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Part 4. Examining Process

Chapter 75. Exempt Organizations Examination Procedures

Section 17. EO Examinations Review Responsibilities and Procedures

4.75.17  EO Examinations Review Responsibilities and Procedures

4.75.17.1  (03-01-2003)
Introduction

  1. The TE/GE EO examination review groups, centrally located in Dallas, Texas, is part of the Exam Programs & Review (EP & R) function. Two groups, Mandatory and Special share the responsibilities of reviewing Examination cases. Although the managers for both groups are located in Dallas, other reviewer/members of the review staffs are located in various posts of duties throughout the United States.

  2. The review staffs also provide coordination for various examination programs and functions. The review managers may, as necessary assign a reviewer to act as the coordinator for a particular program. See Exhibit 4.75.17-1. for a list of the programs and the group charged with responsibility for the accomplishment of that program.

4.75.17.2  (03-01-2003)
Background

  1. The principle objective of the TE/GE Examination Review Staffs (referred to as "Review" is the fair, impartial, courteous and professional administration of revenue laws. Their role is to advise management of areas requiring their attention and to make corrections wherever necessary. To accomplish these objectives, reviewers will review the managerial, technical and procedural aspects of examination cases. To this end, the Review Staffs must continually strive for:

    1. Just, uniform, and impartial treatment of exempt organizations' interests while protecting the Government's interest;

    2. High quality standards;

    3. Constant awareness of unfavorable patterns or trends;

    4. Identification of problem areas, unique issues raised, and for new or novel techniques developed by agents; and

    5. Timely dissemination of information for use by others in evaluating assignment and examination procedures.

4.75.17.2.1  (03-01-2003)
Mandatory Review

  1. Mandatory Review is primarily responsible for performing technical reviews of examination cases specified by IRM 4.75.18 as being subject to mandatory review.

  2. Mandatory Review is also responsible for assisting management and agents in the preparation and approval of closing agreements. This would include ensuring any subsequent follow-ups are made and all payments required by the closing agreement are timely received and processed appropriately.

  3. For additional information on closing agreement procedures, refer to IRM 4.75.25.

4.75.17.2.2  (03-01-2003)
Special Review

  1. Special Review is primarily responsible for performing a quality sample review of closed examination cases through the Tax Exempt Quality Measurement System (TEQMS).

  2. The manager of Special Review is responsible for publishing the quarterly newsletter for the EP & R function.

  3. Reviewers will be responsible for submitting articles on various topics of interest to the field.

  4. Articles will be solicited from the other groups within EP & R including Planning, Classification, and Closing.

4.75.17.3  (03-01-2003)
Staffing

  1. Reviewers should be experienced and highly competent personnel who:

    1. Possess a comprehensive knowledge of generally accepted accounting and auditing principles;

    2. Possess superior skill in interpreting and applying tax laws, regulations, and court decisions;

    3. Are knowledgeable in Service policies and procedures;

    4. Are capable of performing a managerial review of cases;

    5. Have a fair and impartial attitude;

    6. Merit the highest respect and cooperation of EO and other IRS personnel;

    7. Have demonstrated an ability to assume responsibility and take positive action when warranted;

    8. Communicate ideas and opinions clearly, tactfully and objectively; and

    9. Apply good judgment; and exercise individual initiative.

4.75.17.4  (03-01-2003)
Requesting Area Counsel Assistance

  1. Cases requiring Area Counsel approval, (i.e. proposed adverse letters, proposed revocation letters, and proposed deficiency notices) should be sent to the Area Counsel office where the case would be tried should it go to trial. This generally would be the Area Counsel office where the taxpayer/organization or their representative resides.

  2. The proper Counsel offices to receive these cases are as follows:

    Great Lakes Area CC:TEGE:GLGC:CHI Area Counsel, Chicago
    Gulf Coast Area CC:TEGE:GLGC:DAL Area Counsel, Dallas
    Central Mountain Area CC:TEGE:PCCM:SF Area Counsel, San Francisco
    Pacific Coast Area CC:TEGE:PCCM:LA Area Counsel, Los Angeles
    Mid-Atlantic Area CC:TEGE:NEMA:BAL Area Counsel, Baltimore
    Northeast Area CC:TEGE:NEMA:LI Area Counsel, Long Island

  3. Reviewers may contact Area Counsel at anytime for advice. A directory of the Area Counsel attorneys with their area of expertise is compiled and distributed annually.

