7.20.2. Determination Letter Processing of Exempt Organizations

(1) EO includes two primary operational areas: Rulings and Agreements (R&A) and Examinations.

(2) EO Rulings and Agreements (EO R&A) is responsible for issuing determination letters on exempt status, private foundation classification, and other determinations related to exempt organizations.

(3) Organizations submit Form 1023, Application for Recognition of Exemption Under Section 501(c)(3), Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3), Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4), Form 1024, Application for Recognition for Exemption Under Section 501(a) or Section 521, and Form 8940, Request for Miscellaneous Determination, electronically through Pay.gov. Organizations submit other letter applications for tax-exempt status to the Cincinnati Accounts Management Campus Support (Campus Support).

(4) Campus Support processes the user fee payments in the Letter Information Network and User Fee System (LINUS) and scans the applications/requests into the Modified EO-EP Determination System (MEDS). MEDS transmits the information to the Employee Plans/Exempt Organizations Determination System (EDS).

(5) Campus Support sends open hard copy case files to an IRS facility in Ogden, UT.

(6) Cases are generally processed electronically in MEDS. See IRM 7.22.4, Modified EO-EP Determination System (MEDS) User Manual, for more information.

(1) Rev. Proc. 2024-5, updated annually, sets forth procedures for issuing determination letters on issues under the jurisdiction of the Director, EO R&A. It explains the 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. 2024-4, updated annually), private foundation classification, and other determinations related to exempt organizations. Rev. Proc. 2024-5 also provides guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under IRC 7428 and guidance on applicable user fees for requesting determination letters.

(1) The Director of EO R&A is responsible for issuing determination letters on exempt status, private foundation status, and other determinations related to tax-exempt organizations.

(2) EO R&A is the office within Exempt Organizations and Government Entities (EOGE) that is primarily responsible for up-front, customer-initiated activities such as determination letter requests, taxpayer assistance, and assistance to other EOGE offices.

(3) EO R&A includes EO Determinations and EO Determinations Quality Assurance (EODQA).

(1) EODQA reviews determination cases to ensure:

1. Technical accuracy,

2. Adherence to written procedures,

3. Uniform and impartial treatment of exempt organizations' interests while protecting the government's interest,

4. Uniform application of the statutes, tax treaties, regulations, court opinions, or guidance published in the Internal Revenue Bulletin, and

5. Identification of unfavorable case patterns, trends affecting processing quality, problem areas, unique issues, and new or novel techniques that EOD specialists develop.

(1) Commonly used abbreviations include:

(1) Use the following IRMs in conjunction with this manual when processing requests for determination letters:

• IRM 7.20.1, Exempt Organizations Determination Letter Overview, includes authorized persons information and disclosure issues.

• IRM 7.20.3, Processing Foundation Classification and Miscellaneous Requests, includes foundation classification processing information and procedures for processing miscellaneous determination requests.

• IRM 7.20.4, Automatic Revocation and Other Special Determination Issues, describes automatic revocation procedures, foreign organization processing, and other non-standard procedures.

• IRM 7.20.5, Review Procedures for EO Determinations, lists cases subject to mandatory review and procedures for responding to review memorandums.

• IRM 7.20.6, Anti-Terrorism and Other Emerging Issues, describes EO Determinations processing procedures for combatting terrorism.

• IRM 7.20.9, Processing Form 1023-EZ, includes pre-determination review procedures for specialists.

• IRM 7.21, Exempt Organizations Determinations Processing, describes EO R&A Processing & Support Unit’s various roles and procedures.

• IRM 7.22, Exempt Organizations Determination Letter Automation Systems, provides system information primarily for MEDS and EDS.

• IRM 7.28, Exempt Organizations Disclosure Procedures, describes disclosure procedures under IRC 6104(c) and IRC 6110.

• IRM 25.1, Special Topics, Fraud Handbook.

(1) A determination case request is established as one of the following types of cases:

(2) For cases requiring corrective actions, discuss with your manager.

(1) Automatic revocation considerations under IRC 6033(j) generally apply when determining the effective date of exemption. IRM 7.20.4, Automatic Revocation and Other Special Determination Issues, provides effective date guidelines for automatic revocation reinstatement requests as well as certain initial requests for exempt status (for example, when an organization changes legal form). In general, to be recognized as exempt from its date of formation, an organization applying for exemption must:

1. File its application for exemption within 27 months from the end of the month it was legally formed (which includes an automatic 12-month extension of the time to file an application for exemption).

2. Establish its purposes and activities prior to a determination were consistent with the requirements for exemption since its inception.

(2) Special rules may apply to an organization seeking recognition of exemption under IRC 501(c)(3), (9), (17), or (29). (See IRC 505 and 508, and Treas. Reg. 1.505(c)-1T, 1.508-1(a), and 301.9100-2(a)(2)(iii) and (iv). See also IRC 501(c)(29), Treas. Reg. 1.501(c)(29)-1 and Rev. Proc. 2015-17.) In its application for recognition of exemption under IRC 501(c)(3), (9), (17), or (29), an organization that has not filed its application within the required time period may request relief under Treas. Reg. 301.9100-3 in order to be recognized and treated as tax-exempt effective as of a date earlier than the date of application. EO R&A may grant such relief if the requirements for relief are met and consistent with Rev. Proc. 2024-5 (updated annually).

(3) Rev. Proc. 2024-5 provides that EO R&A won’t:

• Grant relief under Treas. Reg. 301.9100-3 if granting request for relief would result in the organization’s exemption being automatically revoked under IRC 6033(j)(1) effective before the date of application.

