[Federal Register Volume 84, Number 68 (Tuesday, April 9, 2019)]
[Rules and Regulations]
[Pages 14009-14011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07043]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9856]
RIN 1545-BN63


Disclosures of Return Information Reflected on Returns to 
Officers and Employees of the Department of Commerce for Certain 
Statistical Purposes and Related Activities

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulation and removal of temporary regulation.

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SUMMARY: This document contains a final regulation that authorizes the 
disclosure of specified items of return information to the Bureau of 
the Census (Census Bureau). This regulation finalizes a proposed 
regulation cross-referencing a temporary regulation that was made 
pursuant to a request from the Secretary of Commerce. This final 
regulation requires no action by taxpayers and has no effect on their 
tax liabilities. No taxpayers are likely to be affected by the 
disclosures authorized by this guidance.

DATES: 
    Effective date: This regulation is effective on April 9, 2019.
    Applicability date: For dates of applicability, see Sec.  
301.6103(j)(1)-1(e).

FOR FURTHER INFORMATION CONTACT: William Rowe, (202) 317-6834 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains amendments to 26 CFR part 301 (Procedure and 
Administration Regulations). Section 6103(j)(1)(A) of the Internal 
Revenue Code authorizes the Secretary of the Treasury (Secretary) to 
furnish, upon written request by the Secretary of Commerce, such 
returns or return information as the Secretary may prescribe by 
regulation to officers and employees of the Census Bureau for the 
purpose of, but only to the extent necessary in, the structuring of 
censuses and national economic accounts and conducting related 
statistical activities authorized by law. Section 301.6103(j)(1)-1 of 
the existing regulations further defines such purposes by reference to 
13 U.S.C. chapter 5 and provides an itemized description of the return 
information authorized to be disclosed for such purposes.
    By letter dated August 2, 2016, the Secretary of Commerce requested 
amendments to Sec.  301.6103(j)(1)-1 to allow disclosure of several 
additional items of return information to the Census Bureau for 
purposes of its economic statistics program, structuring the censuses, 
and related program evaluations. The Secretary of Commerce's letter 
lists the additional items of return information requested based on the 
Census Bureau's specific need for each item of information. The 
Secretary of Commerce asserted that good cause exists to amend Sec.  
301.6103(j)(1)-1 to add these additional items to the list of items of 
return information that may be disclosed to the Census Bureau. The 
Department of the Treasury (Treasury Department) and the IRS agree that 
amending existing regulations to permit disclosure of these items to 
the Census Bureau is appropriate to meet the needs of the Census 
Bureau.
    On December 9, 2016, a temporary regulation (TD 9802) was published 
in the Federal Register (81 FR 89004). The text of the temporary 
regulation also serves as the text of the proposed regulation set forth 
in a notice of proposed rulemaking (REG-133353-16) published in the 
Federal Register on the same day (81 FR 89022). The preamble to the 
temporary regulation describes the categories of information requested 
by the Secretary of Commerce. No public hearing was requested or held. 
No comments were received in response to the notice of proposed 
rulemaking.
    Accordingly, the proposed regulation, the contents of which are 
described in the following Explanation of Provisions, is adopted by 
this Treasury decision without change, and the corresponding temporary 
regulation is removed, applicable to disclosures on or after December 
9, 2016.

Explanation of Provisions

    The proposed regulation authorized disclosure of additional expense 
items

[[Page 14010]]

