4.24.24. Form 637 Registration Files: Administrative Procedures for Initial Applications and Case Reviews

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(4) This section is tailored for the administrative procedures for Form 637 initial applications and case reviews. Refer to IRM 4.24.2, Form 637 Excise Tax Registrations, for a general overview of Form 637 Registrations, including applications under IRC sections 4101, 4222, 4662, and 4682, as well as for general guidance. Refer to IRM 4.24.23, Operational Procedures and Responsibilities for Form 637 Registrations and Secure Airport Terminals (SAT), for information about the operational roles, responsibilities and procedures for Form 637 Registrations and SATs.

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

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

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

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

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

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

• Registration Group - The registration group administers and maintains Form 637 Registrations. The registration group consists of lead technicians (LTs), tax examiners (TEs), an exam technician and a management and program assistant. Refer to IRM 4.24.23.6, Responsibilities of the Form 637 Registration Group.

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

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

• Examination Headquarters Monthly Briefings

• Program Manager Monthly Briefings

• SB/SE Examination Operational Reviews and Business Performance Reviews

(2) Program Effectiveness - Program goals are measured with Excise Embedded Quality Performance Reports that monitor whether quality attributes are applied uniformly and consistently.

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

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

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

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

(2) Refer to IRM 4.24.1 , Introduction to Excise Taxes, for general framework describing basic examiner responsibilities, excise IRC sections, excise IRM sections, excise tax abstracts, and Excise Tax Program returns and claims.

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

(4) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. Refer to IRC 7803(a)(3), Commissioner of Internal Revenue; other officials, execution of duties in accord with taxpayer rights. For additional information about the TBOR, refer to Taxpayer Bill of Rights.

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

(1) The registration group manager's "Queue Manager Q1" screen under the IMS Queue Menu, displays all IMS case files in Status 10 that have been input by CSTO or created by an LT. Status 10 cases include new applications and follow-up compliance reviews.

(2) The registration group manager and/or queue manager shall make territory assignments on all Form 637 IMS cases in Status 10. Territory assignments are based on the geographical location of the applicant or registrant.

(3) Once the territory has been assigned, the IMS case file will be placed in Status 15 in the case inventory for the LT assigned to the territory.

(1) Status 15 IMS case files include initial applications, discretionary and sample reviews.

(2) The LT will assign IMS case files in Status 15 to TEs in the registration group and to excise groups from the "LT Assignment Q1."

(3) Under the "LT Assignment Q1," the LT will assign initial applications in Status 15 to the TE and update to Status 20.

(4) The registration group’s sample reviews in Status 15 will be assigned by the LT to a TE and updated to Status 20.

(5) The LT assigning a sample review to an excise group will:

1. Establish the IMS case file on ERCS and verify the correct project and tracking code(s) are assigned to the case. Refer to IRM 4.24.2.9, Examinations Resulting from Form 637 Compliance Reviews, for a list of the applicable tracking codes.

2. Upload the Form 637 historical file into the IMS case file, if applicable.

3. Update the IMS case file to Status 40 and select the appropriate team code.

4. Place the IMS case file in the designated group manager queue.

(6) The LT assigning a discretionary review to an excise group will:

1. Upload the Form 637 historical file into the IMS case file, if applicable.

2. Update the IMS case file to Status 40 and select the appropriate team code.

3. Place the IMS case file in the designated group manager queue.

   Note: The excise group is responsible for establishing the case file on ERCS for discretionary reviews.

(1) An IMS case file in Status 20 is either an initial application or a sample review that is assigned to the registration group. This will allow the TE to:

1. Conduct an Integrated Data Retrieval System (IDRS) compliance check on the applicant or registrant and all related persons.

2. Conduct an Accurint search on the applicant or registrant.

3. Complete the initial application or sample review.

(2) If the initial application or sample review is designated as a registration group case, then the TE will complete the initial application or sample review. The TE will:

1. Conduct the applicable registration tests.

2. Verify satisfactory tax history.

3. Recommend approval or denial on an initial application.

4. Recommend continuing or revoking a registration on a sample review.

(3) The initial application or sample review will only be designated as an excise group case, if there is an open excise examination, no compliance issues have been identified or Letter 3681 was not returned "undeliverable". Refer to IRM 4.24.24.4.4.2 for more information about when a case is designated as an excise group case.

(4) If the LT returns an initial application or sample review to the TE for corrections, then it will be updated to Status 20. The TE must take action within 10 days of assignment.

(5) The Form 637 review of an initial application in IMS Status 20 designated as a registration group case will be completed within 45 days of assignment in IMS. If deficiencies are discovered, then the TE has 60 days from the date of assignment to complete the initial application review. If third-party contacts are necessary, then the TE has 120 days from the date of assignment to complete the initial application review. Extensions to these timeframes may be approved by the LT. TE’s must document the Case Level Activity Record in IMS with the reasons for the delay and the estimated completion date.

