Publication 4206 (2-2006) INFORMATION FOR AUTHORIZED IRS E-FILE PROVIDERS OF EXEMPT ORGANIZATION FILINGS FOR TAX YEAR 2005

(NOTE: Unless such attachments are required by the Internal Revenue Code or regulations, or by return instructions, their voluntary use by filers is not a basis for exemption from the electronic filing requirements.

General

All Authorized IRS e-file Providers must adhere to IRS e-file rules and requirements to continue participation in IRS e-file. Requirements are included in Revenue Procedure 2000-31, throughout this publication, and in other publications and notices that govern IRS e-file (See Publication 3112, IRS e-file Application and Participation). Adherence to all rules and requirements is expected of all Providers regardless of where published. Some rules and requirements are specific to the activities performed by the Provider and are included in appropriate chapters of this publication.

The following list, while not all-inclusive, applies to all Authorized IRS e-file Providers of Exempt Organization Returns, except Software Developers that do not engage in any other IRS e-file activity other than software development. A Provider must:

The Federal Trade Commission (FTC) states that financial institutions include businesses that are “significantly engaged” in providing financial products or services to customers. This includes tax preparers, data processors, mortgage brokers, check-cashing businesses, non-bank lenders, personal property or real estate appraisers, courier services, and retailers that issue credit cards to consumers. It also applies to companies that receive information from financial institutions or share information with other financial institutions about their customers. It also pertains to their affiliates and services providers.

If you are a preparer, collector, intermediate service provider, data processor, or transmitter of nonpublic personal tax and financial information, you are considered a financial institution. Tax Preparation Service is defined in 16 CFR 313.3.

Effective May 23, 2003, the FTC enacted two rules pursuant to the GLBA, the Privacy Rule and the Safeguards Rule.

Visit the FTC website

for documents, guidance, and useful information about your responsibilities.

Safeguarding of Modernized e-File from Fraud and Abuse

Safeguarding MeF from fraud and abuse is the shared responsibility of the IRS and Authorized IRS e-file Providers. Authorized IRS e-file Providers must be diligent in recognizing and preventing fraud and abuse in IRS e-file. Neither the IRS nor Providers benefit when fraud or allegations of abuse tarnish the integrity and reputation of IRS MeF. Providers appoint an individual of a business as a Responsible Official who is responsible for ensuring the firm meets IRS e-file rules and requirements. Providers with problems involving fraud and abuse may be suspended or expelled from the IRS e-file program, be assessed civil and preparer penalties or be subject to legal action.

Any time you observe or become aware of suspicious activity, report it to the IRS by calling 1-800-829-0433 (toll-free).

To learn more about what the Internal Revenue Service has done to maintain integrity of its systems, go to the following link: http://www.irs.gov/efile/article/0..id=146388,00.html

Returns Filed Through Modernized e-File

A “return” filed through Modernized e-File is a composite of electronically transmitted data. If an organization is required to file a document that requires an original signature, proposed regulation (REG-116664-01) eliminates the obligation to mail the original document to the IRS. Instead, the original document should be scanned and transmitted with the return, but the original paper documents must be retained by the originator/organization. More information on the temporary regulations can be found at this link http://www.irs.gov/irb/2004-03_IRB/ar07.html#d0e286

Responsible Officials

A Responsible Official is an individual who is responsible for the organization’s e-file operation. A Responsible Official may be a President, Vice President, Treasurer, Assistant Treasurer, Chief Accounting Officer or other corporate or association officer such as a tax officer.

The Responsible Official is the first point of contact with the IRS and has the authority to sign revised IRS e-file applications. The Responsible Official ensures that the organization adheres to the provisions of all publications and notices governing IRS e-file. If one individual cannot fulfill these responsibilities, additional Responsible Officials may be identified. To add or change Responsible Officials, the IRS e-file Application must be revised.

Delegated Users

A Delegated User is an individual within an organization, other than a Responsible Official, who is authorized to use one or more of the e-Services products. A Responsible Official appoints an individual as a Delegated User on the IRS e-file Application. A Delegated User should be an employee, partner, or other member of the organization, or have a business relationship with the organization. A Delegated User may be authorized by a Responsible Official with one or all of the following authorities:

The Actions of the Delegated User are the responsibility of the Responsible Officer who appoints the individual.

It is important that Responsible Officials and/or Delegated Users and their authorities be deleted from the IRS e-file Application when they are no longer associated with the organization or when their position within the organization no longer warrants one or more authorities.

Reporting Changes

A Responsible Official or a Delegated User authorized to revise an IRS e-file Application should ensure that the IRS has current information. All required changes can be made by updating your IRS e-file Application at:

http://www.irs.gov/efile/article/0,,id=98246,00.html

The Application must be revised within thirty days of a change of any information on the current application. This is important for several reasons. If the IRS does not have current addresses, important letters, credentials, publications, or other materials may not be received. If any of these items are returned to the IRS indicating that the address has changed, the Electronic Return Originator will be temporarily removed from participation in IRS e-file. This means that all returns submitted after than time will be rejected until the address information is updated. The same is true for telephone numbers. If the IRS tries to call a number that has changed or has been disconnected, the Electronic Return Originator will be temporarily removed from participation on IRS e-file until new telephone numbers are provided.

NOTE: Changes submitted on an IRS e-file Application will not update the address of record for tax return records, nor will a change to tax return records automatically update information associated with your EFIN.

Submitting a Timely Filed Electronic Return

All prescribed due dates for filing of returns apply to MeF returns. All Authorized IRS e-file Providers must ensure that returns are promptly processed. A Provider that receives a complete copy of a return for electronic filing on or before the due date of the return must ensure that the electronic portion of the return is transmitted on or before that due date (including extensions). A complete copy of an organiation’s return include jurats, as well as the electronic portion of the return.

An electronically filed return is not considered filed until the electronic portion of the return has been acknowledged by the IRS as accepted for processing and a signature for the return has been received. If the electronic portion of a return is transmitted on or shortly before the due date and is ultimately rejected, but the Provider and the filer comply with the requirements for timely resubmission of a correct return, the return will be considered timely filed. For additional information about the filing of a return through Modernized e-File, see The Procedures for Electronic Return Originators of an Electronic Return in Part IV of this publication.

