4.24.2. Form 637 Excise Tax Registrations

(1) The Internal Revenue Code (IRC) requires each person who engages in certain activities subject to federal excise tax (FET) to be registered by the IRS as a taxpayer who engages in these activities. The taxpayer must register with the IRS before undertaking the activity. In other situations, a person must register with the IRS as a taxpayer who conducts certain activities to receive an excise tax benefit that may come with such activity, such as, buying or selling an article tax-free or filing a claim for refund or credit. For specified activities, the taxpayer must use Form 637 to apply for registration under:

• IRC 4101, Registration and bond (related to certain fuel taxes and credits)

• IRC 4222, Registration (related to IRC 4221 tax-free sales)

• IRC 4662, Definitions and special rules (related to certain tax-free sales of intermediate hydrocarbon streams or tax-free inventory exchanges of taxable chemicals)

• IRC 4682, Definitions and special rules (related to ozone-depleting chemicals)

(2) Form 637 includes a listing of activities for which registration is required or allowed. Refer to the tables found in IRM 4.24.2.3, Applications Under IRC 4101, and IRM 4.24.2.4, Applications Other Than Under IRC 4101, that list all applicable activity letters.

(3) Letter 3689, Approval of Excise Tax Registration, is issued when an application is approved. A copy of the Form 637 application is not considered proof of registration. Letter 3689 should be retained as proof of registration.

(4) Letter 3689 does not constitute a determination letter. For example, an approval of an AB, NB, or SA registration does not mean all future product produced unequivocally qualifies for the biodiesel/renewable diesel mixture credit or sustainable aviation fuel credit. In addition, an approval of an AL or AM registration does not mean all future product produced unequivocally qualifies for the alternative fuel/alternative fuel mixture credit.

(5) If an application for registration is denied or an approved registration is revoked, then the applicant or registrant will be notified in writing and the reason for the denial, revocation will be provided.

(6) An approved registration remains valid until revoked. Registration status can be found at Confirm Online Form 637 Registration Status.

(7) All Form 637 Registration numbers issued after February 1, 2004, are comprised of 10 digits. For registration numbers issued prior to the preceding date:

1. The non-UV/UP registration number has eight digits.

2. The activity letters UP and UV registration numbers are comprised of nine digits.

(1) Form 637 Registrations are processed under the following authorities:

• IRC 4101 - Registration and bond with respect to the tax imposed by IRC 4041(a)(1)or IRC 4081, every person producing or importing biodiesel (as defined in IRC 40A(d)(1)), including renewable diesel as defined in IRC 40A(f)(3)), or alcohol (as defined in IRC 6426(b)(4)(A)), every person producing or importing sustainable aviation fuel (SAF) (as defined in IRC 40B), and every person producing second generation biofuel (as defined in IRC 40(b)(6)(E))

  Note: The IRS will treat the producer or importer of a SAF synthetic blending component and the United States producer of a SAF co-processed qualified mixture as the persons required to register under IRC 4101. Refer to Section 5 of Notice 2023-6 for guidance.

• Treas. Reg. 48.4082-5 - Registration relating to diesel fuel or kerosene removed, entered, or sold in Alaska for ultimate sale or use in an exempt area of Alaska

• IRC 4222 - Registration for certain tax-free sales under IRC 4221

• IRC 4662(b)(10)(C) - Registrations for intermediate hydrocarbon streams containing one or more organic taxable chemicals

• IRC 4662(c)(2)(B) - Registrations for inventory exchanges of taxable chemicals

• Treas. Reg. 52.4682-5(d) - Exports of ozone-depleting chemicals (ODCs)

(2) Delegation Order SBSE 1-23-7 (formerly SBSE DO 4.36, Rev. 3), Approval, Denial, Suspension or Revocation of Form 637, Application for Registration (for Certain Excise Tax Activities), delegates the authorities for approving, denying, revoking, and suspending Form 637 Registrations.

(3) Delegation Order 4-6 (Rev. 1), Taxable Fuel Bond, delegates the authority to make the final determination as to the amount of bond required to be given by an applicant or existing registrant, to satisfy certain registration requirements under IRC 4101 with respect to the tax imposed by IRC 4041(a)(1) or IRC 4081. This delegation order also delegates the authority to require the posting of a bond to satisfy certain registration requirements under IRC 4101 for Form 637 Registration and to set the value of such bond.

