CREW: IRS: Regarding Investigation of 501(c)(3) Organizations: 12/3/2007 - IRS Response

8/6/2019 CREW: IRS: Regarding Investigation of 501(c)(3) Organizations: 12/3/2007 - IRS Response

1/33

DEPARTMENT OF THE TREASURYI NTERNAL REVENUE SERVICE

WASHINGTON , D .C . 20224

SMALL BUSINESS/SELF-EMPLOYED DIVISION December 3, 2007

Kimberly PerkinsCitizens for Responsibility and Ethics in Washington1400 Eye Street, NW, Suite 450Washington, DC 20005Dear Ms. Perkins:This is a third interim response to your Freedom of Information Act (FOIA) request,dated September 21, 2006, and received in our office on September 25, 2006,concerning IRS's Political Activity Compliance Initiative (PACI) Project.We located 1570 pages responsive to your request. We are releasing 29 pages.Under the FOIA subsections and Internal Revenue Code (lRC) sections listed below,we are withholding 1541 pages in full and 20 pages in part. The redacted portion(s) ofeach page are marked by the applicable FOIA subsection(s) exempting disclosure ofthe information. Multiple exemptions appear on many of the documents.We are withholding 229 pages in full under FOIA Subsection (b)(3) in conjunction withIRC Section 6103.Subsection (b)(3) of the FOIA exempts from disclosure matters that are specificallyexempted by statute. The information being withheld under FOIA Subsection (b)(3)consists of third party tax information, the disclosure of which is prohibited by IRCSection 6103.In addition, we are withholding 1312 pages in full and 16 pages in part under FOIASubsection (b)(5).Subsection (b)(5) of the FOIA exempts from disclosure inter-agency or intra-agencymemorandums or letters which would not be available by law to a party other than anagency in litigation with the agency. The three primary priVileges covered by thisexemption are the deliberative process privilege, the attorney work product privilegeand the attorney-client privilege.The deliberative process privilege protects documents which reflect advisory opinions,recommendations, and deliberations comprising the process by which decisions andpolicies are formulated. The attorney work product privilege protects memorandumsprepared by an attorney in contemplation of litigation which sets forth the attorney'stheory of the case and litigation strategy.The attorney-client privilege protects confidential communications between an attorneyand a client relating to a legal matter for which the client has sought professional advice


2/33

2We are withholding four pages in part under FOIA Subsection (b)(6).Subsection (b)(6) of the FOIA exempts from disclosure personnel and medical files andsimilar files the disclosure of which would constitute a clearly unwarranted invasion ofpersonal privacy. The determination to withhold is based on a balancing of interestsbetween the protection of an individual's privacy from unnecessary public scrutiny andthe preservation of the public's right to government information. The Supreme Courthas ruled that Congress intended the similar files provision to be construed broadly, sothat all information which applies to a particular individual qualifies for considerationunder Subsection (b)(6).We are continuing our search for documents that may be responsive to your requestand will advise you of the results as soon as possible.Should you have any questions concerning this correspondence, you may contact TaxLaw Specialist D. Kozarovich, 10 # 61-11479, by calling 502-572-2108 or by writing to:Internal Revenue Service, Disclosure, 600 Martin Luther King Plaza, Room 622,Louisville, Kentucky 40202. Please refer to case number 50-2007-00006.

Sincerely,9 ~ e : t 'K.. 1 ' 1 1 ~ ~Janet R. MinerActing Chief, Disclosure

Enclosures


3/33

Kall Jason CFrom: Cochran Virginia E [[email protected]]Sent: Thursday, January 20, 2005 1:32 PMTo: Kall Jason CSubject: RE: PIP final report

fine. but please, on the top of page 3, make it say "an absolute" rather than "a absolute"

-----Original Message-----From: Kall Jason C [mailto:[email protected]]sent: Thursday, January 20, 2005 1:24 PMTo: Cochran Virginia ESubject: RE: PIP final reportsubstance only.