Transmitters may provide electronic postmarks to organizations if the Transmitters adhere to the requirements in Part V of this publication. The receipt of an electronic postmark will provide filers with confidence that they have filed their return timely. The date of the electronic postmark is considered the date of filing when the date of electronic postmark is on or before the prescribed due date and the return is received by the IRS after the prescribed due date for filing. All requirements for signing the return and completing the declaration as well as resubmitting a rejected timely filed return must be adhered to for the electronic postmark to be considered the date of filing.

Disclosure of Return Information

Under IRC §301.7216 and/or the civil penalties in IRC §6713 for unauthorized disclosure or use of return information.

Preparer Penalties

Preparer penalties may be asserted against an individual or firm meeting the definition of an income tax preparer under IRC §301.7701-15. Preparer penalties that may be asserted under appropriate circumstances include, but are not limited to, those set forth in IRC §§6694, 6695, and 6713.

Under Federal Tax Regulation §301.7701-15(d). A nonsubstantive change is a correction or change limited to a transposition error, misplaced entry, spelling error, or arithmetic correction.

If an ERO, Intermediate Service Provider, Transmitter, or the product of a Software Developer alters the return in a way that does not come under the “mechanical assistance” exception, the Authorized IRS e-file Provider may be held liable for return preparer penalties. See §Rev. Rul. 85-189, 1985-2 C.B. 341 (which describes a situation where the Software Developer was determined to be a return preparer and subject to certain preparer penalties).

In addition to the above specified provisions, the IRS reserves the right to assert all appropriate preparer and nonpreparer penalties against an Authorized IRS e-file Provider as warranted.

Suspensions

For all rules for eligibility to reapply for participation in IRS e-file after being previously denied or suspended from participation in IRS e-file refer to Publication 3112, IRS e-file Application and Participation.

Advertising Standards

Providers must not use improper or misleading advertising in relation to IRS e-file. Any claims by Providers concerning faster refunds by virtue of electronic filing must be consistent with the language in official IRS publications.

In using the Direct Deposit name and logo in advertisement, the Provider must use the name “Direct Deposit” with initial capital letters or all capital letters; the Provider will use the logo/graphic for Direct Deposit whenever feasible; and the Provider may change the color or size of the Direct Deposit logo/graphic when it is used in advertising pieces.

Paperwork Reduction Act Notice

The collections of information contained in this publication have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1708.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, returns and return information are confidential, as required by 26 U.S.C. § 6103.

The collections of information in this publication are in Part III and IV. This information is required to implement IRS e-file and to enable organizations to file their returns electronically. The information will be used to ensure that organizations receive accurate and essential information regarding the filing of their electronic returns and to identify the persons involved in the filing of electronic returns. The collections of information are required to retain the benefit of participating in IRS e-file.

If you have comments or suggestions for making this publication simpler, we would be happy to hear from you. You can write to the Tax Forms Committee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001.

Part IV - Procedures for Electronic Return Originators of Exempt Organization MeF Returns

Obtaining, Handling, and Processing Return Information from Exempt Organizations

An Electronic Return Originator (ERO) originates the electronic submission of returns it either prepares or collects from organizations wishing to have their returns e-filed. The ERO must always identify the paid preparer (if any) in the appropriate field of the electronic record of returns the ERO originates. EROs may either transmit returns directly to the IRS or arrange with another Provider to transmit the electronic return to the IRS. An Authorized IRS e-file Provider, including an ERO, may disclose return information to other Providers for the purpose of preparing a return under Federal Tax Regulation 301.7216. For example, an ERO may pass on return information to an Intermediate Service Provider or a Transmitter for the purpose of having an electronic return formatted or transmitted to the IRS.

An ERO that chooses to originate returns that it has not prepared, but only collected, becomes the return preparer of the returns when, as a result of entering the data, the ERO discovers errors that require substantive changes and then makes the changes. A nonsubstantive change is a correction limited to a transposition error, misplaced entry, spelling error, or arithmetic correction. All other changes are considered substantive and the ERO becomes the return preparer. As such, the ERO may be required to sign the return as the return preparer.

Safeguarding Modernized e-File from Fraud and Abuse

While all Authorized IRS e-file Providers must be on the lookout for fraud and abuse in IRS e-file, EROs must be particularly diligent while acting in their capacity as the first contact with taxpayers filing a return. An ERO should always seek to recognize and prevent fraud and abuse of IRS e-file. A potentially abusive return is a return that is not fraudulent, is required to be filed by the taxpayer, but contains inaccurate information that may lead to an understatement of a liability or the overstatement of a credit resulting in a refund to which the taxpayer may not be entitled.

Any time you observe or become aware of suspicious activity, report it to the IRS by calling 1-800-829-0433 (toll-free).

Be Careful With Addresses

EROs should inform filers that the address on the first page of the return, once processed by the IRS, will be used to update the organization’s address of record. The IRS uses an organization’s address-of-record for various notices that are required to be sent to an organization’s “last known address” under the Internal Revenue Code and for refunds of overpayments of tax (unless otherwise specifically directed by filers, such as by Direct Deposit).

Finally, an ERO’s address must never be put in fields reserved for taxpayers’ addresses in the electronic return record or on Form 8453-EO. The only exceptions are if the ERO is the organization or the address of a power of attorney for the organization for the return is the same as the address of the ERO.

Foreign Address

MeF will not accept returns with a foreign address in the entity portion of Form 990-PF. However, Forms 990. 990-EZ, 1120-POL or 8868 or other forms or any attachments to the return may contain foreign addresses.

There will be instances in the preparation of returns, forms or attachments when the preparer is directed to enter the two character Foreign Country Code. This code should always be the code of the Foreign Country or Foreign Sovereignty as recognized by the US State Department. For example; Scotland, Wales, and England are part of the foreign country United Kingdom. The Foreign Country Code for United Kingdom is UK. As well, the Balearic Islands are a part of Spain and should be coded as Spain, “SP”. These are just a few examples. When entering foreign addresses in the return or forms, the state or republic (such as Scotland or England) can be entered with the city; “London, England” and the country as “United Kingdom” or “UK”. (See Exhibit 4 for a list of the Foreign Country Codes)

Address Changes

Domestic Address

For Forms 990, 990-EZ, 990-PF and 1120-POL, MeF will accept all domestic address changes as shown by the organization in the entity portion of the return. IRS will update the organization’s entity information with the change of address.

