[Federal Register Volume 63, Number 246 (Wednesday, December 23, 1998)]
[Proposed Rules]
[Pages 71050-71052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33905]


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DEPARTMENT OF THE TREASURY

Office of the Secretary

31 CFR Part 1


Privacy Act; Implementation

AGENCY: Internal Revenue Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, 5 U.S.C. 552a, as amended, the Department of the Treasury, 
Internal Revenue Service (IRS) gives notice of a proposed amendment to 
exempt a new system of records, the IRS Audit Trail Lead Analysis 
System--Treasury/IRS 34.020, from certain provisions of the Privacy 
Act. The exemptions are intended to comply with the legal prohibitions 
against the disclosure of certain kinds of information and to protect 
certain information, about individuals, maintained in this system of 
records.


[[Page 71051]]


DATES: Comments must be received no later than January 22, 1999.

ADDRESSES: Please submit comments to Office of Governmental Liaison and 
Disclosure, Internal Revenue Service, 1111 Constitution Ave., NW, 
Washington, DC 20220. Persons wishing to review the comments should 
call 202-622-6240 to make an appointment with the Office of 
Governmental Liaison and Disclosure.

FOR FURTHER INFORMATION CONTACT: Michael Sincavage, Director, 6103/
Privacy Operations, Governmental Liaison and Disclosure, Internal 
Revenue Service, at 202-622-6240.

SUPPLEMENTARY INFORMATION: Under 5 U.S.C. 552a(k)(2), the head of an 
agency may promulgate rules to exempt a system of records from certain 
provisions of 5 U.S.C. 552a, if the system is investigatory material 
compiled for law enforcement purposes. The IRS compiles records in this 
system for law enforcement purposes. Treasury/IRS 34.020--IRS Audit 
Trail Lead Analysis System (ATLAS) contains records that enable the IRS 
to investigate and monitor the activities of individuals who access its 
information systems which process taxpayer information. The IRS will 
use the information to ensure the protection and confidentiality of tax 
returns and return information for the detection and deterrence of 
unauthorized access and abuse of electronic records. The ATLAS 
electronically identifies possible unauthorized accesses to taxpayer 
information through matching of records using search criteria 
indicative of probable unauthorized accesses and/or fraudulent use of 
IRS information systems. ATLAS then generates leads for the Office of 
Chief Inspector/Treasury Office of Inspector General for Tax 
Administration for evaluation and analysis. After the Office of Chief 
Inspector/Treasury Office of Inspector General for Tax Administration 
completes evaluation and analysis of the leads, the information 
received from ATLAS will be disposed of as appropriate in one of the 
following ways: (1) Information obtained from this application will 
become part of Conduct Investigation Files, Inspection (Treasury/IRS 
60.003); Miscellaneous Information Files, Inspection (Treasury/IRS 
60.007); and Special Inquiry Investigation Files (Treasury/IRS 60.009); 
and will be retained in accordance with procedures established in 
Records Disposition Handbooks, IRM 1(15)59.1 through IRM 1(15)59.32, 
and IRM Exhibit (10)100-2; (2) information relevant to an investigation 
that results in judicial or administrative action is retained for 10 
years after the date of the action; or (3) information obtained from 
this computer match that does not become part of the files in (1) above 
will not be retained in any form searchable by individual identifier. 
Summary or statistical data may be retained as part of audit or 
integrity project workpapers.
    The IRS is hereby giving notice of a proposed rule to exempt 
Treasury/IRS 34.020 (ATLAS) from certain provisions of the Privacy Act 
of 1974 pursuant to 5 U.S.C. 552a(k)(2). The proposed exemption is from 
provisions 552a (c)(3), (d)(1), (d)(2), (d)(3), (d)(4), (e)(1), (e)(4) 
(G), (H), (I) and (f) because the system contains investigatory 
material compiled for law enforcement purposes. The data will be 
utilized to enforce 26 U.S.C. 7213, 7213A, 7214, and 18 U.S.C. 
1030(a)(2)(B). The following are the reasons why this system of records 
maintained by the IRS is exempt pursuant to 5 U.S.C. 552a(k)(2) of the 
Privacy Act of 1974.
    (1) 5 U.S.C. 552a(c)(3). This provision of the Privacy Act provides 
for the release of the disclosure accounting required by 5 U.S.C. 
552a(c) (1) and (2) to the individual named in the record at his/her 
request. The reasons for exempting this system of records from the 
foregoing provisions are:
    (i) The release of disclosure accounting would put the subject of 
an investigation on notice that an investigation exists and that such 
person is the subject of that investigation.
    (ii) Such release would provide the subject of an investigation 
with an accurate accounting of the date, nature, and purpose of each 
disclosure and the name and address of the person or agency to whom the 
disclosure was made. The release of such information to the subject of 
an investigation would provide the subject with significant information 
concerning the nature of the investigation and could result in the 
altering or destruction of documentary evidence, the improper 
influencing of witnesses, and other activities that could impede or 
compromise the investigation.
    (iii) Release to the individual of the disclosure accounting would 
alert the individual as to which agencies were investigating the 
subject and the scope of the investigation and could aid the individual 
in impeding or compromising investigations by those agencies.
    (2) 5 U.S.C. 552a (d)(1), (d)(2), (d)(3), (d)(4), (e)(4)(G), (H), 
and (f). These provisions of the Privacy Act relate to an individual's 
right to be notified of the existence of records pertaining to such 
individual; requirements for identifying an individual who requested 
access to records; the agency procedures relating to access to records 
and the contest of the information contained in such records and the 
civil remedies available to the individual in the event of adverse 
determinations by an agency concerning access to or amendment of 
information contained in record systems. The reasons for exempting this 
system of records from the foregoing provisions are as follows: To 
notify an individual at the individual's request of the existence of an 
investigative file pertaining to such individual or to grant access to 
an investigative file pertaining to such individuals could interfere 
with investigative and enforcement proceedings; deprive co-defendants 
of a right to a fair trial or an impartial adjudication; constitute an 
unwarranted invasion of the personal privacy of others; disclose the 
identity of confidential sources and reveal confidential information 
supplied by such sources; and, disclose investigative techniques and 
procedures.
    (3) 5 U.S.C. 552a(e)(4)(I). This provision of the Privacy Act 
requires the publication of the categories of sources of records in 
each system of records. In cases where an exemption from this provision 
has been claimed, the reasons are as follows:
    (i) Revealing categories of sources of information could disclose 
investigative techniques and procedures;
    (ii) Revealing categories of sources of information could cause 
sources who supply information to investigators to refrain from giving 
such information because of fear of reprisal, or fear of breach of 
promises of anonymity and confidentiality.
    (4) 5 U.S.C. 552a(e)(1). This provision of the Privacy Act requires 
each agency to maintain in its records only such information about an 
individual as is relevant and necessary to accomplish a purpose of the 
agency required to be accomplished by statute or executive order. The 
reasons for exempting this system of records from the foregoing 
provision are as follows:
    (i) The IRS will limit its inquiries to information that is 
necessary for the enforcement and administration of computer security 
laws and tax laws. However, an exemption from the foregoing provision 
is needed because, particularly in the early stages of an 
investigation, it is not possible to determine the relevance or 
necessity of specific information.
    (ii) Relevance and necessity are questions of judgment and timing. 
What appears relevant and necessary when collected may subsequently be 
determined to be irrelevant or