from business tax returns in order to improve the expense data that is 
collected by the Census Bureau. Specifically, the proposed regulation 
authorized disclosure of the following enumerated components of total 
expenses or total deductions from business tax returns (Forms 1065, 
Forms in the 1120 series, and Form 1040, Schedule C, E or C/EZ): (1) 
Repairs (and maintenance) expense; (2) rents (or lease) expense; (3) 
taxes and licenses expense; (4) interest expense, including mortgage or 
other interest; (5) depreciation expense; (6) depletion expense; (7) 
advertising expense; (8) pension and profit-sharing plans (retirement 
plans) expense; (9) employee benefit programs expense; (10) utilities 
expense; (11) supplies expense; (12) contract labor expense; and (13) 
management (and investment advisory) fees. The proposed regulation also 
authorized disclosure of purchases from Form 1125-A and the following 
additional items from Form 1040, Schedule C: (1) Materials and 
supplies; and (2) purchases less cost of items withdrawn for personal 
use.
    The proposed regulation also authorized disclosure of additional 
items of return information from business tax returns for the purpose 
of directing a high proportion of research and development surveys 
towards businesses with known research activities. Specifically, the 
proposed regulation authorized disclosure of additional items of return 
information from Forms 6765 (when filed with corporation income tax 
returns): (1) Cycle posted; and (2) the research tax credit amount to 
be carried over to a business return, schedule, or form.
    The proposed regulation also authorized disclosure of additional 
items of return information for purposes of maintaining a centralized, 
continuous Business Register that comprehensively lists and 
characterizes United States business establishments and their domestic 
parent enterprises. Specifically, the proposed regulation authorized 
disclosure of additional items of return information from employment 
tax returns: (1) If a business has closed or stopped paying wages; (2) 
final date a business paid wages; and (3) if a business is a seasonal 
employer and does not have to file a return for every quarter of the 
year. The proposed regulation also authorized disclosure of the 
electronic system filing indicator from business tax returns and the 
cycle from the IRS's Business Master Files.
    The proposed regulation also authorized disclosure of additional 
items of return information for purposes of modeling firm survival for 
production of statistics on business dynamics. Specifically, the 
proposed regulation authorized disclosure of additional items of return 
information from business tax returns: (1) Dividends, including 
ordinary and qualified; and (2) type of REIT (from Form 1120-REIT).
    The proposed regulation also authorized disclosure of additional 
items of return information for purposes of the Survey of Business 
Owners. Specifically, the proposed regulation authorized disclosure of 
the following additional items of return information from Form 1065, 
Schedule K-1: (1) Publicly-traded partnership indicator; (2) partner's 
share of nonrecourse, qualified nonrecourse, and recourse liabilities; 
and (3) ordinary business income (loss). The proposed regulation also 
authorized disclosure of ordinary business income (loss) from Forms 
1120S, Schedule K-1.
    Finally, the proposed regulation authorized disclosure of 
additional items of return information for purposes of developing and 
preparing the Quarterly Financial Report. Specifically, the proposed 
regulation authorized disclosure of the following additional items of 
return information from Forms 1120-REIT: (1) Type of Real Estate 
Investment Trust (``REIT''); and (2) gross rents from real property. 
The proposed regulation also authorized disclosure of the corporation's 
method of accounting from Form 1120F and the total amount reported from 
Form 1096.
    The proposed regulation also amended language in the existing 
regulations to clarify that the TD 9500, which was published in the 
Federal Register (75 FR 52458), authorized disclosure only of 
categorical information for total qualified research expenses from 
Forms 6765. In accordance with the preamble to TD 9500, the existing 
regulations do not authorize the disclosure of the exact amount of 
total research expenses as reported on Form 6765. By letter dated 
February 6, 2006, the Secretary of Commerce requested disclosure of 
categorical information on total qualified research expenses in three 
ranges: Greater than zero, but less than $1 million; greater than or 
equal to $1 million, but less than $3 million; and, greater than or 
equal to $3 million. The proposed regulation amended the existing 
regulations to more clearly reflect the categorical nature of the 
disclosure of total research expenses from Form 6765.
    Lastly, the proposed regulation also removed duplicate paragraphs 
contained in the existing regulations. Under the existing regulations, 
each of the following items of return information from business-related 
returns was authorized for disclosure by two identical paragraphs: 
Social Security tip income; total Social Security taxable earnings; and 
gross distributions from employer-sponsored and individual retirement 
plans from Form 1099-R. Because there is no need for duplicate 
paragraphs that authorize disclosure of the same items of return 
information for the same purpose, the proposed regulation removed the 
duplicate paragraphs.

Special Analyses

    These regulations are not subject to review under section 6(b) of 
Executive Order 12866 pursuant to the Memorandum of Agreement (April 
11, 2018) between the Treasury Department and the Office of Management 
and Budget regarding review of tax regulations. It has also been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply to these regulations. It is hereby 
certified that these regulations will not have a significant economic 
impact on a substantial number of small entities because the 
regulations do not impose a collection of information on small 
entities. Accordingly, a regulatory flexibility analysis is not 
required under the Regulatory Flexibility Act (5 U.S.C. chapter 6). 
Pursuant to section 7805(f) of the Internal Revenue Code, these 
regulations have been submitted to the Chief Counsel for Advocacy of 
the Small Business Administration for comment on its impact on small 
businesses.

