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Part 7. Rulings and Agreements

Chapter 20. Exempt Organizations Determination Letter Program

Section 1. Exempt Organizations Determination Letter Overview

7.20.1  Exempt Organizations Determination Letter Overview

Manual Transmittal

September 23, 2011

Purpose

(1) This transmits revised IRM 7.20.1, Exempt Organizations Determination Letter Program, Exempt Organizations Determination Letter Overview.

Background

This IRM provides guidance and procedures for processing Exempt Organizations determination letters.

Material Changes

(1) This edition revises the entire IRM and updates EO Determinations’ roles and responsibilities in processing requests for determination letters. Topics updated include: types of determination cases, reserved inventory cases, identifying EO Technical cases, transferring cases to EO Technical, referrals, taxpayer contacts, authorized persons, processing Forms 2848 and 8821, and disclosure/third party contacts.

Effect on Other Documents

This revision supersedes IRM 7.20.1, dated April 28, 2009.

Audience

TEGE (Exempt Organizations)

Effective Date

(09-23-2011)


Lois G. Lerner
Director, Exempt Organizations
Tax Exempt and Government Entities

7.20.1.1  (09-23-2011)
Overview

  1. Exempt Organizations (EO) Rulings and Agreements has jurisdiction over processing determination letters and ruling letters on applications for recognition of tax exempt status under IRC 501(a) and IRC 521 and over certain other requests.

    1. EO Determinations, one component under EO Rulings and Agreements, primarily issues determination letters.

    2. Certain categories of determination letters are reserved for processing by EO Technical in Washington, D.C. See IRM 7.20.1.4.

  2. EO Determinations consists of three main components: EO Determinations Areas 1 and 2, EO Determinations Programs and Support, and EP/EO Determinations Processing. For a description of EP/EO Determinations Processing, see IRM 7.21, Exempt Organizations Automated Processing Procedures.

  3. A determination letter is a written statement provided by EO Determinations to an organization. It is issued only when a determination can be made based on:

    1. clearly established rules in the statute, a tax treaty, or the regulations, or

    2. a conclusion in a revenue ruling or other opinion published in the Internal Revenue Bulletin (I.R.B.) or a court decision that specifically answers the questions presented. See Sec. 3.04 of Rev. Proc. 2011-4 (updated annually).

7.20.1.1.1  (09-23-2011)
Nature of Material

  1. This section describes EO Determinations’ role and responsibility in processing requests for determination letters including:

    • Types of determination cases

    • Reserved inventory cases

    • Identifying EO Technical cases

    • Transferring cases to EO Technical

    • Referrals

    • Taxpayer Contacts

    • Authorized persons

    • Processing Forms 2848 and 8821

    • Disclosure/Third Party Contacts

7.20.1.1.2  (09-23-2011)
References

  1. The following additional references should be used, as needed, when processing requests for determination letters:

    1. Document 6379, Exempt Organizations Computer Systems Codes, is a quick reference for EDS/TEDS and Master File codes. It also includes a listing of the application forms and applicable IRC subsections covered by each form.

    2. IRM 7.21, Employee Plans/Exempt Organizations Determinations Processing Procedures, describes the processing of cases in the Records Unit, user fees (dishonored checks and refunds) and unpostables in the Adjustments Unit, and mail/correspondence handling in the Correspondence Unit.

    3. IRM 7.21.5, Exempt Organizations Automated Procedures, describes the Letter Generation System and gives examples of the EDS letters.

    4. IRM 7.25, Exempt Organizations Determinations Manual, and IRM 7.26, Private Foundations Manual, describe the technical requirements applicants must meet.

    5. IRM 7.27, Exempt Organizations Tax Manual, describes prohibited transactions and income accumulations.

    6. IRM 7.28, EO Disclosure Procedures, provides procedures for the release of the text of Exempt Organizations written determinations and any background file documents for public inspection under IRC 6110.

7.20.1.1.3  (09-23-2011)
Responsibilities

  1. The office of EO Determinations, Area 1 and Area 2, is responsible for issuing determination letters for the following exempt organization matters. See Rev. Proc. 2011-4 (updated annually):

    1. organizations seeking exemption under IRC 501(a) and IRC 521;

    2. requests for changes in subsection;

    3. initial classification of private foundation status under IRC 509(a);

    4. changes in foundation classification and voluntary requests for private foundation status under IRC 509(a);

    5. advance approval of unusual grants under IRC 509(a)(1) and IRC 170(b)(1)(A)(vi), and under IRC 509(a)(2);

    6. advance approval of individual grant making procedures described in IRC 4945(g);

    7. advance approval of certain set-asides described in IRC 4942(g)(2);

    8. advance approval of voter registration activities described in IRC 4945(f);

    9. exempt operating foundation status under IRC 4940(d);

