U.S. Individual Income Tax Return

Federal Register / Vol. 73, No. 128 / Wednesday, July 2, 2008 / Rules and Regulations
Issued in Renton, Washington, on June 7,
2008.
Michael Kaszycki,
Acting Manager, Transport Airplane
Directorate, Aircraft Certification Service.
[FR Doc. E8–14205 Filed 7–1–08; 8:45 am]
BILLING CODE 4910–13–P

DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2007–0293; Airspace
Docket No. 07–ANM–18]

Establishment of Class E Airspace;
Salida, CO
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:

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SUMMARY: This action will establish
Class E airspace at Salida, CO.
Controlled airspace is necessary to
accommodate aircraft using a new Area
Navigation (RNAV) Global Positioning
System (GPS) Standard Instrument
Approach Procedure (SIAP) at Harriet
Alexander Field. This will improve the
safety of Instrument Flight Rules (IFR)
aircraft executing the new RNAV GPS
SIAP at Harriet Alexander Field, Salida,
CO.
DATES: Effective Date: 0901 UTC,
September 25, 2008. The Director of the
Federal Register approves this
incorporation by reference action under
1 CFR part 51, subject to the annual
revision of FAA Order 7400.9 and
publication of conforming amendments.
FOR FURTHER INFORMATION CONTACT:
Eldon Taylor, Federal Aviation
Administration, Operations Support
Group, Western Service Area, 1601 Lind
Avenue, SW., Renton, WA, 98057;
telephone (425) 203–4537.
SUPPLEMENTARY INFORMATION:

History
On March 28, 2008, the FAA
published in the Federal Register a
notice of proposed rulemaking to
establish controlled airspace at Salida,
CO, (73 FR 16579). This action would
improve the safety of IFR aircraft
executing a new RNAV GPS SIAP
approach procedure at Harriet
Alexander Field, Salida, CO. Interested
parties were invited to participate in
this rulemaking effort by submitting
written comments on the proposal to the
FAA. No comments were received.
Class E airspace designations are
published in paragraph 6005 of FAA
Order 7400.9R signed August 15, 2007,
and effective September 15, 2007, which

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is incorporated by reference in 14 CFR
part 71.1. The Class E airspace
designations listed in this document
will be published subsequently in that
Order.
The Rule
This action amends Title 14 Code of
Federal Regulations (14 CFR) part 71 by
establishing Class E airspace at Salida,
CO. Controlled airspace is necessary to
accommodate IFR aircraft executing a
new RNAV (GPS) approach procedure at
Harriet Alexander Field, Salida, CO.
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
frequent and routine amendments are
necessary to keep them operationally
current. Therefore, this regulation: (1) Is
not a ‘‘significant regulatory action’’
under Executive Order 12866; (2) is not
a ‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
regulatory evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that will only affect air
traffic procedures and air navigation, it
is certified that this rule, when
promulgated, will not have a significant
economic impact on a substantial
number of small entities under the
criteria of the Regulatory Flexibility Act.
The FAAs authority to issue rules
regarding aviation safety is found in
Title 49 of the U.S. Code. Subtitle 1,
Section 106 discusses the authority of
the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more
detail the scope of the agency’s
authority. This rulemaking is
promulgated under the authority
described in Subtitle VII, Part A,
Subpart I, Section 40103. Under that
section, the FAA is charged with
prescribing regulations to assign the use
of airspace necessary to ensure the
safety of aircraft and the efficient use of
airspace. This regulation is within the
scope of that authority as it establishes
controlled airspace at Harriet Alexander
Field, Salida, CO.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 71 as follows:

■

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37797

PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:

■

Authority: 49 U.S.C. 106(g), 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1

[Amended]

2. The incorporation by reference in
14 CFR 71.1 of the Federal Aviation
Administration Order 7400.9R, Airspace
Designations and Reporting Points,
signed August 15, 2007, and effective
September 15, 2007 is amended as
follows:

■

Paragraph 6005. Class E Airspace Areas
Extending Upward From 700 Feet or More
Above the Surface of the Earth.

*

*

*

*

*

ANM CO, E5 Salida, CO [New]
Harriet Alexander Field, CO
(Lat. 38°32′18″ N., long. 106°02′55″ W.)
That airspace extending upward from 700
feet above the surface within a 9.5 mile
radius of Harriet Alexander Field.

*

*

*

*

*

Issued in Seattle, Washington, on June 18,
2008.
Clark Desing,
Manager, Operations Support Group, Western
Service Center.
[FR Doc. E8–14939 Filed 7–1–08; 8:45 am]
BILLING CODE 4910–13–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9408]
RIN 1545–BD01

Dependent Child of Divorced or
Separated Parents or Parents Who
Live Apart
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:

SUMMARY: This document contains final
regulations relating to a claim that a
child is a dependent by parents who are
divorced, legally separated under a
decree of separate maintenance, or
separated under a written separation
agreement, or who live apart at all times
during the last 6 months of the calendar
year. The regulations reflect
amendments under the Working
Families Tax Relief Act of 2004

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Federal Register / Vol. 73, No. 128 / Wednesday, July 2, 2008 / Rules and Regulations