-----Original Message-----From: Cochran Virginia E [mailto:[email protected]]sent: Thursday, January 20, 2005 1:12 PMTo: Kall Jason CSubject: RE: PIP final reportJason, I'm looking at this right now. do you want me to call you with typo, grammar, etc.type stuff or only look at substance?

-----Original Message-----From: Kall Jason C [mailto:[email protected]]sent: Thursday, January 20, 2005 1:04 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson SusanB; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty ASubject: RE: PIP final reportIt would help if I included the attachment

-----Original Message----From: Kall Jason Csent: Thursday, January 20, 2005 1:02 PIVlTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, BettySubject: PIP final report

1/3/2007


4/331/3/2007

Here is the draft final report. I hope this version meets Martha's needs.PIP Team, please review and make sure I did not make any factual mistakes regarding the work youall did at the beginning.

ThanksJason


5/33


6/33

Kall Jason CFrom:Sent:To:Cc:Subject:Importance:Attachments:

PIP Final ReportJan 26 2005 w...

Grissom Jackie RMonday, January 31, 2005 2:40 PMSullivan MarthaWilson Wendy R; "Director EO Examinations; Kall Jason C; Payne Jackie; Grissom Jackie RPIP Final Report Jan 26 2005 ww rev2.docHighPIP Final Report Jan 26 2005 ww rev2.doc

Attached is the revised PIP report with the changes and clarifications highlighted in yellow. Wendy, please print out 2reports for Martha. One with the highlights and one without the highlights.Ifyou need anything else please let me know.J a c ~ e (}rissomSenior Program SpecialistEO Examinations1100 Commerce StreetDallas TX 75242Phone: 214-413-5404Fax: 214-413-5453

1


7/33

Kall Jason CFrom: Schaffer Sharon ASent: Thursday, June 02, 2005 9:57 AMTo: Kall Jason CSubject: Input on Church ProceduresAttachments: Church PIP Concerns - Schaffer 6-02-2005.doc

Jason,In my haste to get my input to you, I miswrote (is that a word?) Item 5. The change is in the attached revision.know the Admin & Const. Rights are an exhibi t in the manual. I meant to say that an electronic copy of themshould be included in the distribution of sample letters, questions, etc.I'll take a look at the CUT revisions and sample questions.Sharon

1/312007


8/33

Kall Jason CFrom:Sent:To:Subject:Attachments:

Abramowitz HymanWednesday, July 13, 2005 9:30 AMFisher Andrea; Lawson Colleen C; Pugh Larry D; Johnson Susan B; Medina Moises C;Sutherland Anita A; Cochran Virginia E; Miller Thomas J; Kall Jason C; Davis Tonya LRE: PACI proceduresPACI procedures-7-13-05.doc

I'm forwarding this again.-----Original Message-----From: Fisher Andreasent: Tuesday, July 12, 2005 6:51 PMTo: Lawson Colleen C; Pugh Larry D; Johnson Susan B; Medina Moises C; Sutherland Anita A; Cochran Virginia E; AbramowitzHyman; Miller Thomas J; Kall Jason C; Davis Tonya LSubject: PACI proceduresImportance: High

Attached are the revised PACI procedures, incorporating comments received on the last draft ciruclated after oumeeting last month.The final is due to Martha by Tuesday (one week from today). Please review and provide any further commentsfor incorporation into the document to me NO LATER THAN FRIDAY, 7/15.Andi File: PACI procedures-7-13-05.doc

PACIedures-7-13-05.doc[Abramowitz Hyman]

1


9/33

Kall Jason CFrom: Cochran Virginia E [[email protected]]Sent: Friday, July 29,20053:26 PMTo: Kall Jason CSubject: RE: Latest and last version of the letters

looks good to me

-----Original Message-----From: Kall Jason C [mailto:[email protected]]sent: Friday, July 29, 20053:21 PMTo: Miller Thomas J; Pugh Larry D; Cochran Virginia ECc: Fisher AndreaSubject: Latest and last version of the lettersHere are the letters incorporating Tom's and Virginia's changes from Today.Larry, could you let me know if you have any concerns from Mandatory Review's standpoint. Tom, since weaccepted your changes I assume we have the green light from R & A.