    10. operating foundation status under IRC 4942(j)(3);

    11. requests from non-exempt charitable trusts described in IRC 4947(a)(1) and requesting classification under IRC 509(a)(3);

    12. group rulings;

    13. requests for exemption from filing annual information returns; and,

    14. termination of private foundation status under IRC 507(b)(1)(B);

7.20.1.2  (09-23-2011)
Types of Determination Cases

  1. The office of EO Determinations handles the following types of cases:

    Type Description
    Amendment or "A" An "A" case is set up when an organization submits a letter request for a determination involving a situation listed in IRM 7.20.1.1.3(1)(d) through (m).
    Initial Application for Recognition of Exemption or "I" An "I" case is set up when an organization submits a request (via Form 1023, Form 1024, Form 1028) for recognition of tax-exempt status as described in IRC 501(a) or IRC 521; an organization that is exempt and submits a request for recognition of tax-exempt status under a different subsection; or, a request from an organization that was erroneously closed as a Failure to Establish (FTE).
    Termination of Private Foundation Status or "P" A "P" case is set up:

    1. when a private foundation voluntarily provides notification and requests an advance ruling letter to terminate its private foundation status under the provisions of IRC 507(b)(1)(B), and

    2. when the 60-month termination period ends.

7.20.1.3  (09-23-2011)
Reserved Inventory Cases for Designated Groups

  1. The following types of cases may be categorized as reserved inventory for designated groups in Areas 1 and 2, unless they are closed on merit (see IRM 7.20.2.3):

    • Charter schools with management contract(s)

    • Carbon/electric credits

    • Conservation Easements

    • Credit Counseling

    • Disaster relief

    • Donor advised funds

    • Down-payment assistance

    • Farmers’ cooperatives

    • Foreclosure Assistance

    • Foreign organizations

    • Gaming as primary activity

    • Group exemption requests

    • Health Care

    • Hedge Funds

    • IRC 4940 – exempt operating foundations

    • IRC 4942(g)(2) – advance approval of set-asides

    • IRC 4945(f) - advance approval of voter registration

    • IRC 4945(g) - advance approval of grants

    • IRC 501(d) – religious/apostolic organizations

    • IRC 501(e) – Cooperative Hospital Service Organizations

    • IRC 501(f) - Cooperative Service Organizations of Operating Educational Organizations

    • IRC 501(c)(5) – Labor, agricultural, horticultural organizations

    • IRC 501(c)(7) - social clubs

    • IRC 501(c)(8) and IRC 501(c)(10) – fraternal organizations

    • IRC 501(c)(9) – VEBAs

    • IRC 501(c)(13) – cemetery associations

    • IRC 501(c)(17) - supplemental unemployment benefits

    • IRC 501(c)(19) – veterans organizations

    • IRC 509(a)(3) – supporting organizations

    • Limited liability companies (applying under IRC 501(c)(3))

    • Medical Marijuana

    • Partnerships/Joint Ventures

    • Potential Auto Revocation

    • Private Schools

    • Touch And Go (Refer to IRM 7.20.6)

    • Other applications the Manager, EO Determinations, decides should be reserved.

7.20.1.4  (09-23-2011)
Identification of EO Technical Cases

  1. EO Technical in Washington, D.C., is responsible for processing:

    1. cases where issues cannot be resolved by established precedent and thus require interpretation of the tax law. See IRM 7.20.1.4.1 for a list of cases reserved for EO Technical.

    2. cases where issues are subject to a study or not covered by clearly established precedent because they may have significant regional or national impact.

    3. technical advice cases. Procedures for requesting technical advice are set forth in Rev. Proc. 2011-5 (updated annually).

    4. technical assistance requests (Guidance from EO Technical on procedural or technical matters that do not relate to a specific case). See Rev. Proc. 2011-5 (updated annually).

  2. Determination staff should expeditiously handle any case identified for EO Technical to avoid delay in processing the case. If possible, screeners and group managers should attempt to identify cases that meet criteria for referral to EO Technical before they are assigned to a determination specialist.

  3. Determination specialists may encounter certain issues which require analysis, development, and/or guidance from EO Technical before a case can be conclusively identified as an appropriate EO Technical referral.

    1. The specialist, with the approval of his/her group manager, may contact an EO Technical subject matter expert to determine whether clearly established precedent covers the issue before transferring the case.

    2. Under no circumstances should screeners, specialists, or managers cite a telephone conversation with a person in EO Technical as the reason for transferring a case.

    3. A determination specialist, who decides an assigned case should be referred to EO Technical after checking with EO Technical staff, should forward the case to his or her group manager for transfer.

    4. Under no circumstances should a determination specialist issue a determination letter in a case that should be handled by EO Technical.

