[Federal Register Volume 68, Number 132 (Thursday, July 10, 2003)]
[Proposed Rules]
[Pages 41089-41090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17385]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-140808-02]
RIN 1545-BB16


Disclosure of Return Information by Certain Officers and 
Employees for Investigative Purposes

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 temporary regulations relating to 
the disclosure of return information pursuant to section 6103(k)(6) of 
the Internal Revenue Code. The temporary regulations describe the 
circumstances under which officers or employees of the IRS, the IRS 
Office of Chief Counsel, and the Office of Treasury Inspector General 
for Tax Administration (TIGTA), in connection with official duties 
relating to any examination, administrative appeal, collection 
activity, administrative, civil or criminal investigation, enforcement 
activity, ruling, negotiated agreement, prefiling activity, or other 
proceeding or offense under the internal revenue laws or related 
statutes, or in preparation for any proceeding described in section 
6103(h)(2) (or investigation which may result in such a proceeding), 
may disclose return information to the extent necessary to obtain 
information relating to such official duties or to accomplish properly 
any activity connected with such official duties. The temporary 
regulations amend the existing regulations to clarify and elaborate on 
the facts and circumstances in which disclosure pursuant to section 
6103(k)(6) is authorized. The temporary regulations clarify that IRS 
and TIGTA officers and employees make the determination, based on the 
facts and circumstances, at the time of the disclosure, whether a 
disclosure is necessary to obtain the information sought, and that 
section 6103(k)(6) does not affect the authority or decision of IRS and 
TIGTA officers and employees to initiate, or to conduct, an 
investigation, or to determine the nature of the investigation. The 
temporary regulations clarify that the return information of any 
taxpayer, not only the taxpayer under investigation, may be disclosed 
when necessary to obtain the particular information sought. The 
temporary regulations clarify that section 6103(k)(6) permits IRS and 
TIGTA officers and employees to identify themselves, their 
organizational affiliation with the IRS (e.g., Criminal Investigation 
(CI)) or TIGTA (e.g., Office of Investigations (OI)), and the nature of 
their investigation when making oral, written, or electronic contacts 
with third party witnesses.

DATES: Written and electronic comments and requests for a public 
hearing must be received by October 8, 2003.

ADDRESSES: Send submissions to CC:PA:RU (REG-140808-02), 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 4 p.m. to CC:PA:RU (REG-140808-02), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC. Alternatively, taxpayers may submit comments 
electronically via the Internet directly to the IRS Internet site: 
http://www.irs.gov/regs.

FOR FURTHER INFORMATION CONTACT: Helene R. Newsome, 202-622-4570 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    Under section 6103(a), returns and return information are 
confidential unless the Internal Revenue Code (Code) authorizes 
disclosure. Section 6103(k)(6) authorizes an internal revenue officer 
or employee and an officer or employee of TIGTA, in connection with 
official duties relating to any audit, collection activity, civil or 
criminal tax investigation, or offense under the internal revenue laws 
or related statutes, to disclose return information to a person other 
than the taxpayer to whom such return information relates (or his or 
her representative) to the extent that such disclosure is necessary to 
obtain information not otherwise reasonably available with respect to 
the correct determination of tax, liability for tax, or the amount to 
be collected, or with respect to the enforcement of any other provision 
of the Code or related statutes. Disclosure is subject to situations 
and conditions prescribed by regulation.
    The proposed regulations amend the existing regulations to reflect 
a recent legislative amendment to section 6103(k)(6). The Consolidated 
Appropriations Act, 2001, Public Law 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 313(c) of the Community Renewal Tax Relief Act of 2000 amended 
section 6103(k)(6) to clarify that officers or employees of TIGTA are 
among those persons authorized to make disclosures under section 
6103(k)(6).
    The proposed regulations also clarify the standard used in 
determining whether disclosures are authorized under section 
6103(k)(6). Recent litigation indicates that there is some confusion as 
to the authority of IRS (and now TIGTA) officers and employees to make 
disclosures in certain situations under section 6103(k)(6). The 
proposed regulations seek to address these issues. In particular, the 
proposed regulations address the issues surrounding the disclosures 
that occur when IRS or TIGTA officers and employees introduce 
themselves to third party witnesses or communicate in writing using, 
e.g., official letterhead that reveals affiliation with IRS or TIGTA. 
The proposed regulations also clarify

[[Page 41090]]

that section 6103(k)(6) does not limit IRS or TIGTA officers and 
employees with respect to the initiation or conduct of an 
investigation. Finally, the proposed regulations clarify that section 
6103 does not require IRS and TIGTA officers or employees to contact a 
taxpayer for information before contacting third party witnesses.
    The text of the temporary regulations also serves as the text of 
these proposed regulations. The preamble to the temporary regulations 
contains a full explanation of the reasons underlying the issuance of 
the proposed regulations.

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 has also 
been determined that 5 U.S.C. 553(b), the Administrative Procedure Act 
does not apply to these regulations, and because the regulation does 
not impose a collection of information on small entities, the 
Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. 
Pursuant to section 7805(f), this notice of proposed rulemaking will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any electronic and written comments (a 
signed original and eight (8) copies) that are submitted timely to the 
IRS. The IRS and Treasury Department request comments on the clarity of 
the proposed rules and how they can be made easier to understand. 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 these regulations is Helene R. Newsome, 
Office of the Associate Chief Counsel (Procedure and Administration), 
Disclosure and Privacy Law Division.

List of Subjects in 26 CFR Part 301

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

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 301 is proposed to be amended as follows:
    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(k)(6)-1 also issued under 26 U.S.C. 6103(k)(6); * 
* *
    Par. 2. Section 301.6103(k)(6)-1 is removed.
    Par. 3. Section 301.6103(k)(6)-1T is added to read as follows:
    [The text of this proposed section is the same as the text of Sec.  
301.6103(k)(6)-1T published elsewhere in this issue of the Federal 
Register].

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 03-17385 Filed 7-9-03; 8:45 am]
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