(4) This section is tailored for a general overview of Form 637 Registrations, including applications under IRC 4101, IRC 4222, IRC 4662, and IRC 4682, as well as for general guidance. Refer to IRM 4.24.23, Operational Procedures and Responsibilities for Form 637 Excise Tax Registrations and Secure Airport Terminals (SATs), for guidance regarding operational procedures and responsibilities for Form 637 Registrations and SATs. Refer to IRM 4.24.24, Form 637 Registration Files: Administrative Procedures for Initial Applications and Case Reviews, for guidance regarding Form 637 initial applications and case reviews.

(1) Director, Examination - Specialty Policy is responsible for the procedures and policies addressed in this section.

(2) Program Manager, Excise Tax Policy is responsible for ensuring the procedures are accurate and updated regularly as needed.

(3) The Chief, Estate & Gift/Excise Tax Exam is responsible for ensuring the procedures within this section are adhered to by employees in Excise Tax Examination.

(4) Form 637 Registration case work is processed by the following areas:

• Centralized Specialty Tax Operations (CSTO) - All initial Form 637 Applications are received by the Cincinnati IRS Center (CIRSC), date stamped and forwarded to CSTO for initial processing. Refer to IRM 4.24.23.5, Responsibilities of Centralized Specialty Tax Operations (CSTO).

• Excise Case Selection (ECS), Excise Workload Selection and Delivery (WSD) - The selection of sample review cases and monitoring the Annual Form 637 Registration Work Plan is conducted by ECS/WSD. Refer to IRM 4.24.23.4, Responsibilities of Excise Case Selection (ECS) and Workload Selection and Delivery (WSD).

• Form 637 Registration Group - The registration group administers and maintains Form 637 Registrations. The registration group consists of Lead Technicians (LTs), Tax Examiners (TEs), Exam Technician and Management and Program Assistant. Refer toIRM 4.24.23.6, Responsibilities of the Form 637 Registration Group.

• Excise Groups - Form 637 compliance reviews assigned to Excise Tax Examination groups are conducted by examiners. Group managers are responsible for concurring with the examiner's compliance review recommendation and approving penalty determinations, if applicable. Refer to IRM 4.24.23.7, Roles and Responsibilities for Excise Groups.

(1) Program Reports - Information regarding the reporting of program objectives are included on, but not limited to:

• Examination Headquarters Monthly Briefing

• Program Manager Monthly Briefing

• SB/SE and Examination Operational Reviews and Business Performance Review

(2) Program Effectiveness - Program effectiveness may be measured by the Exam Quality Review Staff, located in Field & Specialty Exam Quality (FSEQ). FSEQ supports the SB/SE Quality Improvement Program utilizing National Quality Review System (NQRS) to conduct case reviews from statistically valid samples of examination case work. National, area and territory trend analysis on the quality attributes are used to establish baselines to assess program performance, identify opportunities to improve work processes, analyze causes of failure, assess the feasibility of possible solutions and measure the success of quality improvement efforts.

(3) Annual Review - Program Manager, Excise Tax Policy is responsible for reviewing annually the information in this section to ensure accuracy and promote consistent tax administration.

(1) Below are definitions for terms frequently used throughout this section:

(1) Below are the acronyms and their definitions used throughout this section.

(1) Refer to IRM 4.24.1, Introduction to Excise Taxes, for general information about basic examiner responsibilities, Excise IRM Sections, primary excise returns and excise claim forms and materials about excise tax abstracts and issues.

(2) For tax law and regulations regarding Form 637 Registrations, refer to the following:

• IRC 4101, for registration and bond related to certain fuel taxes and credits

• Treas. Reg. 48.4082-5, for registration relating to diesel fuel or kerosene removed, entered or sold in Alaska for ultimate sale or use in an exempt area of Alaska

• IRC 4222, for registration relating to certain tax-free sales under IRC 4221

• IRC 4662(b)(10)(C), for registration relating to intermediate hydrocarbon streams containing one or more organic taxable chemicals

• IRC 4662(c)(2)(B), for registration relating to inventory exchanges of taxable chemicals

• IRC 4682, for definitions and special rules relating to exports of ozone-depleting chemicals (ODCs), refer to Treas. Reg. 52.4682-5(d)

• IRC 6719, for failure to register or reregister penalties

(3) Form 637 Registration status can be located at Confirm On-line Form 637 Registration Status.