• Grant relief under Treas. Reg. 301.9100-3 if the period of limitations on assessment under IRC 6501(a) for any taxable year for which the organization claims exemption has expired prior to the date of application.

• Consider relief for an organization that is not required to apply for recognition of exempt status in order to be tax-exempt (for example, a church).

(4) Request information, as necessary, to determine whether to grant relief to an organization that requests consideration under Treas. Reg. 301.9100-3 in its application.

1. Secure agreement from your manager on whether to grant relief and document managerial concurrence of approval or denial in the CCR.

2. Prepare a Form 14261, Memorandum to File - EO Determinations Case Closing, documenting whether relief was granted and why.

3. Input TC590, if appropriate, to prevent erroneous revocation.

4. Continue to process cases using "no-gap" procedures and push to Status 97 if the taxpayer’s exemption is automatically revoked under Section 6033(j) on or after the application date but before issuance of a favorable determination letter. If the taxpayer qualifies for relief under Treas. Reg. 301.9100-3 under the procedures discussed above, then its effective date of exemption is retroactive to formation. If the taxpayer does not qualify for relief, then its effective date is the application date.

5. Select the appropriate MEDS case category for 9100 Relief (whether or not granted).

(5) In all instances where the request for exemption is being approved but relief under Treas. Reg. 301.9100-3 isn’t being granted, call the organization and explain why relief isn’t being granted. Prepare and send the correct determination letter along with Letter 6392, 9100 Effective Date. These cases are not processed as proposed adverse determinations or proposed approvals with an adverse issue.

(6) An organization that doesn’t file an application for exemption within 27 months of formation or doesn’t request and meet relief requirements is recognized as exempt from the date it files its application (see Rev. Proc. 2024-5, updated annually, IRC 508(a) and IRC 505(c) and related regulations, and Treas. Reg. 301.9100-2).

1. If an application is returned because it’s substantially incomplete, the filing date is the date the organization resubmits a complete application and the IRS accepts it for processing.

2. For the filing/submission date of Form 1023-EZ, see IRM 7.20.9, Processing Form 1023-EZ.

3. For other applications required to be submitted on Pay.gov, the filing date (control date on MEDS) is the date the application is submitted on Pay.gov.

(7) Recognize exempt status in advance of operations if the organization can describe its proposed operations in sufficient detail to permit you to conclude that it meets the particular requirements of the section under which it’s requesting exemption.

(8) An organization that wasn’t described in any IRC 501(c) from the time it was formed is recognized as exempt as of the date the organization is first described in IRC 501(c). In this case, explain the issue to the organization and secure a signed written statement agreeing to a specific effective date.

(9) An organization formed as a for-profit corporation that changes to a non-profit entity is generally granted exemption as of the date it met the requirements (for example, organizational and operational) for the requested exempt status.

(10) An applicant for exemption under IRC 501(c)(3) formed as a mutual benefit organization is generally granted exemption as of the date it is re-formed as a public benefit organization, if it meets all other exemption requirements. Discuss and secure acknowledgement of the effective date in writing from the organization.

(11) A non-exempt corporation operating in an exempt manner as an unincorporated association prior to incorporating may also be recognized as exempt for the period it operated in an unincorporated status (see Rev. Rul. 54-134). If the organization wants recognition for the unincorporated period:

1. Secure the organizing document from the unincorporated period.

2. Enter the date of incorporation as the effective date of exemption on the determination letter.

3. Add an addendum referencing the prior effective period.

   Example: Your exemption under IRC 501(c)[subsection] is effective from the date you were formed as an unincorporated association, [date of association formation], to the date of your incorporation, [date of incorporation].

(12) A tax-exempt organization must submit a new application for exemption to request a change in subsection. For subsection changes other than IRC 501(c)(3) to another subsection:

1. Determine the effective date based on when the organization’s purposes and activities changed and when the organizational document was amended to meet any organizational test requirements.

   Note: The organization may agree to exemption under the new subsection effective as of the filing date of the new application as long as the other requirements are met as of that date.

2. Include the appropriate selective paragraphs on the determination letter, referencing the effective date of the new subsection and the period covered under the prior subsection.

3. Enter the original (BMFOLO) Effective Date and Ruling Date in the MEDS closing information tab.

4. If the application is not filed within 27 months from the date the organizational documents and activities were amended to meet any requirements, the effective date is the postmark date of the application. See Rev. Proc. 2024-5, updated annually.

(13) Section 3.01 of Rev. Proc. 2024-5, updated annually, provides that for a currently recognized IRC 501(c)(3) organization (other than a private foundation) seeking recognition under another paragraph of IRC 501(c):

1. The organization must distribute its assets to another IRC 501(c)(3) organization or government entity.

2. If necessary, the organization must change its organization and operations to satisfy the requirements of the paragraph of IRC 501(c) under which it wants to be recognized.

   Note: It’s possible that an IRC 501(c)(3) organization also meets the requirements of another IRC 501(c) paragraph without changing its organization structure or operations.

3. The organization must submit a Form 1024/1024-A and, with that application, the organization must represent that its assets have been distributed as of application submission date and provide a description of the assets distributed, date of distribution, and name, EIN, and address of each recipient. It must also agree to submission (postmark) date for recognition under the new paragraph of IRC 501(c).

4. If necessary to reflect the change in type of exempt status, the specialist must complete Form 2363-A.

5. Organizations seeking to be recognized as described in IRC 501(c)(4) should be reminded that they are required to file Form 8976 within 60 days of the date they submit their Form 1024-A. If an organization previously described in IRC 501(c)(3) submits Form 8976 within such period, it will be considered to have reasonable cause for not filing a Form 8976 within 60 days of its formation.