Foreign Address

For Forms 990, 990-EZ, and 1120-POL, MeF will not automatically process changes to foreign addresses. Organizations must submit Form 8822, Change of Address, to IRS to update or change a foreign address. Form 8822 can be downloaded through the IRS web site, http://www.irs.gov.

Standard Street Address Abbreviations

Exhibit 5, Standard Street Address Abbreviations, is included in this publication. The list is comprised of common abbreviations that are recognized by the U.S. Postal Service.

Valid ZIP Codes

See Exhibit 6 for a complete list of valid ZIP Codes.

Name Controls

The Name Control for organizations should be determined from the information specified on the first name line. Generally, the Name Control is derived from the first four characters of the organization name and consists of up to four alpha and/or numeric characters. See Exhibit I - Name controls for a complete list of rules for creating Name Control and examples to assist you in the preparation of the organization return.

Refund Returns

When organizations are entitled to refunds, Providers should inform filers that they have several options. An organization’s refund may be applied to next year’s estimated tax; received as a Direct Deposit or paper check; or be split so that a portion is applied to next year’s estimated tax and the rest received as Direct Deposit or paper check.

Direct Deposit of Refunds

Organizations often elect the Direct Deposit option because it is the fastest way of receiving refunds. Providers must accept any Direct Deposit election to any eligible financial institution designated by the organization. Refunds may be designated for Direct Deposit to qualified accounts in the organization’s name. Qualified accounts include savings, checking, share draft, or consumer asset accounts (for example, IRA or money market accounts). Refunds may not be designated for Direct Deposit to credit card accounts. Qualified institutions may be national banks, state banks (including the District of Columbia and political sub-divisions of the 50 states), savings and loan associations, mutual savings banks, and credit unions.

Organizations choosing Direct Deposit must provide Providers with account numbers and routing numbers for qualified accounts. This information is best obtained from official financial institution records, account cards, checks or share drafts that contain the organization’s name and address.

Additionally, a Provider must never charge a separate fee for Direct Deposit. The Provider must advise the organization that a Direct Deposit election cannot be rescinded and that changes cannot be made to routing numbers of financial institutions or to the organization’s account numbers after IRS has accepted the return. The Provider must not alter the Direct Deposit information in the electronic record after an organization has signed the return.

Providers with repeat customers or clients should check to see if organizations have new accounts. Some software maintains last year’s information and reuses it unless it is changed. Organizations will not receive Direct Deposit of their refunds if account information is not updated to reflect current information.

Refunds that are not Direct Deposited because of institutional refusal, erroneous account or routing numbers, closed accounts, bank mergers, or any other reason will be issued as paper checks, resulting in refund delays of up to ten weeks. While the IRS will ordinarily process a request for Direct Deposit, it reserves the right to issue a paper check and does not guarantee a specific date by which the refund will be deposited into the organization’s account. Neither the IRS not FMS is responsible for the misapplication of a Direct Deposit that is caused by error, negligence, or malfeasance on the part of the organization, Authorized IRS e-file Provider, financial institution, or any of their agents

Balance Due Returns

Organizations owing additional tax must pay the balances due by the original due date of the return or be subject to interest and penalties. An extension of time to file may be filed electronically by the original return due date, but it is an extension of time to file the return only, and is not an extension of time to pay a balance due. Providers should inform filers of their obligations and options for paying balances due. Organizations have several choices when paying any taxes owed on their returns as well as estimated tax payments.

Electronic Funds Withdrawal

Organizations can e-file and, at the same time, authorize electronic funds withdrawal. Organizations choosing this option must provide account numbers and routing transit numbers for qualified savings, checking or share draft accounts to the Authorized IRS e-file Provider. The IRS return instructions describe how to find and identify these numbers. This information is best obtained from official financial institution records, account cards, checks or share drafts that contain the organization’s name and address. Providers should caution organizations to ensure, before they e-file, that their financial institution allows electronic funds withdrawal requests from the designated account. Payments cannot be authorized for this purpose from some credit union share accounts.

Organizations can schedule the payment for withdrawal on a future date. Scheduled payments must be effective on or before the return due date. For example, the Provider may transmit a return with a due date of May 15{th} in February and the organization can specify that the withdrawal be made on any day on or before the return due date. The organization does not have to remember to do anything at a later date. For returns transmitted after the due date, the payment date must be the same as the date the return is transmitted. Electronic Funds Withdrawal payments must be authorized at the time the balance due return or form is e-filed. Payments can be made by electronic funds withdrawal for the following:

Providers should be careful to ensure that all the information needed for the electronic funds withdrawal request is included with the return. Organizations must provide all of the following:

If organizations do not provide all of the required information, Providers must contact the organization. If the Provider is unsuccessful in obtaining the electronic funds withdrawal information but the returns are otherwise complete, the Provider should proceed with the origination of the electronic return data to the IRS. The Provider must notify the organization in writing that other arrangements must be made to pay the balance due.

Credit Card Payments

The IRS announced a policy decision in 2002 which allows business e-filers to pay their balance due by credit card. This is a unique opportunity for the tax preparation software industry to incorporate a credit card tax payment option in the exempt organization returns software. If you are interested in paying with a credit card, please contact your software developer regarding development of this feature. The credit card payment feature is available only as a part of the 990-PF and 1120-POL software.

Electronic Federal Tax Payment System (EFTPS)

Organizations can pay balances due and estimated taxes year round using the Electronic Federal Tax Payment System (EFTPS). Organizations can enroll in EFTPS-On-Line on the Internet at the following link http://www.eftps.gov/ To make payments On-Line, an organization will need the PIN and Internet password. Organizations can refer to the confirmation package for instructions on obtaining an Internet password. An Electronic Funds Withdrawal Consent must be presented when the filer has selected the EFTPS option. For more information on electronic deposit options, visit http://www.irs.gov/efile and click on “Electronic Federal Tax Payment System”.

If your return is rejected, the time to make a timely payment has lapsed and you still need to make a payment, please make a Federal Tax Deposit through the Electronic Federal Tax Payment System (EFTPS). If you are not enrolled in the EFTPS you can complete and take Form 8109, Federal Tax Deposit Coupon, with the payment to an authorized depositary (e.g., a commercial bank or other financial institution authorized to accept Federal Tax Deposits). If you would like to enroll in the EFTPS by phone, you can call 800-316-6541 or 800-945-8400, or visit the website at http://www.eftps.gov.