(4) For further guidance and procedures on a wide variety of excise issues, refer to Excise Tax Knowledge Base Homepage accessed via the Virtual Library on IRS Source - Home.

(5) The Taxpayer Bill of Rights lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. For additional information, refer to IRC 7803(a)(3), or to the Taxpayer Bill of Rights.

(6) For information relating to identity theft, refer to IRM 25.23, Identity Protection and Victim Assistance.

(1) Registration tests are defined in Treas. Reg. 48.4101-1(f). Different activity letters have different tests; some require all three tests are satisfied. The tests are:

• Activity Test

• Acceptable Risk Test

• Adequate Security Test (Adequate Financial Resources and Satisfactory Tax History)

(2) Activity Test - Under Treas. Reg. 48.4101-1(f)(2), an applicant meets the activity test only if it is determined that it is, in the course of its trade or business, regularly engaged in the activity applied for or likely to be regularly engaged within a reasonable period of time after being registered. In determining whether an applicant is likely to be engaged in a listed activity, the following factors should be considered:

• Business experience

• Financial standing

• Contracts with buyers and sellers of fuel

• Trade connections

• State licenses

• Federal and state tax returns

(3) Acceptable Risk Test - Under Treas. Reg. 48.4101-1(f)(3), an applicant meets the acceptable risk test only if it is determined that neither the applicant nor a related person has been penalized for a wrongful act.

(4) Even though the applicant or a related person has been penalized for a wrongful act as defined under Treas. Reg. 48.4101-1(b)(4), the Chief, Estate & Gift/Excise Tax Exam may determine, after review of evidence offered by the applicant, that the registration does not create a significant risk of nonpayment or late payment of the tax imposed by IRC 4041(a)(1) and IRC 4081.

(5) In determining whether an applicant creates a significant risk of nonpayment or late payment of tax, the following factors should be considered:

• The time elapsed since the applicant or related person was penalized for a wrongful act

• The present relationship between the applicant and any related person that was penalized for any wrongful act

• The degree of rehabilitation of the person penalized for any wrongful act

• The amount of bond given by the applicant (in this regard, the amount of bond may be in any amount without limits)

  Note: Refer to IRM 4.24.2.5, for information on bonds.

(6) Related person - Under Treas. Reg. 48.4101-1(b)(5), a related person, which includes officers, owners, and members, is a person that meets any of the following conditions:

1. Directly or indirectly exercises control over an activity of the applicant, if the activity is described in paragraph (c)(1) or (d) of Treas. Reg. 48.4101-1

2. Owns, directly or indirectly, five percent of more of the applicant

3. Is under a duty to assure the payment of a tax for which the applicant is responsible

4. Is a member with the applicant of a group of organizations (as defined in Treas. Reg. 1.52-1(b)), that would be treated as a group of trades or businesses under common control for purposes of Treas. Reg. 1.52-1

5. Distributed or transferred assets to the applicant in a transaction in which the applicant’s basis is determined by reference to the basis of the assets in the hands of the distributor or transferor

(7) Penalized by a Wrongful Act - Treas. Reg. 48.4101-1(b)(4) provides a person has been penalized for a wrongful act if any of the following conditions are true:

• Any penalty under Chapter 68 of the Code (or similar provision of the law of any state) has been assessed for fraudulently failing to file any return or pay any tax and the penalty has not been fully abated, refunded or credited.

• Any penalty under Chapter 68 of the Code has not been fully abated, refunded or credited and the Chief, Estate & Gift/Excise Tax Exam determines that the conduct resulting in the penalty is part of a consistent pattern of failing to deposit, or pay over a substantial amount of tax.

• A conviction of a crime under Chapter 75 of the Code (or similar revision of the law of any state), or conspiracy to commit such a crime occurred and the conviction has not been fully reversed by a court of competent jurisdiction.

• A conviction of a crime, under the laws of the United States or any state, of a felony for which an element of the offense is theft, fraud or the making of false statements occurred and the conviction has not been fully reversed by a court of competent jurisdiction.

• Any tax under IRC 4103, Certain additional persons liable for tax where willful failure to pay, has been assessed and the tax has not been fully abated, refunded or credited.

• The registration under IRC 4101 or IRC 4222 was revoked.

(8) Adequate Security Test - Under Treas. Reg. 48.4101-1(f)(4), an applicant meets the adequate security test only if it is determined the applicant has both adequate financial resources and a satisfactory tax history or the applicant posts a bond under Treas. Reg 4041-1(j).

