[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.7605-1]

[Page 581-585]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
             Discovery of Liability and Enforcement of Title
 
Sec. 301.7605-1  Time and place of examination.

    (a) Time and place of examination to be reasonable--(1) In general. 
The time and place of examination pursuant to the provisions of sections 
6420(e)(2), 6421(g)(2), 6427(j)(2), or 7602 of the Internal Revenue Code 
are to be fixed by an officer or employee of the Internal Revenue 
Service, and officers and employees are to endeavor to schedule a time 
and place that are reasonable under the circumstances. This section sets 
forth general criteria for the Service to apply in determining whether a 
particular time and place for an examination are reasonable under the 
circumstances. Officers and employees should exercise sound judgment in 
applying these criteria to the circumstances at hand and should balance 
convenience of the taxpayer with the requirements of sound and efficient 
tax administration.
    (2) International examinations. Except for the provisions of 
paragraph (b)(2) of this section, this section does not apply to 
examinations that fall under the jurisdiction of the Office of the 
Assistant Commissioner (International).
    (3) Criminal investigations. Except for the provisions of paragraph 
(b)(2) of this section, this section does not apply to criminal 
investigations.
    (b) Time of examination--(1) Date and time of examination. It is 
reasonable for the Service to schedule the day (or days) for an 
examination during a normally scheduled workday (or workdays) of the 
Service, during the Service's normal business hours. It is reasonable 
for the Service to schedule examinations throughout the year, without 
regard to seasonal fluctuations in the businesses of particular 
taxpayers or their representatives. However, the Service will work with 
taxpayers or their representatives to try to minimize any adverse 
effects in scheduling the date and time of an examination.
    (2) Date of appearance when summons is used. If a summons is issued 
under authority of section 7602(a)(2) of the Internal Revenue Code, or 
under the corresponding authority of sections 6420(e)(2), 6421(g)(2), or 
6427(j)(2), the date fixed for appearance before an officer or employee 
of the Service must be no less than 10 days from the date of the 
summons.
    (c) Type of examination--(1) In general. The Service will determine 
whether an examination will be an office examination (i.e., an 
examination conducted at a Service office) or a field examination (i.e., 
an examination conducted at the taxpayer's residence or place of 
business, or some other location that is not a Service office), based 
upon the complexity of the return and which form of examination will be 
more conducive to effective and efficient tax administration.
    (2) Office examination held in location other than Service office in 
case of clear need. The Service will grant a request to hold an office 
examination at a location other than a Service office in a case of clear 
need, such as when it would be unreasonably difficult for the

[[Page 582]]

taxpayer to travel to a Service office because of the taxpayer's 
advanced age or infirm physical condition, or when the taxpayer's books, 
records, and source documents are too cumbersome for the taxpayer to 
bring to a Service office.
    (d) Place of examination--(1) In general. The Service generally will 
make an initial determination of the place for an examination, including 
the Internal Revenue Service district to which an examination will be 
assigned, based upon the address shown on the return for the period 
selected for examination. Requests by taxpayers to transfer the place of 
examination will be resolved on a case-by-case basis, using the criteria 
set forth in paragraph (e) of this section.
    (2) Office examinations--(i) In general. An office examination of an 
individual or sole proprietorship generally is based on the residence of 
the individual taxpayer. An office examination of a taxpayer that is an 
entity generally is based on the location where the taxpayer entity's 
original books, records, and source documents are maintained. An office 
examination generally will take place at the closest Service office 
within the district encompassing the taxpayer's residence or at the 
closest Service office within the district where the taxpayer entity's 
books, records, and source documents are maintained. It generally is not 
reasonable for the Service to require a taxpayer to attend an 
examination at an office within an assigned district other than the 
closest Service office.
    (ii) Exception. If the office within the assigned district closest 
to an individual taxpayer's residence or the location where a taxpayer 
entity's books, records and source documents are maintained does not 
have an examination group or the appropriate personnel to conduct the 
examination, it generally is reasonable for the Service to require the 
taxpayer to attend an examination at the closest Service office within 
the assigned district that has an examination group or the appropriate 
personnel.
    (iii) Travel considerations. In scheduling office examinations, the 
Service in appropriate circumstances will take into account the distance 
a taxpayer would have to travel.
    (3) Field examinations--(i) In general. A field examination will 
generally take place at the location where the taxpayer's original 
books, records, and source documents pertinent to the examination are 
maintained. In the case of a sole proprietorship or taxpayer entity, 
this will usually be the taxpayer's principal place of business.
    (ii) Exception for certain small businesses. If an examination is 
scheduled by the Service at the taxpayer's place of business and the 
taxpayer represents to the Service in writing that conducting the 
examination at the place of business would essentially require the 
business to close or would unduly disrupt business operations, the 
Service, upon verification, will change the place of examination to a 
Service office within the district where the taxpayer's books, records, 
and source documents are maintained.
    (iii) Site visitations. Regardless of where an examination takes 
place, the Service may visit the taxpayer's place of business or 
residence to establish facts that can only be established by direct 
visit, such as inventory or asset verification. The Service generally 
will visit for these purposes on a normal workday of the Service during 
the Service's normal duty hours.
    (e) Requests by taxpayers to change place of examination--(1) In 
general. The Service will consider, on a case-by-case basis, written 
requests by taxpayers or their representatives to change the place that 
the Service has set for an examination. In considering these requests, 
the Service will take into account the following factors--
    (i) The location of the taxpayer's current residence;
    (ii) The location of the taxpayer's current principal place of 
business;
    (iii) The location at which the taxpayer's books, records, and 
source documents are maintained;
    (iv) The location at which the Service can perform the examination 
most efficiently;
    (v) The Service resources available at the location to which the 
taxpayer has requested a transfer; and

