[Federal Register Volume 59, Number 48 (Friday, March 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5746]


[[Page Unknown]]

[Federal Register: March 11, 1994]


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DEPARTMENT OF THE TREASURY
Internal Revenue Service

26 CFR Part 301

[TD 8527]
RIN 1545-AS53

 

Disclosure of Return Information to the U.S. Customs Service

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

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SUMMARY: These amendments to the regulations under 26 CFR part 301 
implement section 6103(l)(14) of the Internal Revenue Code, which 
authorizes the disclosure of certain return information to the U.S. 
Customs Service. The regulations specify the procedure by which return 
information may be disclosed and describe the conditions and 
restrictions on the use of the information by the U.S. Customs Service.

EFFECTIVE DATE: These regulations are effective March 11, 1994.

FOR FURTHER INFORMATION CONTACT: Donald Squires, 202-622-4570 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The North American Free Trade Agreement Implementation Act, Public 
Law 103-182, 107 Stat. 2057, was signed into law on December 8, 1993. 
Section 522 of the Act adds section 6103(l)(14) to the Internal Revenue 
Code (Code) and directs the Treasury Department to adopt temporary 
regulations to implement the new section.

Explanation of Provisions

    The temporary regulations specify the procedure by which return 
information may be disclosed to officers and employees of the United 
States Customs Service, as authorized by section 6103(l)(14) of the 
Code, and describe the conditions and restrictions on the use and 
redisclosure of that information.
    The temporary regulations limit the return information to be 
disclosed to that necessary to the purpose authorized by the statute, 
i.e., ascertaining the correctness of entries in Customs audits and in 
other actions to recover any loss of revenue or collect amounts 
determined to be due and owing as a result of these audits. The 
temporary regulations permit redisclosure to the Department of Justice 
for civil enforcement actions related to these collection efforts. 
Consistent with the statute's legislative history, the temporary 
regulations prohibit disclosure of information either (i) relating to 
Advance Pricing Agreements (as described in Rev. Proc. 91-22, 1991-1 
C.B. 526), or (ii) covered by tax treaties and executive agreements 
with respect to which the United States is a party. The temporary 
regulations also specifically prohibit any use or redisclosure of the 
information by Customs in a manner inconsistent with section 6103 and 
the regulations.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It has also been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to 
these regulations, and, therefore, a Regulatory Flexibility Analysis is 
not required. Pursuant to section 7805(f) of the Internal Revenue Code, 
these temporary regulations will be submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on their 
impact on small business.

Drafting Information

    The principal author of these temporary regulations is Donald 
Squires, Office of the Assistant Chief Counsel (Disclosure Litigation), 
Internal Revenue Service. However, other personnel from the IRS, 
Customs Service and Treasury Department participated in their 
development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:
    Paragraph 1. The authority citation for part 301 is amended by 
adding an entry in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * * Section 301.6103(l)(14)-1T also 
issued under 26 U.S.C. 6103(l)(14).

    Par. 2. Section 301.6103(l)(14)-1T is added to read as follows:


Sec. 301.6103(l)(14)-1T  Disclosure of return information to United 
States Customs Service (temporary).

