Updates to EP/EO Determination System (EDS) information should be entered directly on Inventory Control System (ICS) at the time the change occurs. This includes status updates, correcting information on the Master Record and/or closing updates. The Area Offices may choose to allow group clerks to close cases on the Case Approval Screen after the group manager has approved the case for closing. Every effort should be made to the ensure that cases are not erroneously deleted from inventory. Instructions that refer to managerial case approval and record updates should be interpreted in this light.

ICS will automatically update the case to status code 55 (Awaiting Closing Approval) when any of the proposed closing codes are entered on the Master record. Please note that any action that requires Quality Assurance Staff (QAS) approval (e.g., proposed adverse letter or technical advise request) is considered a proposed closing by ICS even though the case is not actually closed.

ICS will identify all mandatory review (cases required to be forwarded to QAS) cases except EP cases with interested party comments. If the case is subject to mandatory review, the specialist must attach Form 3198,Special Handling Notice, or a locally developed form, to the front of the administrative file before forwarding the case to the group manager for approval. If the case is not one identified by ICS, the manager must update the status to QAS by entering an "x" next to the case number on the Case Approval Screen.

Cases approved by manager may be automatically selected by EDS for the TE/GE Quality Measurement Standards (TEQMS) Review. Cases are randomly selected by EDS for TEQMS review. If the case is selected, "TEQMS" is reflected on the comment line of the Case Approval Screen. Form 3198,Special Handling Notice, should be attached to the front of the administrative file indicating TEQMS.

A Case Closing Sheet (Form 8671) should be printed and placed in the case file after all proposed closing data has been entered at the specialist level. If the case is returned to the specialist, the manager should update the record to status 53. If the specialist’s actions are acceptable, the manager should:

Cases identified as merit closures can be updated for closing at any time; however, ICS will not accept the closing approval for EP cases until the 60–day period has expired unless the closing code is:

An unpostable code will appear on the Master record of each case opening or closing that was not accepted on the transfer from EDS to the Master file. The code identifies the unpostable condition and indicates whether it occurred on opening or closing. Cases can be updated for closing but the unpostable condition must be resolved before the manager approves the closing. To do otherwise will result in another unpostable record. The unpostable codes and conditions are explained in IRM 7.13.8,EDS Unpostables.

If the case is to be returned to the specialist by the reviewer, the Master record is updated with the appropriate status code (32 or 33). There is no approval screen for such updates, therefore the manager of QAS is required to approve the return of the case (or reviewer’s memorandum). It is recommended that the group clerk, not the reviewer, update the status after the review manager’s approval to ensure that the case is returned immediately after the record is updated.

In rare instances, the specialist may have to prepare a final adverse determination letter (e.g. taxpayer did not appeal a proposed adverse letter or when the response to technical advice request is adverse to the taxpayer and the taxpayer does not correct the deficiency). Cases in QAS requesting Technical Advice can be returned to the specialist for preparation of the final adverse letter. This action must be updated by the reviewer’s manager to code 34, District Counsel Review. The case closing is approved by the reviewer’s manager through the Case Approval Screen when it is returned by District Counsel for issuance of the final adverse letter. The final closing code must be entered.

When a case is returned for preparation of a favorable letter after Tax Court proceedings, the favorable letter will be prepared to include a caveat to rescind the prior adverse letter and a final closing code must be entered on the ICS record. The case closing will be approved by the reviewer’s manager through the Case Approval Screen and the favorable letter will be issued.

All letters generated from EDS (including closing letters) are generated without a date or signature. Therefore, all letters must be dated and signature stamped before being mailed. Rubber stamps may be used for this purpose.

One of the following codes must be entered on the Master record before a case can be closed or updated to review:

There are seven options on the menu for Update Master Record screen, but only six of the options are available for general use. The options are:

No data can be changed by anyone under Option 1 (i.e., all fields are protected) and only certain individuals are profiled to update records through Option 5. Most updates will be made through Option 2, 3, or 4. Updates allowed through Options 2 and 3 can also be made through Option 4. For example, if it is necessary to update the status and other data elements on a record, both can be done in one session by accessing Option 4 instead of accessing Options 2 and 3 which would require the user to access and exit two separate Options.