6. These procedures do not apply to certain organizations covered by Section 504(a). Section 504(a) provides that if an organization that was described in IRC 501(c)(3) ceases to be described in that Section either: (a) because of carrying on propaganda, or otherwise attempting, to influence legislation; or (b) because it participates in, or intervenes in, any political campaign on behalf of (or in opposition to) any candidate for public office, it shall not at any time thereafter be treated as an organization described in IRC 501(c)(4). Section 1.504-1 of the Regulations adds that Section 504(a) also applies to an organization that ceases to be described in IRC 501(c)(3) because it is an action organization within the meaning of Section 1.501(c)(3)-1(c)(3)(ii) or (iv), on account of activities occurring after October 4, 1976, or is denied exemption under the provisions of Section 501(h).

7. These procedures do not apply to IRC 501(c)(3) organizations classified as private foundations, which must follow the termination rules of Section 507. See Section 509(b).

8. An organization previously recognized as described in IRC 501(c)(3) that has had its tax-exempt status revoked after examination is no longer described in IRC 501(c)(3). It is not required to follow the Application Requirements described above, and it may be eligible for a determination letter that it is described in a new paragraph of IRC 501(c) with an effective date of the date its application was submitted, provided it meets the requirements for the paragraph of IRC 501(c) under which it seeks exemption, it is not a private foundation, and Section 504 does not apply.

9. Similarly, an organization that was formerly recognized as described in IRC 501(c)(3) but whose status was automatically revoked pursuant to Section 6033(j) and that now seeks to be recognized as described in a different paragraph of IRC 501(c) will not have to follow the Application Requirements if it does not seek such status retroactive to its automatic revocation date. Such an organization is no longer described in IRC 501(c)(3) and, if it is not a private foundation, may be eligible for a determination letter that it is described in a new paragraph of IRC 501(c), provided it meets the requirements for the paragraph of IRC 501(c) under which it seeks exemption. The effective date of such a determination letter will be the date the organization submits its application.

10. In contrast, if such an organization (other than a private foundation) meets the criteria in Rev. Proc. 2014-11 to be eligible for reinstatement retroactive to the automatic revocation date and requests such retroactive reinstatement under a different IRC 501(c) paragraph, it will not have had any break in tax-exempt status, and is in the same position as a currently tax-exempt IRC 501(c)(3) organization, and under Section 3.01(1) of Rev. Proc. 2024-5 (updated annually), it must comply with the Application Requirements.

11. If an organization is an applicable tax-exempt organization within the meaning of Section 4958(e)(2) and Section 53.4958-2 of the Regulations, it continues to be subject to Section 4958 for a period of five years after ceasing to be described in IRC 501(c)(3).

(14) A tax-exempt organization that changes legal form may need to submit a new application for exemption. See IRM 7.20.4.2.5, New Organization, Rev. Proc. 2018-15, and Rev. Proc. 2024-5, updated annually, for more information.

1. The effective date of exemption for the new legal entity is generally the formation date of the new entity if it timely filed the application and otherwise meets requirements for exemption.

2. An organization that changes legal form may or may not have to get a new EIN (IRM 7.20.2.2.2, Employer Identification Numbers).

   Note: One of the goals of Rev. Proc. 2018-15 was to better align the requirements for new exemption applications with the requirements for obtaining new EINs in common restructuring situations.

(15) If you have to secure an agreement to the effective date and the organization disagrees with your proposed effective date of exemption, process the request as a proposed adverse determination or proposed approval with an adverse issue (IRM 7.20.2.4, Adverse Determinations). See IRM 7.20.2.2.1(6), Effective Date of Exemption, regarding cases involving Treas. Reg. 301.9100-3 relief issues.

(16) See Rev. Proc. 2024-5, updated annually, for guidelines on the effective date of exemption.

(1) The IRS uses an EIN to identify business entities for federal tax purposes. All organizations applying for exemption must have an EIN that is uniquely theirs (Rev. Rul. 73-526).

(2) Conduct IDRS research on all applications to verify the EIN. If the EIN that the organization provided doesn’t appear to be correct, conduct additional IDRS research to determine whether the organization has been assigned an EIN.

(3) Don’t approve or deny an application until the organization provides a valid EIN. If not provided:

1. Close the case using closing code 12.

2. Use Letter 5239 with a composed paragraph indicating that a valid EIN was not provided. Remove the invalid EIN from the letter.

   Reminder: Refund the user fee. See IRM 7.20.2.3.8.2, User Fee Refunds.

(4) If an organization without a valid EIN doesn’t respond to a 1312 Letter, FTE the case as usual, but remove the EIN from the letter.

(5) If an organization was assigned more than one EIN in error:

1. Research IDRS for all EINs (for example, INOLES, ENMOD, BMFOLO, and BMFOLI).

2. Confirm which EIN the organization wants to continue using. (Recommend using the EIN under which any returns were filed or payments applied.)

3. Prepare Form 14271, EO Determinations EIN Merger Memo, with the applicable IDRS research and send it to *TEGE-EO-Correspondence. Use "EIN Merger" as the subject line of the email. Document all actions taken in the CCR and import the email and response into the MEDS Non-Disclosable folder.

   Note: Case can be closed immediately with valid EIN.

(6) A tax-exempt organization that changes legal form may have to secure a new EIN. See Pub. 1635, Understanding Your EIN, and Rev. Rul. 73-526.

