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How To Amend A Tax Return

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How To Amend A Tax Return

How to amend a tax return 3. How to amend a tax return   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. How to amend a tax return Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. How to amend a tax return Certain contracts held by a charitable remainder trust. How to amend a tax return Excise Taxes. How to amend a tax return Indoor tanning services. How to amend a tax return Application for Recognition of ExemptionPolitical activity. How to amend a tax return Private delivery service. How to amend a tax return Amendments to organizing documents required. How to amend a tax return How to show reasonable action and good faith. How to amend a tax return Not acting reasonably and in good faith. How to amend a tax return Prejudicing the interest of the Government. How to amend a tax return Procedure for requesting extension. How to amend a tax return More information. How to amend a tax return Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. How to amend a tax return Grass roots expenditures. How to amend a tax return Lobbying nontaxable amount. How to amend a tax return Grass roots nontaxable amount. How to amend a tax return Organization that no longer qualifies. How to amend a tax return Tax on organization. How to amend a tax return Tax on managers. How to amend a tax return Taxes on organizations. How to amend a tax return Taxes on managers. How to amend a tax return Political expenditures. How to amend a tax return Correction of expenditure. How to amend a tax return Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. How to amend a tax return Religious. How to amend a tax return Charitable. How to amend a tax return Scientific. How to amend a tax return Testing for public safety. How to amend a tax return Literary. How to amend a tax return Educational. How to amend a tax return Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). How to amend a tax return The prevention of cruelty to children or animals. How to amend a tax return To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. How to amend a tax return A trust is a fund or foundation and will qualify. How to amend a tax return However, an individual or a partnership will not qualify. How to amend a tax return Examples. How to amend a tax return   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. How to amend a tax return Child care organizations. How to amend a tax return   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. How to amend a tax return Instrumentalities. How to amend a tax return   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). How to amend a tax return Examples of a qualifying instrumentality might include state schools, universities, or hospitals. How to amend a tax return However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. How to amend a tax return A state or municipality itself does not qualify for exemption. How to amend a tax return Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. How to amend a tax return Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. How to amend a tax return Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. How to amend a tax return Fundraising events. How to amend a tax return   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. How to amend a tax return This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. How to amend a tax return   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. How to amend a tax return If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. How to amend a tax return You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. How to amend a tax return See Disclosure of Quid Pro Quo Contributions in chapter 2. How to amend a tax return Exemption application not filed. How to amend a tax return   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. How to amend a tax return Separate fund—contributions that are deductible. How to amend a tax return   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. How to amend a tax return   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. How to amend a tax return A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. How to amend a tax return Personal benefit contracts. How to amend a tax return   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. How to amend a tax return   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. How to amend a tax return Certain annuity contracts. How to amend a tax return   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). How to amend a tax return Certain contracts held by a charitable remainder trust. How to amend a tax return   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. How to amend a tax return Excise tax. How to amend a tax return   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. How to amend a tax return The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. How to amend a tax return Excise Taxes. How to amend a tax return   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. How to amend a tax return Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. How to amend a tax return Indoor tanning services. How to amend a tax return   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. How to amend a tax return For more information, go to IRS. How to amend a tax return gov and select Affordable Care Act Tax Provisions. How to amend a tax return Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. How to amend a tax return For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. How to amend a tax return See the organization headings that follow for specific information your organization may need to provide. How to amend a tax return Form 1023. How to amend a tax return   Your organization must file its application for recognition of exemption on Form 1023. How to amend a tax return See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. How to amend a tax return Some organizations are not required to file Form 1023. How to amend a tax return See Organizations Not Required To File Form 1023, later. How to amend a tax return    Additional information to help you complete your application can be found online. How to amend a tax return Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. How to amend a tax return See Exemption Requirements - Section 501(c)(3) Organizations. How to amend a tax return   Form 1023 and accompanying statements must show that all of the following are true. How to amend a tax return The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. How to amend a tax return ) specified in the introduction to this chapter. How to amend a tax return No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. How to amend a tax return You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. How to amend a tax return The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. How to amend a tax return See Political activity, next, and Lobbying Expenditures , near the end of this chapter. How to amend a tax return Political activity. How to amend a tax return   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). How to amend a tax return Such participation or intervention includes the publishing or distributing of statements. How to amend a tax return   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. How to amend a tax return Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. How to amend a tax return Effective date of exemption. How to amend a tax return   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. How to amend a tax return These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. How to amend a tax return If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. How to amend a tax return Otherwise, exemption will be recognized only from the date of receipt. How to amend a tax return The date of receipt is the date of the U. How to amend a tax return S. How to amend a tax return postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. How to amend a tax return Private delivery service. How to amend a tax return   If a private delivery service designated by the IRS, rather than the U. How to amend a tax return S. How to amend a tax return Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. How to amend a tax return The following private delivery services have been designated by the IRS. How to amend a tax return DHL Express (DHL): DHL “Same Day” Service. How to amend a tax return Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. How to amend a tax return United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. How to amend a tax return M. How to amend a tax return , UPS Worldwide Express Plus, and UPS Worldwide Express. How to amend a tax return Amendments to organizing documents required. How to amend a tax return   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. How to amend a tax return If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. How to amend a tax return Extensions of time for filing. How to amend a tax return   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. How to amend a tax return Automatic 12-month extension. How to amend a tax return Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. How to amend a tax return To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. How to amend a tax return 9100-2. How to amend a tax return ” Discretionary extensions. How to amend a tax return An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. How to amend a tax return How to show reasonable action and good faith. How to amend a tax return   An organization acted reasonably and showed good faith if at least one of the following is true. How to amend a tax return The organization requests relief before its failure to file is discovered by the IRS. How to amend a tax return The organization failed to file because of intervening events beyond its control. How to amend a tax return The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. How to amend a tax return The organization reasonably relied upon the written advice of the IRS. How to amend a tax return The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. How to amend a tax return An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. How to amend a tax return Not acting reasonably and in good faith. How to amend a tax return   An organization has not acted reasonably and in good faith under the following circumstances. How to amend a tax return It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. How to amend a tax return It was informed of the requirement to file and related tax consequences, but chose not to file. How to amend a tax return It uses hindsight in requesting relief. How to amend a tax return The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. How to amend a tax return Prejudicing the interest of the Government. How to amend a tax return   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. How to amend a tax return Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. How to amend a tax return The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. How to amend a tax return The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. How to amend a tax return Procedure for requesting extension. How to amend a tax return   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. How to amend a tax return A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. How to amend a tax return Any documents relevant to the application. How to amend a tax return An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. How to amend a tax return If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. How to amend a tax return This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. How to amend a tax return ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. How to amend a tax return This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. How to amend a tax return The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. How to amend a tax return These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. How to amend a tax return ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. How to amend a tax return The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. How to amend a tax return The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. How to amend a tax return   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. How to amend a tax return Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. How to amend a tax return More information. How to amend a tax return   For more information about these procedures, see Regulations sections 301. How to amend a tax return 9100-1, 301. How to amend a tax return 9100-2, 301. How to amend a tax return 9100-3, Revenue Procedure 2013-4, section 6. How to amend a tax return 04, 2013-1 I. How to amend a tax return R. How to amend a tax return B. How to amend a tax return 126, and Revenue Procedure 2013-8, 2013-1 I. How to amend a tax return R. How to amend a tax return B. How to amend a tax return 237. How to amend a tax return See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. How to amend a tax return Notification from the IRS. How to amend a tax return   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. How to amend a tax return Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. How to amend a tax return These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. How to amend a tax return Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). How to amend a tax return These organizations are exempt automatically if they meet the requirements of section 501(c)(3). How to amend a tax return Filing Form 1023 to establish exemption. How to amend a tax return   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. How to amend a tax return By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. How to amend a tax return A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. How to amend a tax return Private foundations. How to amend a tax return   