7.20.1.4.1  (09-23-2011)
Cases Reserved for EO Technical

  1. Applications under IRC 501(c)(3) or (4) from prepaid health care plans (sometimes referred to as “"health maintenance organizations" or "HMOs" ).

  2. Applications where IRC 501(m) ("commercial-type insurance" ) may be an issue.

  3. Applications under IRC 501(c)(3) from potentially discriminatory private schools based on following the Private School Determination Checksheet procedures and after consulting with the Exempt Organizations Technical function. See IRM 7.20.4.

  4. Applications under IRC 501(c)(3) from hospitals and health care providers that are not clearly covered by Rev. Rul. 69-545, 1969-2 C.B. 117, including:

    • Hospitals participating in whole hospital joint ventures described in Rev. Rul. 98-15, 1998-1 C.B. 718

    • Faculty group practice organizations (group medical practices that employ the faculty members of a medical school or its affiliated hospital)

    • Physician-hospital organizations ("PHOs" ) (organizations controlled jointly by a hospital and physicians to carry out some of their activities)

    • Individual practice associations ("IPAs" ) (organizations that arrange to provide health care services to enrollees in a prepaid health care organization by contracting with physicians)

    • Corporate practice of medicine (health provider formed under a state's for-profit professional corporate laws).

  5. Applications from like organizations not specifically enumerated under IRC 501(c)(12).

  6. Applications under IRC 501(c)(14) for state-chartered credit unions, cooperatives, and mutual savings banks.

  7. Applications under IRC 501(c)(15) from small insurance companies or associations.

  8. Applications under IRC 501(c)(25) from title holding organizations.

  9. Applications under IRC 501(c)(26) from qualified state-sponsored high risk insurance organizations.

  10. Applications under IRC 501(c)(27) from qualified state-sponsored workers’ compensation organizations.

  11. Applications under IRC 501(c)(29) from Co-op health insurers.

  12. Applications from cooperative hospital service organizations for activities not specifically enumerated under IRC 501(e).

  13. Applications under IRC 501(n) for "charitable risk pools."

  14. Applications under IRC 529 for "qualified state tuition plans."

  15. Applications that raise the following internet issues:

    1. Applications where church status is claimed by an organization whose activities are wholly over the Internet.

    2. Applications under IRC 501(c)(3) from organizations whose sole activity is the provision of Internet access (i.e., Internet Service Providers).

    3. Applications under IRC 501(c)(7) from organizations whose activities are wholly over the Internet.

    4. Applications from organizations involved in charitable/charity fund raising through either auction or percentage fee arrangements with for-profit entities and whose fund raising activities occur wholly over the Internet.

    5. Applications from organizations whose proposed activities include extensive use of the Internet for lobbying or political activity.

  16. Applications under IRC 501(c)(3), 501(c)(4), or 501(c)(6) by nominating conventions or nominating convention host committees. For purposes of this subsection:

    • A nominating convention refers to an organization that conducts a convention arranged by a political party where delegates select candidates for national, state, or local public offices.

    • A nominating convention host committee refers to an organization that encourages the selection of a particular location for a nominating convention arranged by a political party where candidates for national, state, or local public office are selected. A nominating host committee may also be involved in arranging hospitality events for delegates to a nominating convention, such as by offering a welcoming ceremony and informational services, or by otherwise providing support to facilitate a nominating convention.

  17. Applications from organizations that transmit or exchange health data or pharmaceutical prescriptions electronically, or promote or facilitate such activities. These organizations include, but are not limited to, Regional Health Information Organizations (RHIOs) that establish and operate a network through which stakeholders may create, access, and transmit patient records through the network.

  18. Applications from organizations that provide management, consulting, development or operational services to foreign entities and governments to assist in the establishment of foreign health care services not including those organizations providing medical services or supplies to a foreign country.

  19. Applications from open source software companies that indicate the software is free, however charges fees for technical support provided by members, who are usually for-profit businesses or for-profit support technicians.

  20. Applications under IRC 501(c)(3) or (c)(4) from pooled trusts or special needs pooled trusts. A pooled trust or a special needs pooled trust provides benefits to disabled persons on Medicaid or Supplemental Social Security.

7.20.1.4.2  (09-23-2011)
Transferring Cases to EO Technical

  1. The specialist must discuss the proposal with the group manager prior to preparing the case for transfer to EO Technical, when the case is being transferred because of a general lack of precedent. If a discussion is necessary, the specialist should document on the case chronology record the discussion with the group manager.

  2. Prepare two copies of Form 3778, Transmittal Memorandum, which are initialed/dated by the specialist and placed in the left side of the case file in front of the CCR. Form 3778 must include the specific IRM section that supports the referral or appropriate cites (e.g., specific IRM sections, paragraph numbers, revenue rulings, etc.) that were considered and the reasons why they do not apply (if the case is being referred to EO Technical because of lack of established precedent).