Pay by Check

Organizations may pay the balance due by mailing a check. Payments do not have to be mailed at the same time an electronic return is transmitted. For example, the return may be transmitted in January and the organization may mail the payment and voucher at any time on or before the return due date.

Attachments

MeF allows for two types of attachments:

Approved tax preparation software should provide the necessary instructions for creating and submitting all required attachments. IRS prepared the list of Forms and Attachments in Exhibit 2 to assist you in the preparation of electronic returns. The list includes items from the following sources:

Approved MeF tax preparation software should provide the necessary instructions for creating and submitting these attachments. In addition, approved software should provide guidance for creating other attachments that are required by IRS Publications, Code, and/or Regulations.

MeF software may also provide Preparers the capability to scan or export documents in PDF format (i.e. Appraiser Statements, Meeting Notes, and Signature Documents) and submit them as binary attachments. Only attachments that cannot be input into the MeF attachment software can be submitted as binary attachments. Preparers will create PDF documents (scan or export) and submit them as electronic files attached to the MeF return. Check with your Software Provider to see if their software will support binary attachments.

Signing an Electronic Return

As with any exempt organization return submitted to the IRS on paper, an electronic return must be signed by an officer or trustee of the organization and also by the paid preparer, if applicable. The officer or trustee of the organization must be responsible for signing the exempt organization return following the procedures outlined in IRC §6062.

Exempt Organization - For all signature options, the officer or trustee must sign and date the “Declaration of Taxpayer” to authorize the origination of the electronic submission of the return to the IRS prior to the transmission of the return to IRS. The Declaration of Taxpayer includes the filer’s declaration under penalties of perjury that the return is true, correct and complete, as well as the taxpayer’s Consent to Disclosure. The Consent to Disclosure authorizes the IRS to disclose information to the filer’s Authorized IRS e-file Providers. Intermediate Service Providers, Transmitters and EROs are authorized by organizations to receive from IRS acknowledgement of receipt or reason for rejection of the electronic return.

If the data on an exempt organization return is changed after the organization signed the Declaration of Taxpayer, the organization must sign a new declaration if the change causes the reported gross receipts to differ by more than $100.

ERO - The ERO must sign and complete the requested information in the “Declaration of Electronic Return Originator (ERO) and Paid Preparer” section after thoroughly reading the declaration. An ERO may authorize members of its firm or designated employees to sign for the ERO, but the ERO is still responsible for all electronically filed returns originated by its firm. EROs do not have to disclose their EIN or SSN on the copies they supply to organizations.

Paid Preparer - If the return was prepared for a fee, the paid preparer must also sign the jurat. If the paid preparer is also the ERO, the preparer may check the “Also the Paid Preparer” box and not complete the “Paid Preparer’s Use Only” section. Paid Preparers do not have to disclose their SSNs or EINs on the copies they supply to organizations.

Signature Alternatives for Modernized e-File

Modernized e-File provides two alternative signature options for signing exempt organization returns and extensions. Most software will provide the ERO with both signature

Practitioner PIN Option

The Practitioner PIN option can only be used if the organization uses an ERO. This signature option allows the authorized officer or trustee acting as the “taxpayer” and the ERO to select a Personal Identification Number (PIN), which they will use to sign their electronic return. The Practitioner PIN method consists of two PINs—one for the filer and one for the ERO. The filer’s PIN must be 5 numeric characters and cannot contain all zeros. The ERO’s PIN is an 11 position PIN. The first 6 positions of the Practitioner PIN will be made up of the EFIN of the ERO and the next 5 positions will be made up of 5 numeric characters that the ERO will select.

In some instances, exempt organization officers or trustees may wish to sign electronically, but are unable to enter their PIN directly in the electronic return. Organizations may authorize the ERO to enter their PINs in the electronic return record. Practitioner PIN is the only method available for signing extensions.

Organizations and EROs must complete Form 8879-EO to select a PIN for signing exempt organization returns and/or extensions.

EROs should confirm the identity of the officer or trustee when completing Form 8879-EO prior to transmitting returns to IRS. EROs participating in the Practitioner PIN method must retain Forms 8879-EO for three years from the return due date or IRS Received Date, whichever is later.

Note: Do Not Mail Form 8879-EO to IRS.

Scanned Form 8453-EO Option

If this option is chosen, the ERO or the exempt organization must ensure that the software they are using allows for binary attachments. (See section titled Attachments in this document). The Forms 8453-EO will be completed and signed by all required parties and then scanned into a PDF document and inserted into the electronic return as a binary attachment. The binary attachment must be named “8453 Signature Document”. The software you use will provide instructions for including the scanned document with your electronic tax return.

Note: The scanned Form 8453-EO is the only option available for On-Line filing.

Do Not Mail Form 8453-EO to IRS

Avoiding Refund Delays

EROs should advise organizations filing Forms 990-PF or 1120-POL that they can avoid refund delays by having all of their taxes and obligations paid, providing current and correct information to the ERO, ensuring that all bank account information is up-to-date and carefully checking their return information before signing the return.

EROs can do a number of things for clients and customers to avoid rejects and refund delays. Here are some suggestions:

An ERO must originate the electronic submission of a return as soon as possible after it is signed.

An ERO must ensure that stockpiling of returns does not occur at its offices. Stockpiling refers to either collecting returns from exempt organizations or from another Authorized IRS e-file Provider prior to official acceptance in IRS e-file. Or, after official acceptance to participate in IRS e-file, stockpiling refers to waiting more than three calendar days to submit the return to the IRS once the ERO has all necessary information for origination. Returns that are held prior to the date that electronic returns may be transmitted to the IRS are not considered stockpiled. EROs must advise exempt organizations that returns will not be transmitted to the IRS until electronic returns may be transmitted.

Checksum

Tax preparation software approved for electronic filing will compute a checksum value and embed the total in the submission file sent to IRS. The MeF system will also compute a checksum value of the submission file. The MeF system will add the following 4 new XML elements in the submission acknowledgement, regardless of whether the submission is accepted or rejected:

The organization/ERO should check the data in the <

CRC32> element and the <

CRC32> element to ensure that the size of the file transmitted to the IRS is the same size as the file computed by the IRS. If there is a discrepancy between the two values, it is the responsibility of the organization/ERO to contact the transmitter to see if the file was changed before transmission.