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. How to amend a tax return Gross receipts test. How to amend a tax return   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. How to amend a tax return   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. How to amend a tax return For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. How to amend a tax return The organization must file Form 1023 within 90 days after the end of its second tax year. How to amend a tax return   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. How to amend a tax return However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. How to amend a tax return Example. How to amend a tax return   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. How to amend a tax return It was incorporated on January 1, 2009, and files returns on a calendar-year basis. How to amend a tax return It did not file a Form 1023. How to amend a tax return The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. How to amend a tax return Therefore, it did not have to file Form 1023 and is exempt for those years. How to amend a tax return However, for 2010, 2011, and 2012 the total gross receipts were $15,900. How to amend a tax return Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. How to amend a tax return If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. How to amend a tax return The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. How to amend a tax return   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. How to amend a tax return See the procedures for this extension discussed earlier. How to amend a tax return Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. How to amend a tax return This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. How to amend a tax return Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. How to amend a tax return These conditions for exemption are referred to as the organizational test. How to amend a tax return Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. How to amend a tax return Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). How to amend a tax return The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. How to amend a tax return Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. How to amend a tax return Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. How to amend a tax return In interpreting an organization's articles, the law of the state where the organization was created is controlling. How to amend a tax return If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. How to amend a tax return The following are examples illustrating the organizational test. How to amend a tax return Example 1. How to amend a tax return Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). How to amend a tax return These articles appropriately limit the organization's purposes. How to amend a tax return The organization meets the organizational test. How to amend a tax return Example 2. How to amend a tax return An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. How to amend a tax return The organization will not be properly limited as to its purposes since all research is not scientific. How to amend a tax return The organization does not meet the organizational test. How to amend a tax return Example 3. How to amend a tax return An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). How to amend a tax return The organization meets the organizational test. How to amend a tax return Example 4. How to amend a tax return If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. How to amend a tax return Example 5. How to amend a tax return If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. How to amend a tax return On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. How to amend a tax return Example 6. How to amend a tax return If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. How to amend a tax return Such purposes are vague and may be accomplished other than in an exempt manner. How to amend a tax return Example 7. How to amend a tax return A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. How to amend a tax return A hospital may or may not be exempt depending on the manner in which it is operated. How to amend a tax return Example 8. How to amend a tax return An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. How to amend a tax return Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. How to amend a tax return This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. How to amend a tax return If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. How to amend a tax return Dedication. How to amend a tax return   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. How to amend a tax return Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. How to amend a tax return Distribution. How to amend a tax return   Revenue Procedure 82-2, 1982-1 C. How to amend a tax return B. How to amend a tax return 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. How to amend a tax return The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. How to amend a tax return   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. How to amend a tax return Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. How to amend a tax return Sample articles of organization. How to amend a tax return   See sample articles of organization in the Appendix in the back of this publication. How to amend a tax return Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. How to amend a tax return In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. How to amend a tax return You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. How to amend a tax return If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. How to amend a tax return See also Private Schools , discussed later. How to amend a tax return Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. How to amend a tax return Advocacy of a position. How to amend a tax return   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. How to amend a tax return The mere presentation of unsupported opinion is not educational. How to amend a tax return Method not educational. How to amend a tax return   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). How to amend a tax return The following factors may indicate that the method is not educational. How to amend a tax return The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. How to amend a tax return The facts that purport to support the viewpoint are distorted. How to amend a tax return The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. How to amend a tax return The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. How to amend a tax return   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. How to amend a tax return Qualifying organizations. How to amend a tax return   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. How to amend a tax return College book stores, cafeterias, restaurants, etc. How to amend a tax return   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. How to amend a tax return Alumni association. How to amend a tax return   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. How to amend a tax return If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . How to amend a tax return Athletic organization. How to amend a tax return   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. How to amend a tax return If it is not so engaged, your organization may be exempt as a social club described in chapter 4. How to amend a tax return Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. How to amend a tax return If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. How to amend a tax return Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. How to amend a tax return The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. How to amend a tax return (This information also must be projected, so far as may be feasible, for the next academic year. How to amend a tax return ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. How to amend a tax return A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. How to amend a tax return A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. How to amend a tax return The public school district and county in which the school is located. How to amend a tax return How to determine racial composition. How to amend a tax return   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. How to amend a tax return Nevertheless, a statement of the method by which the racial composition was determined must be supplied. How to amend a tax return The identity of individual students or members of the faculty and administrative staff should not be included with this information. How to amend a tax return   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. How to amend a tax return Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. How to amend a tax return Also, the school must circulate information that clearly states the school's admission policies. How to amend a tax return A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. How to amend a tax return The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. How to amend a tax return The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. How to amend a tax return Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. How to amend a tax return A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. How to amend a tax return A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. How to amend a tax return Policy statement. How to amend a tax return   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. How to amend a tax return Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. How to amend a tax return Publicity requirement. How to amend a tax return   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. How to amend a tax return Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. How to amend a tax return To satisfy this requirement, the school must use one of the following two methods. How to amend a tax return Method one. How to amend a tax return   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. How to amend a tax return Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. How to amend a tax return When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. How to amend a tax return If this method is used, the notice must meet the following printing requirements. How to amend a tax return It must appear in a section of the newspaper likely to be read by prospective students and their families. How to amend a tax return It must occupy at least 3 column inches. How to amend a tax return It must have its title printed in at least 12 point bold face type. How to amend a tax return It must have the remaining text printed in at least 8 point type. How to amend a tax return The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. How to amend a tax return It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. How to amend a tax return   Method two. How to amend a tax return   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. How to amend a tax return If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. How to amend a tax return In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. How to amend a tax return The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. How to amend a tax return Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. How to amend a tax return Exceptions. How to amend a tax return   The publicity requirements will not apply in the following situations. How to amend a tax return First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. How to amend a tax return These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. How to amend a tax return If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. How to amend a tax return Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . How to amend a tax return   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. How to amend a tax return The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. How to amend a tax return   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. How to amend a tax return Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. How to amend a tax return   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. How to amend a tax return The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. How to amend a tax return In this regard, it is each school's responsibility to determine whether either of the exceptions applies. How to amend a tax return Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. How to amend a tax return Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. How to amend a tax return Facilities and programs. How to amend a tax return   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. How to amend a tax return Scholarship and loan programs. How to amend a tax return   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. How to amend a tax return This must be known throughout the general community being served by the school and should be referred to in its publicity. How to amend a tax return Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. How to amend a tax return Certification. How to amend a tax return   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. How to amend a tax return   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. How to amend a tax return Recordkeeping requirements. How to amend a tax return With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. How to amend a tax return Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. How to amend a tax return Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. How to amend a tax return Copies of all materials used by or on behalf of the school to solicit contributions. How to amend a tax return Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. How to amend a tax return (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. How to amend a tax return ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. How to amend a tax return