[Federal Register Volume 66, Number 30 (Tuesday, February 13, 2001)]
[Rules and Regulations]
[Pages 9957-9959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1989]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 8943]
RIN 1545-AY51


Disclosure of Return Information to the Bureau of the Census

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

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[[Page 9958]]

SUMMARY: This document contains temporary regulations relating to 
additions to the list of items of information disclosed to the Bureau 
of the Census for use in the Longitudinal Employer-Household Dynamics 
(LEHD) project and the Survey of Income and Program Participation 
(SIPP) project. These regulations provide guidance to IRS and Social 
Security Administration (SSA) personnel responsible for disclosing the 
information. The text of the temporary regulations also serves as the 
text of the proposed regulations set forth in the notice of proposed 
rulemaking on this subject in the Proposed Rules section of this issue 
of the Federal Register.

DATES: Effective Date: These regulations are effective February 13, 
2001.
    Applicability Date: For dates of applicability, see 
Sec. 301.6103(j)(1)-1T(e) of these regulations.

FOR FURTHER INFORMATION CONTACT: Stuart Murray, (202) 622-4580 (not a 
toll-free number).

Background

    Under section 6103(j)(1), upon written request from the Secretary 
of Commerce, the Secretary is to furnish to the Bureau of the Census 
(Bureau) tax return information that is prescribed by Treasury 
regulations for the purpose of, but only to the extent necessary in, 
structuring censuses and national economic accounts and conducting 
related statistical activities authorized by law. Section 
301.6103(j)(1)-1 of the regulations further defines such purposes by 
reference to 13 U.S.C. Chapter 5 and provides an itemized description 
of the return information authorized to be disclosed for such purposes. 
Section 301.6103(j)(1)-1(b)(5) of the regulations provides a list of 
information provided to the Social Security Administration (SSA) 
pursuant to Internal Revenue Code section 6103(l)(1)(A) or (5) that 
officers or employees of SSA may disclose to the Bureau. Periodically, 
the disclosure regulations are amended to reflect the changing needs of 
the Bureau for data for its statutorily authorized statistical 
activities.
    This document adopts temporary regulations that authorize IRS and 
SSA personnel to disclose the additional items of return information 
that have been requested by the Secretary of Commerce for specified 
purposes related to the LEHD and SIPP projects.
    Except for Sec. 301.6103(j)(1)-1T(b)(2)(v) and (vi); (b)(3)(xxiii), 
(xxiv),(xxv), (xxvi), (xxvii) and (xxviii); and (b)(5)(iii) , (iv), and 
(v); the text of the temporary regulations is the same as 26 CFR 
301.6103(j)(1)-1. The changes made by Sec. 301.6103(j)(1)-1T(b)(2)(v) 
and (vi); (b)(3)(xxiii), (xxiv), (xxv), (xxvi), (xxvii) and (xxviii); 
and (b)(5)(iii), (iv), and (v); are discussed below.