(9) Adequate Financial Resources - An applicant has adequate financial resources only if it is determined by the Chief, Estate & Gift/Excise Tax Exam the applicant is financially capable of paying:

• The expected tax liability under IRC 4041(a)(1) and IRC 4081 for a representative six-month period.

• In the case of a terminal operator, the expected tax liability under IRC 4081 of persons other than the terminal operator with respect to taxable fuel removed at the racks of its terminals during a representative one-month period.

Note: The determination that an applicant has adequate financial resources must be based on all information relevant to the applicant’s financial status. For example, lines of credit are generally revocable and, as such, should not be considered.

(10) Satisfactory Tax History - Under Treas. Reg. 48.4101-1(f)(4)(iii) an applicant has a satisfactory tax history only if the Chief, Estate & Gift/Excise Tax Exam is satisfied with the filing, deposit and payment history for all federal taxes of the applicant and any related person. Complete transcripts or other equivalent research will be used for this purpose.

(11) An applicant will be registered for activities K, M or S only if the examiner determines that the applicant meets all three registration tests found in Treas. Reg. 48.4101-1(f).

(12) An applicant will be registered for activities as an X, Y, AB, AF, AL, AM, BC, CC, NB, QR, SA, SB, UA, UB, UP, or UV only if the examiner determines that the applicant meets the Activity Test and the applicant and all related persons have a Satisfactory Tax History, including claim history.

(13) In addition to the registration tests, AB agri-biodiesel and NB biodiesel applicants must meet the requirements of IRC 40A(d)(1) that define biodiesel as the monoalkyl esters of long chain fatty acids derived from plant or animal matter, which must meet:

• The registration requirements for fuels and fuel additives established by the Environmental Protection Agency under Section 211 of the Clean Air Act (42 USC 7545), and

• The requirements of the American Society for Testing and Materials (ASTM) D6751.

(14) In addition to the registration tests, NB renewable diesel applicants must adhere to the requirements of IRC 40A(f)(3) that define renewable diesel as liquid fuel derived from biomass, which must meet:

• The registration requirements for fuels and fuel additives established by the Environmental Protection Agency under Section 211 of the Clean Air Act (42 USC 7545), and

• The requirements of ASTM D396 or D975.

(15) NB registrants that produce or import renewable diesel are also required to register under activity letter S to identify them as a refiner or enterer of a taxable fuel.

(16) In addition to the registration tests, SA sustainable aviation fuel applicants must adhere to the requirements of IRC 40B(d) that define sustainable aviation fuel as liquid fuel, the portion of which is not kerosene, which:

• Meets the requirements of ASTM International Standard D7566, or the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1,

• Is not derived from co-processing an applicable material (or materials derived from an applicable material) with a feedstock which is not biomass,

• Is not derived from palm fatty acid distillates or petroleum, and

• Has been certified as having a lifecycle greenhouse gas emissions reduction percentage of at least 50 percent. See Notice 2023-06 for more details.

(17) SA registrants that blend SAF synthetic blending components and ASTM D1655 kerosene used to produce SAF qualified mixtures are also required to register under Activity Letter S if the blending occurs within the bulk transfer/terminal system (that is, above the rack) or under Activity Letter M if the blending occurs outside the bulk transfer/terminal system (that is, below the rack).

(18) SA registrants that produce SAF co-processed qualified mixtures and co-processed liquid fuel are also required to register under Activity Letter S to identify them as a refiner of a taxable fuel.

(19) In addition to the registration tests, the examiner must obtain samples to determine that agri-biodiesel, biodiesel, renewable diesel, or sustainable aviation fuel producer applicants and registrants (AB, NB, or SA applicants and registrants) are adhering to the ASTM requirements listed above.

(20) Samples of agri-biodiesel, biodiesel, renewable diesel, and sustainable aviation fuel produced or imported are required for testing for ASTM standards. FCOs or FCAs, if available, should obtain the samples from the producer/importer applicant during the initial registration process and in follow-up compliance reviews. There may be instances when an FCO/FCA is not readily available. For these situations, an examiner may allow an applicant, registrant, or designated proxy to collect and ship samples to the Excise Forensics Laboratory (EFL). The collection and shipping of samples without an FCO/FCA may occur under the following circumstances and procedures:

1. The examiner requests FCO/FCA support through the group manager. If an FCO/FCA is not available to obtain the sample, then the group manager will direct an FCA in the group to send the necessary sampling and shipping supplies to the examiner. The supplies include sample bottles and caps, Form 9667, Sample Bottle Seals and Identification Labels, and shipping supplies with instructions.