  3. If TEDS case:

    1. All documents imported into TEDS will be printed for the hard-copy case file and placed on the left side of the orange folder (see IRM 7.20.2).

    2. Case will be updated in TEDS to Status 74 (awaiting managerial review).

      Note:

      Form 8670 is not required.

    3. After review, the group manager will update the case in TEDS to Status 59 (EDS manual process).

    4. Groups will forward the orange folder via Form 3210 to the Processing Section, Records Unit, who will associate the orange folder with the hard-copy case file.

  4. If hard-copy case, the specialist will update the case in EDS to Status 74 (awaiting managerial review).

    Note:

    Form 8670 is not required.

  5. Most cases proposed for transfer to EO Technical are subject to mandatory review by EO Determinations Quality Assurance (EODQA). See IRM 7.20.5 and take the following additional actions:

    IF THEN
    Case is not subject to mandatory review by EODQA per IRM 7.20.5.

    • Specialist will prepare Form 3198-A, TE/GE Special Handling Notice, check the box "Forward to EO Technical" in the Determination Cases section of Form 3198-A.

    • If TEDS case, the Records Unit will update the case in EDS to Status 58 (case in transit) and specialist number 50980, and transfer the case to EO Technical.

    • If hard copy case: Groups in Cincinnati - the Records Unit will update the case in EDS to Status 58 (case in transit) and specialist number 50980 and transfer the case to EO Technical on Form 3210.

    • If hard copy case: Groups outside of Cincinnati - the group manager/secretary will update the case in EDS to Status 58 (case in transit) and specialist number 50980 and transfer the case to EO Technical on Form 3210.

    Case is subject to mandatory review by EODQA per IRM 7.20.5

    • Specialist will prepare Form 3198-A, TE/GE Special Handling Notice, check the box "Mandatory Review" in the Determination Cases section of Form 3198-A with instructions "proposed transfer to EO Technical" in the Determination Case Section of Form 3198-A.

    • If TEDS case, the Records Unit will update the case in EDS to Status 75 (group inventory) and specialist number 31893 and transfer the case to EODQA.

    • If hard-copy case: Groups in Cincinnati - the Processing Section will update the case in EDS to Status 75 (group inventory) in EDS and specialist number 31893 and transfer it to EODQA on Form 3210.

    • If hard-copy case: Groups outside of Cincinnati - the group manager/secretary will update the case in EDS to Status 58 (case in transit) and specialist number 31893 and transfer the case to EODQA on Form 3210.

7.20.1.5  (09-23-2011)
Referrals

  1. Determination specialists may report suspected abusive promoters and/or abusive tax avoidance schemes or transactions, as well as suspected misconduct by individuals representing an organization, to the Touch and Go (TAG) group. See IRM 7.20.6, EO Touch-and-Go (TAG) Determination Case Procedures.

  2. Determination specialists may request a review of an organization by preparing an EO Exam Classification referral or a Review of Operations (ROO) referral.

    1. An EO Exam Classification referral is made when there is strong likelihood that there are past taxes and/or penalties due. See IRM 7.20.1.5.1.

    2. A Review of Operations (ROO) follow-up referral is prepared when a determination specialist has concerns about the past, present, or future activities of the organization but does not have sufficient cause to deny exemption. See IRM 7.20.1.5.2.

  3. In cases where an organization is determined to be a governmental unit or instrumentality of government exempt from Form 990 filing requirements, determination specialists are required to prepare a referral to the Federal, State, and Local Government office (FSLG).of TEGE for final determination of the appropriate employment code. See IRM 7.20.1.5.3.

7.20.1.5.1  (09-23-2011)
EO Exam Classification Referrals

  1. EO Exam classification referrals are prepared for cases where there is a strong likelihood that there are taxes and/or penalties due. EO Exam classification referrals may also include a recommendation for referral to Small Business and Self Employed (SBSE) or Large Business & International (LB&I). See IRM 7.20.1.5.1(3)(b), below.

  2. EO Exam classification referrals are generally prepared at case closing. However, in those situations where the statute for assessing tax is in jeopardy of expiration, an "early referral" should be submitted prior to case closing and as soon as possible after the potential for taxes and/or penalties due is identified.

  3. To refer a case to EO Exam Classification, the specialist will take the following actions:

    1. Prepare Form 5666 following instructions attached to the form. Include in Item "O" of Form 5666 a detailed description of the reason the referral is being made.

    2. If a specialist concludes that there is evidence in the case file that supports a referral to SBSE or LB&I, e.g., questionable charitable deductions, loans to disqualified persons, significant non-liquid assets, or other valuation issues, Item "O" of Form 5666 should include for EO Exam Classification’s consideration a recommendation for referral to SBSE or LB&I The recommendation for referral to SBSE or LB&I should include all pertinent facts and circumstances.