(WFTRA) and the Gulf Opportunity
Zone Act of 2005.
DATES: Effective Date: These regulations
are effective July 2, 2008.
Applicability Date: For date of
applicability, see § 1.152–4(h).
FOR FURTHER INFORMATION CONTACT:
Victoria Driscoll (202) 622–4920 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:

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Paperwork Reduction Act
The collection of information
contained in these final regulations has
been reviewed and approved by the
Office of Management and Budget in
accordance with the Paperwork
Reduction Act (44 U.S.C. 3507(d)) in
connection with OMB Control Number
1545–0074. This control number is
assigned to all information collections
associated with individual tax returns
(series 1040 and associated forms and
schedules, and related regulatory
information collections). Information
collections associated with control
number 1545–0074 are subject to annual
public comment and approval by OMB
in accordance with the Paperwork
Reduction Act.
The collection of information in these
final regulations is in § 1.152–4(e). The
information will help the IRS determine
if a taxpayer may claim a child as a
dependent when the parents of the child
are divorced or separated or live apart
at all times during the last six months
of a calendar year. The collection of
information is required to obtain a
benefit. An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid control number
assigned by the Office of Management
and Budget.
The information will be reported on
IRS Form 8332, Release/Revocation of
Release of Claim to Exemption for Child
by Custodial Parent, or successor form.
The time needed to complete and file
this form will vary depending on
individual circumstances. The
estimated burden for individual
taxpayers filing this form is included in
the estimates shown in the instructions
for their individual income tax return.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be sent to
the Internal Revenue Service, Attn: IRS
Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC
20224, and to the Office of Management
and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of
Information and Regulatory Affairs,
Washington, DC 20503.

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1. Scope of Section 152(e)

relative of the noncustodial parent if (1)
the parents are divorced, legally
separated, or live apart during the last
6 months of the taxable year, (2) the
child receives over one-half of the
child’s support during the calendar year
from one or both parents, (3) the child
is in the custody of one or both parents
for more than one-half of the calendar
year, and (4) the custodial parent
releases the claim to the exemption.
Thus, under current section 152(e), the
custodial parent’s release of the claim is
not an exception to a general rule, but
is a condition precedent to the
application of section 152(e). The
proposed regulations include an
example illustrating that section 152(e)
does not apply if the custodial parent
does not release the claim, in which
case entitlement to the exemption is
determined under section 152(c) or (d).
Commentators suggested that the final
regulations should reverse the
conclusion of this example. The
commentators opined that the final
regulations should interpret section
152(e) as if it included the pre-WFTRA
general rule and provide that the
custodial parent is entitled to the
exemption if the custodial parent does
not release the claim. The final
regulations do not adopt this suggestion
because it is inconsistent with the
language of section 152(e) as amended
by WFTRA.

a. Custodial Parent’s Failure To Release
Exemption
For taxable years beginning before
January 1, 2005, section 152(e)(1)
provided that a custodial parent
generally was entitled to claim the
dependency exemption. Thus, if (1)
parents of a child were divorced, legally
separated, or lived apart during the last
6 months of the taxable year, (2) the
child was in the custody of one or both
parents for more than one-half of the
taxable year, and (3) the child received
over one-half of the child’s support
during the calendar year from one or
both parents, the child was treated as
receiving over one-half of the child’s
support from the custodial parent unless
an exception applied. Section 152(e)(2)
provided an exception treating the child
as receiving over one-half of the child’s
support from the noncustodial parent if
the custodial parent released the claim
to the exemption.
In contrast, as amended by WFTRA
(Pub. L. 108–311, 118 Stat. 1166) for
taxable years beginning after December
31, 2004, section 152(e) includes no
general rule allowing the custodial
parent to claim an exemption for a
child. It provides that a child is treated
as the qualifying child or qualifying

b. Definition of Custody
Section 152(e) includes two
provisions relating to the concept of
‘‘custody:’’ (1) Section 152(e) applies
only if a child is in the custody of one
or both parents for over one-half of the
calendar year; and (2) in the absence of
a qualified pre-1985 agreement, the
noncustodial parent may claim the
exemption only if the custodial parent
(defined as the parent having custody
for the greater portion of the calendar
year) releases the claim to the
exemption. The proposed regulations do
not define the term custody.
The lack of a definition of the term
custody in the proposed regulations may
create ambiguity in determining
whether section 152(e) applies. For
example, a commentator suggested that
the final regulations clarify whether a
child who has attained the age of
majority and is emancipated under state
law is in the custody of one or both
parents. The final regulations provide
that a child is in the custody of one or
both parents for more than one-half of
the calendar year if one or both parents
have the right under state law to
physical custody of the child for more
than one-half of the calendar year.
However, a child is not in the custody

