Part 7. Rulings and Agreements
Chapter 21. Exempt Organizations Determinations Processing
Section 2. Processing User Fees
7.21.2 Processing User Fees
Manual Transmittal
May 23, 2023
Purpose
(1) This transmits revised IRM 7.21.2, Exempt Organizations Determinations Processing, User Fees.
Material Changes
(1) Incorporated Interim Guidance Memoranda TEGE-07-0122-0005, Reissued Interim Guidance on Processing Electronically Submitted Form 1023 and TEGE-07-0122-0003, Interim Guidance on Processing Electronically Submitted Form 1024.
(2) Made editorial changes throughout the IRM.
(3) Edited the document for plain language, as required by the Plain Writing Act of 2010.
Effect on Other Documents
This supersedes IRM 7.21.2 dated July 18, 2018.
Audience
Tax Exempt and Government EntitiesExempt OrganizationsRulings and Agreements
Effective Date
(05-23-2023)
Stephen A. Martin
Director, Exempt Organizations, Rulings and Agreements
Tax Exempt and Government Entities
Program, Scope, and Objectives
(1) Purpose: This IRM lists instructions for processing and maintaining records of user fees sent to Exempt Organizations (EO) Determinations and handling user fee refund requests for EO and Employee Plans (EP).
(2) Audience: The procedures in this IRM apply to employees in the EO Rulings and Agreements (R&A), Processing and Support, Adjustments Unit.
(3) Policy Owner: Director, Exempt Organizations, Rulings and Agreements
(4) Program Owner: Exempt Organizations
Background
(1) Rev. Proc. 2023-4 and Rev. Proc. 2023-5 (both updated annually) provide information about user fees for EO determination letter requests and EP letter ruling requests. The EO R&A Processing and Support Unit maintains a user fee processing area to handle user fees. User fees are recorded, tracked, and reported in the Letter Information Network User-Fee System (LINUS).
Authority
(1) Rev. Proc. 2023-4 and 2023-5 (both updated annually) provide background information, administrative procedures, and user fee amounts for determination letter requests in EP and EO and letter ruling requests in EP.
Responsibilities
(1) The EO R&A, Processing and Support, Adjustments Unit is responsible for processing and maintaining user fees and protecting payments in its custody against loss, theft, fire, destruction, and alteration.
Program Controls
(1) The EO R&A, Processing and Support, Adjustments Unit manager reviews the work performed in this IRM.
Acronyms
(1) This manual uses the following acronyms:
Acronym | Definition |
|---|---|
AIS | Application Identification Sheet |
Campus Support | Cincinnati Accounts Management Campus Support |
DLN | Document Locator Number |
EDS | EP/EO Determination System |
EIN | Employer Identification Number |
EO | Exempt Organizations |
EP | Employee Plans |
IDRS | Integrated Data Retrieval System |
LINUS | Letter, Information, and Network User-Fee System |
MEDS | Modified EO-EP Determinations System, also known as TEDS |
POA | Power of Attorney |
R&A | Rulings and Agreements |
User Fee Payments
(1) The Cincinnati Accounts Management Campus Support (Campus Support) is responsible for processing user fees submitted with paper Exempt Organizations (EO) and Employee Plans (EP) determination letter requests. See IRM 3.45.1, Processing Employee Plan and Exempt Organization Determination Applications and User Fees.
(2) If checks are received in EO R&A, and not at Campus Support, a locked area with controlled access is maintained for received checks awaiting processing.
(3) To process a user fee check, complete research to determine if the check is an additional payment, perfection, or rejection and make sure the check is completed correctly.
(4) For additional payments, research the status of the case in MEDS:
If the case has a proposed closing code of 03, 11, or 12 and is in Status 52 or 74, notify the specialist assigned to the case and their manager.
If the status is 21 or 57, notify the specialist to see if the case is to be reopened.
Print the Application Identification Sheet (AIS).
