DEPARTMENT OF THE TREASURY

INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224
SMALL BUSINESS/SELF-EMPLOYED DIVISION
December 3, 2007
Kimberly Perkins
Citizens for Responsibility and Ethics in Washington
1400 Eye Street, NW, Suite 450
Washington, DC 20005
Dear Ms. Perkins:
This is a third interim response to your Freedom of Information Act (FOIA) request,
dated September 21, 2006, and received in our office on September 25, 2006,
concerning IRS's Political Activity Compliance Initiative (PACI) Project.
We located 1570 pages responsive to your request. We are releasing 29 pages.
Under the FOIA subsections and Internal Revenue Code (lRC) sections listed below,
we are withholding 1541 pages in full and 20 pages in part. The redacted portion(s) of
each page are marked by the applicable FOIA subsection(s) exempting disclosure of
the information. Multiple exemptions appear on many of the documents.
We are withholding 229 pages in full under FOIA Subsection (b)(3) in conjunction with
IRC Section 6103.
Subsection (b)(3) of the FOIA exempts from disclosure matters that are specifically
exempted by statute. The information being withheld under FOIA Subsection (b)(3)
consists of third party tax information, the disclosure of which is prohibited by IRC
Section 6103.
In addition, we are withholding 1312 pages in full and 16 pages in part under FOIA
Subsection (b)(5).
Subsection (b)(5) of the FOIA exempts from disclosure inter-agency or intra-agency
memorandums or letters which would not be available by law to a party other than an
agency in litigation with the agency. The three primary priVileges covered by this
exemption are the deliberative process privilege, the attorney work product privilege
and the attorney-client privilege.
The deliberative process privilege protects documents which reflect advisory opinions,
recommendations, and deliberations comprising the process by which decisions and
policies are formulated. The attorney work product privilege protects memorandums
prepared by an attorney in contemplation of litigation which sets forth the attorney's
theory of the case and litigation strategy.
The attorney-client privilege protects confidential communications between an attorney
and a client relating to a legal matter for which the client has sought professional advice
2
We are withholding four pages in part under FOIA Subsection (b)(6).
Subsection (b)(6) of the FOIA exempts from disclosure personnel and medical files and
similar files the disclosure of which would constitute a clearly unwarranted invasion of
personal privacy. The determination to withhold is based on a balancing of interests
between the protection of an individual's privacy from unnecessary public scrutiny and
the preservation of the public's right to government information. The Supreme Court
has ruled that Congress intended the similar files provision to be construed broadly, so
that all information which applies to a particular individual qualifies for consideration
under Subsection (b)(6).
We are continuing our search for documents that may be responsive to your request
and will advise you of the results as soon as possible.
Should you have any questions concerning this correspondence, you may contact Tax
Law Specialist D. Kozarovich, 10 # 61-11479, by calling 502-572-2108 or by writing to:
Internal Revenue Service, Disclosure, 600 Martin Luther King Plaza, Room 622,
Louisville, Kentucky 40202. Please refer to case number 50-2007-00006.
Sincerely,
9 ~ e : t 'K.. 1 ' 1 1 ~ ~
Janet R. Miner
Acting Chief, Disclosure
Enclosures
Kall Jason C
From: Cochran Virginia E [Virginia.E.Cochran@IRSCOUNSEL.TREAS.GOV]
Sent: Thursday, January 20, 2005 1:32 PM
To: Kall Jason C
Subject: RE: PIP final report
fine. but please, on the top of page 3, make it say "an absolute" rather than "a absolute"
-----Original Message-----
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov]
sent: Thursday, January 20, 2005 1:24 PM
To: Cochran Virginia E
Subject: RE: PIP final report
substance only.
-----Original Message-----
From: Cochran Virginia E [mailto:Virginia.E.Cochran@IRSCOUNSEL.TREAS.GOV]
sent: Thursday, January 20, 2005 1: 12 PM
To: Kall Jason C
Subject: RE: PIP final report
Jason, I'm looking at this right now. do you want me to call you with typo, grammar, etc.
type stuff or only look at substance?