2. The examiner should contact the designated Excise Tax Policy Analyst for fuel to obtain a shipping air bill and provide the expected shipping date the samples will be obtained. Excise Tax Policy must be notified immediately if the date changes.

3. The examiner must review IRM 4.24.15, Excise Fuel Compliance Inspection, Sampling and Shipping, to become familiar with the safety, sampling and shipping aspects of handling fuel.

4. The examiner should schedule an appointment to observe the collection of the samples.

   Note: The taxpayer's designation of a proxy requires a valid Form 2848, Power of Attorney and Declaration of Representative, and Form 56, Notice Concerning Fiduciary Relationship, from the applicant prior to sample collection activity.

5. At the time of the appointment, the examiner will observe the applicant or registrant fill eight one-ounce production run samples (fill to the one-ounce line on each sample bottle) for each tank product to be tested.

   Note: The applicant or registrant generally provides equipment, but the examiner should inquire about safety requirements prior to the visit.

6. The examiner shall complete Form 9667 in the presence of the applicant or registrant.

7. The applicant or registrant places the two security strips and label from the Form 9667 onto each bottle. Each Form 9667 can label four sample bottles of the same product from the same tank. The Form 9667 also has a label that may be included in the IMS case file.

8. Crisscross the top two narrow labeling strips over the top of the capped bottle so that four approximately equal lengths come down the outside of the bottle.

   Note: Carefully press these strips against the side of the cap while one end of the strip is still not applied to the bottle. Wrap the third section, which is identified as "Bottle Label" on Form 9667 around the bottle, covering the bottom ends of the two crisscrossed strips.

9. The examiner shall prepare Form 13927, Chain of Custody and Shipping Record. The completed form will be enclosed inside the shipping box.

10. The applicant or registrant ships the samples to EFL the day of the visit unless the daily courier pickup deadline has passed. If the deadline has passed, then the sample must be shipped the next day. Excise Tax Policy will inform the examiner of the shipping deadline prior to the visit. The examiner must ensure that the shipping box is sealed prior to leaving the sampling site.

11. The examiner shall complete Form 14403, Investigative Sample Information, and either fax or e-mail the completed form to the EFL.

12. The EFL will send the sample results to the individual(s) listed on Form 14403.

    Note: Sample results may only be shared with the registrant after the lab’s identifying information is redacted from the document.

(21) Approval or continuation of registration for AB, NB, or SA will be granted only if the results from the lab test for the agri-biodiesel, biodiesel, renewable diesel, and/or sustainable aviation fuel samples submitted by the applicant or registrant meet the IRC requirements.

(22) The Y activity letter is necessary for an aircraft operator to self-assess excise tax on Abstract 077.

(23) Use of fuel in foreign trade. A buyer of aviation-grade kerosene fuel for use in foreign trade does not need to be registered to buy aviation fuel tax-free for that purpose. Refer to Section 4(f) of Notice 2005-04.

(24) An aircraft operator/ultimate purchaser does not need to be a Y registrant for a registered ultimate vendor (UA registrant) to make a claim for kerosene sold for use in commercial aviation. The aircraft operator/ultimate purchaser can provide model Waiver L to an UA registrant without having a Y registration.

(25) The requirement that each commercial aircraft operator have a Y registration was removed by Notice 2005-80 Section 3(d).

(26) Specific rule for qualified fuel sales in Alaska. Treas. Reg. 48.4082-5(b) provides that the Chief, Estate & Gift/Excise Tax Exam will register a person as a Qualified Retailer (QR) only if both of the following requirements are met:

• If it is determined that the person, in the course of its trade or business, regularly sells diesel fuel or kerosene for use by its buyer in a nontaxable use, and

• If the person has satisfied the filing, deposit, payment, and claim history for all federal taxes of the person and any related person.

  Note: Treas. Reg. 48.4101-1 does not address Qualified Retailers. Treas. Reg. 48.4082-5(f) provides that each person that has been registered as a Qualified Retailer, the rules of Treas. Reg. 48.4101-1(g), (h) and (i) apply.

(1) It is required that a field visit be conducted at the principal business location and/or production facility of the applicant for activities K, M, S, X, AB, AF, NB, SA, and SB.

