[Federal Register Volume 68, Number 21 (Friday, January 31, 2003)]
[Rules and Regulations]
[Pages 4922-4923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2207]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 31

[TD 9041]
RIN 1545-BB88


Taxpayer Identification Number (TIN) Matching Program

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: This document contains final and temporary regulations under 
section 3406 relating to the IRS Taxpayer Identification Number (TIN) 
Matching Program. These final and temporary regulations affect payors, 
and their authorized agents, and provide guidance necessary to comply 
with the law. The text of the temporary regulations also serves as the 
text of the proposed regulations set forth in the Proposed Rules 
section published elsewhere in this issue of the Federal Register.

DATES: Effective Date. These regulations are effective January 31, 
2003.
    Applicability Date. For dates of applicability, see Sec. Sec.  
31.3406(j)-1(f) and 31.3406(j)-1T(f).

FOR FURTHER INFORMATION CONTACT: Donna Welch at (202) 622-4910.

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to the Employment Tax Regulations 
(26

[[Page 4923]]

CFR part 31) relating to the IRS TIN Matching Program.
    Section 3406(a)(1) requires a payor to withhold on any reportable 
payment (as defined in section 3406(b)(1)) in certain situations, 
including if (1) the payee fails to furnish his TIN to the payor as 
required or (2) the Secretary notifies the payor that the TIN furnished 
by the payee is incorrect. Section 3406(i) provides that the Secretary 
shall prescribe such regulations as may be necessary or appropriate to 
carry out the purposes of section 3406.
    Regulations under section 3406(i) provide that the Commissioner has 
the authority to establish TIN matching programs through revenue 
procedures or other appropriate guidance. Under the regulations, a 
payor participating in a TIN matching program may, before filing 
information returns with respect to reportable payments, contact the 
IRS with respect to the TIN furnished by the payee. The regulations 
provide that the IRS will inform the payor whether or not the name/TIN 
combination furnished by the payee matches a name/TIN combination 
maintained for the TIN matching program.
    Pursuant to the authority in the regulations, the IRS issued Rev. 
Proc. 97-31 (1997-1 C.B. 703) and implemented a TIN matching program 
for Federal agency payors. The IRS is now issuing a second revenue 
procedure pursuant to that authority (as amended by these temporary 
regulations). This revenue procedure will expand the scope of the IRS 
TIN Matching Program to allow all payors (and not merely Federal agency 
payors), as well as payors' authorized agents, to participate in TIN 
matching. In addition, the IRS and the Treasury Department expect to 
issue additional published guidance that will allow payment card 
organizations to act on behalf of cardholder/payors for purposes of 
soliciting, collecting, and validating merchant/payees' names and TINs 
through TIN matching if certain requirements are met.

Explanation of Provisions

    These regulations specifically authorize a payor's authorized agent 
to participate in TIN matching by providing that, for purposes of the 
TIN matching program, the term payor includes an agent designated by 
the payor to participate in TIN matching on behalf of the payor.

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. For the 
applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) 
refer to the Special Analyses section of the preamble to the cross-
reference notice of proposed rulemaking published in the Proposed Rules 
section of this issue of the Federal Register. Pursuant to section 
7805(f), the temporary regulations will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small business.

Drafting Information

    The principal author of the regulations is Donna Welch, Office of 
Associate Chief Counsel (Procedure and Administration), Administrative 
Provisions and Judicial Practice Division. However, other personnel 
from the IRS and the Treasury Department participated in the 
development of the regulations.

List of Subjects in 26 CFR Part 31

    Employment taxes, Income taxes, Penalties, Pensions, Railroad 
retirement, Reporting and recordkeeping requirements, Social security, 
Unemployment compensation.

Amendments to the Regulations

    Accordingly, 26 CFR part 31 is amended as follows:

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

    1. The authority citation for part 31 is amended by adding an entry 
in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 31.3406(j)-1T also issued under 26 U.S.C. 3406(i). * * *

    2. Section 31.3406(j)-1 is amended by revising paragraphs (a) and 
(f) to read as follows:


Sec.  31.3406(j)-(1)  Taxpayer Identification Number (TIN) matching 
program.

    (a) [Reserved]. For further guidance, see Sec.  31.3406(j)-1T(a).
* * * * *
    (f) [Reserved]. For further guidance, see Sec.  31.3406(j)-1T(f).

    3. Section 31.3406(j)-1T is added to read as follows:


Sec.  31.3406(j)-1T  Taxpayer Identification Number (TIN) matching 
program (temporary).

    (a) The matching program. Under section 3406(i), the Commissioner 
has the authority to establish Taxpayer Identification Number (TIN) 
matching programs. The Commissioner may prescribe in a revenue 
procedure (see Sec.  601.601(d)(2) of this chapter) or other 
appropriate guidance the scope and the terms and conditions of 
participating in any TIN matching program. In general, under a matching 
program, prior to filing information returns with respect to reportable 
payments as defined in section 3406(b)(1), a payor of those reportable 
payments who is entitled to participate in the matching program may 
contact the Internal Revenue Service (IRS) with respect to the TIN 
furnished by a payee who has received or is likely to receive a 
reportable payment. The IRS will inform the payor whether or not a 
name/TIN combination furnished by the payee matches a name/TIN 
combination maintained in the data base utilized for the particular 
matching program. For purposes of this section, the term payor includes 
an agent designated by the payor to participate in TIN matching on the 
payor's behalf.
    (b) through (e) [Reserved]. For further guidance, see Sec.  
31.3406(j)-1(b) through (e).
    (f) Effective date. The provisions of this section are applicable 
on or after June, 18, 1997, except the last sentence in paragraph (a) 
of this section which is applicable on January 31, 2003. The 
applicability of this section expires on January 30, 2006.

David A. Mader,
Acting Deputy Commissioner of Internal Revenue.
    Approved: January 17, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury.
[FR Doc. 03-2207 Filed 1-30-03; 8:45 am]
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