If an organization applies for
tax-exempt status and receives an adverse determination letter
from EO Determinations, the organization will be advised of its
right to protest the determination by requesting Appeals Office
consideration (this process does not apply to adverse
determinations issued by EO Technical). The organization must
send its protest to the EO area manager of the office issuing
the adverse letter. The letter must be sent within 30 days from
the date of the adverse determination letter and must state
whether it wishes an Appeals Office conference.
Representation. A principal officer or trustee may represent an
organization at any level of appeal within the IRS. Or, the
organization may be represented by an attorney, certified
public accountant, or individual enrolled to practice before
the IRS.
If the organization's
representative attends a conference without a principal
officer or trustee, the representative must file a proper
power of attorney or a tax information authorization before
receiving or inspecting confidential information. Form 2848,
or Form 8821, Tax Information Authorization, as appropriate
(or any other properly written power of attorney or
authorization), may be used for this purpose. These forms
may be obtained from the IRS. For more information, get
Publication 947, Practice Before the IRS and Power of
Attorney.
Appeals Office
Consideration
The protest to the Appeals
Office should be filed with the local Appeals Office
considering the application and contain all of the following
information.
The organization's
name, address, daytime telephone number, and
employer identification number.
A statement that
the organization wants to protest the determination.
A copy of the
letter showing the determination you disagree with,
or the date and symbols on the determination letter.
A statement of
facts supporting the organization's position in any
contested factual issue.
A statement
outlining the law or other authority the
organization is relying on.
A statement as to
whether a conference at the Appeals Office is
desired.
The statement of facts
(item 4) must be declared true under penalties of perjury.
This may be done by adding to the protest the following
signed declaration:
“Under penalties of
perjury, I declare that I have examined the statement of
facts presented in this protest and in any accompanying
schedules and statements and, to the best of my
knowledge and belief, it is true, correct, and
complete.”
Signature.
If the organization's
representative submits the protest, a substitute declaration
must be included, stating:
That the
representative prepared the protest and accompanying
documents, and
Whether the
representative knows personally that the statements
of fact contained in the protest and accompanying
documents are true and correct.
Be sure the protest
contains all of the information requested. Incomplete
protests will be returned for completion.
If a conference is
requested, it will be held at the Appeals Office, unless the
organization requests that the meeting be held at a field
office convenient to both parties.
The Appeals Office, after
considering the organization's protest as well as
information presented in any conference held, will notify
the organization of its decision and issue an appropriate
determination letter. An adverse decision may be appealed to
the courts (discussed later).
Appeals offices must
request technical advice from EO Technical on any exempt
organization issue concerning qualification for exemption or
foundation status for which there is no published precedent
or for which there is reason to believe that nonuniformity
exists. If an organization believes that its case involves
such an issue, it should ask the Appeals Office to request
technical advice.
Any determination letter
issued on the basis of technical advice from EO Technical
may not be appealed to the Appeals Office for those issues
that were the subject of the technical advice.
EO Technical
Consideration
If an application is
referred to EO Technical for issuance of a ruling and an
adverse ruling is issued, the organization will be informed
of the basis for the conclusion, its right to file a protest
within 30 days, and its right to have a conference at
Headquarters.
Administrative
Remedies
In the case of an
application under section 501(c)(3), all of the following
actions, called administrative remedies, must be completed
by your organization before an unfavorable ruling or
determination letter from the IRS can be appealed to the
courts.
The filing of a
substantially completed application Form 1023 or
group exemption request under section 501(c)(3)
(described earlier in this chapter) or the filing of
a request for a determination of foundation status
(see Private Foundations
and Public Charities in chapter 3).
In the case of a
late-filed application, requesting relief under
section 301.9100 of the Income Tax Regulations
regarding applications for extensions of time for
making an election or application for relief from
tax (see Application for
Recognition of Exemption in chapter 3).
The timely
submission of all additional information requested
to perfect an exemption application or request for
determination of private foundation status.
Exhaustion of all
administrative appeals available within the IRS,
including protest of an adverse ruling in the EO
Technical original jurisdiction exemption
application cases.
The actions just described
will not be considered completed until the IRS has had a
reasonable time to act upon the appeal or protest, as the
case may be.
An organization will not be
considered to have exhausted its administrative remedies
before the earlier of:
The completion of
the steps just listed and the sending by certified
or registered mail of a notice of final
determination, or
The expiration of
the 270-day period in which the IRS has not issued a
notice of final determination and the organization
has taken, in a timely manner, all reasonable steps
to secure a ruling or determination.
270-day
period.
The 270-day period will be considered by the IRS to
begin on the date a substantially completed Form 1023 or
group exemption request is sent to the IRS. See
Application Procedures, earlier, for information needed to complete Form
1023.
If the application does
not contain all of the required items, it will not be
further processed and may be returned to the applicant
for completion. The 270-day period, in this event, will
not be considered as starting until the date the
application is remailed to the IRS with the requested
information, or, if a postmark is not evident, on the
date the IRS receives a substantially completed
application.