    3. Attach copies of any relevant information in the file that specifically supports the referral, e.g., financial data, correspondence. The group manager must sign Form 5666. Make two copies of Form 5666 and its attachments and place them in the left side of the determination case file folder (see case file assembly procedures in IRM 7.20.2). One copy will be forwarded to EO Exam. One copy will be retained with the case file as non-disclosable information.

    4. Attach Form 3198-A to the outside of the file folder with instructions "Forward attached Form 5666 to Programs and Support Group."

7.20.1.5.2  (09-23-2011)
EO Exam Review of Operations (ROO) Follow-up Referrals

  1. The ROO conducts compliance checks on organizations. They are authorized to determine whether an organization's activities are consistent with their stated tax-exempt purpose, and whether the organization is adhering to recordkeeping and reporting requirements. However, the ROO is not authorized to examine an organization's books and records or ask questions regarding tax liabilities. See Pub 4386 for further details.

  2. ROO follow-up referrals should be made for material issues when questionable activity is likely to occur, e.g., future operations may impact exempt status, generate UBI, or necessitate a change in private foundation classification. ROO follow-up referrals should also be prepared on all denials and withdrawals with the following exceptions:

    1. when an EO Exam classification referral is prepared for a denial or withdrawal, and

    2. when an application is withdrawn due to a change in application form, e.g., organization submits Form 1024 to replace Form 1023.

  3. To make a ROO follow-up referral, the specialist will take the following actions:

    1. Prepare ROO Referral Form and Memo to File to identify the issue (see IRM 7.20.2). The Memo to File should thoroughly explain why the case is being referred to the ROO.

    2. Attach Form 3198-A to the outside of the determination case file folder with instructions "Forward case to the EO Determinations Programs and Support Group - ROO." If the case is part of a special ROO project this should also be noted on the Form 3198-A.

7.20.1.5.3  (09-23-2011)
Federal, State, and Local Government (FSLG) Referrals

  1. When a specialist determines that an organization is a governmental unit or an instrumentality of the government and exempt from Form 990, Return of Organization Exempt from Income Tax, prepare Form 8670, EO Control Sheet, as follows at case closing:

    If ... Then ...
    501(c)(3) Insert Employment Code: W
    non-501(c)(3) Employment Code: leave blank
    Form 990 Filing Requirement Insert 14 (if qualifications are met)

  2. Prepare Form 5666 as follows for referral to FSLG (complete the following fields only):

    1. Line A, name of the organization.

    2. Line 2, EIN of the organization.

    3. Item L, specialist’s name.

    4. Item M, manager’s signature/date

    5. Item 0, enter following: "Organization indicated it is a governmental unit or affiliated with a governmental unit. Please review attached documents and update the Business Master File, Employment Code, as necessary."

    Note 1: Attach IDRS/BMFOLO print and highlight the Employment Code,
    Note 2: Attach copies of the organizing document and/or bylaws that show how the organization was formed and/or its relationship with the governmental unit, and a copy of documents from the organization’s website or other applicable material that may help FSLG determine whether the organization is one of its customers.

  3. Attach Form 3198-A to the outside of the determinations case file folder with instructions to "Forward case to the EO Determinations Programs and Support Group – FSLG."

7.20.1.6  (09-23-2011)
Taxpayer Contacts

  1. Taxpayer contacts can be received in the form of telephone or correspondence.

7.20.1.6.1  (09-23-2011)
Telephone

  1. Taxpayer telephone inquiries on open cases may be handled in various ways described in the examples below:

      If ... Then ...
    1. Case is assigned to a specialist Direct taxpayer to specialist to whom case is assigned
    2. Case is unassigned awaiting screening or in the national unassigned inventory Transfer the call to the W&I toll free call site at 877-829-5500
    3. Case is unassigned in group Direct taxpayer to group manager
    4. Case has been reassigned to EO Technical Direct taxpayer to the Technical Processing Unit (TPU) or, if known, to the tax law specialist to whom the case is assigned
    5. Case has been referred to EO Determinations Quality Assurance (EODQA) or Appeals Specialist should explain to the taxpayer that the case is being reviewed in EODQA or Appeals. If the taxpayer requires more information, the specialist should contact EODQA

  2. Taxpayer telephone inquiries on closed cases may be handled in various ways described in the examples below:

      If ... Then ...
    1. Request for clarification on determination letter Answer the taxpayer’s concern.
    2. Check on the status of the case Obtain the EIN from the taxpayer and check EDS for the current status or transfer the call to the W&I toll free call site at 877-829-5500.
    3. Request for tax-exempt number Inform taxpayer that we do not issue tax-exempt numbers, only determination letters.
    4. Confusion expressed about EIN and sales tax exemption number Advise taxpayer that the EIN is the only number IRS issues and that it is necessary to go through the State to obtain a sales tax exemption number, if that is what is needed.
    5. Change in activities, name, purposes, method of operation, etc. Instruct taxpayer to attach information with any supporting documentation to its annual return.
    6. Requests for a copy of determination letter Secure appropriate information from the taxpayer (name, address, EIN, phone number, etc.) and forward the information to the Correspondence Unit.
    7. Requests information on completing tax or information returns Refer the call to the toll free site at 877-829-5500.
    8. Calls on cases closed Failure to Establish Obtain EIN and taxpayer contact information and forward information to the Adjustments Unit.