(5) For additional payments, complete Form 14267, User Fee Check Transmittal Form, print 4 copies, and include:
Organizations’ names
Employer Identification Numbers (EIN)
Check numbers
Money amounts
Postmark dates
Received dates
(6) Send the following to Campus Support:
Form 14267 (2 copies)
Checks
AIS (if applicable)
Applications for scanning into MEDS (if applicable)
Note: Use one copy of Form 14267 as the label on the mailing bag.
(7) Attach all of the checks to the transmittal and place in an Inter-Office communications envelope. Place the envelope in a first-class mail bag with a lock tie. Campus Support updates LINUS and deposits the check.
(8) Keep a copy of Form 14267 for Adjustments Unit records.
(9) For perfection payments:
Complete Form 3210 and list the name, EIN, SSN, check or money order number, type of payment, amount of payment, postmark date, and received date.
Make 3 copies (1 is for the Adjustments Unit, 2 are sent to Ogden).
Attach the checks to Form 3210 and place in a secured envelope with the inside mailing label and send to the attention of the Operations Manager, Receipt and Control.
Place the addressed envelope in a large white secured envelope and label for Place Perfection shipping on the front.
(10) For rejections:
If the payee line on the check or money order is blank or incomplete, prepare and send Letter 5530 with the check back to the originator.
If a payment is received with an electronic form and there is no record on LINUS or MEDS, prepare and send Letter 5330.
Note: Prepare and send Letter 5333 for Form 1023-EZ.
Payments received with Form 8940 with no record of a request in LINUS or MEDS and the organization submitted the correct user fee and back-up documentation, complete the Cincinnati User Fee Check Transmittal Form 8940 listing the Name, EIN, check or money order number, postmark date, and check received date. Follow the instructions to mail the check to Campus Support in IRM 7.21.2.2(5) through (7).
For Form 8940, Canadian registered charities and "Notice Only" terminations do not require a user fee. For all other request types, the user fee amount can be found in Appendix A of Rev. Proc. 2023-5, updated annually.
Non-Remits, Incomplete User Fees, and Dishonored Payments
(1) Canadian registered charities and Notice Only terminations do not require a user fee. All other applications without a user fee or with an incomplete user fee are returned to the submitter as incomplete. The applicant must resubmit the request in its entirety if it wants IRS consideration. Most application forms and user fees are required to be submitted electronically through Pay.gov.
Note: An application returned as incomplete is entered into LINUS but isn’t scanned into MEDS.
(2) Payments received in Pay.gov may be dishonored. To check for dishonored payments:
Sign in to Pay.gov.
Go to Reports and to Collection Voucher Report.
Click on the blue square for the effective date (always the day prior) and Run Report.
Search for "retired" cases. These are payments that have bounced.
Click on ACH Debit under Collection Status. If it says retired, click on the Pay.gov Tracking ID to see the transaction detail.
Copy the Pay.gov tracking number.
Go to the Dashboard at the top of the page.
Go to the Forms Search Query and paste the Pay.gov tracking number into the Pay.gov Tracking ID square.
In the Form Search results, click on the blue Pay.gov tracking ID number to pull up the form for the dishonored payment.
Document the EIN and the organization’s name.
Note: Continue this process by going back to the Dashboard until you have completed the report.
(3) Update LINUS to reflect dishonored payments:
Log into LINUS and go to the refund page.
Enter the EIN. If nothing appears, then the Pay.gov information hasn’t rolled to LINUS yet.
If the case has rolled to LINUS, click on the arrow and in the Choose the Action box choose Dishonored.
For the reason, select "REQUEST UF PAY W/LETTER" and follow prompts.
The dishonored check number (5302) will appear.
(4) Document the dishonored payment on the spreadsheet located on the shared drive. Enter all required information.
Money Transfers and Moving User Fees
(1) The EO Determinations specialist ensures that MEDS reflects the correct user fee payment with the correct form submission. The specialist will notify the Adjustments Unit if they discover a user fee payment isn’t recorded correctly in LINUS.