(7) An organization must get a new EIN if one of these legal changes apply:

1. A trust that re-forms to other than a trust

2. A corporation that re-forms to a trust

3. A corporation that reincorporates in the same state (for example, state issues a new charter)

4. A corporation that changes from for-profit to non-profit or LLC to non-profit only if the state of formation considers the new status an entirely new/separate entity (for example, it is listed as two separate entities listed on the state filing website)

(8) Ensure EDS, MEDS, and LINUS reflect the correct EIN for the organization. If necessary:

1. Correct the EIN on MEDS (corrections in MEDS will transmit to EDS).

2. Email *TEGE-EO-Adjustments requesting an EIN correction in LINUS (list the organization name, the case number, the incorrect EIN, and the correct EIN). Use "EIN Correction" as the subject of the email. Import a copy of the email and response in the MEDS Non-Disclosable folder.

   Reminder: Document all actions taken in the CCR.

3. Follow EIN merger procedures in IRM 7.20.2.2.2 (5) if merging two or more EINs.

(1) EO Determinations cases are graded based on the case’s primary activity/issue and are set based on MEDS Business Rules. See IRM 7.22.4, Modified EO-EP Determination System (MEDS) User Manual. The Case Assignment Guide (CAG) Case Grading Criteria Matrix, Exhibit 7.20.2-1, lists case complexity factors and grade level distinctions to determine the correct case grade. Due to the variety of issues encountered in determination requests, the CAG, Exhibit 7.20.2-2, lists common case issues and their case grades.

(2) If the case grade is incorrect, contact your manager for approval of correct case grade. Document the case grade change in the CCR and import the email from the manager giving concurrence into the MEDS Non-Disclosable folder.

(1) There are two digital methods of communication with taxpayers that can be used by specialists in EOD: Secure Messaging (SM), a feature within Taxpayer Digital Communication (TDC) and Document Upload Tool for Taxpayer Facing Employees (DUT- TPFE, hereafter DUT). Employees with taxpayer contact must offer either TDC or DUT to the taxpayer and their representative during initial contact and invite them to use it during case processing. The two digital communication methods differ in their use:

• TDC is similar to a web-based email service and encrypts files when transmitting sensitive or confidential tax-related information. Messages sent to or from taxpayers are securely exchanged and can include attachments. See Publication 5295, Secure Messaging for Tax Exempt and Government Entities, for more information.

• DUT uses a URL and access code to provide a method for taxpayers to upload and submit information to the TE/GE employee.

  Note: The specialist may choose to offer whichever method is most appropriate for the situation. If taxpayer interaction changes while working the case, you may modify to use the alternative tool.

(2) To use TDC:

• The taxpayer and their representative must submit Form 15314, TE/GE Secure Messaging Taxpayer Agreement Authorization of Disclosure to Designated Users.

• Submit the signed Form 15314 to the BSP shared mailbox *TEGE TDC Provisioning.

• Document the invitation to use TDC and the taxpayer’s and their representative’s response in the CCR.

• As permitted by law, use TDC for interacting with the taxpayer and their representative during the case until closure.

• Upon case closure, send a message to the taxpayer that you are closing their case. Inform them that future communications within TDC will not be possible for this case. Follow TDC case closing procedures.

  Note: You can reopen the TDC case, if needed, by conducting a search for the closed case in the TDC closed case folder. When you locate the case you wish to reopen, change the case setting from closed to open.

(3) To use the DUT, the employee will provide the taxpayer or their representative an access code and URL, granting access to the upload tool through Letter 1312. The user can upload and submit information to the TE/GE employee through the DUT. Once submitted, the taxpayer receives a confirmation, and the employee can manage the transmitted documents.

(4) Include the appropriate selectable paragraph to advise taxpayers and their representatives of the availability of either TDC or DUT to communicate securely with you.

(1) An organization can submit a written request for expedited handling (proposed expedite).

(2) Expedited handling is granted to applications that meet the criteria in Rev. Proc. 2024-5, updated annually. Organizations must include a compelling reason for the IRS to process their application ahead of others. Expedited handling is generally granted to organizations when one of the following applies:

• There is a pending grant and the failure to secure the grant may have an adverse impact on their ability to continue operations.

• They are a newly created organization that provides disaster relief to victims of emergencies.

• IRS errors have caused undue delays in processing.

(3) For a pending grant, the following supports a request for expedited processing:

• The name of the person or organization committed to giving the grant or asset;

• The amount of the grant or the value of the asset;

• The date the grant will be forfeited or permanently redirected to another organization;

• The impact on the organization's operations if it does not receive the grant/asset; and

• The signature of a principal officer or authorized representative.

(4) The IRS has discretion to grant requests for expedited handling when a factor outside an organization's control creates a real business need to obtain a determination letter to avoid serious business consequences.

(5) The Processing & Support Unit generally assigns proposed expedite cases equally among the individual groups’ Status 75 inventories. Managers will assign proposed expedited handling requests to a designated specialist in the group within two workdays of the Status 75 date.

(6) The manager will assign approved expedite cases ahead of non-expedite cases to specialists in the group to work.

(7) Once assigned, the designated employee will:

1. Review the expedite request within five workdays of assignment and ahead of other assigned cases.

2. Determine whether the request meets expedited handling criteria.

If	Then
The expedite request is complete and demonstrates the existence of the circumstances set forth in Rev. Proc. 2024-5 (updated annually) that generally warrant expedited handling	Update the expedite reason code in MEDS to Approved Expedite Document actions on the CCR Return the case to unassigned group inventory to be assigned
The expedite request isn’t complete or doesn’t demonstrate the existence of the circumstances set forth in Rev. Proc. 2024-5 (updated annually) that generally warrant expedited handling	Update the expedite reason code in MEDS to Denied Expedite Call the organization and explain the expedite has been denied Note: Don’t solicit or accept additional information pertaining to the request. If the organization indicates it wants to resubmit its expedite handling request, provide the manager’s EFax number to submit a new request. Document the CCR Return the case to unassigned group inventory to work in control date order

(1) The IRS will issue a Declaration Notice (see IRM 25.16.1.5.3, Internal and External Notification Process) to identify a covered disaster area. All IMF and BMF accounts with addresses in the area affected by the federally declared disaster designated by the Federal Emergency Management Agency as qualifying for “individual assistance” are frozen (-O Freeze) systemically for the period specified in the Declaration Notice (the “postponement period”).