However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. How to amend a tax return The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. How to amend a tax return Similarly, the IRS does not require a school to keep records prohibited under state or federal law. How to amend a tax return Exceptions. How to amend a tax return   The school does not have to independently maintain these records for IRS use if both of the following are true. How to amend a tax return Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. How to amend a tax return The school maintains copies of these reports from which this information is readily obtainable. How to amend a tax return If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. How to amend a tax return Failure to maintain records. How to amend a tax return   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. How to amend a tax return Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. How to amend a tax return However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. How to amend a tax return Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). How to amend a tax return Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. How to amend a tax return Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. How to amend a tax return Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. How to amend a tax return The rest of this section contains a description of the information to be provided by certain specific organizations. How to amend a tax return This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. How to amend a tax return Each of the following organizations must submit the information described. How to amend a tax return Charitable organization supporting education. How to amend a tax return   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. How to amend a tax return Scholarships. How to amend a tax return   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. How to amend a tax return Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. How to amend a tax return How and by whom the recipients are or will be selected. How to amend a tax return If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. How to amend a tax return If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. How to amend a tax return A copy of the scholarship application form and any brochures or literature describing the scholarship program. How to amend a tax return Hospital. How to amend a tax return   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. How to amend a tax return   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. How to amend a tax return You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. How to amend a tax return Submit also an appraisal showing the fair rental value of the rented space. How to amend a tax return Clinic. How to amend a tax return   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. How to amend a tax return Home for the aged. How to amend a tax return   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. How to amend a tax return Community nursing bureau. How to amend a tax return   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. How to amend a tax return Organization providing loans. How to amend a tax return   If you make, or will make, loans for charitable and educational purposes, submit the following information. How to amend a tax return An explanation of the circumstances under which such loans are, or will be, made. How to amend a tax return Criteria for selection, including the rules of eligibility. How to amend a tax return How and by whom the recipients are or will be selected. How to amend a tax return Manner of repayment of the loan. How to amend a tax return Security required, if any. How to amend a tax return Interest charged, if any, and when payable. How to amend a tax return Copies in duplicate of the loan application and any brochures or literature describing the loan program. How to amend a tax return Public-interest law firms. How to amend a tax return   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. How to amend a tax return How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. How to amend a tax return Whether the organization will accept fees for its services. How to amend a tax return A description of the cases litigated or to be litigated and how they benefit the public generally. How to amend a tax return Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. How to amend a tax return Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. How to amend a tax return Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. How to amend a tax return Acceptance of attorneys' fees. How to amend a tax return   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. How to amend a tax return Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. How to amend a tax return   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. How to amend a tax return All fee awards must be paid to the organization and not to its individual staff attorneys. How to amend a tax return Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. How to amend a tax return Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. How to amend a tax return   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. How to amend a tax return   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. How to amend a tax return Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. How to amend a tax return That the particular religious beliefs of the organization are truly and sincerely held. How to amend a tax return That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. How to amend a tax return Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. How to amend a tax return If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. How to amend a tax return Churches. How to amend a tax return   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. How to amend a tax return In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. How to amend a tax return   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. How to amend a tax return Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. How to amend a tax return The IRS considers the facts and circumstances of each organization applying for church status. How to amend a tax return Convention or association of churches. How to amend a tax return   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. How to amend a tax return Integrated auxiliaries. How to amend a tax return   An organization is an integrated auxiliary of a church if all the following are true. How to amend a tax return The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). How to amend a tax return It is affiliated with a church or a convention or association of churches. How to amend a tax return It is internally supported. How to amend a tax return An organization is internally supported unless both of the following are true. How to amend a tax return It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). How to amend a tax return It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. How to amend a tax return Special rule. How to amend a tax return   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. How to amend a tax return   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. How to amend a tax return   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. How to amend a tax return Scientific Organizations You must show that your organization's research will be carried on in the public interest. How to amend a tax return Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. How to amend a tax return Aiding in the scientific education of college or university students. How to amend a tax return Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
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The How To Amend A Tax Return

How to amend a tax return Publication 556 - Main Content Table of Contents Examination of ReturnsIf Your Return Is Examined Interest Netting Abatement of Interest Due to Error or Delay by the IRS Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Offer in Compromise Appeal RightsAppeal Within the IRS Appeals to the Courts Refund or Credit of Overpayments Before Final Determination Claims for RefundTime for Filing a Claim for Refund Limit on Amount of Refund Processing Claims for Refund Reduced Refund How To Get Tax Help Examination of Returns Your return may be examined for a variety of reasons, and the examination may take place in any one of several ways. How to amend a tax return After the examination, if any changes to your tax are proposed, you can either agree with those changes and pay any additional tax you may owe, or you can disagree with the changes and appeal the decision. How to amend a tax return Examination selection criteria. How to amend a tax return   Your return may be selected for examination on the basis of computer scoring. How to amend a tax return A computer program called the Discriminant Inventory Function System (DIF) assigns a numeric score to each individual and some corporate tax returns after they have been processed. How to amend a tax return If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability. How to amend a tax return   Your return may also be selected for examination on the basis of information received from third-party documentation, such as Forms 1099 and W-2, that does not match the information reported on your return. How to amend a tax return Or, your return may be selected to address both the questionable treatment of an item and to study the behavior of similar taxpayers (a market segment) in handling a tax issue. How to amend a tax return   In addition, your return may be selected as a result of information received from other sources on potential noncompliance with the tax laws or inaccurate filing. How to amend a tax return This information can come from a number of sources, including newspapers, public records, and individuals. How to amend a tax return The information is evaluated for reliability and accuracy before it is used as the basis of an examination or investigation. How to amend a tax return Notice of IRS contact of third parties. How to amend a tax return    The IRS must give you reasonable notice before contacting other persons about your tax matters. How to amend a tax return You must be given reasonable notice in advance that, in examining or collecting your tax liability, the IRS may contact third parties such as your neighbors, banks, employers, or employees. How to amend a tax return The IRS must also give you notice of specific contacts by providing you with a record of persons contacted on both a periodic basis and upon your request. How to amend a tax return    This provision does not apply: To any pending criminal investigation, When providing notice would jeopardize collection of any tax liability, Where providing notice may result in reprisal against any person, or When you authorized the contact. How to amend a tax return Taxpayer Advocate Service. How to amend a tax return   The Taxpayer Advocate Service is an independent organization within the IRS whose goal is to help taxpayers resolve problems with the IRS. How to amend a tax return If you have an ongoing issue with the IRS that has not been resolved through normal processes, or your problems with the IRS are causing financial difficulty, contact the Taxpayer Advocate Service. How to amend a tax return    Before contacting the Taxpayer Advocate Service, you should first discuss any problem with a supervisor. How to amend a tax return Your local Taxpayer Advocate will assist you if you are unable to resolve the problem with the supervisor. How to amend a tax return   For more information, see Publication 1546. How to amend a tax return See How To Get Tax Help , near the end of this publication, for more information about contacting the Taxpayer Advocate Service. How to amend a tax return Comments from small business. How to amend a tax return    The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards have been established to receive comments from small business about federal agency enforcement actions. How to amend a tax return The Ombudsman will annually evaluate the enforcement activities of each agency and rate their responsiveness to small business. How to amend a tax return If you wish to comment on the enforcement actions of the IRS, you can take any of the following steps. How to amend a tax return Fax your comments to 1-202-481-5719. How to amend a tax return Write to the following address: Office of the National Ombudsman U. How to amend a tax return S. How to amend a tax return Small Business Administration 409 3rd Street, SW Washington, DC 20416 Call 1-888-734-3247. How to amend a tax return Send an email to ombudsman@sba. How to amend a tax return gov. How to amend a tax return File a comment or complaint online at www. How to amend a tax return sba. How to amend a tax return gov/ombudsman. How to amend a tax return If Your Return Is Examined Some examinations are handled entirely by mail. How to amend a tax return Examinations not handled by mail can take place in your home, your place of business, an Internal Revenue office, or the office of your authorized representative. How to amend a tax return If the time, place, or method is not convenient for you, the examiner will try to work out something more suitable. How to amend a tax return However, the IRS makes the final determination of when, where, and how the examination will take place. How to amend a tax return Throughout the examination, you can act on your own behalf or have someone represent you or accompany you. How to amend a tax return If you filed a joint return, either you or your spouse, or both, can meet with the IRS. How to amend a tax return The person representing you can be any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled agent (a person enrolled to practice before the IRS), an enrolled actuary, or the person who prepared the return and signed it as the preparer. How to amend a tax