(2) A field visit by an examiner may be warranted to the principal business location of the applicant for activities AL, AM, BC, CC, UA, UB, UP, UV, and Y.

(3) A field visit by an examiner is not required for activity QR.

(4) If the entity is an Indian Tribal Government, refer to IRM 4.24.6.2.14, Excise Examinations of Indian Tribal Government (ITG) Cases, for procedures to follow before visiting an applicant.

(1) The Chief, Estate & Gift/Excise Tax Exam must revoke the registration for activities above, if it is determined at any time the registrant:

• Does not meet one or more of the applicable registration tests described in Treas. Reg. 48.4101-1(f) and has not corrected the deficiency within a reasonable period of time after notification.

• Has used its registration to evade, or attempt to evade, the payment of any tax imposed by IRC 4041(a)(1) or IRC 4081, or to postpone or in any manner to interfere with the collection of any such tax.

• Has used the registration to make a fraudulent claim for a credit or payment.

• Has aided or abetted another person in evading, or attempting to evade, payment of any tax imposed by IRC 4041(a)(1) or IRC 4081, or in making a fraudulent claim for credit or payment.

• Has sold, leased, or otherwise allowed another person to use the registration.

• Fails to follow corrective actions for a CP 241 notice. Refer to IRM 4.24.24.5.2, CP 241, Notice - 637 Registrant, Procedures, for more information.

(2) The examiner must recommend revoking the registration of any person registered for activities AB and/or NB, if it is determined the results of samples obtained during a compliance review do not meet ASTM standards.

(3) The examiner must recommend revoking the registration of any person registered for activity SA, if it is determined the results of samples obtained during a compliance review do not meet ASTM standards and/or do not meet the requirements of IRC 40B(f)(2).

(1) Applicants will be registered under IRC 4222 and IRC 4682, if they meet the following tests:

• Activity test

• Satisfactory tax history

(2) The activity test for activities A, Q, or V will be met only if it is determined the applicant or registrant in the course of its trade or business, regularly engaged in making certain tax-free sales described under IRC 4221 for activities A or Q, or IRC 4682(d) for activity V, or is likely to be regularly engaged in making certain tax-free sales because of such factors as the applicant’s business experience, financial standing or trade connections.

(3) The activity test for activities B, C, D, E, F, or I will be met only if it is determined the applicant in the course of its trade or business, regularly engaged in purchasing taxable articles under Chapter 32, Manufacturer’s Excise Taxes, other than under IRC 4121, or IRC 4081, or under Subchapter C of Chapter 31 (IRC 4051 - 4053) or is likely to be regularly engaged in these activities because of such factors as the applicant’s business experience, financial standing or trade connections.

(4) The activity test for activity G will be met only if it is determined the applicant, in the course of its trade or business, makes inventory exchanges of taxable chemicals under IRC 4662(c)(2) or sells or buys intermediate hydrocarbon streams containing one or more organic taxable chemicals under IRC 4662(b)(10).

(5) The satisfactory tax history test will be met only if, the Chief, Estate & Gift/Excise Tax Exam is satisfied with the filing, deposit, payment, reporting and claim history for all federal taxes of the applicant or registrant and any related person.

(1) A field visit by an examiner may be warranted to the principal business location of applicants for activities A, B, C, D, E, F, G, I, Q and V.

(2) If the entity is an Indian Tribal Government, refer to IRM 4.24.6.2.14, Excise Examinations of Indian Tribal Government (ITG) Cases, for procedures to follow before visiting an applicant.

(1) Per Treas. Reg. 48.4222(c)-1, the examiner is authorized to recommend revoking the registration of any person registered for activities above, if it is determined that:

• Such registrant is not a bona fide manufacturer, or a purchaser reselling direct to manufacturers or exporters.

• Such registrant is for some other reason not eligible under these regulations to retain a Certificate of Registry.

• Revocation is necessary to protect the revenue.

• Such registrant has used this registration to avoid the payment of any tax imposed by Chapter 32 of the Code, or to postpone or interfere in any manner with the collection of such tax.

• For A, B, C, D, E, F, I and Q registrants, the registrant failed to comply with the requirement of paragraph (c) of Treas. Reg. 48.4221(a)-1, relating to the evidence required to support tax-free sales.

Note: If any registrant fails to follow corrective actions for a CP 241 notice, then the examiner is authorized to recommend revoking the registration. Refer to IRM 4.24.24.5.2, CP 241, Notice - 637 Registrant, Procedures, for more information.