(2) Search for declared areas by zip code on the IRS Disaster Assistance Program page.

(3) For cases in your inventory affected by a federally declared disaster:

(1) All Form 1023 applications will have the Form 1023 Case Closing Guide Sheet applied through either MEDS business rules or tax examiner review. If a case can be approved using the Guide Sheet, the approval letter and closing documents will be generated using the information submitted in the application. If it can’t be approved using the Guide Sheet, the case will be returned to unassigned inventory to be assigned to an EOD Specialist in control date order.

(2) Time frames for cases assigned to tax examiners for Guide Sheet review are as follows:

1. The tax examiner reviews the case using the Guide Sheet and either prepares it for closure as an approval or sends for EOD specialist processing and submits it to the group manager for review within two work days of assignment.

2. If the tax examiner has a procedural or technical question related to the Guide Sheet that the manager and lead are unable to answer, EOD specialists are available to assist. To request specialist involvement, send an encrypted email to *TE/GE-EO-Determinations Questions with the organization’s name, EIN, and description of the issue. Put the issue in the subject line. Document actions taken in the CCR and import a copy of the email into the MEDS Non-Disclosable folder.

3. A tax examiner group manager either approves the case or returns the case for EOD specialist processing within two days of submission.

4. After manager approval in MEDS, designated employees complete required closing actions within two work days.

(1) Carefully review the case to ensure your additional information request is complete, appropriate, and necessary to make the requested determination. Prepare additional information requests so they are:

1. Professional in tone

2. Grammatically correct

3. Free of spelling errors

4. Properly formatted

5. Written in plain language

(2) Don’t ask for information already in the case file or that you don’t need to make a determination.

(3) Prepare Letter 1312, Additional Information Request, using appropriate approved streamline questions, pre-written questions, and/or individually composed questions.

(4) Complete the letter using:

• Your name

• The last 7 digits of your SmartID number

• Your telephone number

• Your eFax number

• A response due date of 28 calendar days from the mailing date of letter

(5) If you prepare an additional information request with individually composed questions, your manager must review and approve it before you send it. Managers will review and return the letter to you within three workdays.

(6) When requesting additional information, follow the procedures for offering a form of digital communication, as described in IRM 7.20.2.2.4, Digital Taxpayer Communication.

(7) Mail the letter. For a quicker response, you can also fax a copy of the letter to the organization (IRM 10.5.1.6.9.4, Faxing).

(8) Import the letter, any attachments, and/or copies of the email into the MEDS Disclosable folder.

(1) Two weeks before the response due date, call an authorized contact for the organization (IRM 7.20.1.6, Disclosure) to ask if there are any questions about the information requested, remind them of the upcoming due date, case closing, and potential loss of user fee if the response isn’t received timely. Explain that the case may be closed without a determination or a proposed adverse determination may be issued. If no answer, leave a message with the information (disclosure rules apply, IRM 10.5.1.6.7.2, Answering Machine or Voicemail).

(2) If the organization requests an extension prior to the response due date, grant an extension of 14 days or less. Base extensions on the facts and circumstances. Document extensions and due dates in the CCR.

(3) When you receive a response, complete all necessary actions (see IRM 7.20.2.3.5 (4) below) within five workdays of receipt (unless otherwise specified). "Receipt" is the received date stamped on the response or on the fax receipt.

(4) Review the response.

(5) If the organization doesn’t respond by the due date (including all approved extensions), close the case as FTE ( IRM 7.20.2.5.6, Failure to Establish).

(1) During case processing, an organization may request to replace the pending application with an application for exemption under a different subsection of IRC 501 using a different form (for example, withdraw Form 1023 and submit Form 1024-A). Each application is a request for a determination letter. IRC 7528 requires the IRS to establish user fees for requests for determination letters. The electronic application process through Pay.gov requires a user fee to be submitted with an application. Accordingly, the specialist will process the request as a withdrawal under IRM 7.20.2.5.7, Withdrawals, including the following steps:

1. Inform the organization that the request will be processed as a withdrawal and the user fee will not be refunded.

2. Explain that after withdrawing their application, the organization may submit another application, which will be processed in submission date order (not necessarily by the same specialist) and will require a new user fee.

3. Secure a written withdrawal statement signed by an authorized person.

4. Prepare Letter 2244, Withdrawal of Exemption Determination Request, without a user fee refund addendum.

(2) Don’t establish a new I case when an organization that submitted Form 1024 wants to change its requested subsection to another one listed on Form 1024 (for example, originally requested IRC 501(c)(5) but wants to change to IRC 501(c)(6)). The organization must submit a revised Page 1 of Form 1024, and any applicable schedule. Update the case in MEDS (or EDS) to reflect the correct subsection.

(1) If you need to establish a new case:

1. Complete and email Form 14263, Request for TEDS Case Establishment, to *TEGE Determinations Processing with the subject line "New Case Establishment."

2. Attach Form 2848, Power of Attorney and Declaration of Representative, with the form, if applicable and valid.

(2) The Files & Records Unit establishes the case in MEDS.

