-EZ cases are kept until the end of the fiscal year and then sent to FRC. All other cases are sent to Florence.

    Note:

    EO generally uses three accession numbers: FTE cases not stored at Florence, Form 1023-EZ cases, and EOCC (cases not established in TEDS).

  2. Input the following information for every closed case:

    • EDS case number

    • EIN

    • Organization name control

    • Pack/box number

    • Accession number

  3. For documents to be back end scanned:

    1. Place 25 cases in a folder (put your initials on folder).

    2. Place the next pre-printed pack number on the folder.

    3. Place five folders in a box for shipment to CSPC.

    4. Label the box with the five pack numbers.

    5. Print three Form 3210 or other acceptable documentation (place two in box and keep one).

    6. Ship to CSPC (CSPC ships to Florence after scanning; Florence ships closed cases to FRC).

  4. For documents to be shipped to Florence for association with hard copy file:

    1. Box the documents.

    2. Print three Form 3210 or other acceptable documentation with a general description of the contents (place two in box and keep one).

    3. Ship full box to Florence (Florence ships closed cases to FRC).

  5. For cases to be shipped directly to FRC:

    1. Place the cases in a box.

    2. Print three Form 3210 or other acceptable documentation (place two in box and keep one).

    3. Write accession number and box numbers in black marker in the appropriate areas on the front of the box.

      Caution:

      Don’t write on the front of the box without manager approval.

    4. Ship full box to FRC.

Preparing EP Closed Cases for Scanning and Storage

  1. The Files & Records Unit prepares and ships EP closed determination cases for scanning and storage.

    Note:

    After initial scanning into TEDS, hard copy case files are generally stored at an IRS facility in Florence, KY (Florence).

  2. To prepare closed EP cases stored in Cincinnati:

    1. Remove all paper clips and rubber bands.

      Note:

      You don’t have to remove staples.

    2. Discard all envelopes.

    3. Review case file to ensure associated documents are in the correct case file.

    4. Place the closing sheet on the inside top of the case.

    5. Assign a sequence number to each case in numeric order. Place a pre-printed sequence label on file.

    6. Organize cases sequentially in boxes beginning with the lowest number at the front of the box.

      Note:

      Leave room in box for future document associations.

    7. Place a pre-printed box label on box.

    8. Write the assigned accession and box numbers in black marker in the appropriate areas on the front of the box.

      Caution:

      Don’t write anything in the squares on the front of the box.

    9. Ship cases to FRC when 45 boxes are ready.

  3. To prepare closed EP cases stored in Florence:

    1. Place documents in the order listed below.

    2. Place seven sets of case documents in a folder.

    3. Place four folders in a file to send to CSPC.

    • Green separator sheet

    • EDS Closing sheet

    • Final Letter Control Sheet

    • Sheet indicating "None"

    • Disclosable Control Sheet

    • Sheet indicating "None"

    • Non-Disclosable Control Sheet

    • Sheet indicating "None"

    Note:

    After scanning, CSPC sends the documents back to the Files & Records Unit to reuse the folders.

  4. For hard copy documents that need to be associated with case files held in Florence:

    1. Attach an AIS to the documents.

    2. Ship to Florence.

EP Closed Cases on TRAC

  1. After EP closed cases are ready to be (or already) boxed for shipment to FRC, enter the cases on TRAC:

    1. Input EDS case number.

    2. Click Run (Alt R).

    3. Check name and closing date.

      Caution:

      If date shows 1899, switch out case, removing sequence number from the case when you switch it for a new case. Place the number on the new case.

    4. Enter sequence number (capital letter and four digits), box number (XXXX), and accession number.

    5. Save information.

    Note:

    In TRAC, only enter cases shipping directly from Cincinnati Files & Records Unit to FRC.

  2. To verify case information is entered correctly:

    1. Click Query (Alt Q).

    2. Click on box number and enter the box number.

    3. Input the accession number.

    4. Click Run (Alt R).

    5. Check the sequence numbers using the Next (Alt N) and Previous (Alt V) buttons to verify box contents were properly input.

  3. Repack box as necessary and seal. Place the mailing label above or below the center seam.

Administrative File Requests

  1. Files & Records Unit employees respond to requests for administrative case files.

  2. Requestors may complete and email Form 14264, Request for EP or EO Administrative File, to *TEGE Determinations Processing. An employee monitors the email, identifies and retrieves the requests, and assigns them to employees to complete.

  3. Administrative files may be located in different mediums (such as imaged file copies on DVD or TEDS) or locations based on the timing of the request. File locations include:

    • Cincinnati Federal Building

    • CSPC

    • Florence, KY storage facility

    • FRC

    Note:

    Case files closed July 2004 and after are generally available on TEDS.

  4. Research IDRS, EDS, DVD Master List, TEDS, and the Processing Record database to determine the location of an administrative file. After locating the administrative file, secure and deliver the file to the requestor and complete Form 14264, EP/EO DETERMINATIONS PROCESSING USE ONLY section.