Books or records relating to a
collection of information must be
retained as long as their contents may
become material in the administration
of any internal revenue law. Generally,
tax returns and return information are
confidential, as required by 26 U.S.C.
6103.
Background
This document contains final
amendments to the Income Tax
Regulations, 26 CFR part 1, relating to
section 152(e) and the entitlement of
divorced or separated parents or parents
who live apart at all times during the
last 6 months of the calendar year to
claim a child as a dependent.
On May 2, 2007, a notice of proposed
rulemaking (REG–149856–03) was
published in the Federal Register (72
FR 24192). Written and electronic
comments responding to the notice of
proposed rulemaking were received. A
public hearing was requested and held
on April 3, 2008, however, the hearing
was adjourned after no speakers
appeared. After consideration of all the
comments, the proposed regulations are
adopted as amended by this Treasury
decision. The comments and revisions
are discussed in the preamble.
Explanation of Revisions and Summary
of Comments

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Federal Register / Vol. 73, No. 128 / Wednesday, July 2, 2008 / Rules and Regulations

2. Definition of Custodial Parent
The proposed regulations define
custodial parent as the parent with
whom the child resides for the greater
number of nights during the calendar
year (the counting nights rule) and
include rules for allocating nights when
the child resides with neither parent.

determine where a child resides under
the tiebreaker rule of section
152(c)(4)(B) as well as to identify the
custodial parent for purposes of section
152(e). The tiebreaker rule of section
152(c)(4)(B) is outside the scope of these
regulations and therefore is not
addressed.
Commentators requested clarification
of the term night for purposes of the
counting nights rule. A commentator
noted that the rule does not address
how the child’s residence for a night is
determined (for example, by the child’s
physical location at a given time such as
midnight, or by where the child sleeps)
and for which year the night of
December 31 to January 1 is counted.
In response to this comment, the final
regulations provide that, for purposes of
section 152(e), a child resides for a night
with a parent if the child sleeps (1) at
the parent’s residence (whether or not
the parent is present), or (2) in the
company of the parent when the child
does not sleep at a parent’s residence
(for example, if the parent and child are
on vacation). Under this rule, the time
that a child goes to sleep is irrelevant.
The final regulations provide that a
night that extends over two taxable
years is allocated to the taxable year
when the night begins. Thus, the night
that begins on December 31, 2008, is
counted for taxable year 2008.
Commentators suggested that the
counting nights rule may be inequitable
in certain situations, for example if a
parent works nights and cares for the
child during the day, and the other
parent works days and cares for the
child at night. Under the counting
nights rule, the parent who cares for the
child at night is the custodial parent
although the other parent may spend
more time with the child. A
commentator opined that the counting
nights rule should create only a
rebuttable presumption regarding which
parent is the custodial parent.
Defining custodial parent by means of
a rebuttable presumption would add
complexity and uncertainty and
increase the potential for controversy.
As a ‘‘bright-line’’ test, the counting
nights rule is easy to understand and
apply. The statute and regulations
provide flexibility by allowing the
custodial parent to release the claim to
the exemption. Nonetheless, the final
regulations allow an exception for cases
in which a child resides for a greater
number of days but not nights with a
parent who works at night.

parent with whom the child would have
resided for the night but for the absence.
However, if a child would not have
resided with either parent (for example,
because a court awarded custody of the
child to a third party for the period of
absence), the child is treated as not
residing with either parent for the night
of the absence.
A commentator suggested that the
final regulations omit the language ‘‘for
example’’ and provide that an award of
custody to a third party is the exclusive
circumstance in which a night is not
allocated to either parent. The final
regulations do not incorporate this
suggestion, as other situations may
occur in which a child would not have
resided with either parent for a night.
However, the final regulations omit the
parenthetical and illustrate this
situation in the examples. Other
commentators noted additional
circumstances in which it would be
difficult to determine the parent with
whom a child would have resided for
the night. Therefore, the final
regulations provide that a night is not
counted for either parent if the child
would not have resided with either
parent for the night or it cannot be
determined with which parent the child
would have resided for the night.
Commentators requested that the final
regulations address how nights are
allocated in additional situations
involving a child’s absence. The final
regulations provide additional examples
in response to these comments.
A commentator asked how a night is
allocated in situations involving the
absence of a parent, for example, if a
child spends the night in a parent’s
residence in the care of a third party,
but the parent is absent. Another
commentator requested clarification on
how a night is allocated if a child is
scheduled to reside with one parent but,
because of unexpected circumstances
(such as that parent’s unplanned
absence) the child resides with the other
parent for that night. These comments
are addressed by the addition in the
final regulations of the rule, discussed
earlier in this preamble, that a child
resides with a parent for a night if the
child sleeps (1) at the residence of the
parent (whether or not the parent is
present), or (2) in the company of the
parent, when the child does not sleep at
a parent’s residence.

