[Federal Register Volume 69, Number 3 (Tuesday, January 6, 2004)]
[Rules and Regulations]
[Pages 506-507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-32220]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9111]
RIN 1545-AY94


Definition of Agent for Certain Purposes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
definition of agent for certain purposes. The final regulations clarify 
that the term agent in certain provisions of section 6103 of the 
Internal Revenue Code (Code) includes contractors.

DATES: Effective Date: These regulations are effective January 6, 2004.
    Applicability Date: For dates of applicability, see Sec. Sec.  
301.6103(l)-1(b) and 301.6103(m)-1(b).

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

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to 26 CFR part 301 under section 
6103(l) and (m) of the Code. On February 1, 2002, the Federal Register 
published a notice of proposed rulemaking (REG-120135-01) regarding the 
definition of agent for certain purposes (67 FR 4938). No public 
comments or requests for hearing were received. The Treasury decision 
adopts the regulations as proposed.
    Generally, returns and return information are confidential under 
section 6103 of the Code unless a specific statutory exception applies. 
In cases of non-tax-related disclosures, returns and return information 
generally may be disclosed only to officers and employees of Federal, 
state, and local government agencies, and not to contractors or agents 
of such agencies. In certain limited circumstances, however, Congress 
has permitted disclosures to ``agents'' of these agencies. See section 
6103(l)(6)(B), (l)(12), (m)(2), (m)(4), (m)(5), (m)(7).
    This document contains final regulations that clarify that the term 
agent in section 6103(l) and (m) includes contractors. Clarification 
that the term agent includes contractors is necessary for the purpose 
of bringing certain statutory grants of disclosure authority into 
alignment with the reality of many agencies' operations. Agencies 
generally procure the services of third parties under public 
contracting laws, which do not necessarily incorporate common law 
concepts of agent. This clarification is also consistent with 
Congressional intent. For example, the Senate Finance Committee, in 
amending section 6103(m)(2), stated, ``[a]gents are those who are 
engaged directly in performing or assisting in collection functions for 
the federal government, presumably, private collection agencies who 
have contracted with the government to collect claims * * * .'' S. Rep. 
No. 97-378, at 15 (1982).
    This clarification does not provide any new disclosure authority, 
nor does it authorize the disclosure of return information to 
contractors that Congress has not previously specifically authorized in 
the Code. With regard to protection of taxpayer data, agents/
contractors are subject to safeguard requirements, redisclosure 
prohibitions, and civil and criminal penalties for unauthorized 
disclosures. Accordingly, the regulations do not have an impact on 
taxpayer privacy.

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) and (d) 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, the notice of proposed rulemaking preceding these 
regulations was submitted to the Chief Counsel of the Small Business 
Administration for comment on its impact on small businesses.

Drafting Information

    The principal author of these regulations is Helene R. Newsome, 
Office of the Associate Chief Counsel (Procedure & Administration), 
Disclosure & 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.

Adoption of Amendments to the Regulations

0
Accordingly, 26 CFR part 301 is amended as follows:

[[Page 507]]

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 is amended by 
adding entries in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *
    Section 301.6103(l)-1 also issued under 26 U.S.C. 6103(q).
    Section 301.6103(m)-1 also issued under 26 U.S.C. 6103(q). * * *


0
Par. 2. Section 301.6103(l)-1 is added to read as follows:


Sec.  301.6103(l)-1  Disclosure of returns and return information for 
purposes other than tax administration.

    (a) Definition. For purposes of applying the provisions of section 
6103(l) of the Internal Revenue Code, the term agent includes a 
contractor.
    (b) Effective date. This section is applicable January 6, 2004.

0
Par. 3. Section 301.6103(m)-1 is added to read as follows:


Sec.  301.6103(m)-1  Disclosure of taxpayer identity information.

    (a) Definition. For purposes of applying the provisions of section 
6103(m) of the Internal Revenue Code, the term agent includes a 
contractor.
    (b) Effective date. This section is applicable January 6, 2004.

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
    Approved: December 16, 2003.
Pamela F. Olson,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 03-32220 Filed 12-31-03; 11:59 am]
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