[[Page 583]]

    (vi) Other factors that indicate that conducting the examination at 
a particular location could pose undue inconvenience to the taxpayer.
    (2) Circumstances in which the Service normally will permit 
transfers. A request by a taxpayer to transfer the place of examination 
will generally be granted under the following circumstances:
    (i) Office examination--(A) If the current residence of the 
taxpayer, in the case of an individual or sole proprietorship, or the 
location where the taxpayer's books, records, and source documents are 
maintained, in the case of a taxpayer entity, is closer to a different 
Service office in the same district as the office where the examination 
has been scheduled, the Service normally will agree to transfer the 
examination to the closer Service office.
    (B) If the current residence of a taxpayer, in the case of an 
individual or sole proprietorship, or the location where a taxpayer 
entity's books, records, and source documents are maintained, is in a 
district other than the district where the examination has been 
scheduled, the Service normally will agree to transfer the examination 
to the closest Service office in the other district.
    (ii) Field examinations--(A) If a taxpayer does not reside at the 
residence where an examination has been scheduled, the Service will 
agree to transfer the examination to the taxpayer's current residence.
    (B) If, in the case of an individual, a sole proprietorship, or a 
taxpayer entity, the taxpayer's books, records, and source documents are 
maintained at a location other than the location where the examination 
has been scheduled, the Service will agree to transfer the examination 
to the location where the taxpayer's books, records, and source 
documents are maintained.
    (3) Transfer for convenience of taxpayer's representative. The 
location of the place of business of a taxpayer's representative will 
generally not be considered in determining the place for an examination. 
However, the Service in its sole discretion may determine, based on the 
factors described in paragraph (e)(1) of this section, to transfer the 
place of examination to the representative's office.
    (4) Transfer within thirteen months of expiration of limitations 
period. If any applicable period of limitations on assessment or 
collection provided in the Internal Revenue Code will expire within 
thirteen months from the date of a taxpayer's request to transfer the 
place of an examination, the Service may require, as a condition for an 
otherwise permissible transfer, that the taxpayer first agree in writing 
to extend the limitations period for up to one year.
    (5) Transfer to office with insufficient resources. The Service is 
not required to transfer an examination to an office or district that 
does not have adequate resources to conduct the examination.
    (f) Safety of Service officers and employees. Notwithstanding any 
other provision of this regulation, officers and employees of the 
Service may decline to conduct an examination at a particular location 
if it appears that the possibility of physical danger may exist at that 
location. In these circumstances, the Service may transfer an 
examination to a Service office and take any other steps necessary to 
protect its officers and employees.
    (g) Transfers initiated by Service. Nothing in this section shall be 
interpreted as precluding the Service from initiating the transfer of an 
examination if the transfer would promote the effective and efficient 
conduct of the examination. Should a taxpayer request that such a 
transfer not be made, the Service will consider the request according to 
the principles and criteria set forth in paragraph (e) of this section.
    (h) Restrictions on examination of taxpayer. No taxpayer shall be 
subjected to unnecessary examination or investigations, and only one 
inspection of a taxpayer's books of account shall be made for each 
taxable year unless the taxpayer requests otherwise or unless an 
authorized internal revenue officer, after investigation, notifies the 
taxpayer in writing that an additional inspection is necessary. The 
inspection of a taxpayer's books of account pursuant to the procedures 
of Sec. 1.1441-4(b) (3) and (4) is not an inspection of a taxpayer's 
books of account for purposes of section 7605(b) and this section.