(2) If a submitted user fee payment isn’t recorded in LINUS but posted in IDRS, the payment must be sent as a money transfer from IDRS to LINUS. See IRM 7.21.2.3.1, Money Transfers.
Money Transfers
(1) Research IDRS for information needed to complete a money transfer using the following command codes:
INOLES - Name and address of the organization
BMFOLI - Payment posted
Note: BMFOLI also provides the MFT Code, Tax Period, and the Plan Number (EP) needed to complete Form 2424, Account Adjustment Voucher.
BMFOLT - Transfer Code and Date
TXMODA - Trace Number
Note: If the information is not available on TXMODA, complete a MFREQC first.
(2) Complete Form 2424 for the money transfer entering:
Name
Address
EIN
Tax period
Transaction date
MFT code
Debit and/or credit amounts
Trace ID number
Split fees to Treasury and IRS
Preparer’s name and date
Note: Campus Support will execute the money transfer.
Moving User Fees
(1) When a Determinations specialist (or other employee) notifies Adjustments to move a user fee from one case to another:
In EDS, enter option (4) Update Status, Master Record or Closing Data on the UPDATE MASTER RECORD - EXEMPT ORGANIZATION screen.
Enter a case identifier to access the case EDS data and hit F1.
Zero out the User Fee amount on the "moving from" case and enter the user fee amount paid on the "moving to" case.
If updating based on an email, send a reply email to the submitter that the information was updated.
Flag the original email in the Adjustments Unit’s mailbox as complete (if applicable).
Caution: Don’t move a user fee in EDS until the case is owned by EDS.
Note: You can move a user fee on a closed case.
(2) To transfer a user fee in MEDS from one case to another:
Go to Advanced, click on the blue "i" and select Change Case - Modify user fee information.
Subtract the fee from the first case by putting a minus with the fee amount in the User Fee Adjustment box (for example, -600) and select OK.
Add the fee to the second case by inputting the amount in the Fee Code box using a capital "F" (for example, F600).
Put the fee amount in the User Fee Adjustment box (for example, 600) and select OK.
Send update to EDS.
Note: If the case is in Status 21, manually subtract the fee amount in EDS.
Send acknowledgement email to the requestor. Check the email as completed and move to the Completed folder.
Note: If you are asked to transfer the user fee from one EIN to another EIN, follow the EIN Correction Procedures. Do not transfer the fees in MEDS.
User Fee Refunds
(1) EO and EP refunds user fees if they are overpaid or refundable per Rev. Proc. 2023-4 and 2023-5 (both updated annually).
(2) The Adjustments Unit inputs user fee refund requests from both EO and EP.
(3) Beckley Finance Center processes user fee refunds. The Kansas City Campus generates and mails the checks.
EO User Fee Refunds
(1) EO Determinations specialists and tax examiners initiate:
A partial user fee refund when an organization overpays a user fee amount.
A full refund because of current exemption, Form 1023-EZ non-acceptance, etc.
(2) The Adjustments Unit receives refund requests by email or by searching MEDS for cases that have a Case Category of *Forward Form 14268 - User Fee Refund.
(3) To initiate a refund, an EO employee completes Form 14268, User Fee Refund Request, and places it in the MEDS Non-Disclosable folder. It is signed by the group manager.
(4) Search MEDS for cases with user fee refunds to be processed. In the Advanced search, for the Properties enter all of the following:
Case Category, Contains, *Forward Form 14268 - User Fee Refund
Case Category, Does Not Contain, User Fee Refund Request Processed
Status, Contains, 21
Note: Save this search for future reference.
Access Form 14268 - User Fee Refund in the Non-Disclosable folder.
Check out the Form 14268 from MEDS to process the refund (right click on the document and select Check Out).
Select Properties and search for the Status and Contains and 21.
