[Federal Register Volume 68, Number 13 (Tuesday, January 21, 2003)]
[Rules and Regulations]
[Pages 2695-2696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1158]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 301 and 602

[TD 9036]
RIN 1545-AY77


Disclosure of Returns and Return Information by Other Agencies

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains a final regulation relating to the 
disclosure of returns and return information by Federal, state and 
local agencies other than the IRS. The final regulation permits the IRS 
to authorize agencies with access to returns and return information 
under section 6103 of the Internal Revenue Code (Code) to redisclose 
returns and return information, with the approval of the Commissioner 
of Internal Revenue (Commissioner), to any authorized recipient set 
forth in section 6103, subject to the same conditions and restrictions, 
and for the same purposes, as if the recipient had received the 
information from the IRS directly.

DATES: This regulation is effective January 21, 2003.

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 final regulation 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
4507(d)) under control number 1545-1757. The collection of information 
in this regulation is in Sec.  301.6103(p)(2)(B)-1. This information is 
required for the Commissioner to authorize the disclosure of returns 
and return information from agencies with access to returns and return 
information under section 6103 to other authorized recipients of 
returns and return information in accordance with section 6103.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid OMB control number.
    The estimated annual burden per respondent varies from one half-
hour to two hours, depending on individual circumstances, with an 
estimated average of one hour.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:FP:S 
Washington, DC 20224, and 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.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
return information are confidential, as required by 26 U.S.C. 6103.

Background

    This document contains amendments to 26 CFR parts 301 and 602. On 
December 13, 2001, a notice of proposed rulemaking (REG-105344-01) was 
published in the Federal Register (66 FR 64386). No comments were 
received from the public in response to the notice of proposed 
rulemaking. No public hearing was requested or held. The proposed 
regulations are adopted by this Treasury decision.

Explanation of Provisions

    The final regulation expands the number of agencies that may 
redisclose returns and return information if authorized by the 
Commissioner to any Federal, state or local agency that receives such 
information under section 6103. Similarly, it expands the universe of 
authorized recipients of returns and return information pursuant to 
this redisclosure authority to any recipient authorized to receive 
returns and return information in accordance with section

[[Page 2696]]

6103. All redisclosures by agencies pursuant to this regulation will be 
made subject to the same conditions, restrictions, safeguards, 
recordkeeping requirements, and civil and criminal penalties that would 
apply if the disclosure were made by the IRS. Federal, state and local 
agencies making disclosures of return information under the final 
regulation will continue to provide to the IRS certain information 
regarding disclosures made pursuant to this authority, in order for the 
IRS to fulfill its reporting requirements under section 6103(p).

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 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. Pursuant to the 
Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified 
that this final rule will not have a significant economic impact on a 
substantial number of small entities. The disclosure authorized by the 
rule is voluntary on the part of small governmental jurisdictions and, 
as discussed earlier in this preamble, the burden associated with 
requesting authorization from the Commissioner to disclose returns and 
return information, and to maintain the necessary records concerning 
the disclosure of return information, is minimal. Accordingly, a 
Regulatory Flexibility Analysis is not required. Pursuant to section 
7805(f) of the Code, the proposed regulations preceding these 
regulations were submitted to the Chief Counsel of the Small Business 
Administration for comment on their impact on small businesses.

Drafting Information

    The principal author of these regulations 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 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); 
* * *

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


Sec.  301.6103(p)(2)(B)-1  Disclosure of Returns and Return Information 
by Other Agencies.

    (a) General rule. Subject to the requirements of paragraphs (b), 
(c), and (d) of this section, returns or return information that have 
been obtained by a Federal, state or local agency, or its agents or 
contractors, in accordance with section 6103 (the first recipient) may 
be disclosed by the first recipient to another recipient authorized to 
receive such returns or return information under section 6103 (the 
second recipient).
    (b) Approval by Commissioner. A disclosure described in paragraph 
(a) of this section may be made if the Commissioner of Internal Revenue 
(the Commissioner) determines, after receiving a written request under 
this section, that such returns or return information are more readily 
available from the first recipient than from the Internal Revenue 
Service (IRS). The disclosure authorization by the Commissioner shall 
be directed to the head of the first recipient and may contain such 
conditions or restrictions as the Commissioner may prescribe. The 
disclosure authorization may be revoked by the Commissioner at any 
time.
    (c) Requirements and restrictions. The second recipient may receive 
only returns or return information as authorized by the provision of 
section 6103 applicable to such second recipient. Any returns or return 
information disclosed may be used by the second recipient only for a 
purpose authorized by and subject to any conditions imposed by section 
6103 and the regulations thereunder, including, if applicable, 
safeguards imposed by section 6103(p)(4).
    (d) Records and reports of disclosure. The first recipient shall 
maintain to the satisfaction of the IRS a permanent system of 
standardized records regarding such disclosure authorization described 
in paragraph (a) of this section and any disclosure of returns and 
return information made pursuant to such authorization, and shall 
provide such information as prescribed by the Commissioner in order to 
enable the IRS to comply with its obligations under section 6103(p)(3) 
to keep accountings for disclosures and to make annual reports of 
disclosures to the Joint Committee on Taxation. The information 
required for reports to the Joint Committee on Taxation must be 
provided within 30 days after the close of each calendar year. The 
requirements of this paragraph do not apply to the disclosure of 
returns and return information as provided by paragraph (a) of this 
section which, had such disclosures been made directly by the IRS, 
would not have been subject to the recordkeeping requirements imposed 
by section 6103(p)(3)(A).
    (e) Effective date. This section is applicable on January 21, 2003.


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

    Par. 3. Section 301.6103(p)(2)(B)-1T is removed.

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 removing the 
entry ``301.6103(p)(2)(B)-1T'' from the table and adding the entry 
``301.6103(p)(2)(B)-1'' in numerical order to read as follows:


Sec.  602.101  OMB Control numbers.

* * * * *
    (b) * * *

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                                                            Current OMB
   CFR part or section where identified and described       control No.
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                                * * * * *
301.6103(p)(2)(B)-1.....................................       1545-1757
 
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David A. Mader,
Assistant Deputy Commissioner of Internal Revenue.

    Approved: December 20, 2002.
Pamela F. Olson,
Assistant Secretary (Tax Policy), Department of the Treasury.
[FR Doc. 03-1158 Filed 1-17-03; 8:45 am]
BILLING CODE 4830-01-P