(3) Transfer the user fee after both cases are closed:

1. Email *TE/GE-EO-Adjustments with subject line "User Fee Transfer" with a request to move the user fee noting:

• Move user fee for [organization name] EIN [nn-nnnnnnn]:

• From Form [nnnn], EDS Case # [nnnnnnnnn]

• To Form [nnnn], EDS Case # [nnnnnnnnn]

Note: If you don’t receive the new case information within five workdays of the request, tell your manager.

2. Prepare the new case file by saving and importing copies of any pertinent documents from the old case file to the new one.

   Note: Document in the CCR the reason for the case establishment and cross-reference the related case.

(4) Close the original case or continue processing it as a related case, as appropriate. Close the incorrectly established case using closing code 30 (correction disposal) if you didn’t charge time to it. If you charged time to the case, close it using closing code 12 (other closure).

(1) User fees generally apply to all EO determination letter requests. Rev. Proc. 2024-5, updated annually, lists the user fee schedule and guidelines, including refunds and user fee reconsideration requests.

(2) Campus Support processes initial user fee payments submitted with paper application forms and subsequent user fee payments. User fee payments for electronic forms are submitted through Pay.gov. User fee payments are processed through LINUS and transmit to MEDS and EDS. Payment amounts are noted on the request or other required form.

(3) Use LINUS to verify that the organization paid the correct user fee, as necessary. If the organization didn’t pay the correct user fee:

1. Request additional user fee amounts in an additional information request.

2. Recommend, but don’t require, the organization to send a certified check or money order.

3. Request a new user fee if LINUS indicates the check was dishonored (bounced).

4. Import LINUS research into the MEDS Non-Disclosable folder.

(4) Don’t approve or deny a case unless the organization paid the required user fee.

(5) Refund overpaid user fee amounts if the organization paid too much, regardless of how you close the case (IRM 7.20.2.3.8.2, User Fee Refunds). See Rev. Proc. 2024-5, updated annually, for additional refund situations.

(6) If you approve a case (closing code 01, 06, or 09) after resolving user fee issues and the MEDS user fee field still shows an overpayment, underpayment, or dishonored check:

1. Email *TE/GE-EO-Adjustments, using subject line "User Fee Indicator," with a request to remove the user fee indicator; include the MEDS case number and organization name in the email. Import the response email from the Adjustments Unit into the MEDS Non-Disclosable folder.

2. Follow regular closing procedures after the Adjustments Unit removes the user fee indicator.

(7) See IRM 7.21.2, User Fees, for general user fee information.

(1) Prepare the appropriate proposed adverse letter:

• Letter 4034, Proposed Adverse Determination Under Section 501(a)

• Letter 1079, Exemption Determination with Adverse Issue

• Letter 4786, Amendment Requests, Foundation Follow-ups, and Section 508 (Private Foundation) Termination Requests Adverse

(2) Follow the general drafting rules and procedures in IRM 7.28.4, Public Inspection of Written Determinations under IRC 6110.

(3) Generally, follow the format below for the body of the letter. (Some sections may not apply based on the case’s facts and circumstances.)

(1) To close a proposed adverse determination:

1. Save the proposed adverse letter using the MEDS File Naming Conventions document on the EO R & A Job Aids SharePoint site.

2. Import the letter as a Word document into the MEDS Non-Disclosable folder.

3. If there’s a valid Form 2848 or Form 8821 for the case, complete Letter 937-A, Transmittal of Information to Power of Attorney, and import into the MEDS Non-Disclosable folder.

   Note: The Letter 937-A, Transmittal of Information to Power of Attorney, must include the Director’s signature, not the specialist’s signature.

4. Update the Form 14280, EO Determinations Checklist - Denials, in the MEDS Non-Disclosable folder.

5. Enter closing data in MEDS, including proposed filing requirements (for example, 1120, 990 - 09, 990-PF for adverse PF status, etc.); Determination Status 70 (Denied) or 01 (Approved); Deductibility Code 2 or 1, etc; NAICS and NTEE codes.

   Note: Enter the formation date as the effective date if the Determination Status is 70.

   Reminder: Do not make any updates in EDS.

6. In MEDS, highlight the Case Information line. From the drop down menu, select Mandatory Review and choose the appropriate mandatory review type. Update the case to Status 74PC to submit to the group manager.

7. Move all documents in the MEDS Disclosable folder to the Non-Disclosable folder.

(2) The case will be assigned to an EODQA reviewer. The reviewer will complete the EODQA portion of Form 14280, EO Determinations Checklist - Denials.

(3) If the EODQA reviewer makes changes to the proposed adverse letter and is not otherwise returning the case to the specialist, after the EODQA manager has approved the proposed adverse letter, the reviewer will:

• E-mail a copy of the proposed adverse letter with changes tracked and the advisory or no error memo to the specialist and their manager, and

• Obtain concurrence on the changes to the adverse letter before EODQA mails the letter to the organization.

  Note: The concurrence will be documented through email from the specialist’s manager within 5 business days. A copy of the email must be imported into MEDS when created.

(4) If EODQA sends the case back for corrections with an Inquiry Reviewer’s Memo, make the agreed upon changes (see IRM 7.20.5.4, Reviewer’s Memorandum and Response to Reviewer’s Memorandum) and complete, digitally sign, and import a Response to Reviewer’s Memo into the MEDS Non-Disclosable folder. The group manager will digitally sign the Response to Reviewer’s Memo and return the case to EODQA.