return If you want someone to represent you in your absence, you must furnish that person with proper written authorization. How to amend a tax return You can use Form 2848 or any other properly written authorization. How to amend a tax return If you want to consult with an attorney, a certified public accountant, an enrolled agent, or any other person permitted to represent a taxpayer during an interview for examining a tax return or collecting tax, you should make arrangements with that person to be available for the interview. How to amend a tax return In most cases, the IRS must suspend the interview and reschedule it. How to amend a tax return The IRS cannot suspend the interview if you are there because of an administrative summons. How to amend a tax return Third party authorization. How to amend a tax return   If you checked the box in the signature area of your income tax return (Form 1040, Form 1040A, or Form 1040EZ) to allow the IRS to discuss your return with another person (a third party designee), this authorization does not replace Form 2848. How to amend a tax return The box you checked on your return only authorizes the other person to receive information about the processing of your return and the status of your refund during the period your return is being processed. How to amend a tax return For more information, see the instructions for your return. How to amend a tax return Confidentiality privilege. How to amend a tax return   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. How to amend a tax return   Confidential communications are those that: Advise you on tax matters within the scope of the practitioner's authority to practice before the IRS, Would be confidential between an attorney and you, and Relate to noncriminal tax matters before the IRS, or Relate to noncriminal tax proceedings brought in federal court by or against the United States. How to amend a tax return   In the case of communications in connection with the promotion of a person's participation in a tax shelter, the confidentiality privilege does not apply to written communications between a federally authorized practitioner and that person, any director, officer, employee, agent, or representative of that person, or any other person holding a capital or profits interest in that person. How to amend a tax return   A tax shelter is any entity, plan, or arrangement, a significant purpose of which is the avoidance or evasion of income tax. How to amend a tax return Recordings. How to amend a tax return    You can make an audio recording of the examination interview. How to amend a tax return Your request to record the interview should be made in writing. How to amend a tax return You must notify the examiner 10 days in advance and bring your own recording equipment. How to amend a tax return The IRS also can record an interview. How to amend a tax return If the IRS initiates the recording, you must be notified 10 days in advance and you can get a copy of the recording at your expense. How to amend a tax return Transfers to another area. How to amend a tax return    Generally, your return is examined in the area where you live. How to amend a tax return But if your return can be examined more quickly and conveniently in another area, such as where your books and records are located, you can ask to have the case transferred to that area. How to amend a tax return Repeat examinations. How to amend a tax return    The IRS tries to avoid repeat examinations of the same items, but sometimes this happens. How to amend a tax return If your tax return was examined for the same items in either of the 2 previous years and no change was proposed to your tax liability, please contact the IRS as soon as possible to see if the examination should be discontinued. How to amend a tax return The Examination An examination usually begins when you are notified that your return has been selected. How to amend a tax return The IRS will tell you which records you will need. How to amend a tax return The examination can proceed more easily if you gather your records before any interview. How to amend a tax return Any proposed changes to your return will be explained to you or your authorized representative. How to amend a tax return It is important that you understand the reasons for any proposed changes. How to amend a tax return You should not hesitate to ask about anything that is unclear to you. How to amend a tax return The IRS must follow the tax laws set forth by Congress in the Internal Revenue Code. How to amend a tax return The IRS also follows Treasury Regulations, other rules, and procedures that were written to administer the tax laws and court decisions. How to amend a tax return However, the IRS can lose cases that involve taxpayers with the same issue and still apply its interpretation of the law to your situation. How to amend a tax return Most taxpayers agree to changes proposed by examiners, and the examinations are closed at this level. How to amend a tax return If you do not agree, you can appeal any proposed change by following the procedures provided to you by the IRS. How to amend a tax return A more complete discussion of appeal rights is found later under Appeal Rights . How to amend a tax return If You Agree If you agree with the proposed changes, you can sign an agreement form and pay any additional tax you may owe. How to amend a tax return You must pay interest on any additional tax. How to amend a tax return If you pay when you sign the agreement, the interest is generally figured from the due date of your return (excluding any extension of time to file) to the date of your payment. How to amend a tax return If you do not pay the additional tax when you sign the agreement, you will receive a bill that includes interest. How to amend a tax return If you pay the amount due within 10 business days of the billing date, you will not have to pay more interest or penalties. How to amend a tax return This period is extended to 21 calendar days if the amount due is less than $100,000. How to amend a tax return If you are due a refund, you will receive it sooner if you sign the agreement form. How to amend a tax return You will be paid interest on the refund. How to amend a tax return If the IRS accepts your tax return as filed, you will receive a letter in a few weeks stating that the examiner proposed no changes to your return. How to amend a tax return You should keep this letter with your tax records. How to amend a tax return If You Do Not Agree If you do not agree with the proposed changes, the examiner will explain your appeal rights. How to amend a tax return If your examination takes place in an IRS office, you can request an immediate meeting with the examiner's supervisor to explain your position. How to amend a tax return If an agreement is reached, your case will be closed. How to amend a tax return If you cannot reach an agreement with the supervisor at this meeting, or if the examination took place outside of an IRS office, the examiner will write up your case explaining your position and the IRS's position. How to amend a tax return The examiner will forward your case for processing. How to amend a tax return Fast track mediation. How to amend a tax return   The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from: Examinations (audits), Offers in compromise, Trust fund recovery penalties, and Other collection actions. How to amend a tax return   Most cases that are not docketed in any court qualify for fast track mediation. How to amend a tax return Mediation can take place at a conference you request with a supervisor, or later. How to amend a tax return The process involves an Appeals Officer who has been trained in mediation. How to amend a tax return You may represent yourself at the mediation session, or someone else can act as your representative. How to amend a tax return For more information, see Publication 3605. How to amend a tax return 30-day letter and 90-day letter. How to amend a tax return   Within a few weeks after your closing conference with the examiner and/or supervisor, you will receive a package with: A letter (known as a 30-day letter) notifying you of your right to appeal the proposed changes within 30 days, A copy of the examination report explaining the examiner's proposed changes, An agreement or waiver form, and A copy of Publication 5. How to amend a tax return You generally have 30 days from the date of the 30-day letter to tell the IRS whether you will accept or appeal the proposed changes. How to amend a tax return The letter will explain what steps you should take, depending on which action you choose. How to amend a tax return Be sure to follow the instructions carefully. How to amend a tax return Appeal Rights are explained later. How to amend a tax return 90-day letter. How to amend a tax return   If you do not respond to the 30-day letter, or if you later do not reach an agreement with an Appeals Officer, the IRS will send you a 90-day letter, which is also known as a notice of deficiency. How to amend a tax return You will have 90 days (150 days if it is addressed to you outside the United States) from the date of this notice to file a petition with the Tax Court. How to amend a tax return Filing a petition with the Tax Court is discussed later under Appeals to the Courts and Tax Court . How to amend a tax return The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. How to amend a tax return Suspension of interest and penalties. How to amend a tax return   Generally, the IRS has 3 years from the date you filed your return (or the date the return was due, if later) to assess any additional tax. How to amend a tax return However, if you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you, stating your liability and the basis for that liability, within a 36-month period beginning on the later of: The date on which you filed your tax return, or The due date (without extensions) of your tax return. How to amend a tax return If the IRS mails a notice after the 36-month period, interest and certain penalties applicable to the suspension period will be suspended. How to amend a tax return   The suspension period begins the day after the close of the 36-month period and ends 21 days after the IRS mails a notice to you stating your liability and the basis for that liability. How to amend a tax return Also, the suspension period applies separately to each notice stating your liability and the basis for that liability received by you. How to amend a tax return    The suspension does not apply to a: Failure-to-pay penalty, Fraudulent tax return, Penalty, interest, addition to tax, or additional amount with respect to any tax liability shown on your return or with respect to any gross misstatement, Penalty, interest, addition to tax, or additional amount with respect to any reportable transaction that is not adequately disclosed or any listed transaction, or Criminal penalty. How to amend a tax return Seeking relief from improperly assessed interest. How to amend a tax return   You can seek relief if interest is assessed for periods during which interest should have been suspended because the IRS did not mail a notice to you in a timely manner. How to amend a tax return   If you believe that interest was assessed with respect to a period during which interest should have been suspended, submit Form 843, writing “Section 6404(g) Notification” at the top of the form, with the IRS Service Center where you filed your return. How to amend a tax return The IRS will review the Form 843 and notify you whether interest will be abated. How to amend a tax return If the IRS does not abate interest, you can pay the disputed interest assessment and file a claim for refund. How to amend a tax return If your claim is denied or not acted upon within 6 months from the date you filed it, you can file suit for a refund in your United States District Court or in the United States Court of Federal Claims. How to amend a tax return   If you believe that an IRS officer or employee has made an unreasonable error or delay in performing a ministerial or managerial act (discussed later under Abatement of Interest Due to Error or Delay by the IRS ), file Form 843 with the IRS Service Center where you filed the tax return. How to amend a tax return If the IRS denies your claim, the Tax Court may be able to review that determination. How to amend a tax return See Tax Court can review failure to abate interest later under Abatement of Interest Due to Error or Delay by the IRS . How to amend a tax return If you later agree. How to amend a tax return    If you agree with the examiner's changes after receiving the examination report or the 30-day letter, sign and return either the examination report or the waiver form. How to amend a tax return Keep a copy for your records. How to amend a tax return You can pay any additional amount you owe without waiting for a bill. How to amend a tax return Include interest on the additional tax at the applicable rate. How to amend a tax return This interest rate is usually for the period from the due date of the return (excluding any extension of time to file) to the date of payment. How to amend a tax return The examiner can tell you the interest rate(s) or help you figure the amount. How to amend a tax return   You must pay interest on penalties and additions to tax for failing to file returns, for overstating valuations, for understating valuations on estate and gift tax returns, and for substantially understating tax liability. How to amend a tax return Interest is generally figured from the date (including extensions) the tax return is required to be filed to the date you pay the penalty and/or additions to tax. How to amend a tax return   If you pay the amount due within 10 business days after the date of notice and demand for immediate payment, you will not have to pay any additional penalties and interest. How to amend a tax return This period is extended to 21 calendar days if the amount due is less than $100,000. How to amend