Explanation of Provisions

    By letter dated March 27, 2000, the Secretary of Commerce requested 
that additional items of return information be disclosed to the Bureau 
for purposes related to the Longitudinal Employer-Household Dynamics 
(LEHD) project. The request indicates that the Bureau is ready to begin 
a joint project with SSA to develop data files that contain linked 
information, matching selected worker and employer records for 
statistical research, in order to improve programs at the Bureau and 
SSA. The linked information will come from the Bureau's demographic and 
economic censuses and surveys, the Bureau's Standard Statistical 
Establishment List (SSEL), which includes business tax information, and 
SSA's administrative records. The Bureau's component of this project, 
the LEHD project, will enable the Bureau to conduct studies that are 
intended to improve the quality of the Bureau's core demographic and 
economic censuses and surveys, which are Bureau activities authorized 
under 13 U.S.C. Chapter 5.
    The Bureau has specifically requested information from SSA's Master 
Earnings File (MEF), which contains information from IRS Form W-2 and 
Form 1040SE. The IRS information contained in SSA's MEF will permit the 
Bureau to link employee data with employer data. The Bureau has 
requested Social Security Numbers (SSNs) and Employer Identification 
Numbers (EINs) to link the employee and employer data.
    The Bureau has also requested the disclosure of wages, tips, and 
other compensation and deferred wages from the Form W-2. The Bureau 
indicated that it wants this detailed earnings record information 
because it is provided separately for each employer of the employee; it 
covers all persons with wages, including nonfilers and other non-
covered employees; and it provides specific information on deferred 
compensation, such as retirement contributions.
    By letter dated August 2, 2000, the Secretary of Commerce requested 
additional items of information for purposes related to the Bureau's 
Survey of Income and Program Participation (SIPP) demographic survey. 
This request indicates that the Bureau and SSA want to ensure that the 
regulations authorize the continuation of a joint project to develop 
data files that contain linked information from the SIPP with 
information from SSA's Master Earnings File. The linkage of Census 
survey information on family relationships with SSA's earnings 
histories allows for the study and assessment of welfare and social 
security/retirement proposals. Specifically, the Bureau intends to 
improve the quality of the SIPP by adding a series of projected Primary 
Insurance Amounts (PIAs) to the public-use version of each available 
SIPP.
    In order to adjust for misreported data related to earnings, 
employment, and pensions from the Bureau's SIPP, the Bureau also 
requested data from Forms W-2 and 1099R or data derived from these 
forms. Some of the information requested for LEHD is also requested for 
SIPP, such as the social security number; employer identification 
number; wages, tips and other compensation; and deferred wages.
    As provided in the Commissioner of Internal Revenue's responses to 
the LEHD and SIPP requests dated September 25, 2000, and October 27, 
2000, respectively, information will be furnished under these temporary 
regulations only for the purposes of conducting the LEHD project and/or 
the SIPP/SSA project as specified in the request letters and with the 
understanding that the information will be used strictly in accordance 
with the provisions of the Internal Revenue Code pertaining to 
confidentiality.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has 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 no 
notice of proposed rulemaking is required, the Regulatory Flexibility 
Act (5 U.S.C. chapter 6) does not apply. 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 regulations is Jamie G. Bernstein, 
Office of the Associate Chief Counsel, Procedure & Administration 
(Disclosure & Privacy Law Division) Internal Revenue Service. However, 
other personnel from the IRS and Treasury Department participated in 
their development.

[[Page 9959]]

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:

PART 301--PROCEDURE AND ADMINISTRATION

    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(j)(1)-1T also issued under 26 U.S.C. 6103(j)(1); * 
* *

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


Sec. 301.6103(j)(1)-1T  Disclosure of return information to officers 
and employees of the Department of Commerce for certain statistical 
purposes and related activities (temporary).

    (a) through (b)(2)(iv) [Reserved]. For further guidance, see 
Sec. 301.6103(j)(1)-1(a) through (b)(2)(iv).
    (b)(2)(v) Total Social Security Taxable Earnings;
      (vi) Quarters of Social Security coverage.
    (b)(3)(i) through (xxii) [Reserved]. For further guidance, see 
Sec. 301.6103(j)(1)-1(b)(3)(i) through (xxii).
    (xxiii) Wages, tips, and other compensation;
    (xxiv) Social Security Wages;
    (xxv) Deferred wages;
    (xxvi) Social Security Tip Income;
    (xxvii) Total Social Security Taxable Earnings;
    (xxviii) Gross Distributions from Form 1099R.
    (b)(4) through (b)(5)(ii) [Reserved]. For further guidance, see 
Sec. 301.6103(j)(1)-1(b)(4) through (b)(5)(ii).
    (b)(5)(iii) From Form W-2, and related forms and schedules--
    (A) Social Security Number;
    (B) Employer Identification Number;
    (C) Wages, tips, and other compensation;
    (D) Social Security Wages;
    (E) Deferred wages.
    (iv) Total Social Security Taxable Earnings.
    (v) Quarters of Social Security Coverage.
* * * * *
    (b)(6) through(d) [Reserved]. For further guidance, see 
Sec. 301.6103(j)(1)-1(b)(6) through (d).
    (e) Effective date. This section is applicable to the Bureau of the 
Census on February 13, 2001 through February 13, 2004.

    Approved: January 16, 2001.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Jonathan Talisman,
Assistant Secretary of the Treasury.
[FR Doc. 01-1989 Filed 2-12-01; 8:45 am]
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