MeF Fed-State Program

Beginning in January 2006, the MeF system will accept state tax returns and other required state submissions through the Web Services channel. Through this portal, a transmitter’s or a state charity agency’s system that is registered can communicate directly with the MeF system without human intervention.

Two types of submissions can be transmitted through MeF Fed-State, (1) IRS submissions which contain one and only one federal return, and (2) state submissions. MeF will make redacted copies of accepted Forms 990, 990-EZ and 990-PF submissions available for retrieval by each state charity agency identified in the federal returns if explicitly requested to do so by he filer. Redacted submissions are submissions in which MeF has removed any sensitive data that is not available for public viewing.

MeF makes these state submissions available to the appropriate state agency based on the result of the validations. State specific documents required from exempt organizations are also transmitted in separate state submissions and made available to their corresponding state charity agency if accepted.

It is important to note that each state is responsible for validating its state submission file. MeF only validates the part of the state submission manifest required to perform MeF validations such as FEIN and Name Control. See Publication 4164 for instructions on applying for and submission of returns through the MeF Fed-State application.

Record Keeping and Documentation Requirements

EROs must retain the information listed below until the end of the calendar year in which the return was filed. An ERO may retain the required records at the business address of the Responsible Official during any period of time the office is closed. The ERO must make the records available to the IRS upon request.

Forms 8879-EO, must be available to the IRS in the same manner described above, for three years from the due date of the return or IRS received date, whichever is later.

EROs may electronically image and store all paper records they are required to retain for IRS e-file. This includes signed jurats as well as any supporting documents not included in the electronic record and all signature documents. The storage system must satisfy the requirements of Revenue Procedure 97-22, Retention of Books and Records. In brief, the electronic storage system must ensure an accurate and complete transfer of the hard copy to the electronic storage media. All records must be able to be reproduced with a high degree of legibility and readability (including signatures) when displayed on a video terminal and when reproduced in hard copy.

Providing Information to the Exempt Organization

The ERO must provide a complete copy of the return to the exempt organization. However, the copy need not contain the taxpayer identification number of the paid preparer. A complete copy of an organization’s return includes jurats, as well as the electronic portion of the return. The electronic portion of the return can be contained on a replica of an official form or on an unofficial form. However, on an unofficial form, data entries must be referenced to the line numbers or descriptions on an official form. If the organization provided a completed paper return for electronic filing and the information on the electronic portion of the return is identical to the information provided by the organization, a printout of the electronic portion of the return does not have to be provided to the organization.

The ERO should advise the organization to retain a complete copy of the return and any supporting material. The ERO should also advise the organization that an amended return, if needed, must be filed as a paper return and mailed to the Internal Revenue Service Center, Ogden, UT 84201.

Acknowledgements of Transmitted Return Data

The IRS electronically acknowledges the receipt of all transmissions and returns. Each return in a transmission is either accepted or rejected for specific reasons. Returns which meet the processing criteria are considered “filed” as soon as the return is accepted. Rejected returns that fail to meet processing criteria are considered “not filed.” The acknowledgement identifies the source of the reject and uses business rules to explain the problem. A business rule will explain why the transmission or return rejected (See Exhibit 7, Business Rules). Notification of changes to business rules will be sent out via the “Quick Alerts” Communication System.

If the ERO makes changes to the electronic return after Form 8453-EO has been signed by the organization (whether it was before transmitting or if the return was rejected after transmission), returns can be corrected and transmitted without new signatures or authorizations if changes are not more than $100 to "Gross Receipts." If the changes are more than this amount, the organization is required to sign a new 8453-EO and must be given a copy of the changed document (either paper or electronic).

The ERO must, at the request of the organization, provide the Return ID Number and the date the electronic return was accepted by the IRS. The ERO must also, if requested, supply the electronic postmark, if the Transmitter provided one for the return.

Resubmission of Rejected Returns

If the Service rejects an exempt organization return for processing and the reason for the rejection cannot be corrected and the return retransmitted, the ERO must take reasonable steps to inform the organization of the rejection within 24 hours. When the ERO advises the organization that the return has not been filed, the ERO must provide the organization with the Business Rule explanation (See Exhibit 7).

Transmitter Requirements

A Provider participating in MeF as a Transmitter must fulfill the requirements below.

On-Line Filing is a method of electronic filing through a personal computer. The exempt organization submits the electronic return from a personal computer to an authorized OnLine Provider. An Intermediate Service Provider may be involved to assist in processing tax return information between the organization and the On-line Provider.

Publication 4164, Modernized e-File Guide for Software Developers and Transmitters, outlines requirements for all transmitters in the IRS e-file program. In addition to those requirements, a Transmitter participating in On-Line Filing has some additional responsibilities. When participating in On-Line Filing, the On-Line Provider must:

A Transmitter may provide an electronic postmark to exempt organizations that file returns and extensions of time to file exempt organization returns, through an ERO or through On-Line Filing. The Transmitter creates the electronic postmark bearing the date and time (in the Transmitter’s time zone) that the return is received at the Transmitter’s host computer. The organization must adjust the electronic postmark to the time zone where the ERO is located or where the organization resides in the case of On-Line Filing to determine the postmark’s actual time. For example, if the Transmitter provides an electronic postmark with a time in the Pacific Time Zone but the organization is located in the Eastern Time Zone, the organization must add three hours to the postmark time to determine the actual postmark time (Eastern Time Zone).

If the electronic postmark is on or before the prescribed deadline for filing but the return is received by the IRS after the prescribed deadline for filing, the return will be treated as filed on the electronic postmark’s date. In order for a return to be treated as filed on the electronic postmark’s date, all requirements for signing the return and completing a paper declaration must be met.

If the electronic postmark is after the prescribed deadline for filing, the IRS actual receipt date, not the date of the electronic postmark will be the filing date. If a return is rejected, a corrected return must be filed in accordance with the rules for timely filing corrected returns after rejection of an electronic return.

A Transmitter is authorized to provide an electronic postmark if the Transmitter:

In addition to Electronic Return Originators and Transmitters previously discussed, there are other activities performed by Authorized IRS e-file Providers, including intermediate service and software development.