Jason

1/3/2007


10/33


11/33

Kall Jason CFrom: Miller Thomas JSent: Friday, January 14, 20052:14 PMTo: Kall Jason CSubject: FW: Type A LetterAttachments: Political Intervention Initial Contact Letter - Type A Cases - finaI2.doc; Miller Thomas J([email protected]).vcf

As 1promised in the earlier message I forwarded, here is t h e f b l 1 o w ~ u p ; i e g ~ t d l f i g t h e m i h o r change to


12/33

Kall Jason CFrom:Sent:To:

Miller Thomas JFriday, January 14, 2005 2:21 PMKall Jason C

Subject: FW: Political intervention lettersAttachments: Miller Thomas J.vcf; Miller Thomas J ([email protected]).vcf

Jason,This is what 1found on t 1 J j t l } ~ e ; l B l f J : ~ ~ i l lTom

Thomas J. MillerTechnical Advisor,Exempt Organizations Rulings & Agreements~ ~ ( } 2 ) 283-9472 f-----Original Message----From: Miller Thomas JSent: Friday, August 27,20043:36 PMTo: Letourneau Diane LSubject: RE: Political intervention lettersT h i a ; ; ' ~ ' ~ " A l l l : Y < Y } \ 1 ~ ~ ~ 1 ' ? ~ ~ e t h a ~ qeletirig ihereference to eirip16yment taxes, etc., in the "A" 1etter

~ \ J j s t l ' h ' ~ : " hanks for picking that up!TomThomas J. MillerTechnical Advisor,Exempt O r g a n i ~ ; ) t i o n s Rulings & Agreements(202) 283-9472 1

-----Original Message----From: Letourneau Diane LSent: Friday, August 27, 20043:31 PMTo: Miller Thomas JSubject: Political intervention lettersTom,

i 3 Q . t : t b . Y a p ~ ~ 9 Y ~ ~ i l \ l Q , ~ ~ i l.'i.R'.f!e B" l ~ t e r . J ' y ~ : q U e c h . e d t h E r V n a l yersion and changed the name of the file,Joinclude'theworo"TlnaC""", . I.... "~ ; 7 ~ r ' ,

As I explained in my voice message, I h , , , , ~ ~ & : J , ~ % t ~ S , , J ! ; 1 e r e f e r e n c e t o ~ r : n p l g Y r n e t 1 t J ~ x , e ~ ~ t 9 J l ~ . ~ h e first ,;s ~ l J t e n c e of the the fifth paragraph of the "Type A" letter. Please let me know if this is OK.- r ' ' - ~

Thanks,Diane

113/2007


13/33


14/33

Kall Jason CFrom: Davis Tonya LSent: Thursday, January 20, 20059:34 AMTo: Kall Jason CCc: Johnson Susan B; Downing Nanette M; McClernan Betty ASubject: PIP ReportImportance: HighAttachments: Report_PROJECT 302 draft (davis 01-19-2004).doc

Finally, here is the draft of the reportJason - i f you have any questions let me know.Tonya Davis T:EO:E:PR:P:7992Revenue Agent/Project AnalystTE/GE Exempt Organizations, CSDAU

~ I 1 2 ) : 5 4 , 5 - : - 4 4 5 1 ,Extension 288 ('865) 545-4493 Fa

1/312007


15/33

, !Kall Jason CFrom: Johnson Susan BSent: Thursday, January 20, 2005 10:09 AMTo: Kall Jason CSubject: PIP ReportImportance: HighAttachments: Tonya's Draft w Susan's chgs 1-20-05 (davis 01-19-2004).doc

Jason,Attached is Tonya's report that I received this morning, which incorporates my 1-19-05 report I sent to her lastnight. I have made a couple of cosmetic changes to the sentences (a couple of misspelled words), but not to itscontent. I also changed that headings so that they are all consistent (caps vs. non-caps). Only the Introduction isin lower case.The filename: Tonya's Draft w susan's chgs 1-20-05 (david 01-19-2004).doc.This message is sent via secure messaging. If you have questions, just let me know. I am in the office today.Susan B. Johnson, 10# 73-3310Revenue Agent, EO Group 794955 N. Robinson/MS 4900-0KCOklahoma City, OK 73102-9229P h o n e : & Q . 5 ~ 2 . 9 ? - 4 4 73't!Fax: 4 0 . 5 ~ ' 9 1 : a 4 9 S. - ~ . , . , , , . , ~ , - ' ' ' ' ' ' ' ' : ~ ~ . 'Paqer: 8.0.0-21.0-1789 JT ..