(6) The IDRS compliance check for an initial application in Status 20 designated as an excise group case will be completed within 45 days of assignment in IMS. If deficiencies are found on an application designated as an excise group case, then the TE will attempt to resolve the deficiencies and recommend denial if the deficiencies are not resolved. At that time, the TE will document the Form 637 IMS recommendation screen and the Case Level Activity Record in IMS accordingly and follow the procedures in IRM 4.24.24.4.3.2(1) sections g-j and IRM 4.24.24.4.3.2(2).

(7) Initial applications in Status 20 that contain mixed activity letters designated as both registration group case and excise group case activity letters will be worked as an excise group case unless compliance issues are found by the TE. If compliance issues are found, then the TE must follow the procedures to deny the application. Refer to IRM 4.24.24.4.3.2, IMS Status 20 - Initial Compliance Review Procedures Specific to Form 637 Registration Group Cases.

(8) Initial applications in Status 20 that contain mixed activity letters designated as both a registration group case and an excise group case activity letters will be worked as an excise group case if no compliance issues are found by the TE. These types of applications will be processed as an excise group case following procedures found in IRM 4.24.24.4.3.3, IMS Status 20 - Compliance Review Procedures for Excise Group Cases.

(1) The criteria used to designate a case as a registration group or an excise group case will be reviewed as warranted based on the needs of the Excise Tax Program. Cases may be assigned or reassigned to either the registration group or an excise group based upon workload or priorities.

(2) Both registration group and excise group initial applications completed and approved by the TE will be updated to IMS Status 30 for an LT review.

(3) The IMS case file is returned to the LT that assigned the IMS case file to the TE in Status 20.

(4) The LT will confirm the determination made by the TE that the IMS case file is one of the following:

• An excise group case

• A registration group case

(5) Registration group cases are kept within the registration group, and the LT will make the determination to approve the application for registration.

(6) All cases that are denied in IMS by the TE are updated to Status 65 and placed in the registration group manager’s "Queue Manager Q2" under the IMS Queue Menu for concurrence and to make the final determination. Refer to IRM 4.24.24.4.5 for additional guidance.

(7) If a registration group case has multiple activity letters and some are denied and others are approved, then the IMS case file will be updated to Status 30 and placed in the "LT Process Q2" under the IMS Queue Menu for a final determination on the activity letter(s) that the TE recommended be approved. The denied activity letters will be forwarded to Status 65.

(1) When it is determined a Form 637 Registration should be denied, revoked, or the taxpayer requests withdrawal of a registration, the IMS case file is updated to Status 65 and placed in the registration group manager’s "Queue Manager Q2" to make the final action in IMS.

(2) The registration group manager's concurrence is required on all IMS case files that are denied or revoked in the registration group. The manager will:

1. Review the IMS case file and TE’s recommendation to deny or revoke registration.

2. Document concurrence on the Case Level Activity Record in IMS.

3. Take final action in IMS.

4. Update the IMS case file to Status 80 or 85 for the appropriate registration letter(s) to be issued.

(1) Status 70 cases are IMS case files with a change in ownership closed by an excise group to the LT or a recommended denial of an appeal.

(2) If it is a change in ownership case, then the LT will:

1. Process the change in ownership in the IMS case file.

2. Prepare and issue Letter 3689 and Letter 3691.

3. Update the Form 637 IMS case to Status 90.

(3) If it is a recommend denial of an appeal case, then the LT will:

1. Review the IMS case file for the response from the examiner.

2. Document the Case Level Activity Record in IMS with the findings.

3. Update the IMS case to Status 65.

(1) The IMS case files assigned to an LT in Status 80 include, but are not limited to, ownership changes, name changes, or those ready for final disposition.

(2) The LT will document all actions taken and contacts made on the Case Level Activity Record in IMS.

(3) When an IMS case file is assigned to Status 80 for a final disposition, the LT (or delegate) will:

1. Prepare the applicable Form 637 Registration letter(s) or other correspondence to the applicant or registrant and sign the registration group manager’s name or stamp the registration group manager’s name using a signature stamp, if available.

2. Scan and upload signed letter(s) into the IMS case file under "Administrative Issue" section and mail original letter to the applicant or registrant.

3. Input or remove the Form 637 indicator from the BMF account in IDRS. Refer to IRM 4.24.24.5.1, for additional information.

(4) Once all actions are completed, the LT will change the IMS case file status to "Complete Review" and update the IMS case file to Status 90. The IMS case file is now finalized in IMS.