a tax return How To Stop Interest From Accruing If you think that you will owe additional tax at the end of the examination, you can stop the further accrual of interest by sending money to the IRS to cover all or part of the amount you think you will owe. How to amend a tax return Interest on part or all of any amount you owe will stop accruing on the date the IRS receives your money. How to amend a tax return You can send an amount either in the form of a deposit in the nature of a cash bond or as a payment of tax. How to amend a tax return Both a deposit and a payment stop any further accrual of interest. How to amend a tax return However, making a deposit or payment will stop the accrual of interest on only the amount you sent. How to amend a tax return Because of compounding rules, interest will continue to accrue on accrued interest, even though you have paid the underlying tax. How to amend a tax return To stop the accrual of interest on both tax and interest, you must make a deposit or payment for both the tax and interest that has accrued as of the date of deposit or payment. How to amend a tax return Payment or Deposit Deposits differ from payments in two ways: You can have all or part of your deposit returned to you without filing for a refund. How to amend a tax return However, if you request and receive your deposit and the IRS later assesses a deficiency for that period and type of tax, interest will be figured as if the funds were never on deposit. How to amend a tax return Also, your deposit will not be returned if one of the following situations applies: The IRS assesses a tax liability. How to amend a tax return The IRS determines that, by returning the deposit, it may not be able to collect a future deficiency. How to amend a tax return The IRS determines that the deposit should be applied against another tax liability. How to amend a tax return Deposits returned to you will include interest based on the Federal short-term rate determined under section 6621(b). How to amend a tax return The deposit returned will be treated as a tax payment to the extent of the disputed tax. How to amend a tax return A disputed tax means the amount of tax specified at the time of deposit as a reasonable estimate of the maximum amount of any tax owed by you, such as the deficiency proposed in the 30-day letter. How to amend a tax return Notice not mailed. How to amend a tax return    If you send money before the IRS mails you a notice of deficiency, you can ask the IRS to treat it as a deposit. How to amend a tax return You must make your request in writing. How to amend a tax return   If, after being notified of a proposed liability but before the IRS mails you a notice of deficiency, you send an amount large enough to cover the proposed liability, it will be considered a payment unless you request in writing that it be treated as a deposit. How to amend a tax return Keep copies of all correspondence you send to the IRS. How to amend a tax return   If the amount you send is at least as much as the proposed liability and you do not request that it be treated as a deposit, the IRS will not send you a notice of deficiency. How to amend a tax return If you do not receive a notice of deficiency, you cannot take your case to the Tax Court. How to amend a tax return See Tax Court , later under Appeal Rights . How to amend a tax return Notice mailed. How to amend a tax return    If, after the IRS mails the notice of deficiency, you send money without written instructions, it will be treated as a payment. How to amend a tax return You will still be able to petition the Tax Court. How to amend a tax return   If you send money after receiving a notice of deficiency and you have specified in writing that it is a “deposit in the nature of a cash bond,” the IRS will treat it as a deposit if you send it before either: The close of the 90-day or 150-day period for filing a petition with the Tax Court to appeal the deficiency, or The date the Tax Court decision is final, if you have filed a petition. How to amend a tax return Using a Deposit To Pay the Tax If you agree with the examiner's proposed changes after the examination, your deposit will be applied against any amount you may owe. How to amend a tax return The IRS will not mail you a notice of deficiency and you will not have the right to take your case to the Tax Court. How to amend a tax return If you do not agree to the full amount of the deficiency after the examination, the IRS will mail you a notice of deficiency. How to amend a tax return Your deposit will be applied against the proposed deficiency unless you write to the IRS before the end of the 90-day or 150-day period stating that you still want the money to be treated as a deposit. How to amend a tax return You will still have the right to take your case to the Tax Court. How to amend a tax return Installment Agreement Request You can request a monthly installment plan if you cannot pay the full amount you owe. How to amend a tax return To be valid, your request must be approved by the IRS. How to amend a tax return However, if you owe $10,000 or less in tax and you meet certain other criteria, the IRS must accept your request. How to amend a tax return Before you request an installment agreement, you should consider other less costly alternatives, such as a bank loan. How to amend a tax return You will continue to be charged interest and penalties on the amount you owe until it is paid in full. How to amend a tax return Unless your income is below a certain level, the fee for an approved installment agreement has increased to $105 ($52 if you make your payments by electronic funds withdrawal). How to amend a tax return If your income is below a certain level, you may qualify to pay a reduced fee of $43. How to amend a tax return For more information about installment agreements, see Form 9465, Installment Agreement Request. How to amend a tax return Interest Netting If you owe interest to the IRS on an underpayment for the same period the IRS owes you interest on an overpayment, the IRS will figure interest on the underpayment and overpayment at the same interest rate (up to the amount of the overpayment). How to amend a tax return As a result, the net rate is zero for that period. How to amend a tax return Abatement of Interest Due to Error or Delay by the IRS The IRS may abate (reduce) the amount of interest you owe if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act (discussed later). How to amend a tax return Only the amount of interest on income, estate, gift, generation-skipping, and certain excise taxes can be reduced. How to amend a tax return The amount of interest will not be reduced if you or anyone related to you contributed significantly to the error or delay. How to amend a tax return Also, the interest will be reduced only if the error or delay happened after the IRS contacted you in writing about the deficiency or payment on which the interest is based. How to amend a tax return An audit notification letter is such a contact. How to amend a tax return The IRS cannot reduce the amount of interest due to a general administrative decision, such as a decision on how to organize the processing of tax returns. How to amend a tax return Ministerial act. How to amend a tax return    This is a procedural or mechanical act, not involving the exercise of judgment or discretion, during the processing of a case after all prerequisites (for example, conferences and review by supervisors) have taken place. How to amend a tax return A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act. How to amend a tax return Example 1. How to amend a tax return You move from one state to another before the IRS selects your tax return for examination. How to amend a tax return A letter stating that your return has been selected is sent to your old address and then forwarded to your new address. How to amend a tax return When you get the letter, you respond with a request that the examination be transferred to the area office closest to your new address. How to amend a tax return The examination group manager approves your request. How to amend a tax return After your request has been approved, the transfer is a ministerial act. How to amend a tax return The IRS can reduce the interest because of any unreasonable delay in transferring the case. How to amend a tax return Example 2. How to amend a tax return An examination of your return reveals tax due for which a notice of deficiency (90-day letter) will be issued. How to amend a tax return After you and the IRS discuss the issues, the notice is prepared and reviewed. How to amend a tax return After the review process, issuing the notice of deficiency is a ministerial act. How to amend a tax return If there is an unreasonable delay in sending the notice of deficiency to you, the IRS can reduce the interest resulting from the delay. How to amend a tax return Managerial act. How to amend a tax return    This is an administrative act during the processing of a case that involves the loss of records or the exercise of judgment or discretion concerning the management of personnel. How to amend a tax return A decision concerning the proper application of federal tax law (or other federal or state law) is not a managerial act. How to amend a tax return Example. How to amend a tax return A revenue agent is examining your tax return. How to amend a tax return During the middle of the examination, the agent is sent to an extended training course. How to amend a tax return The agent's supervisor decides not to reassign your case, so the work is unreasonably delayed until the agent returns. How to amend a tax return Interest from the unreasonable delay can be abated since both the decision to send the agent to the training class and not to reassign the case are managerial acts. How to amend a tax return How to request abatement of interest. How to amend a tax return    You request an abatement (reduction) of interest on Form 843. How to amend a tax return You should file the claim with the IRS Service Center where you filed the tax return that was affected by the error or delay. How to amend a tax return   If you have already paid the interest and you would like a credit or refund of interest paid, you must file Form 843 within 3 years from the date you filed your original return or 2 years from the date you paid the interest, whichever is later. How to amend a tax return If you have not paid any of the interest, these time limitations for filing Form 843 do not apply. How to amend a tax return   Generally, you should file a separate Form 843 for each tax period and each type of tax. How to amend a tax return However, complete only one Form 843 if the interest is from an IRS error or delay that affected your tax for more than one tax period or for more than one type of tax (for example, where 2 or more tax years were being examined). How to amend a tax return   If your request for abatement of interest is denied, you can appeal the decision to the IRS Appeals Office. How to amend a tax return Tax Court can review failure to abate interest. How to amend a tax return    The Tax Court can review the IRS's refusal to abate (reduce) interest if all of the following requirements are met: You filed a request for abatement of interest (Form 843) with the IRS after July 30,1996. How to amend a tax return The IRS has mailed you a notice of final determination or a notice of disallowance. How to amend a tax return You file a petition with the Tax Court within 180 days of the mailing of the notice of final determination or the notice of disallowance. How to amend a tax return   The following requirements must also be met: For individual and estate taxpayers — your net worth must not exceed $2 million as of the filing date of your petition for review. How to amend a tax return For this purpose, individuals filing a joint return shall be treated as separate individuals. How to amend a tax return For charities and certain cooperatives — you must not have more than 500 employees as of the filing date of your petition for review. How to amend a tax return For all other taxpayers — your net worth must not exceed $7 million, and you must not have more than 500 employees as of the filing date of your petition for review. How to amend a tax return Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions If you are (or were) affected by a Presidentially declared disaster occurring after 1996 or a terrorist or military action occurring after September 10, 2001, the IRS may abate (reduce) the amount of interest you owe on certain taxes. How to amend a tax return The IRS may abate interest for the period of any additional time to file or pay that the IRS provides on account of the disaster or the terrorist or military action. How to amend a tax return The IRS will issue a notice or news release indicating who are affected taxpayers and stating the period of relief. How to amend a tax return If you are eligible for relief from interest, but were charged interest for the period of relief, the IRS may retroactively abate your interest. How to amend a tax return To the extent possible, the IRS can take the following actions: Make appropriate adjustments to your account. How to amend a tax return Notify you when the adjustments are made. How to amend a tax return Refund any interest paid by you where appropriate. How to amend a tax return For more information on disaster area losses, see Disaster Area Losses in Publication 547. How to amend a tax return For more information on other tax relief for victims of terrorist attacks, see Publication 3920. How to amend a tax return Offer in Compromise In certain circumstances, the IRS will allow you to pay less than the full amount you owe. How to amend a tax return If you think you may qualify, you should submit your offer by filing Form 656, Offer in Compromise. How to amend a tax return The IRS may accept your offer for any of the following reasons: There is doubt about the amount you owe (or whether you owe it). How to amend