a. Counting Nights Rule
A commentator requested that the
final regulations clarify that the
counting nights rule applies to

b. Allocation of Nights
The proposed regulations provide that
a child who resides with neither parent
for a night is treated as residing with the

a. Release of Claim to Exemption
Section 152(e)(2) provides that a
custodial parent may release a claim to
an exemption for a child by signing a

of either parent for purposes of section
152(e), for example, when the child
reaches the age of majority under state
law. See Boltinghouse v. Commissioner,
T.C.M. 2007–324. The final regulations
include an example that illustrates that
a child is not in the custody of a parent
after the child attains the age of majority
and is emancipated under state law.
c. Application of Section 152(e) to Child
Residing With Third Party
Section 152(e)(1) provides that, if
specified conditions are met, section
152(e) applies notwithstanding the
principal place of abode test of section
152(c)(1)(B) and the tiebreaker rule of
section 152(c)(4) for a qualifying child,
or the support test of section
152(d)(1)(C) for a qualifying relative. A
commentator requested that the final
regulations clarify whether section
152(c), rather than section 152(e),
applies when a child resides with
someone other than a parent for more
than one-half of the year because of a
parent’s lengthy absence. The final
regulations include additional examples
illustrating when section 152(e) applies
to determine the right to claim a child
as a dependent, and how the nights
during which the child resides with a
third party may be allocated to a parent.
d. Coordination of Section 152(e) and
Other Provisions
The proposed regulations provide that
a child who is treated as the qualifying
child or qualifying relative of a
noncustodial parent under section
152(e) is treated as a dependent of both
parents for purposes of sections 105(b),
132(h)(2)(B), and 213(d)(5). Consistent
with the statutory language of those
provisions, the final regulations clarify
that, if section 152(e) does not apply,
then this rule treating the child as a
dependent of both parents does not
apply. Thus, if a custodial parent does
not release the claim to the exemption,
only the taxpayer who is entitled to
claim the child as a dependent under
section 152(c) or (d) may treat the child
as a dependent for purposes of sections
105(b), 132(h)(2)(B), and 213(d)(5).

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3. Release of Exemption and Revocation
of Release

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Federal Register / Vol. 73, No. 128 / Wednesday, July 2, 2008 / Rules and Regulations

written declaration that he or she will
not claim the child as a dependent. The
proposed regulations provide that the
written declaration may be made on
Form 8332, Release/Revocation of
Release of Claim to Exemption for Child
by Custodial Parent, or successor form,
and any declaration not on Form 8332
must conform to the substance of that
form. The proposed regulations also
provide that a court order or decree may
not serve as the written declaration.
A commentator asserted that the final
regulations should allow a noncustodial
parent to claim a child as a dependent
if a divorce decree allocates the
exemption to that parent, whether or not
the custodial parent releases the right to
claim the child. Another commentator
suggested that presumptions in favor of
the custodial parent in the proposed
regulations unfairly burden the
noncustodial parent.
A state court may not allocate an
exemption because sections 151 and
152, not state law, determine who may
claim an exemption for a child for
Federal income tax purposes. Section
152(e) provides for the unilateral release
of an exemption by a custodial parent.
Therefore, the final regulations do not
adopt these comments.
Commentators suggested that the final
regulations should specify that a written
separation agreement may not serve as
the written declaration. One
commentator recommended that the
final regulations provide that the release
must be on Form 8332 or that the
release may be on either Form 8332 or
a document that is executed for the sole
purpose of releasing the claim. Other
commentators opined, however, that the
final regulations should provide
specifically that a separation agreement
that includes an unconditional release
or a divorce decree may serve as a
written declaration. A commentator
suggested that a divorce settlement
agreed to by both parents should
determine the right to claim a child as
a dependent without regard to which
parent is the custodial parent and
without requiring a separate written
declaration.
Divorce decrees, separation
agreements, and similar instruments are
complex documents that may be subject
to differing interpretations governed by
state law. Allowing these documents to
serve as a written declaration creates
complexity and uncertainty. Therefore,
the final regulations retain the rule that
a written declaration not on Form 8332
(or successor form) must conform to the
substance of Form 8332, and further
provide that a release not on a Form
8332 must be a document executed for
the sole purpose of releasing the claim.

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The final regulations provide
specifically that a court order or decree
or a separation agreement may not serve
as the written declaration. These rules
will improve tax administration and
reduce controversy.
The proposed regulations provide that
if a release of a claim to a child is for
more than one year, the noncustodial
parent must attach the original written
declaration to the parent’s return for the
first taxable year for which the release
is effective and a copy of the written
declaration for later years. A
commentator requested that the final
regulations allow a taxpayer to attach a
copy of a declaration (rather than the
original) to a tax return in the first year
the release is effective as well as
subsequent years. The final regulations
adopt this comment.
b. Revocation of Release of Exemption
Under the proposed regulations, Form
8332 or a substitute document may be
executed for multiple years. Further, to
provide flexibility to parents whose
circumstances change, the proposed
regulations allow a custodial parent to
revoke a release, but the revocation may
be effective no earlier than the taxable
year that begins in the first calendar
year after the calendar year in which the
parent revoking the release provides
notice of the revocation to the other
parent. Commentators objected to the
custodial parent’s broad discretion to
revoke a release under the proposed
regulations. A commentator
recommended that the final regulations
provide that a taxpayer may revoke a
release only if both parents agree.
Section 152(e) provides for the
unilateral release of an exemption by a
custodial parent. The final regulations
retain the rule allowing unilateral
revocation by the custodial parent as
consistent with the statute.
A commentator suggested that a
revocation should take effect in the
taxable year that the parent signs the
revocation. The final regulations do not
adopt this comment, which could result
in insufficient notice of the revocation
to the noncustodial parent and increase
controversies.
The proposed regulations also provide
that the taxpayer revoking the release
must attach the original or a copy of the
revocation to the taxpayer’s tax return
for any taxable year the taxpayer claims
the exemption as a result of the
revocation, and keep a copy of the
revocation and evidence of delivery of
written notice of revocation to the
noncustodial parent. A commentator
recommended that the final regulations
require the custodial parent to send a
copy of the written revocation to the