    Reminder:

    Try to answer the customer’s concerns and questions. All disclosure rules apply with respect to customer inquiries.

7.20.1.6.2  (09-23-2011)
Correspondence

  1. Correspondence received for open determination cases should be associated with the open case file.

  2. Correspondence received for administrative case files open in EO Technical should be forwarded to EO TPU, Attention: SE:T:EO:R:TPU.

  3. Correspondence received for IRC 521 administrative case files open in EO Technical should be forwarded to the Office of the Assoc. Chief Counsel (Passthroughs & Special Industries) through the Manager, EO Technical, Attn: CC:PSI.

  4. Correspondence received for closed cases should be sent to the EO Determinations Processing Section, Correspondence Unit.

7.20.1.7  (09-23-2011)
Authorized Persons

  1. Specialists are responsible for ensuring that a determination request is signed by an authorized individual and includes, as required under IRC 6065, a written declaration that the request is made under the penalties of perjury. The signature on the determination request is considered prima facie evidence of the individual’s authority to sign the request. However, if evidence indicates that the person is not authorized to sign, return the application for an authorized signature and title.

  2. The following individuals may sign a determination request:

    1. A bona fide officer, director, or other official who is authorized to sign for the organization;

    2. Trustee, if the entity is a trust;

    3. Responsible and duly authorized member or officer having knowledge of the organization’s affairs, if the entity is a partnership or other unincorporated association;

  3. Specialists must be careful not to make unauthorized disclosures of confidential information while processing a determination request and should review records such as bylaws or articles of incorporation to identify persons authorized by the organization to receive confidential information. Usually, officers and board members are authorized to receive confidential information, but executive directors may or may not be authorized. See IRM 11.3, Disclosure of Official Information, for disclosure guidelines.

    1. Ask sufficient questions to establish the identity and position of the person contacted if requesting additional information from the applicant by telephone.

    2. Ensure that a power of attorney form or authorization is valid before contacting the designated representative.

7.20.1.7.1  (09-23-2011)
Processing Forms 2848 and 8821

  1. Form 2848, Power of Attorney and Declaration of Representative, authorizes an individual(s) to act as Power of Attorney for an organization; receive tax information, notices and other communications on behalf of an organization; and represent the organization before the IRS.

  2. Form 8821, Tax Information Authorization, designates an appointee (individual, corporation, firm, etc.) to receive tax information, notices, and other written communications on behalf of an organization but does not authorize the appointee to represent the organization before the IRS.

  3. For additional guidance on Form 2848, Form 8821, and other third party authorizations, see Treas. Regs. 601.504 et seq., Statements of Procedural Rules, and Treasury Circular No. 230.

7.20.1.7.1.1  (09-23-2011)
Form 2848

  1. Form 2848 must be properly executed and signed by an officer of the organization and the designated representative. If Form 2848 is properly executed:

    1. Form 2848 authorized representatives are input into EDS.

    2. The determination letter will include paragraph 5998 informing the organization that a copy of the determination letter has been sent to its authorized representative.

    3. Copies of correspondence or determination letters must be sent to the first listed representative on Form 2848.

    4. Copies of correspondence or determination letters are sent to the second representative if box 7b of Form 2848 is marked. Do not send copies to more than two representatives.

    5. Special rules apply to a Form 2848 signed by an unenrolled return preparer. See Pub 470, Rev. Proc. 81-38, and IRM 7.20.1.7.3.

7.20.1.7.1.2  (09-23-2011)
Form 8821

  1. Form 8821 must be properly executed and signed by an officer of the organization.

    1. An appointee designated on Form 8821 is not entered in EDS/TEDS.

    2. Copies of all correspondence, including the final determination letter, are sent to the appointee if Form 8821 is properly executed and block 5a is checked.

    3. Appointees designated on Form 8821 may be unenrolled preparers. See Pub 470 and IRM 7.20.1.7.3.

7.20.1.7.1.3  (09-23-2011)
Unenrolled Preparers

  1. Form 2848 is no longer accepted from unenrolled preparers (category "h" ) to represent organizations before the Internal Revenue Service on determination letters or rulings. Therefore, an unenrolled preparer may not represent an organization that is applying for recognition of tax exempt status.

