[Federal Register Volume 71, Number 217 (Thursday, November 9, 2006)]
[Proposed Rules]
[Pages 65763-65764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18853]



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DEPARTMENT OF THE TREASURY

31 CFR Part 1


Privacy Act; Proposed Implementation

AGENCY: Internal Revenue Service, Treasury.

ACTION: Proposed rule.

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SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, as amended, the Department of the Treasury gives notice of a 
proposed amendment to this part to exempt a new Internal Revenue 
Service (IRS) system of records entitled ``IRS 42.002, Excise Tax 
Compliance Programs'' from certain provisions of the Privacy Act.

DATES: Comments must be received no later than December 11, 2006. You 
may also submit comments through the Federal rulemaking portal at 
http://www.regulations.gov (follow the instructions for submitting 
comments).

ADDRESSES: Please submit comments to the Office of Governmental Liaison 
and Disclosure, 1111 Constitution Avenue, NW., Washington, DC 20224. 
Comments will be made available for inspection at the IRS Freedom of 
Information Reading Room (Room 1621), at the above address. The 
telephone number for the Reading Room is (202) 622-5164.

FOR FURTHER INFORMATION CONTACT: Telephonic inquiries should be 
directed to David Silverman, Tax Law Specialist, Internal Revenue 
Service, 1111 Constitution Avenue, NW., Washington, DC 20224. 
Telephone: (202) 283-7382.

SUPPLEMENTARY INFORMATION: Under 5 U.S.C. 552a(k)(2), the head of an 
agency may promulgate rules to exempt a system of records from certain 
provisions of 5 U.S.C. 552a if the system contains investigatory 
material compiled for law enforcement purposes. The IRS is hereby 
giving notice of a proposed rule to exempt Treasury/IRS 42.002--Excise 
Tax Compliance Records from certain provisions of the Privacy Act of 
1974, pursuant to 5 U.S.C. 552a(k)(2).
    The proposed exemption is from provisions 552a(c)(3), (d) (1), (2), 
(3) and (4), (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I), and (f) because 
the system contains investigatory material compiled for law enforcement 
purposes. The following are the reasons why this system of records 
maintained by the IRS is exempt pursuant to 5 U.S.C. 552a(k)(2) of the 
Privacy Act of 1974.
    (1) 5 U.S.C. 552a(c)(3). This provision of the Privacy Act provides 
for the release of the disclosure accounting required by 5 U.S.C. 
552a(c)(1) and (2) to the individual named in the record at his/her 
request. The reasons for exempting this system of records from the 
foregoing provisions are:
    (i) The release of disclosure accounting would put the tax exempt 
or government entity subject to investigation, or individuals connected 
with those entities, on notice that an investigation exists and that 
such person is the subject of that investigation.
    (ii) Such release would provide the tax exempt or government entity 
subject to investigation, or individuals connected with those entities, 
with an accurate accounting of the date, nature, and purpose of each 
disclosure and the name and address of the person or agency to which 
disclosure was made. The release of such information to the individual 
covered by the system would provide the individual or entity subject to 
investigation with significant information concerning the nature of the 
investigation and could result in the altering or destruction of 
documentary evidence, the improper influencing of witnesses, and other 
activities that could impede or compromise the investigation. In the 
case of a delinquent account, such release might enable the subject of 
the investigation to dissipate assets before levy.
    (iii) Release to the individual of the disclosure accounting would 
alert the individual as to which agencies were investigating the tax 
exempt or government entity subject to investigation, would provide 
information concerning the scope of the investigation, and could aid 
the individual in impeding or compromising investigations by those 
agencies. (2) 5 U.S.C. 552a(d)(1), (2), (3) and (4), (e)(4)(G), 
(e)(4)(H), and (f). These provisions of the Privacy Act relate to an 
individual's right to be notified of: The existence of records 
pertaining to such individual; requirements for identifying an 
individual who requested access to records; the agency procedures 
relating to access to records; the content of the information contained 
in such records; and the civil remedies available to the individual in 
the event of adverse determinations by an agency concerning access to 
or amendment of information contained in record systems.
    The reasons for exempting this system of records from the foregoing 
provisions are as follows: Notifying an individual (at the individual's 
request) of the existence of an investigative file pertaining to such 
individual or granting access to an investigative file pertaining to 
such individual could: Interfere with investigative and enforcement 
proceedings; deprive co-defendants of a right to a fair trial or an 
impartial adjudication; constitute an unwarranted invasion of the 
personal privacy of others; disclose the identity of confidential 
sources and reveal confidential information supplied by such sources; 
or disclose investigative techniques and procedures.
    (3) 5 U.S.C. 552a(e)(1). This provision of the Privacy Act requires 
each agency to maintain in its records only such information about an 
individual as is relevant and necessary to accomplish a purpose of the 
agency required to be accomplished by statute or executive order. The 
reasons for exempting this system of records from the foregoing 
provision are as follows:
    (i) The IRS will limit the system to those records that are needed 
for compliance with the provisions of Title 26. However, an exemption 
from the foregoing is needed because, particularly in the early stages 
of an investigation, it is not possible to determine the relevance or 
necessity of specific information.
    (ii) Relevance and necessity are questions of judgment and timing. 
What appears relevant and necessary when first received may 
subsequently be determined to be irrelevant or unnecessary. It is only 
after the information is evaluated that the relevance and necessity of 
such information can be established with certainty.
    (4) 5 U.S.C. 552a(e)(4)(I). This provision of the Privacy Act 
requires the publication of the categories of sources of records in 
each system of records. The reasons for exempting this system of 
records from this provision are as follows:
    (i) Revealing categories of sources of information could disclose 
investigative techniques and procedures.
    (ii) Revealing categories of sources of information could cause 
sources who supply information to investigators to refrain from giving 
such information because of fear of reprisal, or fear of breach of 
promises of anonymity and confidentiality.
    A proposed notice to establish the Privacy Act system of records 
entitled ``IRS 42.002, Excise Tax Compliance Records'' will be 
published separately in the Federal Register.
    As required by Executive Order 12866, it has been determined that 
this proposed rule is not a significant regulatory action, and 
therefore, does not require a regulatory impact analysis.
    The regulation will not have a substantial direct effect on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
various