(5) If the organization submits a protest to the adverse determination letter, forward the protest to EODQA and notify the reviewer. After reviewing the protest, the reviewer may return the case to you if the protest presents new or revised facts or raises arguments you haven’t addressed. If the reviewer returns the protest to you, review the protest to determine whether it changes the initial determination and take the following actions:

(1) MEDS Case file documents are organized into folders: "Non-Disclosable," "Disclosable," "Working," "New Documents," and "Purge." The specialists and tax examiners must ensure the case file documents are in the correct folder, as described below.

(2) Non-Disclosable: Information not open for public inspection is referred to as non-disclosable. Non-disclosable documents must be placed in the MEDS Non-disclosable folder, including, but not limited to:

• Approval letters for cases subject to disclosure under IRC 6110 (for example, IRC 4945(g) advance approvals)

  Note: For more information about cases subject to disclosure under IRC 6110, see Rev. Proc. 2024-5 and IRM 7.20.3.1.5, References.

• Adverse letters

• IDRS research

• All emails related to case processing (for example, emails from the manager, Knowledge Management, Counsel, etc.)

• Any other non-disclosable information (for example, TEOS information, patents, trade secrets, etc.)

• Form 14261, Memorandum to File-EO Determinations Case Closing

• Any required or optional checksheets, checklists, or worksheets

• Internal forms (for example, Reviewer’s Memorandum, Response to Reviewer’s Memo, etc.)

• Forms that have already been forwarded for processing (such as, Form 5768 or Form 5666)

(3) Disclosable: Information open for public inspection is referred to as disclosable. Disclosable documents must be placed in the MEDS Disclosable folder, including, but not limited to:

• Final determination letter (if an approval), is placed in the Disclosable folder by the tax examiner after it’s signed and dated

• Form 2848 and Form 8821

• Application (for example, Form 1023, Form 1023-EZ, Form 1024, etc.)

• Attachments to the application

• All documents submitted by the applicant

• All correspondence to and from the organization

(4) Working: Place items that require further processing in the Working folder, including, but not limited to:

• Approval letters that are ready to be signed, dated, and mailed by a tax examiner

• Forms that need to be processed upon case closing (such as, Form 2363-A)

(5) New Documents: The MEDS New Documents folder must be empty before the case can be closed. Move all new documents to the correct MEDS folder.

(6) Purge: Move any duplicate files or files erroneously imported into MEDS to the MEDS Purge folder.

(1) When you process determination letter requests, you may need to review or secure an administrative file. Open paper cases are stored at an IRS facility in Ogden. Closed EO Determinations case files are stored:

• On DVD

• Electronically in MEDS

• In hard copy at the Federal Records Center

• At a Service facility in Ogden, UT

(2) Research MEDS to determine whether the file is available electronically. If not, prepare and email Form 14264, Request for Exempt Organizations Administrative File, to *TEGE Determinations Processing.

(1) Exempt organizations, unless specifically excepted, must file an annual information return or notice on Form 990-PF, Form 990, Form 990-EZ, or Form 990-N.

(2) Don’t solicit an annual return during the determination process. However, if you receive one, check IDRS. If you can verify the return was posted, no additional action is needed. If you can’t verify the return was posted:

1. For a return received in the mail, date stamp the return (based on the envelope postmark date). Scan the return and save it in MEDS using the MEDS File Naming Conventions document on SharePoint.

2. If the organization sent Form 990(s) with the application (for example, there is a non-scannable document in MEDS or copies are scanned into MEDS), move the return(s) to the Non-Disclosable folder. Rename the return(s) according to the MEDS File Naming Conventions document on SharePoint.

3. Send a copy of the return(s) to *W&I EEF OSPC Batching or eFax to 855-539-9495.

   Reminder: Document actions taken in the CCR.

(1) The Taxpayer Advocate Service (TAS) uses the Operations Assistance Request (OAR) process to refer cases to EO Determinations when TAS lacks either the statutory or delegated authority to resolve an organization’s problem. TAS uses Form 12412, Operations Assistance Request, to initiate the OAR process.

(2) A designated EO TAS Liaison receives, reviews, and processes OARs. If an OAR relates to an assigned open application, the TAS Liaison assigns the OAR to the employee assigned the case, by emailing him/her Form 12412 and other pertinent information.

(3) If you receive an OAR on a case:

1. Use the TAMIS # (from Form 12412) in the subject line of all emails to the TAS caseworker and to the TAS Liaison.

2. Email a copy of all correspondence you send to the organization to the TAS caseworker.

3. Negotiate response and follow up dates with the TAS caseworker.

4. Communicate directly with the TAS caseworker in resolving issues (document the TAMIS #, communications, and communication outcomes on the CCR).

5. Negotiate new time frames as necessary (don’t allow OAR time to expire) and notify the TAS Liaison by email of revised, agreed upon expiration dates.

6. Notify the TAS Liaison if the case is transferred.

(4) When you close a case with an OAR:

1. Complete Form 12412, Sections V and VI (page 2).

2. Import the OAR (including completed Form 12412 page 2) into the MEDS Non-Disclosable folder.

3. In Case Information in MEDS, select OAR for the Case Category.

4. The TAS Liaison will retrieve the completed OAR and determination letter from MEDS when the case is closed.

5. Negotiate a new expiration date (two to three weeks from the date of closing) if the OAR is expired or expiring shortly after closing.

6. Notify the TAS Liaison if the case will not be closed directly (for example, case is subject to mandatory review).

7. Document all actions taken in the CCR.

(1) Follow these procedures in addition to case closing actions in IRM 7.20.2.5, Case Closing.