Intermediate Service Providers

An Intermediate Service Provider receives return information from an ERO (or from an organization filing electronically using a personal computer, modem, and commercial tax preparation software), processes the return information, and either forwards the information to a Transmitter or sends the information back to the ERO or organization (for On-Line Filing).

An Authorized IRS e-file Provider participating as an Intermediate Service Provider must meet the following responsibilities to participate in IRS e-file. The Intermediate Service Provider must:

When a return is filed using On-Line Filing, the Intermediate Service Provider processes information for an exempt organization so that a Transmitter can send the electronic return(s) to the IRS. In so doing, the Intermediate Service Provider must:

A Software Developer develops software for the purposes of formatting electronic return information according to IRS e-file specifications and/or transmitting electronic return information directly to the IRS. IRS e-file specifications may be found in Publication 4164, Modernized e-File Guide for Software Developers and Transmitters. Software Developers must pass Assurance Testing as prescribed in Publication 4205, Modernized e-File Test Package for Exempt Organization Filings. A Software Developer must:

Transition from Paper to Electronic Filing

The information included in this section will help EROs understand and plan for the differences of preparing a paper return versus an electronic return.

Preparing Supporting Data Required by IRS Forms or Form Instructions

IRS defined a structure that must be used to create most supporting data. This structure is necessary and critical to ensure tax preparation software can create supporting data that can be transmitted to and viewed by IRS systems. IRS reviewed all of the forms and form instructions and identified every instance where organizations are required to attach supporting data. IRS provided XML schemas that defined a format that must be used to report the supporting data.

In certain instances IRS allows supporting data to be attached to the electronic return as a PDF file but only in situations where IRS has not defined a format in an XML schema. Extremely limited exceptions to this rule are described in the Electronic Filing Exclusions found earlier in this document. Most software vendors plan to allow EROs the ability to import/export data from other sources. EROs should discuss options for importing supporting data created in other formats into the tax preparation software.

It is the responsibility of software vendors to provide appropriate instructions for organizations to enter supporting data that meets the IRS guidelines.

EXHIBITS

Exhibit 1 - Name Controls

The following Name Control rules and examples are provided to assist you in the preparation of the exempt organization return/extension.

If after reading this section you still cannot determine your business name control you may contact the e-Help Desk at 1-(866) 255-0654 (prompts 1, 2, and then 5) .

Name Control General Information:

Name Control Valid Characters:

Name Control Special Rule:

Examples:

Exhibit 2 - Accepted Forms and Schedules for Exempt Organizations

The following chart identifies the forms and schedules accepted for the TY 2004 IRS Modernized e-File Program for Exempt Organizations and the maximum number that may be submitted with each return.

 Form              990       990-EZ    990-PF    1120-POL  8868 ------------------------------------------------------------

 Schedule A (Form  1         1         0         0         0

 990/990-EZ)

 Schedule B (Form  1         1         1         0         0

 990/990-EZ/990-PF)

 Schedule D (Form  0         0         0         1         0

 1120)

 Form 926          1,000     1,000     Unbounded 0         0

 Form 970          1         1         0         0         0

 Form 1118         0         0         0         Unbounded 0

 Form 1118,        0         0         0         Unbounded 0

 Schedule I

 Form 1118,        0         0         0         1         0

 Schedule J

 Form 1120 Sch. D  0         0         0         1         0

 Form 2220         0         0         1         0         0

 Form 2439         Unbounded Unbounded Unbounded Unbounded 0

 Form 3115         1         1         0         0         0

 Form 3468         0         0         0         1         0

 Form 3800         0         0         0         1         0

 Form 4136         0         0         0         1         0

 Form 4466         0         0         1         0         0

 Form 4562         10,000    10,000    0         Unbounded 0

 Form 4797         0         0         0         1         0

 Form 5471         Unbounded Unbounded Unbounded 0         0

 Form 5471,        Unbounded Unbounded Unbounded 0         0

 Schedule J

 Form 5471,        Unbounded Unbounded Unbounded 0         0

 Schedule M

 Form 5471,        Unbounded Unbounded Unbounded 0         0

 Schedule O

 Form 6478         0         0         0         1         0

 Form 6765         0         0         0         1         0

 Form 8271         1         1         Unbounded 0         0

 Form 8275         1         1         Unbounded 0         0

 Form 8275-R       1         1         Unbounded 0         0

 Form 8586         0         0         0         1         0

 Form 8609         0         0         0         1         0

 Form 8609,        0         0         0         Unbounded 0

 Schedule A

 Form 8697         Unbounded Unbounded Unbounded 0         0

 Form 8820         0         0         0         1         0

 Form 8826         0         0         0         1         0

 Form 8830         0         0         0         1         0

 Form 8833         Unbounded Unbounded Unbounded 0         0

 Form 8834         0         0         0         1         0

 Form 8835         0         0         0         1         0

 Form 8846         0         0         0         1         0

 Form 8847         0         0         0         1         0

 Form 8858         Unbounded Unbounded Unbounded 0         0

 Form 8865         Unbounded Unbounded Unbounded Unbounded 0

 Form 8874         0         0         0         1         0

 Form 8883         Unbounded Unbounded Unbounded 0         0

 Form 8886         Unbounded Unbounded Unbounded Unbounded 0

 Form 8900         0         0         0         1         0

 Form 8903         0         0         0         1         0

 Form T (Timber) 100       100         Unbounded 0         0

Exhibit 3 - Foreign Country Codes

Code     Foreign Country         Code    Foreign Country

---------------------------------------------------------------

 AF      Afghanistan              BM      Burma

 AL      Albania                  BY      Burundi

 AG      Algeria                  CB      Cambodia

 AQ      American Samoa           CM      Cameroon

 AN      Andorra                  CA      Canada

 AO      Angola                   CV      Cape Verde

 AV      Anguilla                 CJ      Cayman Islands

 AY      Antarctica               CT      Central African Republic

 AC      Antigua & Barbuda        CD      Chad

 AR      Argentina                CI      Chile

 AM      Armenia                  CH      China

 AA      Aruba                    KT      Christmas Island

 AT      Ashmore & Cartier        IP      Clipperton Island

         Islands

 AS      Australia                CK      Cocos (Keeling) Islands

 AU      Austria                  CO      Colombia

 AJ      Azerbaijan               CN      Comoros

 BF      Bahamas                  CG      Congo (Democratic Republic Of Zaire)