[[Page 584]]

    (i) Restriction on examination of churches--(1) In general. This 
section imposes certain restrictions upon the examination of the books 
of account and religious activities of a church or convention or 
association of churches for the purpose of determining whether such 
organization may be engaged in activities the income from which is 
subject to tax under section 511 as unrelated business taxable income. 
The purposes of these restrictions are to protect such organizations 
from undue interference in their internal financial affairs through 
unnecessary examinations to determine the existence of unrelated 
business taxable income, and to limit the scope of examination for this 
purpose to matters directly relevant to a determination of the existence 
or amount of such income. This section also imposes additional 
restrictions upon other examinations of such organizations.
    (2) Books of account. No examination of the books of account of an 
organization which claims to be a church or a convention or association 
of churches shall be made except after the giving of notice as provided 
in this subparagraph and except to the extent necessary (i) to determine 
the initial or continuing qualification of the organization under 
section 501(c)(3); (ii) to determine whether the organization qualifies 
as one, contributions to which are deductible under section 170, 545, 
556, 642, 2055, 2106, or 2522; (iii) to obtain information for the 
purpose of ascertaining or verifying payments made by the organization 
to another person in determining the tax liability of the recipient, 
such as payments of salaries, wages, or other forms of compensation; or 
(iv) to determine the amount of tax, if any, imposed by the Code upon 
such organization. No examination of the books of account of a church or 
convention or association of churches shall be made unless the Regional 
Commissioner believes that such examination is necessary and so notifies 
the organization in writing at least 30 days in advance of examination. 
The Regional Commissioner will conclude that such examination is 
necessary only after reasonable attempts have been made to obtain 
information from the books of account by written request and the 
Regional Commissioner has determined that the information cannot be 
fully or satisfactorily obtained in that manner. In any examination of a 
church or convention or association of churches for the purpose of 
determining unrelated business income tax liability pursuant to such 
notice, no examination of the books of account of the organization shall 
be made except to the extent necessary to determine such liability.

    (3) Religious activities. No examination of the religious activities 
of an organization which claims to be a church or convention or 
association of churches shall be made except (i) to the extent necessary 
to determine the initial or continuing qualification of the organization 
under section 501(c)(3); (ii) to determine whether the organization 
qualifies as one, contributions to which are deductible under section 
170, 545, 556, 642, 2055, 2106, or 2522; or (iii) to determine whether 
the organization is a church or convention or association of churches 
subject to the provisions of part III of subchapter F of chapter 1. The 
requirements of subparagraph (2) of this paragraph that the Regional 
Commissioner give notice prior to examination of the books of account of 
an organization do not apply to an examination of the religious 
activities of the organization for any purpose described in this 
subparagraph. Once it has been determined that the organization is a 
church or convention or association of churches, no further examination 
of its religious activities may be made in connection with determining 
its liability, if any, for unrelated business income tax.

    (4) Effective date. The provisions of this paragraph shall apply to 
audits and examinations of taxable years beginning after December 31, 
1969.

    (j) Effective date. Paragraphs (a) through (g) of this section, 
inclusive,

[[Page 585]]

are effective for examinations scheduled after April 2, 1993.

(Secs. 1441(c)(4) (80 Stat. 1553; 26 U.S.C. 1441(c)(4)), 3401(a)(6) (80 
Stat. 1554; 26 U.S.C. 3401(a)(6)), and 7805 (68A Stat. 917; 26 U.S.C. 
7805), Internal Revenue Code of 1954)

[32 FR 15241, Nov. 3, 1967, as amended by T.D. 7146, 36 FR 20599, Oct. 
27, 1971; T.D. 7977, 49 FR 36836, Sept. 20, 1984; T.D. 8297, 55 FR 
12346, Apr. 3, 1990; T.D. 8469, 58 FR 17519, Apr. 5, 1993]