-----Original Message-----
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov]
sent: Thursday, January 20, 2005 1:04 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan
B; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Original Message-----
From: Kall Jason C
sent: Thursday, January 20, 2005 1:02 PIVl
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,
Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, Betty
Subject: PIP final report
1/3/2007
1/3/2007
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes regarding the work you
all did at the beginning.
Thanks
Jason
Kall Jason C
From: Sullivan Martha
Sent: Thursday, January 27,20057:42 AM
To: Kall Jason C; Johnson Rosie C; Smith Fannie M; Grissom Jackie R
Cc: Sullivan Martha
Subject: FW: PIP Report modified - WW
Importance: High
Follow Up Flag: Follow up
Flag Status: Flagged
Attachments: PIP Final Report Jan 26 2005 ww rev.doc
This is an excellent report and my apologies about the comments on the draft report which I understand
shouldn't have been sent to me. I have made a couple of cosmetic changes, but I have also asked a couple of
questions which I would appreciate your answers to and then it will be ready for forwarding to the commissioner.
Again, thanks for a very good report.
-----Original Message-----
From: Wilson Wendy R
sent: Wednesday, January 26, 2005 3:04 PM
To: Sullivan Martha
Subject: PIP Report modified - WW
Hi Martha,
Attached are the changes in your draft.
Wendy
1/3/2007
Kall Jason C
From:
Sent:
To:
Cc:
Subject:
Importance:
Attachments:
PIP Final Report
Jan 26 2005 w...
Grissom Jackie R
Monday, January 31, 2005 2:40 PM
Sullivan Martha
Wilson Wendy R; "Director EO Examinations; Kall Jason C; Payne Jackie; Grissom Jackie R
PIP Final Report Jan 26 2005 ww rev2.doc
High
PIP Final Report Jan 26 2005 ww rev2.doc
Attached is the revised PIP report with the changes and clarifications highlighted in yellow. Wendy, please print out 2
reports for Martha. One with the highlights and one without the highlights.
If you need anything else please let me know.
J a c ~ e (}rissom
Senior Program Specialist
EO Examinations
1100 Commerce Street
Dallas TX 75242
Phone: 214-413-5404
Fax: 214-413-5453
1
Kall Jason C
From: Schaffer Sharon A
Sent: Thursday, June 02, 2005 9:57 AM
To: Kall Jason C
Subject: Input on Church Procedures
Attachments: Church PIP Concerns - Schaffer 6-02-2005.doc
Jason,
In my haste to get my input to you, I miswrote (is that a word?) Item 5. The change is in the attached revision.
know the Admin & Const. Rights are an exhibit in the manual. I meant to say that an electronic copy of them
should be included in the distribution of sample letters, questions, etc.
I'll take a look at the CUT revisions and sample questions.
Sharon
1/312007
Kall Jason C
From:
Sent:
To:
Subject:
Attachments:
Abramowitz Hyman
Wednesday, July 13, 2005 9:30 AM
Fisher Andrea; Lawson Colleen C; Pugh Larry D; Johnson Susan B; Medina Moises C;
Sutherland Anita A; Cochran Virginia E; Miller Thomas J; Kall Jason C; Davis Tonya L
RE: PACI procedures
PACI procedures-7-13-05.doc
I'm forwarding this again.
-----Original Message-----
From: Fisher Andrea
sent: Tuesday, July 12, 2005 6:51 PM
To: Lawson Colleen C; Pugh Larry D; Johnson Susan B; Medina Moises C; Sutherland Anita A; Cochran Virginia E; Abramowitz
Hyman; Miller Thomas J; Kall Jason C; Davis Tonya L
Subject: PACI procedures
Importance: High
Attached are the revised PACI procedures, incorporating comments received on the last draft ciruclated after our
meeting last month.
