[Federal Register Volume 71, Number 37 (Friday, February 24, 2006)]
[Proposed Rules]
[Pages 9487-9488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1714]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-157271-05]
RIN 1545-BF21


Procedures for Administrative Review of a Determination That an 
Authorized Recipient Has Failed To Safeguard Tax Returns or Return 
Information

AGENCY: Internal Revenue Service (IRS), Treasury.

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

-----------------------------------------------------------------------

SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations regarding 
administrative review procedures for certain government agencies and 
other authorized recipients of tax returns or return information 
(authorized recipients) whose receipt of returns and return information 
may be suspended or terminated because they do not maintain proper 
safeguards. The temporary regulations provide guidance to responsible 
IRS personnel and authorized recipients as to these administrative 
procedures. The text of the temporary regulations published in the 
Rules and Regulation section of this issue of the Federal Register 
serves as the text of the proposed regulations.

DATES: Written and electronic comments and requests for a public 
hearing must be received by May 25, 2006.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-157271-05), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered between the 
hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-157271-05), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., 
Washington, DC, or sent electronically, via the IRS Internet site at 
http://www.irs.gov/regs, or via the Federal eRulemaking Portal at 
http://www.regulations.gov (IRS and REG-148864-03).

FOR FURTHER INFORMATION CONTACT: Concerning submission of comments, 
Treena Garrett, (202) 622-7180; concerning the temporary regulations, 
Melinda K. Fisher, (202) 622-4580 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    Under section 6103 of the Internal Revenue Code (Code), tax returns 
and return information are protected from disclosure except in 
specifically enumerated circumstances. Where disclosure is permitted, 
section 6103 generally imposes strict safeguarding requirements and 
requires the IRS to monitor and enforce compliance with those 
requirements. Section 6103(p)(7) requires the Secretary of the Treasury 
to prescribe procedures providing for administrative review of any 
determination under section 6103(p)(4) that an agency, body, or 
commission receiving returns or return information pursuant to section 
6103(d) has failed to meet the safeguarding requirements. Withdrawn 
Sec.  301.6103(p)(7)-1 set forth the procedures for terminating future 
disclosures to these authorized recipients. These proposed regulations 
provide the intermediate review and termination procedures for all

[[Page 9488]]

authorized recipients identified in section 6103(p)(4).
    With an increasing volume of authorized disclosures of returns and 
return information, it is critical that authorized recipients of 
returns and return information adhere to the strict safeguard 
requirements of the Code and that the IRS take all necessary steps to 
ensure that those requirements are met. If unauthorized disclosures do 
occur, it is similarly important that the IRS take steps to address 
them and ensure that they are not repeated. Such steps include, as 
appropriate, suspension or termination of further disclosures to an 
authorized recipient. Nevertheless, because the authority to receive 
returns and return information is provided by law, authorized 
disclosures should not be suspended or terminated for failure to 
maintain adequate safeguards without appropriate administrative review 
procedures. The temporary regulations set forth procedures to ensure 
that authorized recipients provide the proper security and protection 
to returns and return information.
    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend the Procedure and Administration 
Regulations (26 CFR part 301) relating to section 6103(p)(4) and 
(p)(7). The temporary regulations provide the intermediate review and 
termination procedures for all authorized recipients.
    The text of the temporary regulations also serves as the text of 
these proposed regulations. The preamble to the temporary regulations 
explains 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. Pursuant to 
the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small businesses. These regulations 
do not impose burdens or obligations on any person, but instead provide 
certain rights of administrative review. Accordingly, a regulatory 
flexibility analysis is not required. Pursuant to section 7805(f) of 
the Code, these proposed regulations will be submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their 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 specifically request comments on 
the clarity of the proposed regulations 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 who timely submits 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 Melinda K. Fisher, 
Office of the Associate Chief Counsel (Procedure & 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:

PART 301--PROCEDURE AND ADMINISTRATION

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


    Authority: 26 U.S.C. 7805 * * * Sections 301.6103(p)(4)-1 and 
301.6103(p)(7)-1 also issued under 26 U.S.C. 6103(p)(4) and (7) and 
(q); * * *

    Par. 2. Section 301.6103(p)(4)-1 is added to read as follows:


Sec.  301.6103(p)(4)-1  Procedures relating to safeguards for returns 
or return information.

    [The text of proposed Sec.  301.6103(p)(4)-1 is the same as the 
text of Sec.  301.6103(p)(4)-1T published elsewhere in this issue of 
the Federal Register].
    Par. 3. Section 301.6103(p)(7)-1 is added to read as follows:


Sec.  301.6103(p)(7)-1  Procedures for administrative review of a 
determination that an authorized recipient has failed to safeguard tax 
returns or return information.

    [The text of proposed Sec.  301.6103(p)(7)-1 is the same as the 
text of Sec.  301.6103(p)(7)-1T published elsewhere in this issue of 
the Federal Register].

Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 06-1714 Filed 2-23-06; 8:45 am]
BILLING CODE 4830-01-U