[Federal Register Volume 61, Number 243 (Tuesday, December 17, 1996)]
[Rules and Regulations]
[Pages 66217-66218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31769]


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DEPARTMENT OF THE TREASURY
26 CFR Part 301

[TD 8695]
RIN 1545-AT48


Disclosure of Returns and Return Information To Procure Property 
or Services for Tax Administration Purposes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
disclosure of returns and return information in connection with the 
procurement of property and services for tax administration purposes. 
The regulations authorize the Department of

[[Page 66218]]

Justice, including offices of United States Attorneys, to make such 
disclosures. Prior to these amendments, disclosure authority within the 
Department of Justice rested only with the Tax Division. The amendments 
also reflect a change to the law made by the Omnibus Budget 
Reconciliation Act of 1990 regarding the type of services about which 
disclosures may be made.

EFFECTIVE DATE: These regulations are effective on December 17, 1996.

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

SUPPLEMENTARY INFORMATION:

Background

    On December 15, 1995, a notice of proposed rulemaking (DL-40-95) 
relating to the disclosure of returns and return information in 
connection with the procurement of property and services for tax 
administration purposes was published in the Federal Register (60 FR 
64402). No public hearing was requested or held nor were any comments 
submitted by the public in response to this notice.
    The regulations proposed by DL-40-95 are adopted by this Treasury 
decision without revision and are discussed below.

Explanation of Provisions

    As previously written, 26 CFR 301.6103(n)-1 authorized the Tax 
Division of the Department of Justice, among other entities and 
individuals, to disclose returns and return information pursuant to 
section 6103(n) of the Internal Revenue Code. This authority allowed 
the Tax Division to disclose tax information incident to its contracts 
to private parties for, among other purposes, automated litigation 
support services.
    The Department of Justice indicated its intention to establish an 
expanded automated tracking system for all monetary judgments in favor 
of the United States, which will be operated by a private company under 
contract with the Department. Although the majority of tax cases are 
handled by the Tax Division, there are several United States Attorneys' 
offices that also have litigation responsibility in the civil tax area. 
In addition, the Tax Division refers some judgments in tax cases to the 
United States Attorneys for collection. The previously existing 
regulations arguably would not have permitted these offices, which are 
technically not part of the Tax Division, to disclose tax information 
incident to their inclusion of tax judgments in the automated tracking 
system.
    The amendments adopted by this Treasury decision authorize the 
Department of Justice, including offices of United States Attorneys, to 
make disclosures to procure property and services for tax 
administration purposes. Any such disclosures will be made under the 
same conditions and restrictions already set forth in the previously 
existing regulations. By definition, any office within the Department 
of Justice without tax administration duties will not have occasion or 
authority pursuant to these regulations to make such disclosures.
    The amendments also authorize disclosures in connection with ``the 
providing of other services,'' i.e., services not related to the strict 
mechanical processing or manipulation of tax returns or return 
information. This conforms the regulations to the language of the 
statute, as amended by the Omnibus Budget Reconciliation Act of 1990 
(Public Law 101-508, 104 Stat. 1388-353).

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) 
does not apply to these regulations, and because the notice of proposed 
rulemaking preceding the regulations was issued prior to March 29, 
1996, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, the 
notice of proposed rulemaking preceding these regulations was submitted 
to the Small Business Administration for comment on its impact on small 
business.

Drafting Information

    The principal author of these regulations is Donald Squires, Office 
of the Assistant Chief Counsel (Disclosure Litigation), IRS. However, 
other personnel from the IRS, Department of Justice 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.

Adopted Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
in part as follows;

    Authority: 26 U.S.C. 7805 * * *

    Paragraph 2. Section 301.6103(n)-1 is amended as follows:
    1. The first sentence of paragraph (a) introductory text is amended 
by removing the language ``Tax Division,''.
    2. Paragraph (a)(2) is amended by removing the language ``or to''.
    3. Paragraph (a)(2) is further amended by adding the language ``or 
the providing of other services,'' immediately following the text 
``other property,''.
    4. The concluding text of paragraph (a) is amended by removing the 
language ``Tax Division,''.
    5. The second sentence of paragraph (d) introductory text is 
amended by removing the language ``Tax Division,''.
    6. Paragraph (d)(2) is amended by removing the language ``Tax 
Division,''.
    7. Paragraph (e)(1) is amended by removing the language ``, and'' 
at the end of the paragraph and adding a semicolon in its place.
    8. Paragraph (e)(2) is amended by removing the period at the end of 
the paragraph and adding ``; and'' in its place.
    9. Paragraph (e)(3) is added.
    10. The authority citation immediately following Sec. 301.6103(n)-1 
is removed.
    The addition reads as follows:


Sec. 301.6103(n)-1  Disclosure of returns and return information in 
connection with procurement of property and services for tax 
administration purposes.

* * * * *
    (e) * * *
    (3) The term Department of Justice includes offices of the United 
States Attorneys.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
    Approved: June 26, 1996.
Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 96-31769 Filed 12-16-96; 8:45 am]
BILLING CODE 4830-01-U