The final is due to Martha by Tuesday (one week from today). Please review and provide any further comments
for incorporation into the document to me NO LATER THAN FRIDAY, 7/15.
Andi
File: PACI procedures-7-13-05.doc
~
PACI
edures-7-13-05.doc
[Abramowitz Hyman]
1
Kall Jason C
From: Cochran Virginia E [Virginia.E.Cochran@IRSCOUNSEL.TREAS.GOV]
Sent: Friday, July 29,20053:26 PM
To: Kall Jason C
Subject: RE: Latest and last version of the letters
looks good to me
-----Original Message-----
From: Kall Jason C[mailto:Jason.C.Kall@irs.gov]
sent: Friday, July 29, 20053:21 PM
To: Miller Thomas J; Pugh Larry D; Cochran Virginia E
Cc: Fisher Andrea
Subject: Latest and last version of the letters
Here are the letters incorporating Tom's and Virginia's changes from Today.
Larry, could you let me know if you have any concerns from Mandatory Review's standpoint. Tom, since we
accepted your changes I assume we have the green light from R & A.
Jason
1/3/2007
Kall Jason C
From: Miller Thomas J
Sent: Friday, January 14,20052:12 PM
To: Kall Jason C
Subject: FW: Final Type A letter
Attachments: Miller Thomas J.vcf; Miller Thomas J (Thomas.J.Miller@irs.gov).vcf
Jason,
I assumption was probably that Diane
would send it out through Bobby Zarin, but I don't have or recall seeing such a message. Jwill forward
the subsequent message I received from Anita concerning the minor change to the letter.
TomM.
Thomas J. Miller
Technical Advisor,
l:xempt Organizations Rulings & Agreements
72JT
-----Original Message-----
From: Miller Thomas J
sent: Friday, August 27, 20044:22 PM
To: Letourneau Diane L
Subject: RE: Final Type A letter
Diane,
Thanks. Looks good to go!
Tom
Thomas J. Miller
Technical Advisor,
Exempt Organizations Rulings & Agreements
c-gQf) 283-9472,
-----Original Message-----
From: Letourneau Diane L
sent: Friday, August 27, 2004 4: 19 PM
To: Miller Thomas J
Subject: Final Type A letter
/
........".L.{" '!if'
1/3/2007
Kall Jason C
From: Miller Thomas J
Sent: Friday, January 14, 20052:14 PM
To: Kall Jason C
Subject: FW: Type A Letter
Attachments: Political Intervention Initial Contact Letter - Type A Cases - finaI2.doc; Miller Thomas J
(Thomas.J.Miller@irs.gov).vcf
As 1promised in the earlier message I forwarded, here is change to <",-:ri
t';i A lefterf

Thomas J. Miller
Technical Advisor,
,Exempt Organizations Rulings & Agreements
1
1
(2:02) 283-9472: i
-----Original IVJessage-----
From: Sutherland Anita A
sent: Friday, October 01, 2004 1:49 PIVJ
To: Miller Thomas J
Cc: McClernan Betty A; Cochran Virginia E; Abramowitz Hyman; Pugh Larry D; Johnson Susan B
SUbject: FW: Type A Letter
These are changes to address at the top has been changed to reflect
Sharon's address and the other change is noted below.
-----Original Message-----
From: Schaffer Sharon A
sent: Wednesday, September 29, 2004 7:21 AM
To: Sutherland Anita A
Subject: Type A Letter
Anita,
Sharon
1/3/2007
Kall Jason C
From:
Sent:
To:
Miller Thomas J
Friday, January 14, 2005 2:21 PM
Kall Jason C
Subject: FW: Political intervention letters
Attachments: Miller Thomas J.vcf; Miller Thomas J (Thomas.J.Miller@irs.gov).vcf
Jason,
This is what 1found on
Tom
Thomas J. Miller
Technical Advisor,
Exempt Organizations Rulings & Agreements
283-9472 f
-----Original Message-----
From: Miller Thomas J
Sent: Friday, August 27,20043:36 PM
To: Letourneau Diane L
Subject: RE: Political intervention letters
qeletirig ihereference to eiri
p
16yment taxes, etc., in the "A" 1etter
hanks for picking that up!