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noncustodial parent at the last known
address or at an address reasonably
calculated to ensure receipt. The
commentator opined that proof of
mailing by certified mail or other
tracked delivery should suffice as
evidence of notification. Another
commentator expressed concern that a
parent whose location is unknown may
not receive notice of a revocation.
To retain flexibility but increase the
likelihood that a noncustodial parent
will receive notice of a revocation, the
final regulations require that the parent
revoking the release notify, or make
reasonable attempts to notify, in writing,
the other parent of the revocation. What
is a reasonable attempt is determined
under the facts and circumstances, but
mailing a copy of the written revocation
to the noncustodial parent at the last
known address or at an address
reasonably calculated to ensure receipt
satisfies this requirement.
A commentator recommended that
the final regulations provide that a
release may be revoked only on a Form
8332. Consistent with the requirements
for a release, the final regulations
provide that (1) a revocation may be
made on Form 8332, or successor form
designated by the IRS, (2) a revocation
not on the designated form must
conform to the substance of the form
and be in a document executed for the
sole purpose of revoking a release, and
(3) a taxpayer revoking a release may
attach a copy rather than an original to
the taxpayer’s return for the first taxable
year the revocation is effective, as well
as for later years.
c. Releases Predating Applicability Date
The proposed regulations do not
address whether the rules for releasing
a claim to an exemption and for
revoking a release apply to a written
declaration that is effective for multiple
years and that was executed before the
applicability date of the regulations. The
final regulations apply prospectively,
but clarify that a multiple year written
declaration executed in a taxable year
beginning on or before July 2, 2008, that
satisfies the requirements for the form of
a written declaration in effect at the
time the written declaration is executed
is treated as satisfying the requirements
for the form of a release under the final
regulations. However, the final
regulations provide that the rules for
revoking a release of a claim to an
exemption apply without regard to
whether a custodial parent executed the
release in a taxable year beginning on or
before July 2, 2008. Thus, a release
executed in a taxable year beginning on
or before July 2, 2008, may be revoked.

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4. Effective/Applicability Date
These final regulations apply to
taxable years beginning after July 2,
2008.
Special Analyses
This Treasury decision is not a
significant regulatory action as defined
in Executive Order 12866. Therefore, a
regulatory assessment is not required.
Section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations and,
because the regulations do 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) of the Code,
the notice of proposed rulemaking that
preceded these final regulations was
submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on its
impact on small business.
Drafting Information
The principal author of these
regulations is Victoria J. Driscoll of the
Office of Associate Chief Counsel
(Income Tax and Accounting). However,
other personnel from the IRS and
Treasury Department participated in
their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Amendment to the Regulations
Accordingly, 26 CFR part 1 is
amended as follows:

■

PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry
to read in part as follows:

■

Authority: 26 U.S.C. 7805. * * *
Section 1.152–4 also issued under 26
U.S.C. 152(e) * * *
■ Par. 2. Section 1.152–4 is revised to
read as follows:

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§ 1.152–4 Special rule for a child of
divorced or separated parents or parents
who live apart.

(a) In general. A taxpayer may claim
a dependency deduction for a child (as
defined in section 152(f)(1)) only if the
child is the qualifying child of the
taxpayer under section 152(c) or the
qualifying relative of the taxpayer under
section 152(d). Section 152(c)(4)(B)
provides that a child who is claimed as
a qualifying child by parents who do not
file a joint return together is treated as
the qualifying child of the parent with
whom the child resides for a longer
period of time during the taxable year