1/3/2007

- .. 7\


16/33

-----Original Message-----From: Kall Jason C [mailto:[email protected]]Sent: Thursday, January 20, 2005 1:04 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan B;Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McCiernan Betty ASubject: RE: PIP final reportIt would help if I included the attachment

-----Origi nal Message----From: Kall Jason CSent: Thursday, January 20,2005 1:02 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson, Susan;Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McCiernan, BettySubject: PIP final reportHere is the draft final report. I hope this version meets Martha's needs.PIP Team, please review and make sure I did not make any factual mistakes regarding the work you all didat the beginning.

1/312007


17/33

-----Original Message-----From: Kall Jason C [mailto:[email protected]]sent: Thursday, January 20, 2005 1:04 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan B;Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty ASubject: RE: PIP final reportIt would help if I included the attachment

-----Original Message----From: Kall Jason Csent: Thursday, January 20, 2005 1:02 PI"ITo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson, Susan;Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, BettySubject: PIP final reportHere is the draft f inal report. I hope this version meets Martha's needs.PIP Team, please review and make sure I did not make any factual mistakes regarding the work you all didat the beginning.

ThanksJason

1/3/2007


18/33


19/33

-----Original Message-----From: Kall Jason C [mailto:[email protected]]Sent: Thursday, January 20, 2005 1:04 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson SusanB; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty ASubject: RE: PIP final reportIt would help if I included the attachment

-----Original Message----From: Kall Jason CSent: Thursday, January 20, 2005 1:02 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, BettySubject: PIP final reportHere is the draft final report. I hope this version meets Martha's needs.PIP Team, please review and make sure I did not make any factual mistakes regarding the work youall did at the beginning.

ThanksJason

1/312007


20/33

/

From: Kall Jason C [mailto:[email protected]] --""sent: Thursday, January 20, 2005 1:04 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson SusanB; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty ASubject: RE: PIP final reportIt would help if I included the attachment

-----Original Message----From: Kall Jason Csent: Thursday, January 20, 2005 1:02 PMTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, BettySubject: PIP final reportHere is the draft f inal report. I hope this version meets Martha's needs.PIP Team, please review and make sure I did not make any factual mistakes regarding the work youall did at the beginning.

ThanksJason


21/331/3/2007

McClernan Betty ASubject: RE: PIP final reportIt would help if I included the attachment

-----Original IVJessage----From: Kall Jason CSent: Thursday, January 20, 2005 1:02 PIVJTo: Payne Jackie; Grissom Jackie R; Johnson Rosie CCc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher,Andrea; Johnson, Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland,Anita; McClernan, BettySUbject: PIP final reportHere is the draft final report. I hope this version meets Martha's needs.PIP Team, please review and make sure I did not make any factual mistakesregarding the work you all did at the beginning.

ThanksJason


22/33

Kall Jason CFrom: Sutherland Anita ASent: Friday, January 21, 2005 7:13 AMTo: Kall Jason CSubject: FW: Political InterventionAttachments: Political Intervention Sept report.doc; Political Intervention Sept report.doc

Some reports from Betty that explain actions and dates-----Original Message-----From: McClernan Betty ASent: Friday, October 08, 2004 12:03 PMTo: Grissom Jackie RCc: Kall Jason C; Schaffer Sharon A; Sutherland Anita A; Fitch Karen LSubject: Political InterventionAttached is the report for the Political Intervention team.Betty A. McClernanManager, EO Compliance Strategy and Data AnalysisVMS and LA O ~ ~ ~ ] g . f R . ~ ~ ~ ~ (pending relocation to DC)