Review the form for accuracy and completeness. If there are issues, email the EO group manager that signed the form to update/correct the form before the refund can be processed. Right click the document and select Cancel Checkout and do not process the refund.
(5) The Adjustments Unit inputs the user fee refund request based on information the EO employee submitted.
Note: If Form 14268 is not signed by a group manager, return the form to the originating group manager.
(6) The Adjustments Unit maintains a refund spreadsheet and electronic memo for each refund case.
EO User Fee Refund Processing
(1) To input an EO user fee refund request in LINUS:
Open LINUS Refund and click on EO LOOKUP.
Input the EIN to show the user fee.
Click on the tile next to the DLN that the refund is issued under.
In the ACTION box, click on REFUND.
In the REFUND box, highlight the reason for the refund.
Input the current date.
In the FEE RECEIVED box, input the refund amount.
Hit the split button (LINUS automatically splits the amount).
Click SAVE (refund shows on the refund screen).
Print a copy of the refund screen.
(2) Update the EDS user fee field to reflect the user fee after the refund. Print a copy of the EDS screen showing the updated user fee.
Example: EDS shows an $850 user fee, and the refund is $450; update the user fee field to $400.
(3) After entering 50 refunds in LINUS, input information on a user fee refund spreadsheet using the LINUS prints. Enter the following for each refund:
Organization name
Address
EIN
Received date (date of original deposit)
Amount paid
Amount refunded
(4) Email the completed spreadsheet with a memo to Beckley Finance Center, including the total amount of all refunds to be issued. Email to *CFO BFC User Fee Refunds and *CFO BFC Approval - User Fees. Copy the Adjustments Unit manager on the email.
EP User Fee Refunds
(1) EP specialists initiate:
A partial user fee refund when an organization overpays a user fee amount.
A full refund because none was required or it accompanied an incomplete determination request.
(2) EP sends refund requests to the Adjustments Unit with the following:
Item | Details |
|---|---|
Form 1725, Routing Slip |
|
EP User Fee Refund Request |
|
Form 8717 |
|
Form 5300, 5307, or 5310 |
|
EP User Fee Refund Processing
(1) To input an EP user fee refund request in LINUS:
Open LINUS Refund and click on EP LOOKUP.
Input the EIN to show the user fee.
Click on the arrow next to the DLN that the refund is issued under.
Caution: Look for the plan number or appropriate postmark/received dates if there is more than one plan with the same plan name.
Click VIEW TRANSACTIONS to show the user fees paid.
In the ACTION box, click on REFUND.
In the REFUND box, highlight the reason for the refund.
Input the current date.
In the FEE RECEIVED box, input the refund amount.
Hit the split button (LINUS automatically splits the amount).
Click SAVE (refund shows on the refund screen).
Print a copy of the refund screen.
(2) Update the EDS user fee field to reflect the user fee after the refund. Print a copy of the EDS screen showing the updated user fee.
(3) After entering 50 refunds in LINUS, input information on a user fee refund spreadsheet using the LINUS prints. For each refund, enter:
Plan name
Address
EIN
Received date (date of original deposit)
Amount paid
Amount refunded
(4) Email the completed spreadsheet with a memo to Beckley Finance Center, including the total amount of all refunds to be issued. Email to *CFO BFC Debt Collection Helpdesk. Copy the Adjustments Unit manager on the email.
EP Voluntary Compliance User Fee Refunds
(1) EP Voluntary Compliance (VC) specialists initiate a refund where:
An organization submitted an overpayment of the user fee
No user fee was required
(2) EP VC specialists enter user fee refund requests in TRAC and email the requests to the Adjustments Unit at *TE/GE-EO-Adjustments with:
Form 3210 (with organization’s TRAC control number)
Refund Request Form with manager’s signature
EP TRAC sheet
EP Voluntary Compliance User Fee Refund Processing
(1) To input an EP user fee refund request in TRAC:
Log on to TRAC.
Then MAPICS/ HQEP.
Click on FORMS.