(1) Once the final determination has been made by the LT to approve a registration or the registration group manager to deny or revoke a registration, applicable Form 637 Registration correspondence will need to be prepared and sent to the applicant or registrant. The TE assigned to an IMS case file in IMS Status 85 will:

1. Prepare the applicable Form 637 Registration letter(s) or other correspondence to the applicant or registrant and sign the registration group manager’s name or stamp the registration group manager’s name using a signature stamp, if available.

2. Scan and upload signed letter(s) into the IMS case file under "Administrative Issue" section and mail original letter to the applicant or registrant.

3. Forward the Form 2363 request to have the Form 637 indicator added to or removed from the BMF account. Refer to IRM 4.24.24.5.1 for additional information.

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

(2) Once the above actions are completed, the TE will update the IMS case file to Status 90. The IMS case file is now finalized in IMS.

(1) The Form 637 indicator on the BMF account in IDRS should be updated when:

• A new applicant is registered.

• A registration is revoked.

(2) Form 2363 must be completed and faxed to Centralized Case Processing (CCP) that will update the indicator on the BMF account in IDRS.

(3) The E-fax number for CCP may be found on Excise Tax Knowledge Base Homepage at the Form 637 Registrations shelf, Registration Information book, Current Issues chapter at "Update: Where to Send Form 2363" page.

(4) The registration group manager or delegate will:

1. Verify the accuracy of the EIN, name of the applicant or registrant and name control.

2. Ensure that the Form 637 indicator is added or removed from the registrant’s BMF account using "1" to turn on the indicator or "9" to turn off the indicator.

(5) The registration group manager or delegate will use command codes ENMOD or BMFOLE to verify the BMF account has been updated with the Form 2363 information.

(1) Form 637 registrants whose indicators are active will be monitored for compliance. A CP 241 notice is generated when one or more of the eleven conditions listed below is met. The condition printed on the notice identifies the reason it was generated.

(2) On a monthly basis, the registration group manager or delegate will download the CP 241 notice from the Control D WebAccess Server.

(3) The CP 241 notice will be reviewed by the registration group manager or delegate and appropriate action as described in IRM 4.24.24.5.2(4) below are taken.

(4) The 11 conditions listed below indicate that excise involvement may be required for the registrant's account:

(5) When a CP 241 notice is generated, the registration group manager or delegate will review, prioritize, and determine the next action required for each notice.

(6) If condition code 1 is indicated, then a representative sample will be selected, and the following actions will be completed:

1. Review the IMS case file for prior activity addressing the condition.

2. Secure appropriate IDRS research necessary to ensure all tax modules requiring attention are known.

3. Contact the registrant using Letter 3696 notating the items to be addressed if after reviewing the IDRS research and the condition has not been resolved.

   Note: Allow 14 days from the date of the letter for a response and document all actions on the Case Level Activity Record in IMS.

4. Document all actions on the Case Level Activity Record in IMS if after reviewing IDRS research it is determined that the condition has been resolved or is not applicable and no further action is required.

(7) If conditions 2, 3, 4, 6, 8 and/or 9 are indicated, then the following actions will be completed:

1. Review the IMS case file for prior activity addressing the condition.

2. Secure appropriate IDRS research necessary to ensure all tax modules requiring attention are known.

3. Contact the registrant using Letter 3696 notating the items to be addressed if after reviewing the IDRS research and the condition has not been resolved.

   Note: Allow 14 days from the date of the letter for a response and document all actions on the Case Level Activity Record in IMS.

4. Document all actions on the Case Level Activity Record in IMS if after reviewing IDRS research it is determined that the condition has been resolved or is not applicable and no further action is required.

(8) If conditions 1, 2, 3, 4, 6, 8 and/or 9 are not addressed in a satisfactory manner within 30 days of contact, then action must be initiated to revoke the registration until the condition is corrected.

(9) If condition 5 is indicated, then review IDRS to ascertain it is a final return. If so, then send Letter 3687, Verification of Excise Tax Registration, to the registrant to confirm whether the registration is still needed. If it is determined (after reviewing IDRS) this is not the final return, then document the Case Level Activity Record in IMS and no further action is needed.

(10) If condition 7 is indicated, then this case will be worked as a sample review by the registration group or forwarded to the excise group.

(11) If condition 10 is indicated, then the registration group manager or designee will review IDRS information, document the Case Level Activity Record in IMS and take appropriate actions.

(12) If condition 11 is indicated, then the registration group manager or designee will contact CID to determine the reason for its involvement. At that time, obtain required CID approval before any actions are taken and document accordingly the Case Level Activity Record in IMS.

(13) All decisions, actions and contacts with the registrant will be documented on the Case Level Activity Record in IMS. If the registrant has been contacted, then written notification of the final determination will be provided using Letter 3696.