Publication 557 |
2001 Tax Year |
Appeal Procedures
If an organization applies for tax-exempt status and receives an
adverse determination letter, the organization will be advised of its
right to protest the determination by requesting Appeals Office
consideration. 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, 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.
- 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, IRS Headquarters, 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 Headquarters may not be appealed to the Appeals Office for those
issues that were the subject of the technical advice.
Headquarters Consideration
If an application is referred to IRS Headquarters 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) of the Code,
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 (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 Headquarters
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 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 other than a private foundation under
section 509, or
- A private operating foundation under section
4942(j)(3).
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) of the Code,
- Is a private foundation as defined in section
4942(j)(3), or
- Is a public charity described in a part of
section 509 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.
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