[Federal Register Volume 66, Number 240 (Thursday, December 13, 2001)]
[Proposed Rules]
[Pages 64386-64387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30620]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[REG-105344-01]
RIN 1545-AY77


Disclosure of Returns and Return Information by Other Agencies

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing a temporary regulation to enable 
the Commissioner to authorize Federal, state and local agencies with 
access to returns and return information under section 6103 of the 
Internal Revenue Code to redisclose such returns and return 
information, with the Commissioner's approval, to any authorized 
recipient set forth in section 6103 of the Internal Revenue Code, 
subject to the same restrictions and for the same purposes, as if the 
recipient had received the information from the IRS directly.

DATES: Written comments and electronic comments and requests for a 
public hearing must be received by February 14, 2002.

ADDRESSES: Send submissions to CC:ITA:RU (REG-105344-01), room 5226, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. Submissions may be delivered Monday through Friday between 
the hours of 8 a.m. and 5 p.m. to CC:ITA:RU (REG-105344-01), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC. Alternatively, taxpayers may submit comments 
electronically via the Internet by selecting the ``Tax Regs'' option on 
the IRS Home Page, or by submitting comments directly to the IRS 
Internet site: http://www.irs.gov/prod/tax_regs/comments/html.

FOR FURTHER INFORMATION CONTACT: Julie C. Schwartz, 202-622-4570 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collection of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:FP:S, 
Washington, DC 20224. Comments on the collection of information should 
be received by February 11, 2002.
    Comments are specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see below);
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of service to provide information.
    The collection of information in this proposed regulation is in 26 
CFR 301.6103(p)(2)(B)-1T. This information is required for the 
Commissioner to authorize agencies with access to returns and return 
information under section 6103 to disclose such to other authorized 
recipients of returns and return information in accordance with section 
6103. The collection of information is required to obtain a benefit. 
The likely respondents and recordkeepers are federal agencies and state 
or local governments.
    Estimated total annual reporting and/or recordkeeping burden: 11 
hours.
    Estimated average annual burden hours per respondent and/or 
recordkeeper: 1 hour.
    Estimated number of respondents and/or recordkeepers: 11.
    Estimated annual frequency of responses: Once.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of an internal revenue law. Generally, tax returns and 
return information are confidential, as required by 26 U.S.C. 6103.

Background

    Section 6103(p)(2)(B) provides that return information disclosed 
pursuant to the Code may be disclosed by any mode or means that the 
Secretary determines necessary or appropriate. 26 CFR 
301.6103(p)(2)(B)-1 currently permits certain recipients of returns and 
return information under section 6103, with the Commissioner's 
approval, to disclose returns and return information to certain other 
permissible recipients under section 6103. Specifically, the existing 
regulation permits disclosure by Federal agencies, with the 
Commissioner's approval, to (1) other Federal agencies, (2) state tax 
agencies, (3) the General Accounting Office, (4) Federal, state and 
local child support enforcement agencies, (5) persons described in 
section 6103(c) (person designated in a taxpayer consent), and (6) 
persons described in section 6103(e) (person with a material interest).
    The Consolidated Appropriations Act, 2001, Pub. L. No. 106-554 (114 
Stat. 2763), was signed into law on December 21, 2000. Section 1 of 
that Act enacted into law H.R. 5662, the Community Renewal Tax Relief 
Act of 2000. Section 310 of the Community Renewal Tax Relief Act of 
2000 added section 6103(j)(6) to the Code, authorizing the

[[Page 64387]]

Commissioner to disclose return information to the Congressional Budget 
Office (CBO) for the purpose of, but only to the extent necessary for, 
long term models of the Social Security and Medicare programs. The 
conference report, H. R. Conf. Rep. No. 106-1033, at 1020-21 (2000), 
provides that it is the intent of Congress that all requests for 
information made by CBO under this provision be made to the 
Commissioner, who will use his authority under section 6103(p)(2) such 
that the Social Security Administration (SSA) or other agency can 
furnish the information directly to CBO for the purpose of CBO's long 
term models of Social Security and Medicare. SSA, not IRS, collects and 
maintains much of the information sought by CBO and also receives the 
tax information CBO seeks under other provisions of section 6103. 
However, section 301.6103(p)(2)(B)-1 in its current form would not 
allow the Commissioner to authorize SSA to redisclose return 
information properly in its possession to CBO, an authorized recipient 
of the information under section 6103(j)(6). Updating the regulation 
would allow SSA to make return information in its possession available 
to CBO to the extent authorized by section 6103(j)(6).
    There are other situations, similar to that found under section 
6103(j)(6), where it is more efficient for returns and return 
information in the possession of one authorized agency recipient, to be 
disclosed by such agency to another statutorily authorized recipient. 
The inability of agencies, including Federal, state and local agencies, 
to share returns and return information between themselves or even 
inside a single agency, even where the information is more readily 
available from an agency other than the IRS, was highlighted by the 
Department of the Treasury on pages 89-90 of its October 2000 Report to 
the Congress on the Scope and Use of Taxpayer Confidentiality and 
Disclosure Provisions. The report notes, for example, that currently a 
single agency within a state (or even a single caseworker) may be 
administering both child support under Title IV-D of the Social 
Security Act and welfare under Title IV-A of the Social Security Act. 
The agency may receive return information under both section 6103(l)(6) 
and section 6103(l)(7) to aid the agency in making determinations of 
eligibility for these programs, but the current regulation does not 
permit even intra-agency pooling or sharing of these data. The report 
notes that both intra- and inter-agency data sharing with respect to 
common data elements could be authorized by amendment to the Treasury 
regulations. Updating the regulation would allow the IRS to authorize 
such redisclosure in appropriate situations.
    The text of the proposed temporary regulation also serves as the 
text of this proposed regulation. The preamble to the temporary 
regulation contains a full explanation of the reasons underlying the 
issuance of the proposed regulation.

Special Analyses

    It has been determined that this notice of proposed rulemaking 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) 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 Code, this notice of proposed rulemaking will be 
submitted to the Chief Counsel of the Small Business Administration for 
comment on its impact on small businesses.

Comments and Request for a Public Hearing

    Before this proposed regulation is adopted as a final regulation, 
consideration will be given to any electronic and written comments (a 
signed original and eight (8) copies) that are submitted timely to the 
IRS. All comments will be available for public inspection and copying. 
A public hearing may be scheduled if requested in writing by a person 
that timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the hearing will be published 
in the Federal Register.

Drafting Information

    The principal author of this regulation is Julie C. Schwartz, 
Office of the Associate Chief Counsel (Procedure and Administration), 
Disclosure and Privacy Law Division.

List of Subjects

26 CFR Part 301

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

26 CFR Part 602

    Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR parts 301 and 602 are proposed to be 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(p)(2)(B)-1 also issued under 26 U.S.C. 6103(p)(2); 
* * *.


Sec. 301.6103(p)(2)(B)-1  [Removed]

    Par. 2. Section 301.6103(p)(2)(B)-1 is removed.
    Par. 3. Section 301.6103(p)(2)(B)-1T is added to read as follows:
    [The text of this proposed section is the same as the text of 
Sec. 301.6103(p)(2)(B)-1T published elsewhere in this issue of the 
Federal Register].

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

    Par. 4. The authority citation for part 602 continues to read as 
follows:

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

    Par. 5. In Sec. 602.101, paragraph (b) is amended by adding an 
entry to the table in numerical order to read as follows:
    [The text of this proposed section is the same as the text of 
Sec. 602.101 published elsewhere in this issue of the Federal 
Register].

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 01-30620 Filed 12-12-01; 8:45 am]
BILLING CODE 4830-01-P