a tax return There is doubt as to whether you can pay the amount you owe based on your financial situation. How to amend a tax return An economic hardship would result if you had to pay the full amount owed. How to amend a tax return Your case presents compelling reasons that the IRS determines are a sufficient basis for compromise. How to amend a tax return If your offer is rejected, you have 30 days to ask the Appeals Office of the IRS to reconsider your offer. How to amend a tax return The IRS offers fast track mediation services to help taxpayers resolve many issues including a dispute regarding an offer in compromise. How to amend a tax return For more information, see Publication 3605. How to amend a tax return Generally, if you submit an offer in compromise, the IRS will delay certain collection activities. How to amend a tax return The IRS usually will not levy (take) your property to settle your tax bill during the following periods: While the IRS is evaluating your offer in compromise. How to amend a tax return The 30 days immediately after the offer is rejected. How to amend a tax return While your timely-filed appeal is being considered by Appeals. How to amend a tax return Also, if the IRS rejects your original offer and you submit a revised offer within 30 days of the rejection, the IRS generally will not levy your property while it considers your revised offer. How to amend a tax return For more information about submitting an offer in compromise, see Form 656. How to amend a tax return Appeal Rights Because people sometimes disagree on tax matters, the IRS has an appeals system. How to amend a tax return Most differences can be settled within this system without expensive and time-consuming court trials. How to amend a tax return However, your reasons for disagreeing must come within the scope of the tax laws. How to amend a tax return For example, you cannot appeal your case based only on moral, religious, political, constitutional, conscientious, or similar grounds. How to amend a tax return In most instances, you may be eligible to take your case to court if you do not reach an agreement at your appeals conference, or if you do not want to appeal your case to the IRS Office of Appeals. How to amend a tax return See Appeals to the Courts , later, for more information. How to amend a tax return Appeal Within the IRS You can appeal an IRS tax decision to a local Appeals Office, which is separate from and independent of the IRS office taking the action you disagree with. How to amend a tax return The Appeals Office is the only level of appeal within the IRS. How to amend a tax return Conferences with Appeals Office personnel are held in an informal manner by correspondence, by telephone, or at a personal conference. How to amend a tax return If you want an appeals conference, follow the instructions in the letter you received. How to amend a tax return Your request will be sent to the Appeals Office to arrange a conference at a convenient time and place. How to amend a tax return You or your representative should be prepared to discuss all disputed issues at the conference. How to amend a tax return Most differences are settled at this level. How to amend a tax return If agreement is not reached at your appeals conference, you may be eligible to take your case to court. How to amend a tax return See Appeals to the Courts , later. How to amend a tax return Protests and Small Case Requests When you request an Appeals conference, you may also need to file either a formal written protest or a small case request with the office named in the letter you received. How to amend a tax return Also, see the special appeal request procedures in Publication 1660. How to amend a tax return Written protest. How to amend a tax return   You need to file a written protest in the following cases: All employee plan and exempt organization cases without regard to the dollar amount at issue. How to amend a tax return All partnership and S corporation cases without regard to the dollar amount at issue. How to amend a tax return All other cases, unless you qualify for the small case request procedure, or other special appeal procedures such as requesting Appeals consideration of liens, levies, seizures, or installment agreements. How to amend a tax return   If you must submit a written protest, see the instructions in Publication 5 about the information you need to provide. How to amend a tax return The IRS urges you to provide as much information as you can, as it will help speed up your appeal. How to amend a tax return That will save you both time and money. How to amend a tax return    Be sure to send the protest within the time limit specified in the letter you received. How to amend a tax return Small case request. How to amend a tax return   If the total amount for any tax period is not more than $25,000, you may make a small case request instead of filing a formal written protest. How to amend a tax return In figuring the total amount, include a proposed increase or decrease in tax (including penalties), or claimed refund. How to amend a tax return If you are making an offer in compromise, include total unpaid tax, penalty, and interest due. How to amend a tax return For a small case request, follow the instructions in our letter to you by sending a letter: Requesting Appeals consideration, Indicating the changes you do not agree with, and Indicating the reasons why you do not agree. How to amend a tax return Representation You can represent yourself at your appeals conference, or you can be represented by any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled actuary, or an enrolled agent. How to amend a tax return If your representative attends a conference without you, he or she can receive or inspect confidential information only if you have filed a power of attorney or a tax information authorization. How to amend a tax return You can use a Form 2848 or any other properly written power of attorney or authorization. How to amend a tax return You can also bring witnesses to support your position. How to amend a tax return Confidentiality privilege. How to amend a tax return   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. How to amend a tax return See Confidentiality privilege under If Your Return Is Examined , earlier. How to amend a tax return Appeals to the Courts If you and the IRS still disagree after the appeals conference, you may be entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or a United States District Court. How to amend a tax return These courts are independent of the IRS. How to amend a tax return If you elect to bypass the IRS's appeals system, you may be able to take your case to one of the courts listed above. How to amend a tax return However, a case petitioned to the United States Tax Court will normally be considered for settlement by an Appeals Officer before the Tax Court hears the case. How to amend a tax return If you unreasonably fail to pursue the IRS's appeals system, or if your case is intended primarily to cause a delay, or your position is frivolous or groundless, the Tax Court may impose a penalty of up to $25,000. How to amend a tax return See Appeal Within the IRS, earlier. How to amend a tax return Prohibition on requests to taxpayers to give up rights to bring civil action. How to amend a tax return   The Government cannot ask you to waive your right to sue the United States or a Government officer or employee for any action taken in connection with the tax laws. How to amend a tax return However, your right to sue can be waived if: You knowingly and voluntarily waive that right, The request to waive that right is made in writing to your attorney or other federally authorized practitioner, or The request is made in person and your attorney or other representative is present. How to amend a tax return Burden of proof. How to amend a tax return   For court proceedings resulting from examinations started after July 22, 1998, the IRS generally has the burden of proof for any factual issue if you have met the following requirements: You introduced credible evidence relating to the issue. How to amend a tax return You complied with all substantiation requirements of the Internal Revenue Code. How to amend a tax return You maintained all records required by the Internal Revenue Code. How to amend a tax return You cooperated with all reasonable requests by the IRS for information regarding the preparation and related tax treatment of any item reported on your tax return. How to amend a tax return You had a net worth of $7 million or less and not more than 500 employees at the time your tax liability is contested in any court proceeding if your tax return is for a corporation, partnership, or trust. How to amend a tax return    The burden of proof does not change on an issue when another provision of the tax laws requires a specific burden of proof with respect to that issue. How to amend a tax return Use of statistical information. How to amend a tax return   In the case of an individual, the IRS has the burden of proof in court proceedings based on any IRS reconstruction of income solely through the use of statistical information on unrelated taxpayers. How to amend a tax return Penalties. How to amend a tax return   The IRS has the burden of initially producing evidence in court proceedings with respect to the liability of any individual taxpayer for any penalty, addition to tax, or additional amount imposed by the tax laws. How to amend a tax return Recovering litigation or administrative costs. How to amend a tax return   These are the expenses that you pay to defend your position to the IRS or the courts. How to amend a tax return You may be able to recover reasonable litigation or administrative costs if all of the following conditions apply: You are the prevailing party. How to amend a tax return You exhaust all administrative remedies within the IRS. How to amend a tax return Your net worth is below a certain limit (see Net worth requirements , later). How to amend a tax return You do not unreasonably delay the proceeding. How to amend a tax return You apply for administrative costs within 90 days of the date on which the final decision of the IRS Office of Appeals as to the determination of the tax, interest, or penalty was mailed to you. How to amend a tax return You apply for litigation costs within the time frames provided by Tax Court Rule 231, found at http://www. How to amend a tax return ustaxcourt. How to amend a tax return gov  www. How to amend a tax return ustaxcourt. How to amend a tax return gov . How to amend a tax return   Prevailing party, reasonable litigation costs, and reasonable administrative costs are explained later. How to amend a tax return Note. How to amend a tax return If the IRS denies your award of administrative costs, and you want to appeal, you must petition the Tax Court within 90 days of the date on which the IRS mails the denial notice. How to amend a tax return Prevailing party. How to amend a tax return   Generally, you are the prevailing party if: You substantially prevail with respect to the amount in controversy or on the most significant tax issue or set of issues in question, and You meet the net worth requirements, discussed later. How to amend a tax return   You will not be treated as the prevailing party if the United States establishes that its position was substantially justified. How to amend a tax return The position of the United States is presumed not to be substantially justified if the IRS: Did not follow its applicable published guidance (such as regulations, revenue rulings, notices, announcements, private letter rulings, technical advice memoranda, and determination letters issued to the taxpayer) in the proceeding (This presumption can be overcome by evidence. How to amend a tax return ), or Has lost in courts of appeal for other circuits on substantially similar issues. How to amend a tax return   The court will generally decide who is the prevailing party. How to amend a tax return Reasonable litigation costs. How to amend a tax return   These include the following costs: Reasonable court costs. How to amend a tax return The reasonable costs of studies, analyses, engineering reports, tests, or projects found by the court to be necessary for the preparation of your case. How to amend a tax return The reasonable costs of expert witnesses. How to amend a tax return Attorney fees that generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. How to amend a tax return See Attorney fees , later. How to amend a tax return Reasonable administrative costs. How to amend a tax return   These include the following costs: Any administrative fees or similar charges imposed by the IRS. How to amend a tax return The reasonable costs of studies, analyses, engineering reports, tests, or projects. How to amend a tax return The reasonable costs of expert witnesses. How to amend a tax return Attorney fees that generally may not exceed $125 per hour. How to amend a tax return See Attorney fees , later. How to amend a tax return Timing of costs. How to amend a tax return    Administrative costs can be awarded for costs incurred after the earliest of: The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the IRS Office of Appeals, The date you receive notice of the IRS Office of Appeals' decision, or The date of the notice of deficiency. How to amend a tax return Net worth requirements. How to amend a tax return   An individual taxpayer may be able to recover litigation or administrative costs if the following requirements are met: For individuals — your net worth does not exceed $2 million as of the filing date of your petition for review. How to amend a tax return For this purpose, individuals filing a joint return are treated as separate individuals. How to amend a tax return For estates — your net worth does not exceed $2 million as of the date of the decedent's death. How to amend a tax return For charities and certain cooperatives — you do not have more than 500 employees as