Click on CINCINNATI USER FEE PROCESSING/HQ-VC User Fee Processing.
Click on QUERY.
Tab to the CTRL NO.
Enter the ctrl # from the MAPICS user fee information sheet.
Click RUN.
Click or tab to the EIN field and enter the EIN from the user fee refund request form.
Click or tab to the REFUND AMT field and enter the refund amount from the ROUTING SLIP MAPICS/HQEP.
Tab to the REFUND DT (date) field and enter the current date (no slashes).
Click SAVE and a box will pop up in the center of the screen that will read: (1) TRANSACTION COMPLETED.
Print screen.
Repeat steps (e) - (m) as necessary.
(2) After completing the TRAC entries, input information on a user fee refund spreadsheet using the TRAC prints. For each refund, enter:
Plan name
Plan number
Address
Received date (date of original deposit)
Amount paid
Amount refunded
X in the column titled MAPICS
(3) Email the completed spreadsheet with a memo to Beckley Finance Center, including the total amount of all refunds to be issued to *CFO BFC Debt Collection Helpdesk. Copy the Adjustments Unit manager on the email.
User Fee Indicators
(1) MEDS and EDS list user fee amounts and contain these user fee indicators:
Complete (C)
Insufficient (I)
Overpayment (O)
Unknown (U)
(2) MEDS and EDS also contain a dishonored user fee indicator of yes (Y) or no (N).
(3) A case can’t be closed in an approval status with a dishonored user fee indicator of Y or a user fee indicator of I, O, or U.
(4) To correct an indicator, an EO Determinations specialist ensures the appropriate user fee is paid then emails *TE/GE-EO-Adjustments requesting an update to the user fee indicator or dishonored check indicator. The request should include the:
Organization’s name
EIN
EDS case number
Appropriate user fee amount
Note: If the required information is missing, respond back to the requestor and ask for the missing information.
(5) The Adjustments employee retrieves the emails from the Adjustments Unit mailbox.
(6) Research LINUS to verify that a payment has been made.
If | Then |
|---|---|
The payment isn’t on LINUS | Research IDRS for payment information using command codes such as BMFOLI, BMFOLT, URINQ, and TAXMOD. Complete a money transfer if a payment is located. See IRM 7.21.2.3. |
This payment isn’t located on IDRS | Email the specialist to ask the organization for a copy of the cancelled check (front and back). |
The payment is on LINUS, but the payment is dishonored | Email the specialist to request a new user fee payment (if not already requested). |
The payment is verified in LINUS or IDRS | Update the indicator in MEDS only if MEDS owns the case file or EDS if case owned by EDS. |
(7) To update the user fee or dishonored payment, incomplete payment, or overpayment indicator in MEDS:
Log into MEDS.
Left click on the word Advanced.
Enter the EIN in the third blank with the dash (-) in the Properties column and hit search.
Locate the correct case file. (All case files under that EIN will populate.)
Right click on the blue "i" and a drop down menu will appear.
Choose Change Case from the drop down menu and another drop down menu will appear.
Click on the error and select Modify User Fee Information and hit OK.
Locate the User Fee Indicator box and remove the check mark.
Locate the Payment Status box and a drop down menu will appear.
Click on the arrow and select the letter C which will mark the user fee payment status as Correct and select OK.
Note: The update will not automatically roll to EDS. Send the update to EDS.
Email the specialist that the request has been completed and move the email to the Completed folder.
Note: If the case is a Form 8940, and the fee code shows an incorrect amount (for example, if it shows F2500, but the fee amount is 550), change the fee code box to reflect the correct amount and select OK. Do not re-input the fee in the User Fee Adjustment box
(8) To update the user fee or dishonored check indicator in EDS:
Enter option (4) Update Status, Master Record or Closing Data on the UPDATE MASTER RECORD - EXEMPT ORGANIZATION screen.
Enter case identifier to access the case EDS data and hit F1.
