7.20.5. Review Procedures for EO Determinations

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

(2) EO Rulings and Agreements is responsible for determinations related to exempt organizations.

(3) EO Determinations Quality Assurance is responsible for reviewing determinations cases.

(1) Rev. Proc. 2023-5, updated annually, lists procedures for issuing determination letters on issues under the Director, EO Rulings and Agreements jurisdiction. 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. 2023-4, updated annually), private foundation status, and other determinations related to exempt organizations. Rev. Proc. 2023-5 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) Exempt Organizations Determinations Quality Assurance (EODQA):

1. advises Exempt Organizations Determinations (EOD) senior management of areas that need attention, and

2. recommends ways to improve technical and procedural processing of determination cases.

(2) 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, and

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

(3) EODQA provides EOD senior management analytic support to measure, report, and recommend improvements in EOD program quality, primarily through sample case review (see IRM 7.20.5.5, Processing Sample Review Cases).

(4) EODQA reviews and processes determination cases designated for mandatory review and:

1. returns cases requiring additional consideration to specialists and tax examiners with a Reviewer’s Memorandum,

2. mails favorable or adverse letters on reviewed and approved cases, and

3. forwards cases requiring Appeals’ consideration to the Independent Office of Appeals (Appeals).

(5) EODQA:

1. helps EOD specialists, tax examiners, and managers by giving training on technical and procedural issues,

2. provides informal advice on procedural and technical issues, and

3. reports significant trends, problem areas, quality measurement findings, and important Appeals decisions to EOD senior management.

(1) The EODQA manager reviews the work performed by EODQA reviewers and the EODQA tax examiner.

(1) Commonly used abbreviations include:

(1) Cases subject to mandatory review are:

1. Proposed adverse determinations

2. Determinations subject to IRC 6110 disclosure including IRC 4945(g) advance approvals, unusual grant determinations, etc.

3. Foreign organizations (not including those formed in U.S. territories)

4. Group ruling approvals (not including declinations)

5. An organization that was previously revoked or denied recognition of exemption

   Exception: This doesn’t include organizations automatically revoked for failure to file returns.

6. Religious and apostolic organizations under IRC 501(d)

7. Applications that indicate actual or potential political campaign intervention activities (not including IRC 501(c)(4) approvals based on signed Letter 5228 representations)

8. Management requests (senior manager’s approval required)

(1) Specialists: Prepare and import a list of subordinates into the MEDS Working folder.

(2) Reviewer: After review of the case, email the EODQA tax examiner and request a Group Exemption Number (GEN).

(3) Reviewer: Complete and import Form 2363-A into the MEDS Working folder.

(4) EODQA tax examiner: Forward Form 2363-A and any attachments (for example, the list of subordinates) by email to the EO Entity Supervisor, Ogden Campus, and then import the documents into the MEDS Non-Disclosable folder.

(1) Certain written determination letters are subject to public disclosure under IRC 6110 after identifying information is redacted. All EO R&A IRC 6110 written determinations are subject to mandatory review, including:

• proposed and final adverse determinations

  Note: Proposed adverse letters aren’t subject to IRC 6110 until the denial becomes final.

• advance approval of grant making procedures in IRC 4945(g)

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

• advance approval of voter registration activities in IRC 4945(f)

• advance approval of unusual grants under Treas. Reg. 1.170A-9(f)(6)(ii) or Treas. Reg. 1.509(a)-3(c)(c)

• adverse voluntary termination of IRC 501(c)(3) status by a governmental entity, and

• any additional type of determination letter per Rev. Proc. 2023-5, updated annually.

Note: See IRM 7.20.3, Processing Foundation and Miscellaneous Determination Requests, for a chart of letters subject to IRC 6110.

(2) The reviewer ensures technical and procedural accuracy of the IRC 6110 letter, including use of the correct letter.

(3) An IRC 6110 letter must include a:

• Uniform Issue List (UIL) index on the first page of the letter.

• Legend of identifiers used in the letter as substitutes for information not subject to public disclosure under IRC 6110.

  Note: Use the specialist’s name and contact information on the letter, including the last seven digits of their SmartID.

(4) To make changes to the letter submitted by the specialist:

1. download a copy of the letter and make changes,

2. save the letter and name it with the format of EDS Case Number-Letter Number, and

3. email a copy of the letter to the EODQA manager for review.

Note: If a memo is required, send it to the manager along with the letter for approval.

(5) If the reviewer makes changes to a proposed IRC 6110 letter and is not otherwise returning the case to the specialist, after the EODQA manager has approved the revised letter, the reviewer will:

• email a copy of the proposed letter with changes tracked and an advisory or no error memo to the EOD specialist and the specialist's manager,

• obtain the specialist's concurrence on the changes to the letter before EODQA mails the letter to the organization, and

• document the concurrence through email, which must be sent to the reviewer within 5 business days.