Tom
Thomas J. Miller
Technical Advisor,
Exempt Rulings & Agreements
(202) 283-9472 1
-----Original Message-----
From: Letourneau Diane L
Sent: Friday, August 27, 20043:31 PM
To: Miller Thomas J
Subject: Political intervention letters
Tom,
..'i.R ..'.f!e B" yersion and changed the name of the file,Jo
include'theworo"TlnaC""", . I.... "

As I explained in my voice message, I first ,;
of the the fifth paragraph of the "Type A" letter. Please let me know if this is OK.

Thanks,
Diane
113/2007
Kall Jason C
From: Johnson Susan B
Sent: Tuesday, January 18, 2005 2:02 PM
To: Kall Jason C
Subject: Executive Summary - Questions about content (specifically "recommendations")
Importance: High
Jason,
summary report does not address 'recomrpdndations'. Please give me what your t
recommendations are:
L
As a field agent, "not working' any ofthe cases; rdo not feel thartllave the background (or
authority) to draft this section of the report without input (written) from a management official. As I stated during
our telephone call this morning, I was asked to participate in the PIP team because of my experience with IRC
527 issues, and because I had to draft a unique appointment letter & lOR (approved by Counsel before issuance)
for a highly sensitive 527 case. My involvement in the team was simply that. I worked with Virginia Cochran to
draft and initial contact letters (Type A and B) and the lOR templates for the 5 types of political intervention
discussed in the regulations. Both Virginia and I recused ourselves from the case review and selection process
because of our possible involvement as technical employees. I did not review or classify any of the returns. I did
not work any of the cases. My knowledge of the project is limited to the discussions the team had during our 7/25
- 7/30 meeting in Dallas, subsequent e-mails and conference calls, and what I read in the newspapers.
Susan B. Johnson, 10# 73-3310
Revenue Agent, EO Group 7949
55 N. RobinsonlMS 4900-0KC
Oklahoma City, OK 73102-9229
Phone: 405-297-4473
Fax: 405-297-4495
_ 0-1789 )
113/2007
Kall Jason C
From: Davis Tonya L
Sent: Thursday, January 20, 20059:34 AM
To: Kall Jason C
Cc: Johnson Susan B; Downing Nanette M; McClernan Betty A
Subject: PIP Report
Importance: High
Attachments: Report_PROJECT 302 draft (davis 01-19-2004).doc
Finally, here is the draft of the report
Jason - if you have any questions let me know.
Tonya Davis T:EO:E:PR:P:7992
Revenue Agent/Project Analyst
TE/GE Exempt Organizations, CSDAU
,Extension 288 (
'865) 545-4493 F
1/312007
, !
Kall Jason C
From: Johnson Susan B
Sent: Thursday, January 20, 2005 10:09 AM
To: Kall Jason C
Subject: PIP Report
Importance: High
Attachments: Tonya's Draft w Susan's chgs 1-20-05 (davis 01-19-2004).doc
Jason,
Attached is Tonya's report that I received this morning, which incorporates my 1-19-05 report I sent to her last
night. I have made a couple of cosmetic changes to the sentences (a couple of misspelled words), but not to its
content. I also changed that headings so that they are all consistent (caps vs. non-caps). Only the Introduction is
in lower case.
The filename: Tonya's Draft w susan's chgs 1-20-05 (david 01-19-2004).doc.
This message is sent via secure messaging. If you have questions, just let me know. I am in the office today.
Susan B. Johnson, 10# 73-3310
Revenue Agent, EO Group 7949
55 N. Robinson/MS 4900-0KC
Oklahoma City, OK 73102-9229
73't!