 BA      Bahrain                  CW      Cook Islands

 FQ      Baker Islands            CR      Coral Sea Islands

 BG      Bangladesh               VP      Corsica

 BB      Barbados                 CS      Costa Rica

 BS      Bassas da India          IV      Cote D’Ivoire (Ivory Coast)

 BO      Belarus                  HR      Croatia

 BE      Belgium                  CU      Cuba

 BH      Belize                   CY      Cyprus

 BN      Benin                    EZ      Czech Republic

 BD      Bermuda                  DA      Denmark

 BT      Bhutan                   DJ      Djibouti

 BL      Bolivia                  DO      Dominica

 BK      Bosnia-Herzegovina       DR      Dominican Republic

 BC      Botswana                 TT      East Timor

 BV      Bouvet Island            EC      Ecuador

 BR      Brazil                   EG      Egypt

 IO      British Indian           ES      El Salvador Territory

         Ocean

 VI      British Virgin

         Islands                  EK      Equatorial Guinea

 BX      Brunei                   ER      Eritrea

 BU      Bulgaria                 EN      Estonia

 UV      Burkina Faso             ET      Ethiopia

 EU      Europe Island Territory  IZ      Iraq

 FK      Falkland Islands (Islas  EI      Ireland Malvinas)

 FO      Faroe Islands            IS      Israel

 FM      Federated States of      IT      Italy Micronesia

 FJ      Fiji                     JM      Jamaica

 FI      Finland                  JN      JanMayen

 FR      France                   JA      Japan

 FG      French Guinea            DQ      Jarvis Island

 FP      French Polynesia         JE      Jersey

 FS      French Southern &        JQ      Johnston Atoll Antartic Lands

 GB      Gabon                    JO      Jordan

 GA      The Gambia               JU      Juan de Nova Island

 GZ      Gaza Strip               KZ      Kazakhstan

 GG      Georgia                  KE      Kenya

 GM      Germany                  KQ      Kingman Reef

 GH      Ghana                    KR      Kiribati

 GI      Gibraltar                KN      Korea, Democratic People’s

                                          Republic of (North)

 GO      Glorioso Islands         KS      Korea, Republic of (South)

 GR      Greece                   KU      Kuwait

 GL      Greenland                KG      Kyrgyzstan

 GJ      Grenada                  LA      Laos

 GP      Guadeloupe               LG      Latvia

 GQ      Guam                     LE      Lebanon

 GT      Guatemala                LT      Lesotho

 GK      Guernsey                 LI      Liberia

 GV      Guinea                   LY      Libya

 PU      Guinea-Bissau            LS      Liechtenstein

 GY      Guyana                   LH      Lithuania

 HA      Haiti                    LU      Luxembourg

 HM      Heard Island &           MC      Macau

         McDonald Islands

 HO      Honduras                 MK      Macedonia

 HK       Hong Kong               MA      Madagascar

 HQ      Howland Island           MI      Malawi

 HU      Hungary                  MY      Malaysia

 IC      Iceland                  MV      Maldives

 IN      India                    ML      Mali

 ID      Indonesia                MT      Malta

 IR      Iran                     IM      Man, Isle of

 RM      Marshall Islands         PP      Papua-New Guinea

 MB      Martinique               PF      Paracel Islands

 MR      Mauritania               PA      Paraguay

 MP      Mauritius                PE      Peru

 MF      Mayotte                  RP      Philippines

 MX      Mexico                   PC      Pitcairn Islands

 MQ      Midway Islands           PL      Poland

 MD      Moldova                  PO      Portugal

 MN      Monaco                   RQ      Puerto Rico

 MG      Mongolia                 QA      Qatar

 MH      Montserrat               RE      Reunion

 MO      Morocco                  RO      Romania

 MZ      Mozambique               RS      Russia

 WA      Namibia                  RW      Rwanda

 NR      Nauru                    WS      Samoa (Western)

 BQ      Navassa Island           SM      San Marino

 NP      Nepal                    TP      Sao Tome and Principe

 NL      Netherlands              SA      Saudi Arabia

 NT      Netherlands

         Antilles                 SG      Senegal

 NC      New Caledonia            SE      Seychelles

 NZ      New Zealand              SL      Sierra Leone

 NU      Nicaragua                SN      Singapore

 NG      Niger                    LO      Slovakia

 NI      Nigeria                  SI      Slovenia

 NE      Niue                     BP      Solomon Islands

 NF      Norfolk Island           SO      Somalia

 CQ      Northern Mariana

         Island                   SF      South Africa

 NO      Norway                   SX      South Georgia & The South

                                          Sandwich Islands

 MU      Oman                     SP      Spain

 OC      Other Countries          PG      Spratly Islands

 PK      Pakistan                 CE      Sri Lanka

 LQ      Palmyra                  SH      St. Helena

 PS      Palau                    SC      St. Kitts & Nevis

 PM      Panama                   ST      St. Lucia Island

 SB      St. Pierre &

         Miquelon                 UG      Uganda

 VC      St. Vincent and

         the                      UP      Ukraine Grenadines

 SU      Sudan                    TC      United Arab Emirates

 NS      Suriname                 UK      United Kingdom (England,

                                     Northern Ireland,

                                     Scotland, and Wales)

 SV      Svalbard                 UC      Unknown Country

 WZ      Swaziland                UY      Uruguay

 SW      Sweden                   UZ      Uzbekistan

 SZ      Switzerland              NH      Vanuatu

 SY      Syria                    VT      Vatican City

 TW      Taiwan                   VE      Venezuela

 TI      Tajikistin               VM      Vietnam

 TZ      Tanzania                 VQ      Virgin Islands (US)

 TH      Thailand                 WQ      Wake Island

 TO      Togo                     WF      Wallis & Futuna

 TL      Tokelau                  WE      West Bank

 TN      Tonga                    WI      Western Sahara

 TD      Trinidad & Tobago        YM      Yemen (Aden)