of the filing date of your petition for review. How to amend a tax return For all other taxpayers — as of the filing date of your petition for review, your net worth does not exceed $7 million, and you must not have more than 500 employees. How to amend a tax return Qualified offer rule. How to amend a tax return    You can also receive reasonable costs and fees and be treated as a prevailing party in a civil action or proceeding if: You make a qualified offer to the IRS to settle your case, The IRS does not accept that offer, and The tax liability (not including interest, unless interest is at issue) later determined by the court is equal to or less than the amount of your qualified offer. How to amend a tax return You must also meet the remaining requirements, including the exhaustion of administrative remedies and the net worth requirement, discussed earlier, to get the benefit of the qualified offer rule. How to amend a tax return Qualified offer. How to amend a tax return    This is a written offer made by you during the qualified offer period. How to amend a tax return It must specify both the offered amount of your liability (not including interest) and that it is a qualified offer. How to amend a tax return   To be a qualified offer, it must remain open from the date it is made until the earliest of: The date it is rejected, The date the trial begins, or 90 days from the date it is made. How to amend a tax return Qualified offer period. How to amend a tax return    This period begins on the day the IRS mails you the first letter of proposed deficiency that allows you to request review by the IRS Office of Appeals. How to amend a tax return It ends 30 days before your case is first set for trial. How to amend a tax return Attorney fees. How to amend a tax return   Attorney fees generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. How to amend a tax return However, this amount can be higher in certain limited circumstances depending on the level of difficulty of the issues in the case and the local availability of tax expertise. How to amend a tax return See IRS. How to amend a tax return gov for more information. How to amend a tax return    Attorney fees include the fees paid by a taxpayer for the services of anyone who is authorized to practice before the Tax Court or before the IRS. How to amend a tax return In addition, attorney fees can be awarded in civil actions for unauthorized inspection or disclosure of a taxpayer's return or return information. How to amend a tax return   Fees can be awarded in excess of the actual amount charged if: You are represented for no fee, or for a nominal fee, as a pro bono service, and The award is paid to your representative or to your representative's employer. How to amend a tax return Jurisdiction for determination of employment status. How to amend a tax return    The Tax Court can review IRS employment status determinations (for example, whether individuals hired by you are in fact your employees or independent contractors) and the amount of employment tax under such determinations. How to amend a tax return Tax Court review can take place only if, in connection with an audit of any person, there is a controversy involving a determination by the IRS that either: One or more individuals performing services for that person are employees of that person, or That person is not entitled to relief under Section 530(a) of the Revenue Act of 1978 (discussed later). How to amend a tax return   The following rules also apply to a Tax Court review of employment status: A Tax Court petition to review these determinations can be filed only by the person for whom the services are performed, If you receive a Notice of Determination by certified or registered mail, you must file a petition for Tax Court review within 90 days of the date of mailing that notice (150 days if the notice is addressed to you outside the United States), If during the Tax Court proceeding, you begin to treat as an employee an individual whose employment status is at issue, the Tax Court will not consider that change in its decision, Assessment and collection of tax is suspended while the Tax Court review is taking place, Payment of the asserted employment tax deficiency is not required to petition the U. How to amend a tax return S. How to amend a tax return Tax Court for a determination of employment status. How to amend a tax return There can be a de novo review by the Tax Court (a review which does not consider IRS administrative findings), and At your request and with the Tax Court's agreement, small tax case procedures (discussed later) are available to simplify the case resolution process when the amount at issue (including additions to tax and penalties) is $50,000 or less for each tax period involved. How to amend a tax return   For further information, see Publication 3953, Questions and Answers About Tax Court Proceedings for Determination of Employment Status Under IRC Section 7436. How to amend a tax return Section 530(a) of the Revenue Act of 1978. How to amend a tax return   This section relieves an employer of certain employment tax responsibilities for individuals not treated as employees. How to amend a tax return It also provides relief to taxpayers under audit or involved in administrative or judicial proceedings. How to amend a tax return Tax Court review of request for relief from joint and several liability on a joint return. How to amend a tax return    As discussed later, at Relief from joint and several liability on a joint return under Claims for Refund, you can request relief from liability for tax you owe, plus related penalties and interest, that you believe should be paid by your spouse (or former spouse). How to amend a tax return You also can petition (ask) the Tax Court to review your request for innocent spouse relief or separation of liability if either: The IRS sends you a determination notice denying, in whole or in part, your request, or You do not receive a determination notice from the IRS within 6 months from the date you file Form 8857. How to amend a tax return   If you receive a determination notice, you must petition the Tax Court to review your request during the 90-day period that begins on the date the IRS mails the notice. How to amend a tax return See Publication 971 for more information. How to amend a tax return Note. How to amend a tax return Your spouse or former spouse may file a written protest and request an Appeals conference to protest your claim of innocent spouse relief or separation of liability. How to amend a tax return See Rev. How to amend a tax return Proc. How to amend a tax return 2003-19, which is on page 371 of the Internal Revenue Bulletin 2003-5 at  www. How to amend a tax return irs. How to amend a tax return gov/pub/irs-irbs/irb03-05. How to amend a tax return pdf. How to amend a tax return Tax Court You can take your case to the United States Tax Court if you disagree with the IRS over: Income tax, Estate tax, Gift tax, Employment tax involving IRS employment status determinations, or Certain excise taxes of private foundations, public charities, qualified pension and other retirement plans, or real estate investment trusts. How to amend a tax return For information on Tax Court review of a determination of employment status, see Jurisdiction for determination of employment status, earlier. How to amend a tax return For information on Tax Court review of an IRS refusal to abate interest, see Tax Court can review failure to abate interest, earlier under Examination of Returns. How to amend a tax return For information on Tax Court review of Appeals determinations with respect to lien notices and proposed levies, see Publication 1660. How to amend a tax return You cannot take your case to the Tax Court before the IRS sends you a notice of deficiency. How to amend a tax return You can only appeal your case if you file a petition within 90 days from the date the notice is mailed to you (150 days if it is addressed to you outside the United States). How to amend a tax return The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. How to amend a tax return Withdrawal of notice of deficiency. How to amend a tax return If you consent, the IRS can withdraw a notice of deficiency. How to amend a tax return A notice of deficiency may be rescinded if the notice was issued as a result of an administrative error; the taxpayer submits information establishing the actual tax due is less than the amount shown in the notice; the taxpayer specifically requests a conference with the appropriate Appeals office for the purpose of entering into settlement negotiations. How to amend a tax return However, the notice may be rescinded only if the appropriate Appeals office first decides that the case is susceptible to agreement. How to amend a tax return See Revenue Procedure 98-54 for a more detailed explanation of the requirements. How to amend a tax return Once withdrawn, the limits on credits, refunds, and assessments concerning the notice are void, and you and the IRS have the rights and obligations that you had before the notice was issued. How to amend a tax return The suspension of any time limitation while the notice of deficiency was issued will not change when the notice is withdrawn. How to amend a tax return After the notice is withdrawn, you cannot file a petition with the Tax Court based on the notice. How to amend a tax return Also, the IRS can later issue a notice of deficiency in a greater or lesser amount than the amount in the withdrawn deficiency. How to amend a tax return Generally, the Tax Court hears cases before any tax has been assessed and paid; however, you can pay the tax after the notice of deficiency has been issued and still petition the Tax Court for review. How to amend a tax return If you do not file your petition on time, the proposed tax will be assessed, a bill will be sent, and you will not be able to take your case to the Tax Court. How to amend a tax return Under the law, you must pay the tax within 21 days (10 business days if the amount is $100,000 or more). How to amend a tax return Collection can proceed even if you think that the amount is excessive. How to amend a tax return Publication 594 explains IRS collection procedures. How to amend a tax return If you filed your petition on time, the court will schedule your case for trial at a location convenient to you. How to amend a tax return You can represent yourself before the Tax Court or you can be represented by anyone admitted to practice before that court. How to amend a tax return Small tax case procedure. How to amend a tax return   If the amount in your case is $50,000 or less for any 1 tax year or period, you can request that your case be handled under the small tax case procedure. How to amend a tax return If the Tax Court approves, you can present your case to the Tax Court for a decision that is final and that you cannot appeal. How to amend a tax return You can get more information regarding the small tax case procedure and other Tax Court matters from the United States Tax Court, 400 Second Street, N. How to amend a tax return W. How to amend a tax return , Washington, DC 20217. How to amend a tax return More information can be found on the Tax Court's website at www. How to amend a tax return ustaxcourt. How to amend a tax return gov. How to amend a tax return Motion to request redetermination of interest. How to amend a tax return   In certain cases, you can file a motion asking the Tax Court to redetermine the amount of interest on either an underpayment or an overpayment. How to amend a tax return You can do this only in a situation that meets all of the following requirements: The IRS has assessed a deficiency that was determined by the Tax Court. How to amend a tax return The assessment included interest. How to amend a tax return You have paid the entire amount of the deficiency plus the interest claimed by the IRS. How to amend a tax return The Tax Court has found that you made an overpayment. How to amend a tax return You must file the motion within one year after the decision of the Tax Court becomes final. How to amend a tax return District Court and Court of Federal Claims Generally, the District Courts and the Court of Federal Claims hear tax cases only after you have paid the entire tax and penalties, and filed a claim for a credit or refund. How to amend a tax return The taxpayer may litigate certain types of employment tax cases in either the United States District Court or the United States Court of Federal Claims. How to amend a tax return Before taxpayers can initiate suit in either of these courts with respect to certain employment taxes, they will have to pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. How to amend a tax return Once the claim for refund is denied or 6 months elapse without any action by the IRS, the taxpayer may initiate suit. How to amend a tax return As explained later under Claims for Refund, you can file a claim with the IRS for a credit or refund if you think that the tax you paid is incorrect or excessive. How to amend a tax return If your claim is totally or partially disallowed by the IRS, you should receive a notice of claim disallowance. How to amend a tax return If the IRS does not act on your claim within 6 months from the date you filed it, you can then file suit for a refund. How to amend a tax return You generally must file suit for a credit or refund no later than 2 years after the IRS informs you that your claim has been rejected. How to amend a tax return However, you can file suit if it has been 6 months since you filed your claim and the IRS has not yet delivered a decision. How to amend a tax return You can file suit for a credit or refund in your United States District Court or in the United States Court of Federal Claims. How to amend a tax return However, you cannot appeal to the United States Court of Federal Claims if your claim is for credit or refund of a penalty that relates to promoting an abusive tax shelter or to aiding and abetting