  5. Locate administrative files on DVD:

    1. Research the DVD Master List using the EIN. If no results, research the name control for cases closed on EDS up through 2004.

    2. If there is a DVD, write the DVD number on the request.

    3. Retrieve the DVD from the DVD file cabinet.

    4. Insert the DVD into a computer, locate the case file, and drag the file to your desktop to make a copy.

    5. Send the file to the requestor by email, OCS, or by burning a copy to a DVD.

  6. Locate administrative files on TEDS:

    1. Use the Advanced Search feature locate a case file.

    2. If you find the case on TEDS, make a folder on a computer desktop using the EIN.

    3. Open the folder in TEDS and click on Documents.

    4. Click on Disclosable.

    5. Highlight all forms.

    6. Click on File.

    7. Select Export (this should show the EIN folder you created and automatically import the documents). Use the same procedures for requested non-disclosable documents.

    8. Send the documents to the requestor by email, OCS, or hard copy printout.

  7. Locate and request administrative files in Florence or CSPC:

    1. Review the DLN to determine if the case file is or was stored in Florence (in other words, second set of DLN digits 311 or higher, and last digit 4 or higher).

    2. Review the closed case database to determine if/when information was shipped to CSPC for scanning.

    3. For documents in CSPC, call CSPC and request documents be scanned.

    4. For documents in Florence, complete Form 2275, Records Request, Charge and Recharge, Parts A and B and fax it to Florence.

    5. When you receive the case file, prepare Form 3210 or other acceptable documentation and send any hard copy documents to the requestor.

    6. When the requestor returns the case file, send it back to Florence.

  8. Locate and request administrative files at the Federal Records Center (Springboro, Ohio):

    1. Research the EO Closed Case Database for the EO accession number and box or TRAC for the EP case number.

    2. Complete an OS Get Services request including Form OF-11, Reference Request - Federal Records Center.

    3. Fax a coversheet and the OF-11 to a support service specialist in Covington, KY, Facilities Management.

    4. When you receive the case from the FRC, enter the information on the tracking spreadsheet; put a label on the back of the file with identifying information; prepare a Form 3210 or other acceptable documentation; and deliver to the requestor.

    5. When the requestor returns the case, enter the information into the tracking spreadsheet and return the case to the FRC.

    6. Review the status of outstanding cases periodically (such as every 30 days) for case control.

Preventing Erroneous Automatic Revocations

  1. Monthly, an Information Technology Specialist (Systems Analysis/Applications Software) sends the following information to the Correspondence Unit:

    1. List 1: Potential Erroneous Revocations (all organizations that the system is scheduled to update to Status 97 during the next update)

    2. List 2: Automatically Revoked Organizations to receive CP 120A and Post to EO Select Check (all organizations in Status 97 that are scheduled to be sent CP 120A in the following update)

  2. Forward List 1 to the designated assistant to generate a Business Objects (BOBJ) report with EP/EO Determination System (EDS) case information for each organization.

  3. Review the BOBJ report and eliminate the following organizations as potentially erroneous revocations:

    • Organizations that don’t have a closed case on EDS.

    • Organizations whose cases were closed on EDS prior to May 15, 2010 (i.e., the earliest date of revocation).

    • Organizations whose effective dates were prior to May 15, 2010.

  4. Complete research for the remaining List 1 organizations and identify organizations that will be erroneously revoked. Research may include but is not limited to:

    • IDRS research for completed TC 590s, Form 990-series filings, etc.

      Note:

      Incorrectly executed TC 590s may result in erroneous revocations.

    • EDS research for automatic revocation paragraphs in the determination letter

    • EO Select Check for prior automatic revocation

    Note:

    See IRM 7.20.4.2, Automatic Revocation and Other Special Determination Issues, for information on automatic revocation and determination case processing such as TC 590 requirements.

  5. The system updates all the organizations on the original List 1 to Status 97.

  6. Once updated to status 97, input the necessary TC 590s for each preventable erroneous revocation identified above. Enter TC 590s for the tax period prior to the organization’s effective date or ruling date if the case was worked as a reinstatement case or the earliest tax period that the system considers.

    Note:

    The system considers only the three most recent tax periods.

  7. Before the next scheduled automatic revocation update (and allowing for transaction posting times), update IDRS for each preventable erroneous revocation. Update IDRS to reflect Status 01 and the appropriate filing requirement(s) as determined by the employee that worked the case.

    Note:

    Because the organization won’t be in Status 97 at the time of the next extract, the system won’t generate a CP 120A automatic revocation notice to the organization, and the organization won’t be listed on EO Select Check as automatically revoked. Also, completed TC 590s will prevent future erroneous revocations.

  8. Review List 2 the month following the IDRS update in Item 7 to ensure the updated organizations are not listed.