Fax:

Paqer: 8.0.0-21.0-1789 J
T ..
1/3/2007
- .. 7\
-----Original Message-----
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov]
Sent: Thursday, January 20, 2005 1:04 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan B;
Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McCiernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Origi nal Message-----
From: Kall Jason C
Sent: Thursday, January 20,2005 1:02 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson, Susan;
Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McCiernan, Betty
Subject: PIP final report
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes regarding the work you all did
at the beginning.
1/312007
-----Original Message-----
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov]
sent: Thursday, January 20, 2005 1:04 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan B;
Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Original Message-----
From: Kall Jason C
sent: Thursday, January 20, 2005 1:02 PI"I
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson, Susan;
Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, Betty
Subject: PIP final report
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes regarding the work you all did
at the beginning.
Thanks
Jason
1/3/2007
-"lJ
-----Original Message-----
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov]
sent: Thursday, January 20, 2005 1:04 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan
B; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Original Message-----
From: Kall Jason C
sent: Thursday, January 20,20051:02 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,
Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McCiernan, Betty
Subject: PIP final report
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes regarding the work you
all did at the beginning.
Thanks
Jason
-----Original Message-----
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov]
Sent: Thursday, January 20, 2005 1:04 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan
B; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Original Message-----
From: Kall Jason C
Sent: Thursday, January 20, 2005 1:02 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,
Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, Betty
Subject: PIP final report
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes regarding the work you
all did at the beginning.
Thanks
Jason
1/312007
/
From: Kall Jason C [mailto:Jason.C.Kall@irs.gov] --""
sent: Thursday, January 20, 2005 1:04 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz Hyman; Cochran Virginia E; Davis Tonya L; Fisher Andrea; Johnson Susan
B; Lawson Colleen C; Miller Thomas J; Pugh Larry D; Sutherland Anita A; McClernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Original Message-----
From: Kall Jason C
sent: Thursday, January 20, 2005 1:02 PM
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher, Andrea; Johnson,
Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland, Anita; McClernan, Betty
Subject: PIP final report
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes regarding the work you
all did at the beginning.
Thanks
Jason
1/3/2007
McClernan Betty A
Subject: RE: PIP final report
It would help if I included the attachment
-----Original IVJessage-----
From: Kall Jason C
Sent: Thursday, January 20, 2005 1:02 PIVJ
To: Payne Jackie; Grissom Jackie R; Johnson Rosie C
Cc: Wells Renee B; Abramowitz, Hyman; Cochran, Virginia; Davis, Tonya; Fisher,
Andrea; Johnson, Susan; Lawson, Colleen; Miller, Thomas; Pugh, Larry; Sutherland,
Anita; McClernan, Betty
SUbject: PIP final report
Here is the draft final report. I hope this version meets Martha's needs.
PIP Team, please review and make sure I did not make any factual mistakes
regarding the work you all did at the beginning.
Thanks
Jason
Kall Jason C
From: Sutherland Anita A
Sent: Friday, January 21, 2005 7:13 AM
To: Kall Jason C
Subject: FW: Political Intervention
Attachments: Political Intervention Sept report.doc; Political Intervention Sept report.doc
Some reports from Betty that explain actions and dates
-----Original Message-----
From: McClernan Betty A
Sent: Friday, October 08, 2004 12:03 PM
To: Grissom Jackie R
Cc: Kall Jason C; Schaffer Sharon A; Sutherland Anita A; Fitch Karen L
Subject: Political Intervention
Attached is the report for the Political Intervention team.
Betty A. McClernan
Manager, EO Compliance Strategy and Data Analysis
VMS and LA (pending relocation to DC)

v" --"..
Kall Jason C
From: Grissom Jackie R
Sent:
To:
Cc:
Friday, January 21, 2005 5:13 PM
Sullivan Martha
Ayers Sanford E; Wilson Wendy R; *Director EO Examinations; Payne Jackie; Smith Fannie
M; Kall Jason C
Subject: PIP Final Report Jan 20 2005 jg rev.doc
Importance: High
Attachments: PIP Final Report Jan 20 2005 jg rev.doc
Attached is the final PIP report. Please let me know if you have questions.
