[Federal Register Volume 59, Number 243 (Tuesday, December 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31213]


[[Page Unknown]]

[Federal Register: December 20, 1994]


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DEPARTMENT OF THE TREASURY
Internal Revenue Service

 

Privacy Act of 1974, as Amended; System of Records

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice of proposed amendment to Privacy Act system of records.

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SUMMARY: The Treasury Department, Internal Revenue Service, gives 
notice of a proposed amendment to the system of records entitled 
Compliance Programs and Projects Files--Treasury/IRS 42.021, which is 
subject to the Privacy Act of 1974, 5 U.S.C. 552a.

DATES: Comments must be received no later than January 19, 1995. This 
revised system of records will be effective January 30, 1995, unless 
comments are received which result in a contrary determination.

ADDRESSES: Comments should be sent to the Office of Disclosure, 
Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, 
DC. 20224. Comments will be made available for inspection and copying 
in the Freedom of Information Reading Room, (202) 622-5164 upon 
request.

FOR FURTHER INFORMATION CONTACT:
Larry Faulkner, Compliance 2000 Executive, (202) 622-6900.

SUPPLEMENTARY INFORMATION: The Internal Revenue Service is redesigning 
business and work processes to improve the way we use technology to 
maximize the availability of information resources. This will require 
long-term, continuous improvement to product quality, productivity, and 
customer satisfaction.
    One of the strategies to implement this change is Compliance 2000. 
This is a mission-based philosophy of tax administration that 
emphasizes taxpayer education and assistance coupled with a more 
focused use of enforcement resources. Compliance 2000 will address 
making the tax system easier for taxpayers to comply voluntarily, yet 
recognizes that despite the Service's best efforts some people will not 
voluntarily respond. One goal of Compliance 2000 is to identify and 
address causes of noncompliance.
    This system presently includes records relating to information 
gathering to identify noncompliance with the Internal Revenue Code. 
Enhancements are being added to the system to enable the Internal 
Revenue Service to identify causes of noncompliance. These enhancements 
will be accomplished by use of an automated information system to form 
an integrated, on-line resource network. Instead of each function or 
level within a geographical area addressing isolated or systemic 
compliance or business issues on its own (National, Regional, District, 
or Service Center), we will approach business from a more unified 
perspective to provide one-stop information to compliance personnel 
within a local area and greatly reduce the need for separate contracts 
with outside sources. Data will be drawn from the Audit Information 
Management System (AIMS)--Treasury/IRS 42.008; the Individual Master 
File (IMF)--Treasury/IRS 24.030; the Business Master File (BMF)--
Treasury/IRS 24.046; the Returns Compliance Programs File--Treasury/IRS 
26.016; the Taxpayer Delinquent Accounts Files (TDA)--Treasury/IRS 
26.019; Taxpayer Delinquency Investigation (TDI) Files--Treasury/IRS 
26.020; Wage and Information Returns Processing (IRP) System--Treasury/
IRS 22.061; the International Enforcement Program Files--Treasury/IRS 
42.017; the Case Management and Time Reporting System--Treasury/IRS 
46.002; and from the Centralized Evaluation and Processing of 
Information Items--Treasury/IRS 46.009. In addition, data will be drawn 
from other third party sources. As an example, these third party 
sources may include commercial sources, state and local agencies, 
construction contract information, license information from state and 
local agencies, Currency and Banking Reports (CBRS), data regarding 
assets and financial transactions from state and local agencies, and 
information on significant financial transactions from reviews of 
periodicals and local newspapers, and other media sources.
    The system of records notice is being amended to give a more 
definitive description of the records that are to be included in the 
system. This notice will also reflect the change to consolidate this 
new information within each geographical location and for on-line 
access to this information on a need-to-know basis. There will be 
additional authorized users within each local area network.
    Internal Revenue Service will develop and maintain database and 
retrieval systems accessed through automated local area networks. The 
purpose of these systems will be to combine information from sources 
inside and outside the IRS, such as motor vehicle data, business 
license data, currency and banking data (CBRS), commercial database 
information, into a centralized processing unit which will serve as a 
comprehensive compliance network for each district, service center, 
region, etc. These databases would be available for use by all IRS 
functions on a need-to-know basis. As an example, a database may be 
configured to identify a particular grouping or market segment of 
taxpayers and their assets in a more efficient and effective manner 
than is presently available. Previously this was not possible because 
of the format and configuration of the original databases. For example, 
in addition to taxpayer data from the system of records listed herein, 
this system may include on-line access to such information as the 
Currency and Banking Retrieval System (CBRS), any state's Department of 
Motor Vehicle (DMV), Credit Bureau information, real estate ownership 
information, and commercial databases.
    This system of records is currently exempt from certain provisions 
of the Privacy Act. No amendment to the rule exempting this system from 
certain provisions of the Privacy Act is being made to the system. The 