(6) Once the letter is ready to be mailed (no changes were made to the original letter or the changes were agreed upon) the reviewer will:

1. Import the agreed-upon version of the letter into the MEDS Working folder and move any prior versions of the letter into the Purge folder.

2. If the case is an approval, prepare and import a redacted version of the letter into the MEDS Working folder.

   Note: For adverse determinations, the redacted letter isn’t prepared until after the protest period has expired.

3. Close the case to the EODQA manager.

(7) To redact a letter, the reviewer will:

1. replace identifying information in the legend with general terms,

2. remove the organization’s name, mailing address, and employer identification number, and

3. remove information identifying IRS personnel.

   Note: See IRM 7.28.4, Public Inspection of Written Determinations Under IRC 6110, for more information on IRC 6110 requirements and processing procedures.

(8) For proposed adverse IRC 6110 letters, the EODQA tax examiner will:

1. save the letter as a PDF and add the Director’s digital signature and date,

2. make sure there is a completed Letter 937-A with the Director’s signature if there’s a valid Form 2848 or Form 8821,

3. mail the letter to the organization and any valid POA(s) using certified mail,

4. email the reviewer to let them know the date that the letter was mailed,

5. hold adverse cases for the 30-day protest period,

   Note: Hold the case for an additional 15 days after the expiration of the protest period to allow for mail delivery.

6. keep track of the protest period expiration date and email the reviewer to notify them once the protest period has expired, and

7. return the case to the reviewer in MEDS after the protest period expiration.

(9) For IRC 6110 approval letters, the EODQA tax examiner will:

1. save the letter as a PDF and add the Director’s digital signature and date,

   Note: There will also be a redacted version of the approval letter, which only has a date and does not get signed.

2. prepare Letter 437, Notice of Intention to Disclose (Rulings), and import into the MEDS Non-Disclosable folder,

3. make sure there is a completed Letter 937-A with the Director’s signature if there’s a valid Form 2848 or Form 8821,

4. mail the letter to the organization and any valid POA(s),

   Note: Do not send approval letters using certified mail.

5. make sure the IRC 6110 approval letter package contains the unredacted letter, redacted letter, and Letter 437, and

6. email the reviewer to let them know the date the letter was mailed and ask them to send the IRC 6110 package to Counsel.

(10) Reviewer: Once the EODQA tax examiner has mailed the letter:

1. If it is an adverse letter, email a copy of the letter (noting the mailing date) to the specialist and the specialist’s manager and copy the *TE/GE-EO-Determinations QA mailbox.

2. If it is an approval letter, send the IRC 6110 package to Counsel at the *CC 6110 Disclosure mailbox and copy the *TE/GE-EO-Determinations QA mailbox.

(1) An organization may mail or fax a protest directly to the EODQA reviewer. If the specialist receives a protest to a proposed adverse letter, they will immediately forward it to the EODQA reviewer.

(2) If the certified letter is not successfully delivered (for example, unable to deliver because of an incorrect address, attempt to deliver was made by the post office, but it wasn’t delivered, or the organization refused to sign for the letter), the reviewer will call the taxpayer or Power of Attorney and verify that the address on the letter is correct. If:

• the address was incorrect and a new one is obtained, reissue the letter with a new 30 day protest period.

• the applicant refuses to accept the letter, issue the final denial letter after the protest period has expired (see IRM 7.20.5.8.4, Processing the Final Letter after the Protest Period has Expired).

• it appears the post office wasn’t able to deliver the letter and it’s not clear why, discuss next steps with the EODQA manager.

(3) Section 9.04 of Rev. Proc. 2023-5, updated annually, explains what is considered to be a protest or appeal of an adverse determination. To protest/appeal an adverse determination letter, the organization must submit a statement of the facts, law, and arguments in support of its position within 30 days of the date of the proposed adverse determination letter. The organization must also state whether it is requesting a conference with the Independent Office of Appeals.

(4) Reviewer: Carefully consider the protest’s effect on the determination.

(5) Submit the case to the EODQA manager to review. The manager will then either return to the specialist or approve for sending to Appeals.

(6) If approved for Appeals:

1. EODQA tax examiner: Update the case to Status 54 in MEDS and send the case to Appeals using Form 3210. Notify the reviewer when the case is sent to Appeals.

2. Reviewer: Notify the specialist and EOD group manager that the case was transferred to Appeals.

(7) If the organization does not submit a timely protest/appeal of a proposed adverse determination letter, issue the final adverse determination letter. See Section 9.05 of Rev. Proc. 2023-5, updated annually, and IRM 7.20.5.8.4, Processing Adverse Letters After the Protest Period has Expired.