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or, if the child resides with both parents
for an equal period of time, of the parent
with the higher adjusted gross income.
However, a child is treated as the
qualifying child or qualifying relative of
the noncustodial parent if the custodial
parent releases a claim to the exemption
under section 152(e) and this section.
(b) Release of claim by custodial
parent—(1) In general. Under section
152(e)(1), notwithstanding section
152(c)(1)(B), (c)(4), or (d)(1)(C), a child
is treated as the qualifying child or
qualifying relative of the noncustodial
parent (as defined in paragraph (d) of
this section) if the requirements of
paragraphs (b)(2) and (b)(3) of this
section are met.
(2) Support, custody, and parental
status—(i) In general. The requirements
of this paragraph (b)(2) are met if the
parents of the child provide over onehalf of the child’s support for the
calendar year, the child is in the
custody of one or both parents for more
than one-half of the calendar year, and
the parents—
(A) Are divorced or legally separated
under a decree of divorce or separate
maintenance;
(B) Are separated under a written
separation agreement; or
(C) Live apart at all times during the
last 6 months of the calendar year
whether or not they are or were married.
(ii) Multiple support agreement. The
requirements of this paragraph (b)(2) are
not met if over one-half of the support
of the child is treated as having been
received from a taxpayer under section
152(d)(3).
(3) Release of claim to child. The
requirements of this paragraph (b)(3) are
met for a calendar year if—
(i) The custodial parent signs a
written declaration that the custodial
parent will not claim the child as a
dependent for any taxable year
beginning in that calendar year and the
noncustodial parent attaches the
declaration to the noncustodial parent’s
return for the taxable year; or
(ii) A qualified pre-1985 instrument,
as defined in section 152(e)(3)(B),
applicable to the taxable year beginning
in that calendar year, provides that the
noncustodial parent is entitled to the
dependency exemption for the child
and the noncustodial parent provides at
least $600 for the support of the child
during the calendar year.
(c) Custody. A child is in the custody
of one or both parents for more than
one-half of the calendar year if one or
both parents have the right under state
law to physical custody of the child for
more than one-half of the calendar year.
(d) Custodial parent—(1) In general.
The custodial parent is the parent with

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37801

whom the child resides for the greater
number of nights during the calendar
year, and the noncustodial parent is the
parent who is not the custodial parent.
A child is treated as residing with
neither parent if the child is
emancipated under state law. For
purposes of this section, a child resides
with a parent for a night if the child
sleeps—
(i) At the residence of that parent
(whether or not the parent is present);
or
(ii) In the company of the parent,
when the child does not sleep at a
parent’s residence (for example, the
parent and child are on vacation
together).
(2) Night straddling taxable years. A
night that extends over two taxable
years is allocated to the taxable year in
which the night begins.
(3) Absences. (i) Except as provided in
paragraph (d)(3)(ii) of this section, for
purposes of this paragraph (d), a child
who does not reside (within the
meaning of paragraph (d)(1) of this
section) with a parent for a night is
treated as residing with the parent with
whom the child would have resided for
the night but for the absence.
(ii) A child who does not reside
(within the meaning of paragraph (d)(1)
of this section) with a parent for a night
is treated as not residing with either
parent for that night if it cannot be
determined with which parent the child
would have resided or if the child
would not have resided with either
parent for the night.
(4) Special rule for equal number of
nights. If a child is in the custody of one
or both parents for more than one-half
of the calendar year and the child
resides with each parent for an equal
number of nights during the calendar
year, the parent with the higher adjusted
gross income for the calendar year is
treated as the custodial parent.
(5) Exception for a parent who works
at night. If, in a calendar year, due to a
parent’s nighttime work schedule, a
child resides for a greater number of
days but not nights with the parent who
works at night, that parent is treated as
the custodial parent. On a school day,
the child is treated as residing at the
primary residence registered with the
school.
(e) Written declaration—(1) Form of
declaration—(i) In general. The written
declaration under paragraph (b)(3)(i) of
this section must be an unconditional
release of the custodial parent’s claim to
the child as a dependent for the year or
years for which the declaration is
effective. A declaration is not
unconditional if the custodial parent’s
release of the right to claim the child as

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a dependent requires the satisfaction of
any condition, including the
noncustodial parent’s meeting of an
obligation such as the payment of
support. A written declaration must
name the noncustodial parent to whom
the exemption is released. A written
declaration must specify the year or
years for which it is effective. A written
declaration that specifies all future years
is treated as specifying the first taxable
year after the taxable year of execution
and all subsequent taxable years.
(ii) Form designated by IRS. A written
declaration may be made on Form 8332,
Release/Revocation of Release of Claim
to Exemption for Child by Custodial
Parent, or successor form designated by
the IRS. A written declaration not on the
form designated by the IRS must
conform to the substance of that form
and must be a document executed for
the sole purpose of serving as a written
declaration under this section. A court
order or decree or a separation
agreement may not serve as a written
declaration.
(2) Attachment to return. A
noncustodial parent must attach a copy
of the written declaration to the parent’s
return for each taxable year in which the
child is claimed as a dependent.
(3) Revocation of written
declaration—(i) In general. A parent
may revoke a written declaration
described in paragraph (e)(1) of this
section by providing written notice of
the revocation to the other parent. The
parent revoking the written declaration
must make reasonable efforts to provide
actual notice to the other parent. The
revocation may be effective no earlier
than the taxable year that begins in the
first calendar year after the calendar
year in which the parent revoking the
written declaration provides, or makes
reasonable efforts to provide, the written
notice.
(ii) Form of revocation. The
revocation may be made on Form 8332,
Release/Revocation of Release of Claim
to Exemption for Child by Custodial
Parent, or successor form designated by
the IRS whether or not the written
declaration was made on a form
designated by the IRS. A revocation not
on that form must conform to the
substance of the form and must be a
document executed for the sole purpose
of serving as a revocation under this
section. The revocation must specify the
year or years for which the revocation
is effective. A revocation that specifies
all future years is treated as specifying
the first taxable year after the taxable
year the revocation is executed and all
subsequent taxable years.
(iii) Attachment to return. The parent
revoking the written declaration must