Update the Dishonored Check Indicator field (N), as needed and hit F1.
Note: If two separate payments were received, update the amount to the amount that was not dishonored. If one payment was received and dishonored, zero out the entire payment. Hit enter until you come to the Dishonored Check indicator. Enter N if the fee was not dishonored and enter Y if it was dishonored.
Update the User Fee Payment Status. If the fee wasn’t dishonored and you are updating with the correct fee, enter C. If the fee was dishonored, enter Y and hit F1.
Email the specialist that the request has been completed or that the payment was dishonored and move the email to the completed folder.
EIN Corrections
(1) Research the EIN in LINUS:
Look up the incorrect EIN in LINUS. If there are multiple transactions under that EIN, move one of the transaction lines to the correct EIN.
Look up the new/correct EIN in LINUS to see if it is already in the system.
(2) If the old EIN has one transaction and the new EIN doesn’t exist on LINUS, update the EIN using the Edit EIN or Entity screen in the LINUS Editor:
Input the incorrect EIN in Search for this EIN box.
Input the new/correct EIN in Enter Valid EIN box. Confirm valid EIN and select Enter.
Send acknowledgement email to the requestor. Check the email as completed and move to the Completed folder.
(3) If the old EIN has multiple transactions and the new/correct EIN doesn’t on LINUS:
Send an email to your manager and lead with an IDRS screenshot of the new EIN’s entity requesting that it be added to LINUS. The subject line of the email is "Please add Entity to LINUS" with the name control in parentheses.
Flag the request to follow-up in the mailbox and categorize it as blue.
Once a response is received that the entity is added, go to the EIN Correction screen in the LINUS Editor.
Input the DLN of the transaction that needs to be moved in the boxes at the top left of the screen. Select "Look Up DLN".
Note: To make sure the correct transaction is moved, follow up with the requestor to verify.
Input new/correct EIN in Type New EIN Here box. Select "Look Up EIN."
Highlight SEQ at the bottom of the screen and select SAVE.
Send acknowledgement email to the requestor. Check the email as completed and move to the Completed folder.
Note: If the old EIN has multiple transactions, check MEDS and IDRS to see what entity that EIN belongs to. Update LINUS accordingly.
Duplicate Flag Error in MEDS
(1) This is a MEDS indicator to alert the specialist that there is more than one case file in MEDS under an EIN and the specialist should confirm there are not multiple open or closed (a prior approval) cases. If the box is marked it will prevent the agent from closing the case file in MEDS.
(2) To correct the error so the case can be closed:
Log into MEDS.
Left click on the word Advanced. A search screen will populate for you to input your information.
Enter the EIN in the third blank with the dash (-) in the Properties column and hit search.
Right click on the blue "i" and a drop down menu will appear.
Left click on the blue dot and click on General Case Info.
Scroll down and locate Potential Duplicate Flag. The box located next to it will have a check mark. Click on the box and remove the check mark. Hit OK.
Email the specialist that the request has been completed and move the email to the Completed folder.
Updating Entity Information in LINUS
(1) LINUS entity information consists of the applicant name, EIN, and address. Requests to update information are sent by EP/EO specialists, tax examiners, secretaries, and clerical support.
(2) To make an update:
Log into LINUS editor.
Enter your 5 digit TE number and press return.
Click on Edit EIN or Entity box and the EIN Edit screen will populate.
Input the EIN without the dash in the EIN box and press enter. The entity information will populate. Review the data and determine it is the correct case file.
If correcting the EIN in the Enter Valid EIN lines in the box, input the correct EIN and enter EIN to confirm the EIN. Hit enter. A dialog box will populate for you to confirm that you want to update the EIN. Click Ok to update the EIN.
Note: To confirm any updates made to the LINUS account, log into LINUS Research and enter the EIN without the dash and review all updates. If the account updated, you can close LINUS. If the data you entered did not update, repeat the steps above. Make sure the information in LINUS matches MEDS/EDS.