(1) If Appeals:

1. upholds the adverse ruling, they prepare and issue the final adverse letter.

2. doesn’t uphold an adverse ruling, they prepare and issue a closing letter revoking the proposed adverse letter and addressing the effective date of exemption and foundation status (if applicable) and return the case file to EODQA.

(2) When the case comes back to EODQA from Appeals, the reviewer will:

1. review the case summary prepared by Appeals,

   Note: Discuss any novel legal analyses, disagreement with case disposition, or procedures used to settle the case with the EODQA manager who will determine how to share the information.

2. confirm that the determination made in the case is clear and consistent with the documents and letters issued by Appeals,

3. consider other appropriate follow-up actions before closing the case (such as preparing an exam referral),

4. confirm Master File and/or the applicable processing systems have been updated,

5. prepare a no error memo for the originating EOD specialist, attaching a copy of the Appeals statement,

6. prepare a Quality Assurance Determination Case Processing Instruction Sheet and place on top of case file, and

7. assemble the case file and submit to the EO R&A Processing & Support Unit.

(3) EODQA manager: Report significant appealed determination case decisions to EOD senior management.

(1) After the 30-day protest period has expired on an adverse case, the reviewer will:

1. email the specialist to determine if a protest was received. Import the email with the specialist’s response into the MEDS Non-Disclosable folder.

   Note: Document all contact with the specialist and actions taken in the CCR.

2. verify that the signed certified mail card (green card) was returned. If it was returned, upload a copy into the MEDS Non-Disclosable folder.

3. track the letter using the USPS Tracking tool to verify it was delivered if the signed certified mail card was not returned. If the letter was delivered, upload a copy of the verification into the MEDS Non-Disclosable folder.

4. contact the specialist and instruct them to call the organization to verify receipt of the adverse letter if unable to verify delivery using the tracking tool and the signed certified mail card was not returned.

   Note: The specialist's call and the result of the call must be documented in the CCR. If the specialist isn’t able to update the CCR, the result of the call can be emailed to the reviewer and then imported into the MEDS Non-Disclosable folder. In addition to uploading the email, the reviewer will document the result of the call in the CCR (for example, the specialist called the director and confirmed receipt of the letter).

(2) If a protest is received, the reviewer will consider the protest according to IRM 7.20.5.8.2, Response to Adverse Letter.

(3) If no protest is received for adverse letters subject to IRC 6110, the reviewer will prepare Letter 4038, Final Adverse Determination IRC 501(a) - No Protest, and a redacted copy of Letter 4038 (see IRM 7.20.5.8.1(7) and IRM 7.28.4 for redaction procedures) and send to the EODQA manager for approval.

(4) If no protest is received for adverse letters subject to IRC 6104, the reviewer will prepare the appropriate final letter, if any (such as Letter 1079-F) and close the case per IRM 7.20.2.5, Case Closing.

(5) After EODQA managerial approval of the final adverse letter, the reviewer will import the letters into the MEDS Working folder.

(6) For final closure of an IRC 6110 case, the reviewer will:

1. prepare a Checklist for IRC 6110 Written Determinations,

2. ensure all case documents have been moved to the MEDS Non-Disclosable folder, and

3. forward the case to the EODQA manager for approval.

(7) EODQA manager: After review, send the case to the EODQA tax examiner for final closure.

(8) To close a final adverse IRC 6110 case, the EODQA tax examiner will:

1. save the final adverse letter (Letter 4038) as a PDF and add the Director’s digital signature and date.

   Note: There is also a redacted version of the letter, which only has a date (no signature).

2. prepare Letter 437, Notice of Intention to Disclose (Rulings), and import into the MEDS Non-Disclosable folder.

3. make sure there is a completed Letter 937-A with the Director’s signature if there’s a valid Form 2848 or Form 8821. If there is a POA (or two), print a complete IRC 6110 package for each and mail it with the Letter 937-A on top.

4. make sure the IRC 6110 final package contains, in this order: Letter 4038 (dated and signed), Letter 437 (all dates filled in), redacted Letter 4034 (dated by the reviewer with the date that the proposed denial was mailed), and redacted Letter 4038 (date only).

5. mail the final IRC 6110 package to the organization and any valid POA(s).

6. email the reviewer to let them know the date the final letter was mailed and ask them to send the IRC 6110 package to Counsel.

(9) Reviewer: After the EODQA tax examiner mails the final letter, email copies of all redacted and unredacted letters (excluding POA copies), Letter 437, and the Checklist for IRC 6110 Written Determinations, to the *CC 6110 Disclosure mailbox and copy the *TE/GE-EO-Determinations QA mailbox. If missing, insert the date each letter was issued on the electronic copies.