~ ' ; ~ ~ ' v" -- " .._


23/33

Kall Jason CFrom: Grissom Jackie RSent:To:Cc:

Friday, January 21, 2005 5:13 PMSullivan MarthaAyers Sanford E; Wilson Wendy R; *Director EO Examinations; Payne Jackie; Smith FannieM; Kall Jason C

Subject: PIP Final Report Jan 20 2005 jg rev.docImportance: HighAttachments: PIP Final Report Jan 20 2005 jg rev.doc

Attached is the final PIP report. Please let me know if you have questions.Thank you,J a c ~ i e qrissomSenior Program SpecialistEO Examinations1100 Commerce StreetDallas TX75242 .Phone: ~ r 4 - f l ~ . , 5 ~ 1 ! ~Fax: 2'1'1":0413'-5453' J'

1/312007


24/33

Kall Jason CFrom: Payne Jackie on behalf of Johnson Rosie CSent: Monday, January 31, 2005 2:47 PMTo: Grissom Jackie R; Kall Jason CSubject: FW: PIP Final ReportImportance: HighAttachments: PIP Final Report Jan 26 2005 ww rev2.doc

fyi

Jackie PayneSecretary to Director, EO ExaminationsPhone:Fax:ema. a-----Original Message----From: Sullivan Marthasent: Monday, January 31, 2005 2:37 PMTo: Miller Steven T; Ingram Sarah HCc: Johnson Rosie CSubject: PIP Final ReportImportance: High

Attached is the final report on the Political Intervention Project.

1/3/2007


25/33

Kall Jason CFrom: Zarin Roberta BSent: Monday, July 18, 20054:49 PMTo: Kall Jason CSubject: RE: PACI procedures

I only heard back from you. Who got the actual request? Martha?-----Original Message----From: Kall Jason CSent: Friday, July 15, 2005 5:09 PMTo: Zarin Roberta BSubject: PACI procedures

Bobby,

Jason

113/2007


26/33

Kall Jason CFrom: Fisher AndreaSent: Monday, July 18, 2005 5:32 PMTo: Kall Jason CSubject: PACI proceduresAttachments: PACI procedures-7-18-05.doc

Jason,Attached are the proceduresa clean doc m t

I will be in CPE the next 21/2 days, and will not have access to e-mail while I'm away.Andi

Jlndi PislierPresidential Management FellowCustomer Education & OutreachIR anizationsT:F:E:

1/3/2007


27/33

Kall Jason CFrom: Johnson Susan BSent: Monday, July 25, 2005 5:50 PMTo: Kall Jason CCc:Subject: IPImportance: HighAttachments: .

Jason:Attached is a VERY rough draft of what I think you might be looking for. Let me know what you think.Susan B. Johnson, 10# 73-3310Revenue Agent, EO Group 794955 N. Robinson/MS 4900-0KCOklahoma Ci 7 102-9229Phone:Fax:P a a e ~

11312007


28/33

CMiller Steven TMonday, November 07, 2005 12:02 PMLerner Lois G; Johnson Rosie C; Kall Jason C; Sullivan Martha

c: Ingram Sarah H; Pyrek Steve J; ;ng"_" ..E l \ ~ ~ m " ' - { ~ ' " " ' I ! ' ~ ' " " " _ " " " " ' " " " " - "ubjact: F ' v ' ~ ~ . . . m ~ J ! P i : : t l J G : r " l : ! ! W . u 1 j f l o a l ' I ~ l ! f t t ~ 1 f l e S t l . T h ~

~ a I ! l V l l ~ " R l ~ f l i ' > .~ ~ ~ p ~ ~ ~ 'mal Message-----Keith FrankMonday, November 07, 2005 1:00 PMMiller Steven TF W : ' ~ ~ ; ~ ~ ;

Original Message----Friedland Bruce IMonday, November 07,2005 12:57 PMKeith Frank; Deneroff Jan S