(2) For G registrants, the examiner must recommend revoking a registration if it is determined the registrant failed to meet the activity or satisfactory tax history test.

(3) For V registrants, the examiner must recommend revoking a registration if it is determined the registrant failed to comply with Treas. Reg. 52.4682-5(d) and (e).

(1) For a No Penalty Case File, the IMS case file should contain the following documentation:

• Form 3198, Special Handling Notice for Examination Case Processing

• E500, Penalty Check Sheet and Approval Form, (with manager’s signature)

• Supporting workpapers

• A copy of Letter 4601, No Penalty for Failure to Register

(2) The case will be closed to the group manager who will sign and issue Letter 4601 to the applicant or registrant, close the IMS case file, and maintain the paper case file in the group.

(3) The E500, supporting workpapers, and a copy of Letter 4601 should be uploaded into the IMS case file before closing.

(1) For an Agreed Penalty Case File, the IMS case file, should include the following completed documents:

• Form 3198, Special Handling Notice for Examination Case Processing, (check the "Other Instructions" box in the "Special Features" section and insert the following language: "6719 Penalty Case File – Assess using Reference Code 670")

• Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties

• Form 5384, Excise Tax Examination Changes and Consent to Assessment and Collection, (using Activity Code 555)

• Form 886-A, Explanation of Items

• E500, Penalty Check Sheet and Approval Form, (with manager’s signature)

• Supporting workpapers

• A copy of Letter 4600, Penalty for Failure to Register

• The applicant’s/registrant’s written response, if applicable

• Form 3244-A, Payment Posting Voucher, if applicable

(2) The examiner will prepare Letter 4600 and have the group manager sign letter and mail it to the applicant or registrant.

(3) The Form 8278, Form 5384, Form 886-A, E500, supporting workpapers, a copy of Letter 4600, and the applicant’s/registrant’s written response (if applicable), should be uploaded into the IMS case file before closing.

(1) For an Unagreed Penalty Case File, the IMS penalty case file, should contain the following:

• Form 3198, Special Handling Notice for Examination Case Processing

• Form 4665, Report Transmittal

  Note: For Appeals, include the date of the failure to register or reregister first occurred, the statute date and the controlling tax period for the IRC 6719 penalty.

• Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties

• Form 5384, Excise Tax Examination Changes and Consent to Assessment and Collection

  Note: Form 5384 is used for both agreed and unagreed cases. The taxpayer’s signature is not required for an unagreed case.

• Form 886-A, Explanation of Items

• The applicant’s/registrant’s written response

• The examiner’s rebuttal

• E500, Penalty Check Sheet and Approval Form, (with manager’s signature)

• Supporting workpapers

• A copy of Letter 4600

  Note: Letter 4600 is used for both agreed and unagreed penalty cases.

• Form 3244-A, Payment Posting Voucher, if applicable

(2) The examiner will prepare Letter 4600, which gives the applicant or registrant 30 days to respond. The group manager signs Letter 4600 and mails it to applicant or registrant.

(3) If the applicant or registrant does not agree with the penalty assessment, then they may:

1. Request a managerial conference.

2. Request Appeals consideration.

   Note: Appeals considers these penalties after assessment.

3. Pay the penalty and file a claim for refund or bring suit in the United States District Court or in the United States Court of Claims.

(4) Penalty case files will be closed unagreed and forwarded to CCP for assessment when the applicant or registrant:

• Fails to respond timely to Letter 4600,

• Wishes to pay the penalty and petition the court, or

• Wishes to pay the penalty and file a claim for refund.

(5) An Appeals request requires the case be updated to Status 21 and forwarded to Technical Services.

(6) IRM 25.6.23.7.1, Minimum Time Remaining on ASED, requires a minimum of 365 days remaining on the assessment statute before an unagreed case will be accepted by Appeals.

(7) The Form 8278, Form 5384 (unsigned), Form 886-A, E500, supporting workpapers, a copy of Letter 4600, the applicant’s/registrant’s written response (if applicable), and the examiner’s rebuttal (if applicable), should be uploaded into the IMS case file before closing.

(1) For registrants under IRC 4101, IRC 4101(a)(5) discusses reregistration in the event of change in ownership. Under regulations prescribed by the Secretary, a person (other than a corporation the stock of which is regularly traded on an established securities market) shall be required to reregister under this section if after a transaction (or series of related transactions) more than 50 percent of ownership interests in, or assets of, such person are held by persons other than persons (or persons related thereto) who held more than 50 percent of such interests or assets before the transaction (or series of related transactions). This will require a new Form 637 be filed.