    (a) General rule. Pursuant to the provisions of section 6103(l)(14) 
of the Internal Revenue Code, officers and employees of the Internal 
Revenue Service may disclose to officers and employees of the United 
States Customs Service return information (as defined by section 
6103(b)) with respect to taxes imposed by chapters 1 and 6 of the 
Internal Revenue Code solely for purposes of, and only to the extent 
necessary in--
    (1) Ascertaining the correctness of any entry in audits as provided 
for in section 509 of the Tariff Act of 1930 or;
    (2) Other actions to recover any loss of revenue, or to collect 
duties, taxes, and fees, determined to be due and owing pursuant to 
such audits.
    (b) Procedures. Disclosure of return information by officers or 
employees of the Internal Revenue Service as provided by paragraph (a) 
of this section will be made only following receipt by the Internal 
Revenue Service of a written request for the disclosure by the 
Commissioner of the U.S. Customs Service identifying--
    (1) The particular items of return information to be disclosed;
    (2) The particular taxpayer to whom the return information relates;
    (3) The taxable period or date to which the return information 
relates;
    (4) The particular purpose for which each item of return 
information is needed, including an explanation as to how the requested 
information is necessary to accomplish that purpose. In addition, the 
request must designate by title the officers and employees of the 
Customs Service to whom the disclosure is authorized and certify that 
the Customs Service has initiated or intends to initiate, under section 
509 of the Tariff Act of 1930, an audit of each taxpayer for whom 
return information is requested or that the taxpayer has a 
transactional or ownership relationship with the subject of such an 
audit.
    (c) Return information subject to disclosure. Any return 
information requested must be necessary to a Customs determination of 
the correctness of any entry in audits conducted under section 509 of 
the Tariff Act of 1930. Taxpayers as to whom return information is 
requested must either be the subject of a Customs audit (or intended 
audit) or have a transactional or ownership relationship with the 
subject of a Customs audit. Requested information must relate to the 
declared value, classification or rate of duty applicable to entered 
merchandise. Requested information may also include any adjustment by 
the IRS to the items of return information described by this paragraph.
    (d) Return information not subject to disclosure. The following 
return information may not be requested or disclosed pursuant to 
section 6103(l)(14) of the Internal Revenue Code: any Advance Pricing 
Agreement or information submitted to or generated by the IRS as part 
of the negotiation process for an Advance Pricing Agreement, or any 
information to the extent its disclosure would be inconsistent with a 
tax treaty or executive agreement with respect to which the United 
States is a party.
    (e) Impairment of tax administration. Return information with 
respect to a taxpayer may not be disclosed pursuant to this section if 
the IRS determines that the disclosure would identify a confidential 
informant or seriously impair any civil or criminal tax investigation 
or proceeding.
    (f) Use by Customs Service. Return information disclosed under this 
section may be used by the U.S. Customs Service to the extent necessary 
to ascertain or to document the correctness of any entry in audits as 
provided for in section 509 of the Tariff Act of 1930 and in any 
related administrative proceedings to recover any loss of revenue, or 
to collect duties, taxes or fees, determined to be due and owing 
pursuant to these audits. Uses may include, to the extent necessary, 
disclosure to the importer (or the legal representative of such 
importer) subject to the audit with respect to which the information 
was requested.
    (g) Disclosure to, and use by, the Department of Justice. Return 
information disclosed to officers and employees of the U.S. Customs 
Service as provided by this section may be disclosed by these officers 
and employees to officers and employees of the Department of Justice 
(including United States attorneys) personally and directly engaged in, 
and solely for their necessary use in, advocating or defending the 
correctness of Customs determinations with respect to any entry, in any 
civil judicial proceeding, or any preparations therefor (or for their 
necessary use in an investigation which may result in such a 
proceeding), to recover any loss of revenue, or to collect duties, 
taxes or fees, determined to be due and owing as a consequence of an 
audit provided for in section 509 of the Tariff Act of 1930.
    (h) Disclosure by officers and employees of the Department of 
Justice. Return information disclosed to officers and employees of the 
Department of Justice (including United States Attorneys) as provided 
by this section may be disclosed by these officers and employees to 
other persons as is necessary to properly accomplish the purposes or 
activities described in paragraph (g). Disclosure of return information 
to a person, other than the importer (or the legal representative of 
the importer) subject to the audit with respect to which the 
information was originally requested, to properly accomplish any 
purpose or activity described in paragraph (g) may be made, however, 
only if the purpose or activity cannot otherwise properly be 
accomplished without making the disclosure. Disclosures may include, 
but are not limited to, disclosures where necessary--
    (1) To properly obtain the services of persons having special 
knowledge or technical skills;
    (2) To properly interview, consult, depose, or interrogate or 
otherwise obtain relevant information from, the taxpayer (or the legal 
representative of the taxpayer) to whom the return information relates 
or any witness who may be called to give evidence in the proceeding; or
    (3) To properly conduct negotiations concerning, or obtain 
authorization for, settlement or disposition of the proceeding, in 
whole or in part, or stipulations of fact in connection with the 
proceeding.
    (i) Use in criminal judicial proceedings. Return information 
disclosed pursuant to this section may not be used in any criminal 
judicial proceeding, or any preparations therefor (or in a criminal 
investigation which may result in such a proceeding), involving the 
enforcement of a criminal statute, without compliance with the 
requirements of section 6103(i) (1) or (2) as appropriate. However, the 
return information may in any event be used for purposes of complying 
with the requirements of section 6103(i).
    (j) Restrictions. Return information disclosed to officers and 
employees of the U.S. Customs Service or to the Department of Justice 
as provided by this section may not be used or disclosed for any 
purpose other than to ascertain, or advocate or defend the correctness 
of, Customs determinations with respect to, any entry in the audits for 
which the information was requested or in certain actions resulting 
from the audits as described above. Return information disclosed to 
officers and employees of the U.S. Customs Service or to the Department 
of Justice as provided by this section may not be disclosed to any 
person, including any contractor of the U.S. Customs Service, except as 
provided by this section, or as otherwise provided by section 6103 of 
the Internal Revenue Code.

    Dated: March 7, 1994.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
    Approved:
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 94-5746 Filed 3-8-94; 2:07 pm]
BILLING CODE 4830-01-U