 TE      Tromelin Island          YO      Yugoslavia

 TS      Tunisia                  ZA      Zambia

 TU      Turkey                   ZI      Zimbabwe

 TX      Turkmenistan

 TK      Turks and Caicos Islands

 TV      Tuvalu

EXHIBIT 4 - Standard Street Address Abbreviations

Word              Abbreviation

 ----------------------------------------------------

 Air Force Base    AFB

 and               &

 Alley             ALY

 Annex             ANX

 Avenue            AVE

 Beach             BCH

 Boulevard         BLVD

 Branch            BR

 Bridge            BRG

 Brook             BRK

 Building          BLDG

 Bypass            BYP

 Camp              CP

 Care Of,          %

 or In Care Of

 Center            CTR

 Circle            CIR

 Corner            COR

 Corners           CORS

 Court             CT

 Courts            CTS

 Creek             CRK

 Crossing          XING

 Drive             DR

 East              E

 Estates           EST

 Extension         EXT

 Expressway        EXPY

 Falls             FLS

 Forest            FRST

 Fork              FRK

 Forks             FRKS

 Fort              FT

 Freeway           FWY

 Gardens           GDNS

 General Delivery  GEN DEL

 Grove             GRV

 Harbor            HBR

 Haven             HVN

 Heights           HTS

 Highway           HWY

 Highway Carrier   HC

 Island            IS

 Islands           ISS

 Junction          JCT

 Lake              LK

 Lakes             LKS

 Lane              LN

 Lodge             LDG

 Manor             MNR

 Meadows           MDWS

 Mount             MT

 Mountain          MTN

 North             N

 Northeast         NE

 Northwest         NW

 One-fourth,*      1/4

 One-Quarter*

 One-half*         1/2

 (*All fractions-space after  prior number-for example:

 1012 1/2. St. )

 Parkway           PKY

 Place             PL

 Plaza             PLZ

 Point             PT

 Port              PRT

 P.O.-Box No.      PO BOX

 River             RIV

 Road              RD

 Rural Route       RR

 Shore             SHR

 Shores            SHRS

 South             S

 Southeast         SE

 Southwest         SW

 Square            SQ

 Station           STA

 Street            ST

 Summit            SMT

 Terrace           TER

 Trail             TRL

 Trailer           TRLR

 Turnpike          TPKE

 Union             UN

 Valley            VLY

 Village           VLG

 Vista             VIS

 West              W

 Note:  Plurals for street, road, avenue, etc. should be

 abbreviated by adding “s” to the abbreviation.

 For example; STS, RDS, AVES, etc.

EXHIBIT 5 - Valid ZIP Codes

Standard Postal Service State Abbreviations and ZIP Codes

 State                    Abbr.  ZIP Code  -------------------------------------------------------------------

 Alabama                  AL     350nn-369nn

 Alaska                   AK     995nn-999nn

 Arizona                  AZ     850nn-865nn

 Arkansas                 AR     716nn-729nn, 75502

 California               CA     900nn-908nn, 910nn-961nn

 Colorado                 CO     800nn-816nn

 Connecticut              CT     060nn-069nn

 Delaware                 DE     197nn-199nn

 District of Columbia     DC     200nn-205nn

 Florida                  FL     320nn-339nn, 341nn, 342nn,

                                 344nn, 346nn, 347nn, 349nn

 Georgia                  GA     300nn-319nn, 39815, 39834, 399nn

 Hawaii                   HI     967nn, 968nn

 Idaho                    ID     832nn-838nn

 Illinois                 IL     600nn-629nn

 Indiana                  IN     460nn-479nn

 Iowa                     IA     500nn-528nn

 Kansas                   KS     660nn-679nn

 Kentucky                 KY     400nn-427nn, 45275

 Louisiana                LA     700nn-714nn, 71749

 Maine                    ME     03801, 039nn-049nn

 Maryland                 MD     20331, 206nn-219nn

 Massachusetts            MA     010nn-027nn, 055nn

 Michigan                 MI     480nn-499nn

 Minnesota                MN     550nn-567nn

 Mississippi              MS     386nn-397nn

 Missouri                 MO     630nn-658nn

 Montana                  MT     590nn-599nn

 Nebraska                 NE     680nn-693nn

 Nevada                   NV     889nn-898nn

 New Hampshire            NH     030nn-038nn

 New Jersey               NJ     070nn-089nn

 New Mexico               NM     870nn-884nn

 New York                 NY     004nn, 005nn, 06390, 100nn-149nn

 North Carolina           NC     270nn-289nn

 North Dakota             ND     580nn-588nn

 Ohio                     OH     430nn-459nn

 Oklahoma                 OK     730nn-732nn, 734nn-749nn

 Oregon                   OR     970nn-979nn

 Pennsylvania             PA     150nn-196nn

 Rhode Island             RI     028nn, 029nn

 South Carolina           SC     290nn-299nn

 South Dakota             SD     570nn-577nn

 Tennessee                TN     370nn-385nn

 Texas                    TX     733nn, 73949, 750nn-799nn

 Utah                     UT     840nn-847nn

 Vermont                  VT     050nn-054nn, 056nn-059nn

 Virginia                 VA     20041,201nn, 20301,20370,

                                 220nn-246nn

 Washington               WA     980nn-986nn, 988nn-994nn

 West Virginia            WV     247nn-268nn

 Wisconsin                WI     49936, 530nn-549nn

 Wyoming                  WY     820nn-831nn

Standard Postal Service State Abbreviations and ZIP Codes for U.S. Possessions

 U.S. Possession          Abbr.    ZIP Code  -----------------------------------------------------

 American Samoa           AS       967nn

 Guam                     GU       9691n, 9692n

 Commonwealth of the      MP       9695n

 Northern Mariana Islands

 Puerto Rico              PR       006nn, 007nn, 009nn

 U.S. Virgin Islands      VI       008nn

APO/FPO City/State/ZIP Codes for Military Overseas Addresses

 City         State     ZIP Code -----------------------------------------------------

 APO or FPO   AA        340nn

 APO or FPO   AE        090nn-098nn

 APO or FPO   AP        962nn-966nn

EXHIBIT 6 - Business Rules

To find the most current version of Forms 990, 990-EZ, 990-PF, 1120-POL and 8868, click on the link below. In the current chart of information titled “Production System”, look for the tax year and form type of the return you are inquiring about and click on the “PDF” Business Rule like in the same row. The display will provide all the business rules for a specific year.

Note: There must be a date entered in the “start date” column in order for the business rule file to be active.

http://www.irs.gov/charities/article/0,,id=129364,00.html