system notice, as revised, is published in its entirety below.
Alex Rodriguez,
Deputy Assistant Secretary (Administration).
Treasury/IRS 42.021
    Compliance Programs and Project Files.
    National Office, Districts, Service Centers, and Austin Compliance 
Center. (See IRS Appendix A for addresses.)
    Any individual who has business and/or financial activities. These 
may be grouped by industry, occupation, or financial transactions, 
included in commercial databases, or in information provided by state 
and local licensing agencies. Taxpayers who may be involved in any area 
of noncompliance: Such as self-employed persons who don't file income 
tax returns, businesses who don't file employment tax returns, 
taxpayers with income reported on information returns who don't file 
tax returns, withholding noncompliance, migrant workers, and any 
individuals who may be involved in tax evasion schemes.
    From the Audit Information Management System (AIMS)--Treasury/IRS 
42.008: Tax return status and location, closing information as well as 
other internal management information (i.e., type of return, 
adjustment, penalty, occupation code, issue code, etc.). From the 
Individual Master File (IMF)--Treasury/IRS 24.030 and the Business 
Master File (BMF)--Treasury/IRS 24.046: Taxpayer entity records (name, 
address, identification number (TIN), tax modular records which contain 
all records relative to specific tax returns for each applicable tax 
period or year. Tax transactions such as tax amount, statements and/or 
additions, etc. From the Wage and Information Returns Processing (IRP) 
File--Treasury/IRS 22.061; Records representing certain wages and 
information returns: For example, Forms W-2, W-2P, and 1087 and 1099 
series, currency transaction reports, state tax refunds, statements of 
sales and equity obligations, and records of agricultural subsidy 
payments, etc. Information from the Returns Compliance Programs 
System--Treasury/IRS 26.016. Information from the Taxpayer Delinquent 
Accounts Files (TDA)--Treasury/IRS 26.019: For example, taxpayers who 
have outstanding assessments and persons owing child support 
obligations. From the Taxpayer Delinquency Investigation (TDI) Files--
Treasury/IRS 26.020; Taxpayers who may be delinquent in filing Federal 
tax returns. Information on foreign corporations from International 
Enforcement Program Files, Treasury/IRS 42.017. From the Centralized 
Evaluation and Processing of Information Items (CEPII), Treasury/IRS 
46.009, and from the Case Management and Time Reporting System, 
Treasury/IRS 46.002: Information items received by Internal Revenue 
Service about taxpayers alleging violation of laws. Other information 
would relate to unreported income and asset situations involving 
significant financial transactions within the U.S. as well as foreign 
transactions. Examples of other information would include data from 
commercial databases, any state's Department of Motor Vehicles (DMV), 
credit bureaus, state and local real estate records, commercial 
publications, newspapers, airplane and pilot information, US Coast 
Guard vessel registration information, any state's Department of 
Natural Resources information, as well as other state and local 
records. In addition, Federal government databases may also be 
accessed, such as, federal employment files, federal licensing data, 
etc.
    5 U.S.C. 301, 26 U.S.C. 7602, 7801, and 7802.
    The Internal Revenue Service has adopted a mission-based philosophy 
to increase voluntary compliance with the tax laws of the Internal 
Revenue Code. In order to accomplish this, we will be focusing more on 
research and analysis techniques as opposed to case-by-case enforcement 
in order to determine key areas of non-compliance. The IRS will 
approach these areas with a more unified perspective instead of 
addressing isolated or systemic compliance of business issues on 
national, regional or local levels. The IRS will also address major 
broad-based issues that affect compliance and will lead to better tax 
administration.
    Disclosure of returns and return information may be made only as 
provided by 26 U.S.C. 6103.
    Paper records, microfilm, and magnetic media.
    Name and/or taxpayer identification number (social security number 
or employer identification number), and any personal identifier or 
characteristic (i.e., document locator number) included in this system.
    Access controls will not be less than those provided by the 
Manager's Security Handbook, IRM 1(16)12, and the Automated Information 
System Security Manual, IRM 2(10)00. Passwords and access codes must be 
used to access this system.
    Records are maintained in accordance with Records Control Schedule, 
IRM 1(15)59.
    Officials prescribing policies and practices--Chief Operations 
Officer and Compliance 2000 Executive, 1111 Constitution Avenue, NW., 
Washington, DC 20224. Officials maintaining the system--District 
Directors, Service and Compliance Center Directors, Regional 
Commissioners. Refer to Appendix A and addresses.
    This system is exempt from the notification provisions of the 
Privacy Act.
    This system is exempt from the access and contest provisions of the 
Privacy Act.
    26 U.S.C. 7852(e) prohibits Privacy Act amendment of tax records.
    (1) Taxpayer's returns, (2) taxpayer's books and records, (3) 
informants and third party information, (4) city, state government, (5) 
other Federal agencies, (6) examinations of related taxpayers, (7) 
taxpayer's employer, and (8) investigatory material compiled for law 
enforcement purposes whose sources need not be reported.
    This system is exempt from 5 U.S.C. 552a(c)(3), (d)(1), (d)(2), 
(d)(3), (d)(4), (e)(1), (e)(4)(G), (H), and (I), (f) of the Privacy Act 
pursuant to 5 U.S.C. 552a(k)(2), as published at 31 CFR 1.36.

[FR Doc. 94-31213 Filed 12-19-94; 8:45 am]
BILLING CODE 4830-01-M