Drafting Information

    The principal author of these regulations is William Rowe, Office 
of the Associate Chief Counsel (Procedure & Administration). However, 
other personnel from the Treasury Department and the IRS participated 
in their development.

List of Subjects in 26 CFR Part 301

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

Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *


[[Page 14011]]



0
Par. 2. Section 301.6103(j)(1)-1 is amended by:
0
1. Revising paragraph (b)(2)(iii)(I) and adding paragraphs 
(b)(2)(iii)(K) through (M);
0
2. Revising paragraphs (b)(3)(v) and (b)(3)(xxv) through (xxx);
0
3. Adding paragraphs (b)(3)(xxxi) through (xxxv) and (b)(6)(i)(C) 
through (E); and
0
4. Revising paragraph (e).
    The revisions and additions read as follows:


Sec.  301.6103(j)(1)-1   Disclosures of return information reflected on 
returns to officers and employees of the Department of Commerce for 
certain statistical purposes and related activities.

* * * * *
    (b) * * *
    (2) * * *
    (iii) * * *
    (I) Total taxable wages paid for purposes of chapter 21;
* * * * *
    (K) If a business has closed or stopped paying wages;
    (L) Final date a business paid wages; and
    (M) If a business is a seasonal employer and does not have to file 
a return for every quarter of the year;
* * * * *
    (3) * * *
    (v) Total expenses or deductions, including totals of the following 
components thereof:
    (A) Repairs (and maintenance) expense;
    (B) Rents (or lease) expense;
    (C) Taxes and licenses expense;
    (D) Interest expense, including mortgage or other interest;
    (E) Depreciation expense;
    (F) Depletion expense;
    (G) Advertising expense;
    (H) Pension and profit-sharing plans (retirement plans) expense;
    (I) Employee benefit programs expense;
    (J) Utilities expense;
    (K) Supplies expense;
    (L) Contract labor expense; and
    (M) Management (and investment advisory) fees.
* * * * *
    (xxv) From Form 6765 (when filed with corporation income tax 
returns)--
    (A) Indicator that total qualified research expenses is greater 
than zero, but less than $1 million; greater than or equal to $1 
million, but less than $3 million; or, greater than or equal to $3 
million;
    (B) Cycle posted; and
    (C) Research tax credit amount to be carried over to a business 
return, schedule, or form.
    (xxvi) Total number of documents reported on Form 1096 transmitting 
Forms 1099-MISC.
    (xxvii) Total amount reported on Form 1096 transmitting Forms 1099-
MISC.
    (xxviii) Type of REIT.
    (xxix) From Form 1125-A-- purchases.
    (xxx) From Form 1040, Schedule C--
    (A) Purchases less cost of items withdrawn for personal use; and
    (B) Materials and supplies.
    (xxxi) Electronic filing system indicator.
    (xxxii) Posting cycle date relative to filing.
    (xxxiii) Dividends, including ordinary or qualified.
    (xxxiv) From Form 1120S, Schedule K-1--ordinary business income 
(loss).
    (xxxv) From Form 1065, Schedule K-1--
    (A) Publicly-traded partnership indicator;
    (B) Partner's share of nonrecourse, qualified nonrecourse, and 
recourse liabilities; and
    (C) Ordinary business income (loss).
* * * * *
    (6) * * *
    (i) * * *
    (C) From Form 1120-REIT--
    (1) Type of REIT; and
    (2) Gross rents from real property;
    (D) From Form 1120F--corporation's method of accounting.
    (E) From Form 1096--total amount reported.
* * * * *
    (e) Applicability date. Paragraphs (b)(2)(iii)(I), (b)(2)(iii)(K) 
through (b)(2)(iii)(M), (b)(3)(v), (b)(3)(xxv) through (b)(3)(xxxv), 
and (b)(6)(i)(C) through (b)(6)(i)(E) of this section apply to 
disclosure to the Bureau of the Census made on or after December 9, 
2016. For rules that apply to disclosure to the Bureau of the Census 
before December 9, 2016, see 26 CFR 301.6103(j)(1)-1 (revised as of 
April 1, 2016).


Sec.  301.6103(j)(1)-1T  [Removed]

0
Par. 3. Section 301.6103(j)(1)-1T is removed.

Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
    Approved: March 19, 2019.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2019-07043 Filed 4-5-19; 4:15 pm]
 BILLING CODE 4830-01-P