[[Page 71052]]

unnecessary. It is only after the information is evaluated that the 
relevance and necessity of such information can be established with 
certainty.
    (iii) When information is received by the IRS relating to 
violations of law within the jurisdiction of other agencies, the 
Service processes this information through the Service systems in order 
to forward the material to the appropriate agencies.
    As required by Executive Order 12866, it has been determined that 
this proposed rule is not a significant regulatory action, and 
therefore, does not require a regulatory impact analysis.
    Pursuant to the requirements of the Regulatory Flexibility Act, 5 
U.S.C. 601-612, it is hereby certified that these regulations will not 
significantly affect a substantial number of small entities. The 
proposed rule imposes no duties or obligations on small entities.
    In accordance with the provisions of the Paperwork Reduction Act of 
1995, the Department of the Treasury has determined that this proposed 
rule would not impose new recordkeeping, application, reporting, or 
other types of information collection requirements.

List of Subjects in 31 CFR Part 1

    Privacy.

    Part 1 of Title 31 of the Code of Federal Regulations is amended as 
follows:

PART 1--[AMENDED]

    1. The authority citation for part 1 continues to read as follows:

    Authority: 5 U.S.C. 301, 31 U.S.C. 321, subpart A also issued 
under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C. 
552a.


Sec. 1.36  [Amended]

    2. Section 1.36, under the heading ``The Internal Revenue 
Service,'' is amended by removing in paragraph (a)(1) the entry 
``Integrated Data Retrieval System (IDRS) Security Files--34.018'' and 
in paragraph (b)(1) by adding the following entry in numerical order to 
read as follows:
* * * * *
    (b) * * *
    (1) * * *

------------------------------------------------------------------------
                        Name of system                            No.
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                  *        *        *        *        *
Audit Trail Lead Analysis System.............................     34.020
 
                  *        *        *        *        *
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* * * * *
    Dated: November 10, 1998.
Shelia Y. McCann,
Deputy Assistant Secretary (Administration).
[FR Doc. 98-33905 Filed 12-22-98; 8:45 am]
BILLING CODE 4830-01-P