  2. An organization may designate an unenrolled preparer to receive tax return information by filing Form 8821. If Form 2848 is submitted by an organization for an unenrolled preparer, the organization should be advised to submit Form 8821 by mail or fax to allow the Service to release tax return information to an unenrolled preparer. Finally, the unenrolled preparer should not be entered in EDS/TEDS as an authorized representative.

7.20.1.7.1.4  (09-23-2011)
Invalid Form 2848/Form 8821 Authorization

  1. Individuals designated on an improperly executed Form 2848 are not entered in EDS/TEDS. If a specialist discovers that an individual was entered into EDS/TEDS as an authorized representative or designee, but Form 2848 is invalid, the specialist should delete the individual’s name from EDS/TEDS until such time as the Form 2848 is perfected.

  2. Individuals designated on Form 8821 are not entered into EDS/TEDS whether the form is valid or invalid [see IRM 7.20.1.7.1.2(1)(a)].

    If ... Then ...
    a Form 2848 or Form 8821 authorization is invalid and an additional information letter is issued, the specialist will:

    • return the form to the organization explaining why the form is invalid. A copy of the invalid authorization should be attached to the additional information letter. The original Form 2848/8821 should be attached to the file copy of the additional information letter.

      Note:

      Do not send a copy of the additional information letter to the person(s) designated on an invalid Form 2848 or Form 8821.
    a Form 2848 or Form 8821 authorization is invalid and no additional information letter is issued because the case is being approved on merit, the specialist will:

    • prepare closing determination letter for the organization.

      Note:

      Do not send a copy of the closing determination letter to the person(s) designated on an invalid Form 2848 or Form 8821.

    • The invalid Form 2848 or Form 8821 should remain on top of the application in the closed case file.

7.20.1.7.2  (09-23-2011)
Centralized Authorization File (CAF)

  1. The Centralized Authorization File (CAF) maintains an electronic record of authorization information pertaining to most Federal tax matters. The CAF does not maintain electronic records of authorizations for EO Determination cases; but it does contain electronic records of authorizations for Form 990, 990-PF, 990-T, 941, 940, and other returns. If a Form 2848 is in the determination case file or is received during case processing that specifies representation for Form 990, 990-PF, 990-T, 941, 940, or other returns, the specialist will take the following actions:

    1. On the back of the original Form 2848, below the representative’s signature, the specialist will note the following information:

      Specialist Name
      TE/GE: Group ****
      Phone Number
      POD (Cincinnati or specific Area Office)
      MM/DD/YYYY
      Sent to EP/EO Determinations Processing Section, Adjustments Unit

    2. The specialist will make a copy of the Form 2848 for the case file and place the original in the Group’s designated bin to be forwarded to the Processing Section. Input to the CAF should generally take place within 5 workdays. Therefore, processing the Form 2848 should take place as soon as the case is assigned or as soon as the Form 2848 is subsequently received.

7.20.1.7.3  (09-23-2011)
Frequently Asked Questions About Form 2848

  1. The following situations illustrate some common questions about the validity of a Form 2848:

    If ... Then ...
    Q1. Form 2848 does not specify the kind of tax or the tax period, rather it states that it applies to a request for a determination of a particular date. A1. The Form 2848 can be accepted as a valid instrument provided the date agrees with the date on the correspondence requesting the determination.
    Q2. Form 2848 states that it is for all years or all periods. A2. The Form 2848 is not an acceptable instrument. It cannot be open-ended. However, it is permissible to specify "not applicable" in the years and periods column if the specific tax matter to which the form relates is described in item 3, e.g., "representation on Form 1023." An additional copy of Form 2848 must be filed for each kind of tax, tax matter, and tax period in excess of one.
    Q3. Form 2848 is similar to that in Question 2 but it is modified by the authorized representative to specify the kind of tax and the years. A3. The Form 2848 cannot be accepted if the representative altered it after it had been signed.
    Q4. Form 2848 specifies the kind of tax and period but adds any and all matters coming before the Internal Revenue Service. A4. The Form 2848 cannot be accepted. Each tax matter constitutes a separate tax issue and, therefore, a new power would be required before the representative could act for the organization.
    Q5. Form 2848 names a law firm as the authorized representative. A5. The Form 2848 cannot be accepted. The power must provide the name and address of everyone in the firm authorized to represent the organization. However, a tax information authorization Form 8821 may name a firm if the power is limited to receiving information, and does not purport to authorize the firm as an advocate.
    Q6. Form 2848 lists two organizations as the taxpayer, and only an officer from one of the organizations signed the power. A6. The Form 2848 cannot be accepted unless an officer of each organization signs it. However, if the determination is requested only by one of the named organizations, and an officer of that organization signed the power, it can be accepted.
    Q7. An individual who is not authorized to sign for the organization signs Form 2848 A7. The Form 2848 cannot be accepted unless it is signed by an individual with authority to act for the organization.
    Q8. Form 2848 is a mechanically reproduced copy. A8. The reproduced copy cannot be accepted. A photographic or xerographic copy need not be certified as a true and correct copy of the original.
    Q9. The authorized representative on file submits a substituted power of attorney naming another representative. A9. An authorized representative who has a power of attorney may substitute another individual without written authorization from the organization, but a representative named in the original power of attorney must sign the delegation or substitution.