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levels of government. Therefore, it is determined that this proposed 
rule does not have federalism implications under Executive Order 13132.
    Pursuant to the requirements of the Regulatory Flexibility Act, 5 
U.S.C. 601-612, it is hereby certified that these regulations will not 
significantly affect a substantial number of small entities. The 
proposed rule imposes no duties or obligations on small entities.
    In accordance with the provisions of the Paperwork Reduction Act of 
1995, the Department of the Treasury has determined that this proposed 
rule would not impose new recordkeeping, application, reporting, or 
other types of information collection requirements.

List of Subjects in 31 CFR Part 1

    Privacy.
    Part 1, subpart C of title 31 of the Code of Federal Regulations is 
amended as follows:

PART 1--[AMENDED]

    1. The authority citation for part 1 continues to read as follows:

    Authority: 5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued 
under 5 U.S.C. 552 as amended. Subpart C also issued under 5 U.S.C. 
552a.

    2. Section 1.36 paragraph (g)(1)(viii) is amended by adding the 
following text to the table in numerical order.


Sec.  1.36  Systems exempt in whole or in part from provisions of 5 
U.S.C. 552a and this part.

* * * * *
    (g) * * *
    (1) * * *
    (viii) * * *

------------------------------------------------------------------------
                 Number                           Name of system
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                              * * * * * * *
IRS 42.002.............................  Excise Tax Compliance Records.
 
                              * * * * * * *
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     Dated: September 27, 2006.
Sandra L. Pack,
Assistant Secretary for Management and Chief Financial Officer.
[FR Doc. E6-18853 Filed 11-8-06; 8:45 am]
BILLING CODE 4830-01-P