Thank you,
qrissom
Senior Program Specialist
EO Examinations
1100 Commerce Street
Dallas TX75242 .
Phone:
Fax: 2'1'1":0413'-5453' J'
1/312007
Kall Jason C
From: Payne Jackie on behalf of Johnson Rosie C
Sent: Monday, January 31, 2005 2:47 PM
To: Grissom Jackie R; Kall Jason C
Subject: FW: PIP Final Report
Importance: High
Attachments: PIP Final Report Jan 26 2005 ww rev2.doc
fyi
Jackie Payne
Secretary to Director, EO Examinations
Phone:
Fax:
ema. a
-----Original Message-----
From: Sullivan Martha
sent: Monday, January 31, 2005 2:37 PM
To: Miller Steven T; Ingram Sarah H
Cc: Johnson Rosie C
Subject: PIP Final Report
Importance: High
Attached is the final report on the Political Intervention Project.
1/3/2007
Kall Jason C
From: Zarin Roberta B
Sent: Monday, July 18, 20054:49 PM
To: Kall Jason C
Subject: RE: PACI procedures
I only heard back from you. Who got the actual request? Martha?
-----Original Message-----
From: Kall Jason C
Sent: Friday, July 15, 2005 5:09 PM
To: Zarin Roberta B
Subject: PACI procedures
Bobby,
Jason
113/2007
Kall Jason C
From: Fisher Andrea
Sent: Monday, July 18, 2005 5:32 PM
To: Kall Jason C
Subject: PACI procedures
Attachments: PACI procedures-7-18-05.doc
Jason,
Attached are the procedures
a clean doc m t
I will be in CPE the next 21/2 days, and will not have access to e-mail while I'm away.
Andi
Jlndi Pislier
Presidential Management Fellow
Customer Education & Outreach
IR anizations
T:
F:
E:
1/3/2007
Kall Jason C
From: Johnson Susan B
Sent: Monday, July 25, 2005 5:50 PM
To: Kall Jason C
Cc:
Subject: IP
Importance: High
Attachments: .
Jason:
Attached is a VERY rough draft of what I think you might be looking for. Let me know what you think.
Susan B. Johnson, 10# 73-3310
Revenue Agent, EO Group 7949
55 N. Robinson/MS 4900-0KC
Oklahoma Ci 7 102-9229
Phone:
Fax:
P a a e ~
11312007
KallJason C
From: Miller Steven T
Sent: Monday, November 07, 2005 12:02 PM
To: Lerner Lois G; Johnson Rosie C; Kall Jason C; Sullivan Martha
Cc: Ingram Sarah H; Pyrek Steve J
;;ng"_" ..
S ubj act:


-----Or/gmal Message-----
=rom: Keith Frank
ient: Monday, November 07, 2005 1:00 PM
ro: Miller Steven T
iubject:
-----Original Message-----
:rom: Friedland Bruce I
;ent: Monday, November 07,2005 12:57 PM
0: Keith Frank; Deneroff Jan S
tUbject:
rax-Exempt Organizations and Political

=S-2004-14, October 2004
Jnder law, tax-exempt organizations described in section 501 (c)(3) of
he Internal Revenue Code are prohibited from participating or
ntervening in any political campaign on behalf of, or in opposition to,
my candidate for public office. Charities, educational institutions and
eligiolJs organizations, including churches, are among those that are
:overed under this code section.
-hese organizations cannot endorse any candidates, make donations
J their campaigns, engage in fund raising, distribute statements, or
lecome involved in any other activities that may be beneficial or
letrimental to any particular candidate. Even activities that encourage
,eople to vote for or against a particular candidate on the basis of
lonpartisan criteria violate the political campaign prohibition of section
01(c)(3).