7.20.1.7.4  (09-23-2011)
Frequently Asked Questions About Form 8821

  1. The following situations illustrate some common questions about the validity of Form 8821:

    If ... Then ...
    Q1. Form 8821 does not specify the kind of tax or the tax period, rather it states that it applies to a request for a determination of a particular date. A1. The Form 8821 can be accepted as a valid instrument provided the date mentioned agrees with the date on the correspondence requesting the determination.
    Q2. Form 8821 states that it is for all years or all periods A2. The Form 8821 is not an acceptable instrument. It cannot be open-ended. However, it is permissible to specify "not applicable" in the years or periods column if the specific tax matter to which the form relates is described in 3(d), e.g., "Form 1023." An additional copy of Form 8821 must be filed for each kind of tax, tax matter, and tax period in excess of one.
    Q3. Form 8821 is properly executed. May I discuss the case with the designated appointee? A3. Generally, the answer is "no." Form 8821, if properly executed, authorizes the designee to receive copies of correspondence on the case; however, the designee is not authorized to represent the organization before the Service.
    If an officer/director of the organization gives verbal or written permission for the specialist to discuss the case with the designee on Form 8821, the specialist may do so. Verbal permissions should be thoroughly documented on the case CCR.
    Q4. The organization failed to check box 5a or 5b on Form 8821. May I mail the designee copies of correspondence on the case? A4. No. If block 5a is not checked, we are not authorized to send copies of correspondence to the designee.
    Q5. Form 8821 names a law firm as the authorized representative. A5. Form 8821 may name a firm if the authorization is limited to receiving information, and does not purport to authorize the firm as an advocate.
    Q6. An individual who is not authorized to sign for the organization signs Form 8821. A6. The Form 8821 cannot be accepted unless it is signed by an individual with authority to act for the organization.
    Q7. Form 8821 is a mechanically reproduced copy. A7. The reproduced copy may be accepted. A copy need not be certified as a true and correct copy of the original.

7.20.1.8  (09-23-2011)
Disclosure/Third Party Contact

  1. Improper or unauthorized disclosure is the revealing of information to unauthorized individuals. Requesting information from unauthorized individuals is considered a third party contact. For additional information, see IRM 4.10.1 and IRM 7.28.

  2. If you think that you have made an unauthorized disclosure or a third party contact, then you should discuss it with your manager.

  3. When working cases, you should be very cautious regarding revealing information to unauthorized individuals or making a third party contact.

    1. When working an application, generally only discuss issues or items in the application with officers, board members of the organization, or individuals designated on a valid Form 2848 power of attorney.

    2. It is not a third party contact if the person to contact listed on page 1 of the Form 1023 or Form 1024 is contacted to secure information or to inquire as to the status of responses.

    3. If the specialist believes that the case may be adverse, a Form 2848 should be secured for the contact person (if not listed as an officer or board member) or a request made to be referred to an officer or board member of the organization. In this situation, do not reveal to the contact person that the case may be adverse.

      Note:

      The executive director is not usually a voting officer, but rather an employee. The bylaws of the organization need to be reviewed to determine whether the executive director is an authorized representative of the organization or an employee. If an employee, advise the person that a power of attorney is required before issues in the case can be discussed. Instruction can be provided to these individuals as to how to complete forms, etc.

    4. Procedures for documenting a third party contact include completing Form 12175 and preparing Letter 3164. Attachment 2 of the Letter of Understanding (LOU) dated August 5, 1999, details what is required. It is also necessary to annotate third-party contacts on adverse determination letters.

    5. Organizations may authorize third party contacts by completing Form 12180.

  4. After an application is approved, it is not considered an "unauthorized disclosure" to reveal any information that was submitted as part of the application package or subsequent information provided by the organization as part of the application process, unless the organization requested it be withheld during the application process and the IRS agreed.

  5. The listing for Disclosure Officers can be found at: http://www.irs.gov/foia/article/0,,id=120681,00.html. Before calling, discuss potential disclosure issues with your manager

  6. Third party referrals may be received by specialists during the processing of a determination case.

    1. Specialists will evaluate any referrals received and may use the information received to develop the determination case.

    2. Specialists will keep the referral with the non-disclosable documents in the case file.


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