Queries may be made based on case number, DLN, EIN, FFN or Name Control.

The following are descriptions of the fields that can be changed on EDS. Specific instructions and validity checks are contained in IRM 7.14.5,EP/EO Employee Plans/Exempt Organizations Determination (EDS) User Manual. To prevent inconsistencies in the MIRs, applications with incorrect data displayed EDS application fields not listed below, must be closed as a correction disposal and reestablished with correct data.

EIN — The EIN must be corrected whenever an error is identified. Changes must be made with extreme caution to ensure that accurate entity information is transmitted to EPMF.

Plan No. and FFN — Can be corrected at any time.

Request Type — Only the second character of the request type can be changed. For example, if the request type for an amended plan requesting a determination as a partial termination (AP) was input as AL (amended plan with leased employees), the AL can be changed to AP but the amendment identification (A) can not be changed to another type of request such as initial (I). If the first character of the type request is incorrect, the entity must be closed as a correction disposal and reestablished through DTS. Type of requests are defined as follows:

Plan Sponsor Name — Can and should be changed if an error is present. EDS will automatically adjust the name control to the changed name.

Form 5309 — If Form is attached to the application but this field is blank, enter "Y" in the blank. If "Y" is present but Form 5309 is not attached, delete the "Y" .

Entity Type — Can and should be changed if an error is present.

Model Plan Type — Can and should be changed if an error is present. The codes are defined as:

DBA — This entry represents a second name (e.g., Doing Business As, Also Known As) and should be changed if an error is present.

401(k) — This field indicates whether or not a plan contains a cash or deferred arrangement. It should be corrected if an error is present.

Address (including city, state and zip code) — Can and should be changed if an error is present.

Name of Plan and Plan Year Ends — Can and should be changed if an error is present.

Benefit Type — Can and should be changed if an error is present.

Total Part — If the number of plan participants is incorrect, this entry should be corrected.

Termination/Merger Effective Dt — This should be corrected for Form 5310 or Form 5310-A if the effective date of the termination/merger, spinoff or transfer of assets is incorrect.

Letter Serial No. (DO and NO) — Can and should be changed if an error is present.

Vesting — Can and should be corrected if an error is present. An entry MUST BE PRESENT for all closings except Form 4461 series applications, Form 5310, Form 5310-A and correction disposals (Code 30).

Reversion Amt — This applies only to Form 5310 cases. Can and should be corrected if an error is present.

Reason for Termination — Can and should be corrected if an error is present.

Plan Effec Dt. — Can and should be corrected if an error is present. An entry MUST BE PRESENT for all closings except Form 4461 series applications, Form 5310-A and correction disposals (Code 30).

Law Indicator — An entry MUST BE PRESENT for all closings except Form 4461 series applications, Form 5310-A and correction disposals (Code 30).

Status and Date — This code represents the case status and the date placed in that status. The status field can and should be updated when necessary.

Specialist No. — Enter and correct when necessary. MUST BE PRESENT for certain status codes and most closings. See IRM 7.14.5,EP/EO Employee Plans/Exempt Organizations Determination (EDS) User Manual for detailed instructions.

HOURS — Correct as necessary. MUST BE PRESENT for most closings. See instructions in IRM 7.14.5,EP/EO Employee Plans/Exempt Organizations Determination (EDS) User Manual.

Case Grade — Update or correct with managerial approval, as necessary. MUST BE PRESENT for most closings.

Last Letter Created — This field displays the last letter created in Letter Generation Subsystem (LGS).

Reviewer Number and Reviewer Hours — If present, this number represents the reviewer to whom the case is assigned and the hours expended by the reviewer.