The Office/Correspondence Examination Program (OCEP) is an ongoing program in which EO examiners conduct the examination of returns either by an office interview or through correspondence.

OCEP examinations are generally limited in scope, usually dealing with no more than three issues, and assigned to grade level GS-9 or lower examiners. However, if determined necessary, such as in the case of restrictions on travel, OCEP procedures can be applied to more complex returns examined by higher graded agents.

The normal examination and closing procedures applicable to field examinations generally apply to OCEP exams. Exceptions include:

OCEP procedures can apply to all EO returns. Reference to the term "organization" includes a trust, or corporation or an unincorporated association.

The use of suspense files should be used to hold cases awaiting information or the date of a scheduled appointment. See IRM 4.75.27.4 for information on suspense files.

See exhibit 4.75.27-1 which lists the forms and letters used in OCEP examinations.

EO returns under this program are selected either using Return Inventory Control System (RICS), or as part of a compliance project.

Selection criteria includes entities with gross receipts or total assets under $100,000. However, entities exceeding these criteria may be included if the issues identified are suitable for resolution through the OCEP process.

During the selection/classification process, the classifier will consider the entire return as well as possible related items not reported on the return.

A classification sheet will be attached to each return identifying the classified issues.

The correspondence examination technique will generally be used, but may be converted to an office or field examination, if facts and circumstances warrant.

The project issue(s) should be specified in the letters sent to the organization. The project issue(s) and objective(s) are detailed in the project's action plan.

OCEP pattern letters should be used, if applicable. See Exhibit 4.75.27-1 for a listing of pattern letters and their respective titles.

If the organization does not respond, the examiner will determine whether revocation or termination is appropriate. See IRM 4.75.27.8.

During the normal pre-examination planning, if the examiner notes questionable items on the return or has other information available prior to sending the initial letter, consideration should be given to expanding the scope of the examination.

If an examination cannot be satisfactorily completed under OCEP procedures due to complexity, geographical location, etc., the group manager may change the examination technique to a field examination.

Use of suspense files to hold cases awaiting information or awaiting the date of a scheduled appointment is recommended. Where available, clerical personnel should maintain these files with a purge date relating to when additional action is required. In locations where a clerk is not available, the examiner will maintain the suspense files.

Due to the limited scope of the examination, the normal complince check procedures (package audit) do not apply. However, the examiner will research IDRS to verify the filing of information returns when applicable. The Payer Master File (PMF) and Information Returns Master File (IRMF) will be used to satisfy the compliance check requirements of Policy Statement P-4-4. These on-line queries will assist examiners in checking compliance with information returns filing requirements.

Cancelled checks, receipts and other original records submitted by the organization during the examination will be returned as soon as possible using Letter 1020 (for correspondence and interview examinations).

This letter advises the taxpayer of the examination's status, serving as well as a transmittal for returning records to the organization. If records are needed to document conclusions reached in the examination, copies should be made and the originals returned.

An interview examination usually will take place in the examiner's office post of duty.

If an interview examination is required away from the examiner's post of duty, the examiner will arrange an examination at another IRS office agreeable to both the organization and the examiner.

The organization should not have to travel more than 50 miles.

The Correspondence examination technique is normally used to examine compliance project returns.

The initial contact letter will be mailed to the organization. Item 1 of Form 8001, "Current Activities" , must always be a consideration when using this examination technique.

Forms 8001, 8002, 8003, 8004, and 8005 are used to request information and documentation on issues identified by the classification checksheet. The following is a list of information that can be requested on these forms:

If the case cannot be satisfactorily completed by correspondence, the group manager can convert the case to an office or field interview.

The examiner will notify the organization by letter if the exam is changed to an office or field interview. (Letter 1475 is used when converting the correspondence exam to an office interview.)

In order to obtain a current address the examiner will:

After all possible steps have been taken to obtain a current address, the examiner will take the following actions:

If the organization does not respond within 30 days, the examiner will contact the organization

If the organization fails to respond to the follow-up letter, the examiner will attempt to contact a principal officer or authorized representative by telephone and inform him/her of possible adverse action.

The failure of an organization to respond to an OCEP examination may result in revocation of the organization's exempt status. See Treas. Reg. section 1.6033-2(h)(2).

Examination reports prepared for failure-to-respond cases must:

Established revocation procedures should be followed. See IRM 4.75.15 and IRM 4.75.16.

IRM 7.25, the Exempt Organizations Determinations Manual, should be reviewed on issues that result in proposing revocation. If findings clearly indicate an organization does not materially meet the rules for continued exemption, revocation of the organization's exempt status is appropriate. The case file and examination report must provide clear support for this adverse action. The revocation procedures contained in IRM 4.75.15, IRM 4.75.16, and IRM 4.75.20, Final Case Closing, should be followed.

If findings indicate an organization has gone out of business, termination is appropriate. See IRM 4.75.15 and IRM 4.75.16. The examiner should prepare Form 4620, Transmittal Letter - Exempt Organizations, and a drafted letter terminating the organization's exempt status as of the date of dissolution. In cases involving IRC section 170, the letter should contain a statement terminating the deductibility of contributions.