Appeal to Courts
If the IRS issues an
unfavorable determination letter or ruling to your
organization and you have exhausted all the administrative
remedies just discussed, your organization can seek judicial
remedies.
For example, if your
organization has paid the tax resulting from the unfavorable
determination and met all other statutory prerequisites, it
can file suit for a refund in a United States District Court
or the U.S. Court of Federal Claims. Or, if your
organization elected not to pay the tax deficiency resulting
from the unfavorable determination and met all other
statutory prerequisites, it can file suit for a
redetermination of the tax deficiencies in the United States
Tax Court. For more information on these types of suits, get
Publication 556, Examination of Returns, Appeal Rights, and
Claims for Refund.
In certain situations, your
organization can file suit for a declaratory judgment in the
U.S. District Court for the District of Columbia, the U.S.
Court of Federal Claims, or the U.S. Tax Court. This remedy
is available if your organization received an adverse notice
of final determination, or if the IRS failed to make a
timely determination on your initial or continuing
qualification or classification as an exempt organization.
However, your exempt status claim must be as:
An organization
qualifying under section 501(c)(3),
An organization to
which a deduction for a contribution is allowed
under section 170(c)(2),
An organization
that is a private foundation under section 509(a),
or
A private
operating foundation under section 4942(j)(3),
A cooperative
organization that is exempt from tax under section
521.
Adverse notice of final determination.
The adverse notice of final determination referred to
above is a ruling or determination letter sent by
certified or registered mail, holding that your
organization:
Is not
described in section 501(c)(3) or section
170(c)(2),
Is a private
foundation as defined in section 4942(j)(3), or
Is a public
charity described in a part of section 509(a) or
section 170(b)(1)(A) other than the part under
which your organization requested
classification.
Favorable court rulings - IRS procedure.
If a suit results in a final determination that your
organization is exempt from tax, the IRS will issue a
favorable ruling or determination letter, provided your
organization has filed an application for exemption and
submitted a statement that the underlying facts and
applicable law are the same as in the period considered
by the court.
A protest to the Appeals Office must be filed with office
indicated on the adverse letter the organization receives, and
contain the following information:
The organization's name, address, and employer
identification number;
A statement that the organization wants to protest
the determination;
The date and symbols on the determination letter;
A statement of facts supporting the organization's
position in any contested factual issue;
A statement outlining the law or other authority the
organization is relying on; and
A statement as to whether a conference at the
Appeals Office is desired.
The statement of facts (item 4) must be declared
true under penalties of perjury. This may be done by adding to
the protest the following signed declaration:
Under penalties of perjury, I declare that
I have examined the statement of facts presented in this
protest and in any accompanying schedules and statements
and, to the best of my knowledge and belief, it is true,
correct, and complete.
If the organization's representative submits the
protest, a substitute declaration must be included, stating:
That the representative prepared the protest and
accompanying documents; and
Whether the representative knows personally that the
statements of fact contained in the protest and
accompanying documents are true and correct.
The protest must contain all the information
requested. Incomplete protests will be returned.
If a conference is requested, it will be held at
the Appeals Office, unless the organization requests that the
meeting be held at an IRS office convenient to both parties.
The Appeals Office, after considering the
organization's protest and information presented in any
conference, will notify the organization of its decision and
issue an appropriate determination letter. An adverse decision
may be
appealed to the courts.
Appeals offices must request
technical advice from EO Technical on any exempt
organization issue concerning qualification for exemption or
foundation status for which there is not published precedent or
for which there is reason to believe that nonuniformity exists.
If an organization believes that its case involves such an
issue, it should ask the Appeals Office to request technical
advice.
Publication 892,
Exempt Organization Appeal
Procedures for Unagreed Issues
Publication 556,
Examination of Returns, Appeal
Rights, and Claims for Refund
Private Foundation Excise Tax Appeal Procedures
This article explains the procedures
an organization must follow in appealing the imposition of
Private Foundation Excise Taxes. Appeals of these taxes
are handled by the local Appeals Office in each of the area
offices of the Internal Revenue Service.
An excise tax appeals case may
involve the following steps:
For appeal procedures that apply to
cases involving issues subject to the declaratory judgment
provisions of section 7428 of the Internal Revenue Code, see
Declaratory judgment cases, and Chapter 1 of
Publication 557, Tax-Exempt Status for Your
Organization . These issues include qualification under
section 501(c)(3) or as an operating foundation,
classification as a private foundation, and eligibility to
receive deductible charitable contributions.
Publication 892, Exempt Organization Appeal
Procedures for Unagreed Issues
DISCLAIMER: This information is not intended
to provide legal or accounting advice, or to address specific situations. Please
consult with your legal or tax advisor to supplement and verify what you learn
here.
NonProfitExpert.com Copyright 1998 - 2012 All Rights Reserved.