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attach a copy of the revocation to the
parent’s return for each taxable year for
which the parent claims a child as a
dependent as a result of the revocation.
The parent revoking the written
declaration must keep a copy of the
revocation and evidence of delivery of
the notice to the other parent, or of the
reasonable efforts to provide actual
notice.
(4) Ineffective declaration or
revocation. A written declaration or
revocation that fails to satisfy the
requirements of this paragraph (e) has
no effect.
(5) Written declaration executed in a
taxable year beginning on or before July
2, 2008. A written declaration executed
in a taxable year beginning on or before
July 2, 2008, that satisfies the
requirements for the form of a written
declaration in effect at the time the
written declaration is executed, will be
treated as meeting the requirements of
paragraph (e)(1) of this section.
Paragraph (e)(3) of this section applies
without regard to whether a custodial
parent executed the written declaration
in a taxable year beginning on or before
July 2, 2008.
(f) Coordination with other sections. If
section 152(e) and this section apply, a
child is treated as the dependent of both
parents for purposes of sections 105(b),
132(h)(2)(B), and 213(d)(5).
(g) Examples. The provisions of this
section are illustrated by the following
examples that assume, unless otherwise
provided, that each taxpayer’s taxable
year is the calendar year, one or both of
the child’s parents provide over one-half
of the child’s support for the calendar
year, one or both parents have the right
under state law to physical custody of
the child for more than one-half of the
calendar year, and the child otherwise
meets the requirements of a qualifying
child under section 152(c) or a
qualifying relative under section 152(d).
In addition, in each of the examples, no
qualified pre-1985 instrument or
multiple support agreement is in effect.
The examples are as follows:
Example 1. (i) B and C are the divorced
parents of Child. In 2009, Child resides with
B for 210 nights and with C for 155 nights.
B executes a Form 8332 for 2009 releasing B’s
right to claim Child as a dependent for that
year, which C attaches to C’s 2009 return.
(ii) Under paragraph (d) of this section, B
is the custodial parent of Child in 2009
because B is the parent with whom Child
resides for the greater number of nights in
2009. Because the requirements of
paragraphs (b)(2) and (3) of this section are
met, C may claim Child as a dependent.
Example 2. The facts are the same as in
Example 1 except that B does not execute a
Form 8332 or similar declaration for 2009.
Therefore, section 152(e) and this section do

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not apply. Whether Child is the qualifying
child or qualifying relative of B or C is
determined under section 152(c) or (d).
Example 3. (i) D and E are the divorced
parents of Child. Under a custody decree,
Grandmother has the right under state law to
physical custody of Child from January 1 to
July 31, 2009.
(ii) Because D and E do not have the right
under state law to physical custody of Child
for over one-half of the 2009 calendar year,
under paragraph (c) of this section, Child is
not in the custody of one or both parents for
over one-half of the calendar year. Therefore,
section 152(e) and this section do not apply,
and whether Child is the qualifying child or
qualifying relative of D, E, or Grandmother is
determined under section 152(c) or (d).
Example 4. (i) The facts are the same as in
Example 3, except that Grandmother has the
right to physical custody of Child from
January 1 to March 31, 2009, and, as a result,
Child resides with Grandmother during this
period. D and E jointly have the right to
physical custody of Child from April 1 to
December 31, 2009. During this period, Child
resides with D for 180 nights and with E for
95 nights. D executes a Form 8332 for 2009
releasing D’s right to claim Child as a
dependent for that year, which E attaches to
E’s 2009 return.
(ii) Under paragraph (c) of this section,
Child is in the custody of D and E for over
one-half of the calendar year, because D and
E have the right under state law to physical
custody of Child for over one-half of the
calendar year.
(iii) Under paragraph (d)(3)(ii) of this
section, the nights that Child resides with
Grandmother are not allocated to either
parent. Child resides with D for a greater
number of nights than with E during the
calendar year and, under paragraph (d)(1) of
this section, D is the custodial parent.
(iv) Because the requirements of
paragraphs (b)(2) and (3) of this section are
met, section 152(e) and this section apply,
and E may claim Child as a dependent.
Example 5. (i) The facts are the same as in
Example 4, except that D is away on military
service from April 10 to June 15, 2009, and
September 6 to October 20, 2009. During
these periods Child resides with
Grandmother in Grandmother’s residence.
Child would have resided with D if D had not
been away on military service. Grandmother
claims Child as a dependent on
Grandmother’s 2009 return.
(ii) Under paragraph (d)(3)(i) of this
section, Child is treated as residing with D
for the nights that D is away on military
service. Because the requirements of
paragraphs (b)(2) and (3) of this section are
met, section 152(e) and this section apply,
and E, not Grandmother, may claim Child as
a dependent.
Example 6. F and G are the divorced
parents of Child. In May of 2009, Child turns
age 18 and is emancipated under the law of
the state where Child resides. Therefore, in
2009 and later years, F and G do not have the
right under state law to physical custody of
Child for over one-half of the calendar year,
and Child is not in the custody of F and G
for over one-half of the calendar year. Section
152(e) and this section do not apply, and