,s it has in recent presidential election cycles, the Internal Revenue
:ervice has taken steps to educate such organizations about their
including:
On April 28, 2004, the IRS issued an advisory to charities that
they should be careful that their efforts to educate voters comply
with federal requirements concerning political campaign
activities.
On June 10, 2004, the IRS sent a letter to the nation's political
/7/2005
parties reminding them about the guidelines for political activities
by charitable organizations.
Over the course of the year, the IRS has reviewed information
alleging improper political intervention by more than 100 charities,
churches and other tax-exempt groups.
Because of heightened concerns about improper political activities
during the election season, the IRS created a committee of career civil
servants who are experts in the tax-exem area to review the .-/
allegations. This team selected more th 60" es "hat merited
examination. Over the last e IRS has been
contacting these organizations asking for information about alleged
improper political activities.
While under law the IRS cannot disclose the names of these groups,
the organizations being examined represent a broad cross-section of / ..11.
community and a wide range of viewpoints. A.eout B
of the groups are churches, with the remainder being other types
::>f charitable organizations.
Under the law, political intervention by a tax-exempt organization
:::arries a variety of possible consequences. It can result in the
Jrganization losing its tax-exempt status or paying a tax. In less
3erious situations, the IRS may require corrective actions from the

'Our obligation is to enforce the law, which prohibits all charities from
:mgaging in political activities," said IRS Commissioner Mark W.
::verson.
'By law, the Internal Revenue Service cannot comment regarding any
;ompliance activities involving specific tax-exempt organizations.
_aw-enforcement decisions at the IRS are made without regard to
)olitical considerations," Everson said.
The IRS follows strict procedures involving the selection of tax-
lxempt organizations for audit and resolution of any complaints about
ouch groups. Career civil servants, not political appointees, make
hese decisions in a fair, impartial manner," Everson said. "Any
;uggestion that the IRS has tilted its audit activities for political
lurposes is repugnant and groundless."
Items:
IR-2004-79 - IRS Issues Letter on Exempt Organizations
IR-2004-59 - Charities May Not Engage in Political Campaign
Activities
t/7/2005
Kall Jason C
From: Johnson Susan B
Sent: Tuesday, November 08, 2005 4:43 PM
To: Kall Jason C
Subject: Printing spreadsheets
Jason:
I printed out each of the spreadsheets (& related charts,etc). Each separate document printed on letter paper, but some documents
take more than one page. Some I have had to adjust the margins & the print size (80%, 90%, etc) to get it to fit. All are printed in
'landscape' format. If you will send me the IP address & model of the network printer nearest you, I will send the prints to your printer
and you can see what I mean.
8/2005
- _ . _ - - ~ . - - - - - -- - - - - ~ ..-
~ ....-- .. -. --.. ---f--- - - - ~ / - - - - - - --.-- - - - f ' - - - - - - - ~ - - ,",--.-.-------------...--.------------ ---. -- ~ - . - - ---. -----.- -----.. -----------
On Site Examination Guidelines 4.75.11 page 5
JI"
4.75.11.4.2
(08-01-2003)
Limited Scope
Examinations
4.75.11.4.3
(08-01-2003)
Internal Controls
4.75.11.4.3.1
(08-01-2003)
Evaluation of Internal
Controls
(6) The examiner is expected to identify unusual transactions'i$tk out the pur-
pose of such transactions, and determine whether they to the es-
tablished exempt purposes of the organization.
(1) In certain cases, the scope of an examination may to specific issues
identified by the Examination Planning and Prograrnc; 'function,
(2) A manager may direct an examiner to limit the scope of an examination. How-
ever, the manager must explain which issues w/'t"l not pursued and why.
Note: Documentation will consist of an entry on tre 5464, Case Chronology
Record (CCR) initialed by the manager, which explains the reasons for limit-
ing the examination. If the discussion is lengthy, a separate workpaper
should be indexed to the CCR.