(2) For registrants under IRC 4222, IRC 4662 and IRC 4682, they must notify the IRS within 10 days if any of the information submitted with an application has changed.

(3) For all registrants, a change in EIN number will require a new Form 637 be filed.

(4) Changes in ownership that do not involve obtaining a new Form 637 application will be properly documented on the Case Level Activity Record in IMS by the LT. At a minimum, the LT will:

1. Secure the names and TINs of the new owners.

2. Conduct an IDRS compliance check on the new owners.

3. Ensure that the person who signed the approved application can continue to bind the registrant. If not, then obtain a new Form 637 application signed by a person that can bind the registrant.

4. Document the Case Level Activity Record in IMS for all actions taken.

(5) For changes in ownership that require reregistration under IRC 4101(a)(5) and where the EIN did not change. The LT will:

1. Obtain a new Form 637 application (if not provided) and ensure the application is signed by a person that can bind the applicant.

2. Create a sample review and assign the IMS case file to the appropriate Excise Tax Examination group.

3. Upload the application and documentation on the change in ownership in the existing IMS case file under "Workpapers." The change in ownership on IMS will be made after the Excise Tax Examination group makes a final determination on the application, completes the sample review, and updates the IMS case file to Status 70 - LT Review. The registration group will update the change in ownership on IMS and issue the appropriate registration letters.

4. E-mail the group manager, via secure e-mail, about the establishment of the sample review, change in ownership and new application.

5. Document the Case Level Activity Record in IMS for all actions taken.

(6) For changes in ownership that require reregistration under IRC 4101(a)(5) and the EIN change, a new Form 637 application will be required and processed in accordance with the procedures found in IRM 4.24.24.4.3, Status 20 Compliance Check - Overview Initial Application and Sample Reviews Conducted by Form 637 Registration Group TE. Once the case is returned to the LT in Status 30 - LT Review, the assigned LT will:

1. Create a sample review on the existing IMS case file.

2. Upload documentation of the ownership change in both IMS case files.

3. Notify the group manager via secure e-mail of the ownership change.

4. Assign the initial application and sample review to the Excise Tax Examination group to make the final determinations on both IMS case files.

5. Document the Case Level Activity Record in IMS for all actions taken.

(1) When notification of a name change is received and the name does not match the name on IMS or IDRS, the LT will:

1. Contact the registrant and secure documentation about the name change, if applicable, such as, filings with the Secretary of State or corporate minutes. An internet search can also be conducted at the registrant's Secretary of State website.

2. Once documentation on the name change is received, change the name on IMS and issue a Letter 3689 with the new name to the registrant.

3. Complete Form 2363, Master File Entity Change, and forward the completed form to Centralized Case Processing (CCP).

4. Upload documentation of name change, Letter 3689, and Form 2363 into the IMS case file.

5. Document the Case Level Activity Record in IMS for all actions taken.

(2) When notification of a name change is received and the new name does not match IMS, but matches the name on IDRS (e.g., the ENMOD), the LT will:

1. Secure an ENMOD and ensure the prior name shown on the ENMOD matches the name on IMS.

2. Change the name on IMS.

3. Prepare and issue Letter 3689 with the new name to the registrant.

4. Upload a signed copy of Letter 3689 and ENMOD into the IMS case file.

5. Document the Case Level Activity Record in IMS for all actions taken.

(1) If a registrant requests to add an additional activity to its approved registration, then a new Form 637 is required for the additional activity. The new Form 637 will be processed in accordance with the established procedures in IRM 4.24.24.4.3, Status 20 Compliance Check - Overview Initial Application and Sample Reviews Conducted by Form 637 Registration Group TE.

(2) When notification is received from a registrant that the taxpayer no longer engages in the activity for which the registrant is approved, the LT will:

1. Secure a written consent, from a person that can bind the registrant, to revoke the activity that is no longer needed and upload the consent into the IMS case file.

2. Prepare Letter 3691 and update the IMS case file to status 65 - Deny/Revoke.

3. If applicable, prepare and issue Letter 3689 with the current approved activity and then upload the signed copy of letter into the IMS case file.

4. Document all actions taken on the Case Level Activity Record in IMS.