: a ' ~ ~ " "-Exempt Organizations and Political

-2004-14, October 2004er law, tax-exempt organizations described in section 501 (c)(3) ofInternal Revenue Code are prohibited from participating orin any political campaign on behalf of, or in opposition to,candidate for public office. Charities, educational institutions andiolJs organizations, including churches, are among those that arered under this code section.e organizations cannot endorse any candidates, make donationsir campaigns, engage in fund raising, distribute statements, orme involved in any other activities that may be beneficial orto any particular candidate. Even activities that encourageto vote for or against a particular candidate on the basis ofartisan criteria violate the political campaign prohibition of section

has in recent presidential election cycles, the Internal Revenuevice has taken steps to educate such organizations about theirincluding:On April 28, 2004, the IRS issued an advisory to charities thatthey should be careful that their efforts to educate voters complywith federal requirements concerning political campaignactivities.On June 10, 2004, the IRS sent a letter to the nation's political


29/33

parties reminding them about the guidelines for political activitiesby charitable organizations.er the course of the year, the IRS has reviewed informationging improper political intervention by more than 100 charities,urches and other tax-exempt groups.

of heightened concerns about improper political activitiesring the election season, the IRS created a committee of career civilrvants who are experts in the tax-exem area to review the .-/gations. This team selected more th 60" es "hat meritedamination. Over the last s e ~ m o n 1 f i , e IRS has beenntacting these organizations asking for information about allegedper political activities.ile under law the IRS cannot disclose the names of these groups,organizations being examined represent a broad cross-section of / ..11.

m p t community and a wide range of viewpoints. A.eout Bof the groups are churches, with the remainder being other typescharitable organizations.er the law, political intervention by a tax-exempt organizationa variety of possible consequences. It can result in theganization losing its tax-exempt status or paying a tax. In lessrious situations, the IRS may require corrective actions from the

obligation is to enforce the law, which prohibits all charities fromgaging in political activities," said IRS Commissioner Mark W.

law, the Internal Revenue Service cannot comment regarding anyiance activities involving specific tax-exempt organizations.w-enforcement decisions at the IRS are made without regard toitical considerations," Everson said.IRS follows strict procedures involving the selection of taxpt organizations for audit and resolution of any complaints aboutgroups. Career civil servants, not political appointees, makese decisions in a fair, impartial manner," Everson said. "Anyggestion that the IRS has tilted its audit activities for politicalposes is repugnant and groundless."

Items: IR-2004-79 - IRS Issues Letter on Exempt Organizations IR-2004-59 - Charities May Not Engage in Political CampaignActivities


30/33

all Jason CJohnson Susan BTuesday, November 08, 2005 4:43 PMKall Jason CPrinting spreadsheets

inted out each of the spreadsheets (& related charts,etc). Each separate document printed on letter paper, but some documenmore than one page. Some I have had to adjust the margins & the pr int size (80%, 90%, etc) to get it to fit. All are printed inscape' format. If you will send me the IP address & model of the network printer nearest you, I will send the prints to your pryou can see what I mean.


31/33

- _ . _ - - ~ . - - - - - -- - - - - ~ ..-. . . .- - ..-. --.. --- f --- - - - ~ / - - - - - - --.-- - - - f ' - - - - - - - ~ - - ,",--.-.-------------...- - . - - - - - - - - - - - - ---. - - ~ - . - - ---. - - - - - . - ----- .. - - - - - - - - - - -


32/33

On Site Examination Guidelines 4.75.11 page 5JI"

4.75.11.4.2(08-01-2003)Limited ScopeExaminations

4.75.11.4.3(08-01-2003)Internal Controls

4.75.11.4.3.1(08-01-2003)Evaluation of InternalControls

(6) The examiner is expected to identify unusual transactions'i$tk out the purpose of such transactions, and determine whether they a r ~ ' r e l a t e d to the established exempt purposes of the organization.