(2) For a case closed in any status where a risk is taken and not resolved in the Disclosable section of the file, complete Form 14261, Memorandum to File-EO Determinations Case Closing, and import it into the MEDS Non-Disclosable folder. Documentation must include a full description of the issue, the risk, and rationale for accepting the risk.

(3) For an "I" case, generally, prepare Letter 947, 948, or 1076. See IRM 7.20.3.3.13, Commonly Used Letters, for approval letters for A and P cases.

(4) Enter closing information (filing requirements, closing code, etc.) in MEDS. In the rare instance that there is a paper case, enter closing information in EDS.

(5) Enter a National Taxonomy of Exempt Entities (NTEE) code as selected by the applicant on the application or based on the primary activity of the organization. Use the NTEE code provided by the applicant unless it is invalid. Select the next best NTEE code if the code they selected is invalid. See the Urban Institute or the Instructions for Form 1023 for an NTEE code list. NTEE code format is a letter generally followed by two numbers (for example, B82).

(6) Enter the six-digit North American Industry Classification System (NAICS) code associated with the selected NTEE code. Generally, use the first three digits followed by 000. NAICS codes are listed with the related NTEE codes on the MEDS Closing Worksheet located on SharePoint.

(7) Continue to work MEDS cases with EDS blocks. For MEDS cases with an EDS block, when a status changes in MEDS, update the EDS status to match.

(1) Follow these procedures in addition to case closing actions in IRM 7.20.2.5, Case Closing.

(2) If you’ve attempted to secure additional information from an organization and haven’t received it, close the case as failure to establish (FTE).

(3) For all cases (I, A, and P), generally, prepare Letter 1314 using the appropriate selective paragraph(s).

(4) Enter the appropriate filing requirements in the letter and enter closing information (filing requirements, closing code, etc.) in MEDS. Common filing requirement entries include:

• For non-exempt corporations or associations, enter Form 1120.

• For non-exempt trusts, enter Form 1041.

• For an organization that is currently exempt, enter Form 990 or Form 990-PF in the letter only. (Check the filing requirement in the current determination letter.)

• For a church, no entry is required.

(5) Use Closing Code 11 (Failure to Establish). If case is closed using Closing Code 11, generally, enter 71 for the Determination Code and 09 for the Form 990 Filing Requirement. Enter closing information on the MEDS EO Closing Data tab by completing the Type of Organization, Accounting Period End, NAICS Code, NTEE Code, Affiliation Code (3, 6, or 8), Classification Code, Pension Plan (2), Ruling Date, and Effective Date (formation date).

(6) Complete Form 12412, Sections V and VI, if there’s an OAR on the case, to indicate that the case has been closed FTE.

(7) Move any documents in the MEDS Disclosable folder to the Non-Disclosable folder.

(8) If a specialist receives correspondence on a case after it’s closed FTE, send it to the group manager for review. The manager will determine whether the case will be reopened and worked by the specialist, or if the specialist should call the applicant to explain why the case won’t be reopened (for example, they failed to respond timely to our request). If the manager determines that the case should be reopened, they will instruct the specialist to request a case establishment, as described in IRM 7.20.2.3.7, Request a Case Establishment.

(1) An organization can withdraw its determination letter request (in writing) at any time before a determination letter or proposed adverse determination letter is issued. An authorized person must sign the request. The IRS keeps the application and all supporting documents.

(2) Don’t directly or indirectly say or do anything that may be interpreted as coercing or compelling a withdrawal of an application. However, you can discuss withdrawal as an option when appropriate (for example, when proposing an adverse determination, see IRM 7.20.2.4, Adverse Determinations). Document the discussion in the CCR. When discussing, advise the organization that we don’t refund the user fee (if applicable) and will stop processing the request.

(3) Prepare Letter 2244 (I case) or Letter 4785 (A or P case). Add an addendum if refunding the user fee.

(4) If the organization withdraws its application because it’s already exempt under that subsection, prepare Letter 5239, close using closing code 12 (Other), and initiate a user fee refund.

(5) If the organization is currently exempt and withdraws its request for a change in subsection, add an addendum to Letter 2244 indicating its exemption under IRC 501(c)(X) is still in effect.

(6) If the organization withdraws one form to submit another (for example, from Form 1023 to Form 1024), prepare Letter 2244. The user fee will not be refunded. See IRM 7.20.2.3.6, Change in Subsection/Application Form During Case Processing.

(7) Prepare Form 2363, Master File Entity Change, to establish the appropriate filing requirement(s) if the withdrawing organization isn’t exempt and has been or is operational and appears to have taxable income. Import the form into the Non-Disclosable folder and name it Form 2363-A - Request for IDRS Input. Select the Case Category *Forward Form 2363-A.

(8) On the MEDS EO Closing Data tab, enter the Type of Organization and Accounting Period. Move all documents in the Disclosable folder to the Non-Disclosable folder.

(9) Close withdrawals in closing code 04. Don’t enter NAICS/NTEE codes.

(1) The group manager has three workdays to review additional information requests and provide any feedback on the letter.

(2) The group manager has five workdays from submission (10 workdays for adverse determinations) to review a proposed case closing and either:

• Approve the case as submitted.

• Return the case for procedural errors or further technical development.

(3) Group manager: if returning the case, identify corrections or needed development on a feedback comment sheet and return the case in Status 73/53.

(4) Specialist:

1. Review the manager’s notes or the feedback comment sheet.

2. If the case wasn’t returned in Status 73/53, promptly correct and resubmit to the manager (typically the same day).

3. If case was returned in Status 73/53, take the necessary actions within five workdays.

4. Resubmit the case for closure when complete.

5. Discuss any disagreements or questions regarding the feedback with your group manager before preparing any written disagreement.