L. Exam Case Closing Information

(1) Resolve the following types of related cases:

a. Employment tax cases such as worker reclassification, fringe benefit

treatment, and unreported amounts.

b. Income tax cases (Forms 990-T for tax-exempt foundations, Forms 1120 or

1041 for taxable foundations).

c. Excise tax cases (gaming and/or Chapter 42 taxes).

(2) Discuss with your group manager whether to close the related cases separately

from the Form 990-PF.

(3) Close Form 990-PF as a no change/no change with advisory if there is no

modification to the Section 4940 tax, foundation status, or exempt status. See IRM 4.70.14, Resolving the Examination, for case file assembly and other common closing information.

(4) For agreed cases involving employment, income, or gaming excise taxes:

a. Issue report of examination.

Note: Remember that if a disqualified person is involved, there will be a separate case file and report for that taxpayer, and disclosure rules will be applicable.

b. Secure the agreement.

c. Collect payment or complete a request for an installment agreement. See

IRM 4.70.14, Resolving the Examination.

d. Prepare the appropriate closing letter. See IRM 4.70.14, Resolving the

Examination.

e. Close the case to your manager, who in turn closes it to the EO Closing Unit.

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(5) For agreed cases involving Chapter 42 taxes:

a. Request correction.

Note: No correction for Section 4940 adjustments

b. Obtain verification of correction.

c. Correction made: Issue report of examination.

d. Correction not made: Treat as unagreed.

e. Secure the agreement on Form 870-E.

f. Collect payment and/or complete the installment agreement request.

g. Prepare the appropriate closing letter.

h. Close the case to your manager, who in turn closes it to the EO Closing Unit.

Note: Before asserting excise taxes on the foundation manager(s), issue a Thorne letter, before issuing the 30-day letter. Consult your manager and Area Counsel for pre-issuance review of the Thorne letter.

(6) For cases requiring correction, follow the information below:

a. If correction is acceptable, issue the acceptance letter. See Letter 5305.

b. If correction is inadequate or unacceptable, issue the rejection letter. See

Letter 5306.

c. If uncorrected, determine whether additional time is needed for correction.

d. Grant an extension of time with managerial approval for the correction to be

made.

e. If uncorrected as of the end of the extension date, close as unagreed, even

if the taxpayer previously signed an agreement to the first tier tax on Form 870-E.

(7) For agreed cases involving revocation or foundation status modification:

a. Secure Form 6018, Consent to Proposed Action.

b. Obtain a statute extension, if less than 270 days remaining on the statute of

limitations.

c. Prepare a Form 3198-A, completing the Mandatory Review/Operations,

Planning & Review section.

d. Close the case to your manager, who closes the case to Mandatory Review.

(8) For unagreed cases, regardless of the type of tax or action (revocation,

termination, foundation status modification):

a. Issue a Thorne letter before issuing the 30-day letter if proposing excise taxes

on the foundation manager(s).

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b. Obtain a full copy of the tax form under protest showing the date received, if

not already in the file or on RCCMS. Use Online SEIN if obtaining a Form 990-PF or a filed Form 4720.

c. Issue a formal report of examination with the appropriate waiver/agreement

form(s).

d. Ensure that there are 425 days remaining on the statute of limitations when

closed from the group.

Note: All cases received in Appeals require 365 days remaining on the assessment statute of limitations.

e. Prepare a Form 3198-A, completing the applicable sections.

f. Verify that a formal protest to Appeals is valid. If invalid, secure a valid protest.

g. Prepare and issue a full rebuttal to any protests.

h. Close the case to your manager as unagreed (with or without protest).

Note: If applicable, consider offering a Fast Track Settlement before issuing the formal report of examination. Both agent and manager must approve a request to enter into fast track negotiations. See IRM 4.70.14, Resolving the Examination, for Fast Track Settlement information.

(9) A valid protest contains the following elements:

a. The taxpayer’s name, address, Employer Identification Number (EIN) and a

daytime phone number.

b. A statement that the taxpayer wants to protest the proposed determination.

c. A copy of the 30-day letter showing the findings that the taxpayer disagrees

with (or the date and IRS office symbols from the letter).

Note: If a copy of the 30-day letter is the only item missing from a protest, the case can be closed using the copy in the file without returning the protest to the taxpayer to perfect. See IRM 4.10.8, Report Writing.

d. An explanation of the taxpayer’s reasons for disagreeing, including any

supporting documents.

e. The law or authority, if any, on which the taxpayer is relying.

(10) The protest must also contain a valid jurat statement: “Under penalties of perjury,

I declare that I have examined this protest statement, including accompanying documents, and to the best of my knowledge and belief, the statement contains all relevant facts, and such facts are true, correct and complete.”

(11) Representatives submitting the protest must also include a substitute declaration

stating that the representative prepared the protest and any accompanying documents, and personally knows (or doesn’t know) that the statement of facts in the protest and any accompanying documents are true and correct. Organization

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officers or representatives may sign the protest. (See Pub. 892, How to Appeal an IRS Decision on Tax Exempt Status.)

(12) For cases subject to Section 7428 declaratory judgment, prepare an

administrative record. See IRM 4.70.14, Resolving the Examination.

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