(1) In certain cases, the scope of an examination may b ~ ( i m i t e d to specific issuesidentified by the Examination Planning and Prograrnc; 'function,(2) A manager may direct an examiner to l imit the scope of an examination. However, the manager must explain which issues w/'t"l not pursued and why.Note: Documentation will consist of an entry on tr e 5464, Case ChronologyRecord (CCR) initialed by the manager, which explains the reasons for limiting the examination. If the discussion is lengthy, a separate workpapershould be indexed to the CCR.(3) Limited scope examinations generally include only classified issues and large,

unusual and questionable items (LUQ) reflected on the return or discoveredduring the examination. However, there is an expectation that examinations willbe expanded when the facts warrant. Additional issues in a limited scope examination will not be pursued without the manager's approval. Managers areresponsible for establishing procedures for indicating their written approval inthe case file.(4) In al/ examinations, the examiner should review the organizing documents todetermine the organization's exempt purpose. Where exempt purpose is not aclassified issue, an analysis of the operational activities is not generally appropriate. However, if during the course of the examination it becomes apparentthere are operational issues, the examination scope may be expanded.(5) The examiner must also establish on every case that the organization has filed

all other required Federal returns.(6) In all limited scope examinations, the case file must include proper documentation concerning the scope of the examination and the package audit requirements. The cover sheet accompanying project code cases will constitutemanagerial approval for a limited scope examination, and must remain with thecase file.(1) Internal Controls are defined as the taxpayer's policies and procedures toidentify, measure and safeguard business operations and avoid materialmisstatements of financial information.(2) The lack of good internal controls may indicate the potential for diverted receipts, diverted assets, or other problems.Note: The lack of internal controls does not necessarily jeopardize exemption, butit may affect the scope of the examination.(1) Examiners should evaluate the existence and effectiveness of an organization's internal controls and expand or contract the scope of the examinationappropriately.(2) In determining whether to rely on the organization's books and records, theexaminer should consider the extent to which the following control checks areutilized by the organization:

IR Manual 08-01-2003 4.75.11.4.3.1


33/33

Internal Revenue Manual - 4.75.11 On Site Examination Guidelines

4.75.11.4.2 (08-01-2003)Limited Scope Examinations

Page 1 of 1

1. In certain cases, the scope of an examination may be limited to specific issues identified by the Examination Planningfunction.2. A manager may direct an examiner to limit the scope of an examination. However, the manager must explain which i s

pursued and why.Note:Documentation will consist of an entry on the 5464, Case Chronology Record (CCR) initialed by the manager, which e:reasons for limiting the examination. If the discussion is lengthy, a separate workpaper should be indexed to the CCR.

3. Limited scope examinations generally include only classified issues and large, unusual and questionable items (LUIthe return or discovered during the examination. However, there is an expectation that examinations will be expandedwarrant. Additional issues in a limited scope examination will not be pursued without the manager's approval. Managerfor establishing procedures for indicating their written approval in the case file.4. In all examinations, the examiner should review the organizing documents to determine the organization's exempt purl

exempt purpose is not a classified issue, an analysis of the operational activities is not generally appropriate. Howevercourse of the examination it becomes apparent there are operational issues, the examination scope may be expanded5. The examiner must also establish on every case that the organization has filed all o ~ h e r reqUired Federal returns.6. In all limited scope examinations, the case file must include proper documentation concerning the scope of the examinpackage audit requirements. The cover sheet accompanying project code cases will constitute managerial approval fOIexamination, and must remain with the case file.

4.75.11.4.3 (08-01-2003)Internal Controls

1. Internal Controls are defined as the taxpayer's policies and procedures to identify, measure and safeguard busirand avoid material misstatements of financial information.

2. The lack of good internal controls may indicate the potential for diverted receipts, diverted assets, or other problems.Note:The lack of internal controls does not necessarily jeopardize exemption, but it may affect the scope of the examination

4.75.11.4.3.1 (08-01-2003)Evaluation of Internal Controls

1. Examiners should evaluate the existence and effectiveness of an organization's internal controls and expand or contrathe examination appropriately.2. In determining whether to rely on the organization's books and records, the examiner should consider the extent to whcontrol checks are utilized by the organization:

A. Transactions are recorded in the books and records in a timely manner;

Date post:	07-Apr-2018
Category:	Documents
Upload:	crew
View:	218 times
Download:	0 times

CREW: IRS: Regarding Investigation of 501(c)(3) Organizations: 12/3/2007 - IRS Response

Documents