4.75.17.5  (03-01-2003)
Statute Control

  1. IRM 25.6, Statute of Limitations, provides statute control concepts applicable to exempt organizations.

  2. Each reviewer is responsible for complying with the provisions of IRM section 25.6 for the return(s) assigned to him/her.

  3. Cases being transferred to Review require a Form 895 if there are fewer than 270 days left on the statute. Managers closing a return from the group with a short statute should have previously called and alerted the Manager, Mandatory Review, before sending the case.

  4. A short statute is defined as a statute with less than 180 days remaining for an agreed or "no-change " case, and 240 days remaining on an "unagreed " case.

  5. All examination cases in which revocation is proposed will be considered unagreed.

  6. All cases, as well as any related cases, submitted for technical advice, must have one year remaining on the statute of limitations before being sent to EO Mandatory Review for processing.

  7. Any case closings deviating from the above time frames should include a written explanation from the group manager.

4.75.17.6  (03-01-2003)
Processing Cases

  1. Review staff is responsible for processing the following :

    • Referrals Cases

    • Unagreed Cases

    • Cases with nationwide ramification,

    • Suspension action, and

    • Technical advice.

    • Revocation cases

4.75.17.6.1  (03-01-2003)
Referral Procedures

  1. Any referral cases received in Review will be updated on Automated Information Management System (AIMS) to Status 60, and Exempt Organization Inventory Control (EOIC) to Classification. The Reviewer should identify any referral case and flag it appropriately to ensure the case is properly forwarded to Classification.

4.75.17.6.2  (03-01-2003)
Suspense Procedures

  1. Case files requiring suspension of action will normally be held in Dallas Mandatory Review until such time as action on the case can resume. These will include, but are not limited to technical advice cases and Section 1254 suspense cases.

  2. Prior to forwarding a suspense case to Review it will be the group's responsibility to insure that the statute is protected for at least one year. Upon receipt in Review, it will be Review's responsibility to secure any necessary statute extensions. Review will secure extensions on subsequent years if there is a continuing issue.

  3. Technical Assistance cases will be maintained in the groups with a copy of the technical assistance memorandum kept in Review for information and follow up.

  4. Cases involving issue(s) having nationwide ramifications or those within a particular judicial jurisdiction are at times suspended to ensure uniform and consistent treatment of the issue(s). This includes cases in which the issue is the same or similar to an issue(s) in a case awaiting final action by Rulings and Agreements or the Office of the Chief Counsel (Tax Exempt and Government Entities).

    Note:

    Review is responsible for protecting the statute on the examination, including any subsequent years, while the case is in Rulings and Agreements.

4.75.17.6.3  (03-01-2003)
Section 1254 Procedures

  1. Cases involving issues which have been identified as Form 1254 suspense cases should be sent to Mandatory Review in Dallas. The examining agent should have completed the examination with regard to all other issues prior to forwarding the case to Mandatory Review.

  2. Review will verify the statute expiration date, the taxpayer's name and address, the accounting period and the issues. The Mandatory Review Manager will be advised of any statutes that expired prior to receipt of returns being suspended.

  3. The Form 1254 will be prepared with references to Examination changed to TE/GE.

    Note:

    For a group of cases with an identical issue, a Form 1254 should be prepared for one of the cases, and the remaining identical issue cases should be listed on Form 1254-A, which is attached to Form 1254.

  4. The AIMS status will be updated to the appropriate suspense code.

  5. A Letter 1014 will be prepared and mailed to inform the taxpayer of the status of the case.

  6. The Forms 1254 or 1254-A will be placed in a special suspense file maintained and controlled in Mandatory Review. Until advice is received no action should be taken to close the case, except as may be necessary to protect the Government's interest (i.e., protect the statute). The Form 1254 suspense file should be arranged according to the expiration date of the statute of limitations.

  7. When a final decision is made on any issue in suspense, the case files will be returned to the originating Area with a synopsis of the decision. Any other guidelines available at that time will also be included with the file

  8. When cases are received in EO Mandatory Review, the Control Clerk will verify the statute and update the case on AIMS. The case will then be assigned to a mandatory reviewer.

Exhibit 4.75.17-1  (03-01-2003)
Table of Collateral Duties of Review Staff

DUTIES SPECIAL MANDATORY
Fraud X  
Technical Advice   X
Technical Assistance to Groups and Managers   X
Newsletter X  
Written Guidance to Practitioners X  
Review and Develop Operating Procedures X X
CPE and Group Presentations X X
Statute   X
Internal Revenue Manual   X
Closing Agreements   X
Employees Classification Program   X

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