(3) Limited scope examinations generally include only classified issues and large,
unusual and questionable items (LUQ) reflected on the return or discovered
during the examination. However, there is an expectation that examinations will
be expanded when the facts warrant. Additional issues in a limited scope ex-
amination will not be pursued without the manager's approval. Managers are
responsible for establishing procedures for indicating their written approval in
the case file.
(4) In al/ examinations, the examiner should review the organizing documents to
determine the organization's exempt purpose. Where exempt purpose is not a
classified issue, an analysis of the operational activities is not generally appro-
priate. However, if during the course of the examination it becomes apparent
there are operational issues, the examination scope may be expanded.
(5) The examiner must also establish on every case that the organization has filed
all other required Federal returns.
(6) In all limited scope examinations, the case file must include proper documenta-
tion concerning the scope of the examination and the package audit require-
ments. The cover sheet accompanying project code cases will constitute
managerial approval for a limited scope examination, and must remain with the
case file.
(1) Internal Controls are defined as the taxpayer's policies and procedures to
identify, measure and safeguard business operations and avoid material
misstatements of financial information.
(2) The lack of good internal controls may indicate the potential for diverted re-
ceipts, diverted assets, or other problems.
Note: The lack of internal controls does not necessarily jeopardize exemption, but
it may affect the scope of the examination.
(1) Examiners should evaluate the existence and effectiveness of an organiza-
tion's internal controls and expand or contract the scope of the examination
appropriately.
(2) In determining whether to rely on the organization's books and records, the
examiner should consider the extent to which the following control checks are
utilized by the organization:
IR Manual 08-01-2003 4.75.11.4.3.1
Internal Revenue Manual - 4.75.11 On Site Examination Guidelines
4.75.11.4.2 (08-01-2003)
Limited Scope Examinations
Page 1 of 1
1. In certain cases, the scope of an examination may be limited to specific issues identified by the Examination Planning
function.
2. A manager may direct an examiner to limit the scope of an examination. However, the manager must explain which i s ~
pursued and why.
Note:
Documentation will consist of an entry on the 5464, Case Chronology Record (CCR) initialed by the manager, which e:
reasons for limiting the examination. If the discussion is lengthy, a separate workpaper should be indexed to the CCR.
3. Limited scope examinations generally include only classified issues and large, unusual and questionable items (LUI
the return or discovered during the examination. However, there is an expectation that examinations will be expanded
warrant. Additional issues in a limited scope examination will not be pursued without the manager's approval. Manager
for establishing procedures for indicating their written approval in the case file.
4. In all examinations, the examiner should review the organizing documents to determine the organization's exempt purl
exempt purpose is not a classified issue, an analysis of the operational activities is not generally appropriate. However
course of the examination it becomes apparent there are operational issues, the examination scope may be expanded
5. The examiner must also establish on every case that the organization has filed all o ~ h e r reqUired Federal returns.
6. In all limited scope examinations, the case file must include proper documentation concerning the scope of the examin
package audit requirements. The cover sheet accompanying project code cases will constitute managerial approval fOI
examination, and must remain with the case file.
4.75.11.4.3 (08-01-2003)
Internal Controls
1. Internal Controls are defined as the taxpayer's policies and procedures to identify, measure and safeguard busir
and avoid material misstatements of financial information.
2. The lack of good internal controls may indicate the potential for diverted receipts, diverted assets, or other problems.
Note:
The lack of internal controls does not necessarily jeopardize exemption, but it may affect the scope of the examination
4.75.11.4.3.1 (08-01-2003)
Evaluation of Internal Controls
1. Examiners should evaluate the existence and effectiveness of an organization's internal controls and expand or contra
the examination appropriately.
2. In determining whether to rely on the organization's books and records, the examiner should consider the extent to wh
control checks are utilized by the organization:
A. Transactions are recorded in the books and records in a timely manner;
http://www.irs.gov/irm/part4/ch52s07.html 11/20/2007