the understatement of tax liability on someone else's return. How to amend a tax return For information about procedures for filing suit in either court, contact the Clerk of your District Court or of the United States Court of Federal Claims. How to amend a tax return Refund or Credit of Overpayments Before Final Determination Any court with proper jurisdiction, including the Tax Court, can order the IRS to refund any part of a tax deficiency that the IRS collects from you during a period when the IRS is not permitted to assess that deficiency, or to levy or engage in any court proceeding to collect that deficiency. How to amend a tax return In addition, the court can order a refund of any part of an overpayment determined by the Tax Court that is not at issue on appeal to a higher court. How to amend a tax return The court can order these refunds before its decision on the case is final. How to amend a tax return Taxpayers should thoroughly review IRS settlement offers before signing a Tax Court Decision document to ensure that all adjustments are correct, including the inclusion of any tax credits that the taxpayer is allowed to claim. How to amend a tax return Note. How to amend a tax return The court may no longer order a refund of an overpayment after the case is final. How to amend a tax return Generally, the IRS is not permitted to take action on a tax deficiency during: The 90-day (or 150-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court, or The period that the case is under appeal if a bond is provided. How to amend a tax return Claims for Refund If you believe you have overpaid your tax, you have a limited amount of time in which to file a claim for a credit or refund. How to amend a tax return You can claim a credit or refund by filing Form 1040X. How to amend a tax return See Time for Filing a Claim for Refund , later. How to amend a tax return File your claim by mailing it to the IRS Service Center where you filed your original return. How to amend a tax return File a separate form for each year or period involved. How to amend a tax return Include an explanation of each item of income, deduction, or credit on which you are basing your claim. How to amend a tax return Corporations should file Form 1120X, Amended U. How to amend a tax return S. How to amend a tax return Corporation Income Tax Return, or other form appropriate to the type of credit or refund claimed. How to amend a tax return See Publication 3920 for information on filing claims for tax forgiveness for individuals affected by terrorist attacks. How to amend a tax return Requesting a copy of your tax return. How to amend a tax return   You can obtain a copy of the actual return and all attachments you filed with the IRS for an earlier year. How to amend a tax return This includes a copy of the Form W-2 or Form 1099 filed with your return. How to amend a tax return Use Form 4506 to make your request. How to amend a tax return You will be charged a fee, which you must pay when you submit Form 4506. How to amend a tax return Requesting a copy of your tax account information. How to amend a tax return   Use Form 4506-T, Request for Transcript of Tax Return, to request free copies of your tax return transcript, tax account transcript, record of account, verification of nonfiling, or Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. How to amend a tax return The tax return transcript contains most of the line items of a tax return. How to amend a tax return A tax account transcript contains information on the financial status of the account, such as payments, penalty assessments, and adjustments. How to amend a tax return A record of account is a combination of line item information and later adjustments to the account. How to amend a tax return Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript contains data from these information returns. How to amend a tax return Penalty for erroneous claim for refund. How to amend a tax return   If you claim an excessive amount of tax refund or credit relating to income tax (other than a claim relating to the earned income credit), you may be liable for a penalty of 20% of the amount that is determined to be excessive. How to amend a tax return An excessive amount is the amount of the claim for refund or credit that is more than the amount of claim allowable for the tax year. How to amend a tax return The penalty may be waived if you can show that you had a reasonable basis for making the claim. How to amend a tax return Time for Filing a Claim for Refund Generally, you must file a claim for a credit or refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. How to amend a tax return If you do not file a claim within this period, you may no longer be entitled to a credit or a refund. How to amend a tax return If the due date to file a return or a claim for a credit or refund is a Saturday, Sunday, or legal holiday, it is filed on time if it is filed on the next business day. How to amend a tax return Returns you filed before the due date are considered filed on the due date. How to amend a tax return This is true even when the due date is a Saturday, Sunday, or legal holiday. How to amend a tax return Disaster area claims for refund. How to amend a tax return   If you live in a Presidentially declared disaster area or are affected by terroristic or military action, the deadline to file a claim for a refund may be postponed. How to amend a tax return This section discusses the special rules that apply to Presidentially declared disaster area refunds. How to amend a tax return    A Presidentially declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Disaster Relief and Emergency Assistance Act. How to amend a tax return Postponed refund deadlines. How to amend a tax return   The IRS may postpone for up to 1 year the deadlines for filing a claim for refund. How to amend a tax return The postponement can be used by taxpayers who are affected by a Presidentially declared disaster. How to amend a tax return The IRS may also postpone deadlines for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. How to amend a tax return For more information, see Publication 547. How to amend a tax return   If any deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin. How to amend a tax return A list of the areas eligible for assistance under the Disaster Relief and Emergency Assistance Act is available at the Federal Emergency Management Agency (FEMA) website at www. How to amend a tax return fema. How to amend a tax return gov and at the IRS website at www. How to amend a tax return irs. How to amend a tax return gov. How to amend a tax return Nonfilers can get refund of overpayments paid within 3-year period. How to amend a tax return   The Tax Court can consider taxes paid during the 3-year period preceding the date of a notice of deficiency for determining any refund due to a nonfiler. How to amend a tax return This means that if you do not file your return, and you receive a notice of deficiency in the third year after the due date (with extensions) of your return and file suit with the Tax Court to contest the notice of deficiency, you may be able to receive a refund of excessive amounts paid within the 3-year period preceding the date of the notice of deficiency. How to amend a tax return The IRS may postpone for up to 1 year certain tax deadlines, including the time for filing claims for refund, for taxpayers who are affected by a terrorist attack occurring after September 10, 2001. How to amend a tax return For more information, see Publication 3920. How to amend a tax return Claim for refund by estates electing the installment method of payment. How to amend a tax return   In certain cases where an estate has elected to make tax payments through the installment method, the executor can file a suit for refund with a U. How to amend a tax return S. How to amend a tax return District Court or the U. How to amend a tax return S. How to amend a tax return Court of Federal Claims before all the installment payments have been made. How to amend a tax return However, all the following must be true before a suit can be filed: The estate consists largely of an interest in a closely-held business. How to amend a tax return All installment payments due on or before the date the suit is filed have been made. How to amend a tax return No accelerated installment payments have been made. How to amend a tax return No Tax Court case is pending with respect to any estate tax liability. How to amend a tax return If a notice of deficiency was issued to the estate regarding its liability for estate tax, the time for petitioning the Tax Court has passed. How to amend a tax return No proceeding is pending for a declaratory judgment by the Tax Court on whether the estate is eligible to pay tax in installments. How to amend a tax return The executor has not included any previously litigated issues in the current suit for refund. How to amend a tax return The executor does not discontinue making installment payments timely, while the court considers the suit for refund. How to amend a tax return    If in its final decision on the suit for refund the court redetermines the estate's tax liability, the IRS must refund any part of the estate tax amount that is disallowed. How to amend a tax return This includes any part of the disallowed amount previously collected by the IRS. How to amend a tax return Protective claim for refund. How to amend a tax return   If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. How to amend a tax return A protective claim can be either a formal claim or an amended return for credit or refund. How to amend a tax return Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. How to amend a tax return A protective claim preserves your right to claim a refund when the contingency is resolved. How to amend a tax return A protective claim does not have to state a particular dollar amount or demand an immediate refund. How to amend a tax return However, to be valid, a protective claim must: Be in writing and be signed, Include your name, address, social security number or individual taxpayer identification number, and other contact information, Identify and describe the contingencies affecting the claim, Clearly alert the IRS to the essential nature of the claim, and Identify the specific year(s) for which a refund is sought. How to amend a tax return   Generally, the IRS will delay action on the protective claim until the contingency is resolved. How to amend a tax return Once the contingency is resolved, the IRS may obtain additional information necessary to process the claim and then either allow or disallow the claim. How to amend a tax return   Mail your protective claim for refund to the address listed in the instructions for Form 1040X, under Where To File. How to amend a tax return Exceptions The limits on your claim for refund can be affected by the type of item that forms the basis of your claim. How to amend a tax return Special refunds. How to amend a tax return   If you file a claim for refund based on one of the items listed below, the limits discussed earlier under Time for Filing a Claim for Refund may not apply. How to amend a tax return These special items are: A bad debt, A worthless security, A payment or accrual of foreign tax, A net operating loss carryback, and A carryback of certain tax credits. How to amend a tax return   The limits discussed earlier also may not apply if you have signed an agreement to extend the period of assessment of tax. How to amend a tax return For information on special rules on filing claims for an individual affected by a terrorist attack, see Publication 3920. How to amend a tax return Periods of financial disability. How to amend a tax return   If you are an individual (not a corporation or other taxpaying entity), the period of limitations on credits and refunds can be suspended during periods when you cannot manage your financial affairs because of physical or mental impairment that is medically determinable and either: Has lasted or can be expected to last continuously for at least 12 months, or Can be expected to result in death. How to amend a tax return    The period for filing a claim for refund will not be suspended for any time that someone else, such as your spouse or guardian, was authorized to act for you in financial matters. How to amend a tax return   To claim financial disability, you generally must submit the following statements with your claim for credit or refund: A written statement signed by a physician, qualified to make the determination, that sets forth: The name and a description of your physical or mental impairment, The physician's medical opinion that your physical or mental impairment prevented you from managing your financial affairs, The physician's medical opinion that your physical or mental impairment was or can be expected to result in death, or that it has lasted (or can be expected to last) for a continuous period of not less than 12 months, and To the best of the physician's knowledge, the specific time period during which you were prevented by such physical or mental impairment from managing your financial affairs, and A written statement by the person signing the claim for credit or refund that no person, including your spouse, was authorized to act on your behalf in financial matters during the period described in paragraph (1)(d) of the physician's statement. How to amend a tax return Alternatively, if a person was authorized to act on your behalf in financial matters during any part of the period described in that paragraph, the beginning and ending dates of the period of time the person was so authorized. How to amend a tax return    The period of limitations will not be suspended on any claim for refund that (without regard to this provision) was barred as of July 22, 1998. How to amend a tax return Limit on Amount of Refund If you file your claim within 3 years after filing your return, the credit or refund cannot be more than the part of the tax paid wi