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whether Child is the qualifying child or
qualifying relative of F or G is determined
under section 152(c) or (d).
Example 7. (i) The facts are the same as in
Example 6, except that Child turns age 18
and is emancipated under state law on
August 1, 2009, resides with F from January
1, 2009, through May 31, 2009, and resides
with G from June 1, 2009, through December
31, 2009. F executes a Form 8332 releasing
F’s right to claim Child as a dependent for
2009, which G attaches to G’s 2009 return.
(ii) Under paragraph (c) of this section,
Child is in the custody of F and G for over
one-half of the calendar year.
(iii) Under paragraph (d)(1) of this section,
Child is treated as not residing with either
parent after Child’s emancipation. Therefore,
Child resides with F for 151 nights and with
G for 61 nights. Because the requirements of
paragraphs (b)(2) and (3) of this section are
met, section 152(e) and this section apply,
and G may claim Child as a dependent.
Example 8. H and J are the divorced
parents of Child. Child generally resides with
H during the week and with J every other
weekend. Child resides with J in H’s
residence for 10 consecutive nights while H
is hospitalized. Under paragraph (d)(1)(i) of
this section, Child resides with H for the 10
nights.
Example 9. K and L, who are separated
under a written separation agreement, are the
parents of Child. In August 2009, K and
Child spend 10 nights together in a hotel
while on vacation. Under paragraph (d)(1)(ii)
of this section, Child resides with K for the
10 nights that K and Child are on vacation.
Example 10. M and N are the divorced
parents of Child. On December 31, 2009,
Child attends a party at M’s residence. After
midnight on January 1, 2010, Child travels to
N’s residence, where Child sleeps. Under
paragraph (d)(1) of this section, Child resides
with N for the night of December 31, 2009,
to January 1, 2010, because Child sleeps at
N’s residence that night. However, under
paragraph (d)(2) of this section, the night of
December 31, 2009, to January 1, 2010, is
allocated to taxable year 2009 for purposes of
determining whether Child resides with M or
N for a greater number of nights in 2009.
Example 11. O and P, who never married,
are the parents of Child. In 2009, Child
spends alternate weeks residing with O and
P. During a week that Child is residing with
O, O gives Child permission to spend a night
at the home of a friend. Under paragraph
(d)(3)(i) of this section, the night Child
spends at the friend’s home is treated as a
night that Child resides with O.
Example 12. The facts are the same as in
Example 11, except that Child also resides at
summer camp for 6 weeks. Because Child
resides with each parent for alternate weeks,
Child would have resided with O for 3 weeks
and with P for 3 weeks of the period that
Child is at camp. Under paragraph (d)(3)(i) of
this section, Child is treated as residing with
O for 3 weeks and with P for 3 weeks.
Example 13. The facts are the same as in
Example 12, except that Child does not
spend alternate weeks residing with O and P,
and it cannot be determined whether Child
would have resided with O or P for the
period that Child is at camp. Under

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paragraph (d)(3)(ii) of this section, Child is
treated as residing with neither parent for the
6 weeks.
Example 14. (i) Q and R are the divorced
parents of Child. Q works from 11 PM to 7
AM Sunday through Thursday nights.
Because of Q’s nighttime work schedule,
Child resides with R Sunday through
Thursday nights and with Q Friday and
Saturday nights. Therefore, in 2009, Child
resides with R for 261 nights and with Q for
104 nights. Child spends all daytime hours
when Child is not in school with Q and Q’s
address is registered with Child’s school as
Child’s primary residence. Q executes a Form
8332 for 2009 releasing Q’s right to claim
Child as a dependent for that year, which R
attaches to R’s 2009 return.
(ii) Under paragraph (d) of this section, Q
is the custodial parent of Child in 2009.
Child resides with R for a greater number of
nights than with Q due to Q’s nighttime work
schedule, and Child spends a greater number
of days with Q. Therefore, paragraph (d)(5) of
this section applies rather than paragraph
(d)(1) of this section. Because the
requirements of paragraphs (b)(2) and (3) of
this section are met, R may claim Child as
a dependent.
Example 15. (i) In 2009, S and T, the
parents of Child, execute a written separation
agreement. The agreement provides that
Child will live with S and that T will make
monthly child support payments to S. In
2009, Child resides with S for 335 nights and
with T for 30 nights. S executes a letter
declaring that S will not claim Child as a
dependent in 2009 and in subsequent
alternate years. The letter contains all the
information requested on Form 8332, does
not require the satisfaction of any condition
such as T’s payment of support, and has no
purpose other than to serve as a written
declaration under section 152(e) and this
section. T attaches the letter to T’s return for
2009 and 2011.
(ii) In 2010, T fails to provide support for
Child, and S executes a Form 8332 revoking
the release of S’s right to claim Child as a
dependent for 2011. S delivers a copy of the
Form 8332 to T, attaches a copy of the Form
8332 to S’s tax return for 2011, and keeps a
copy of the Form 8332 and evidence of
delivery of the written notice to T.
(iii) T may claim Child as a dependent for
2009 because S releases the right to claim
Child as a dependent under paragraph (b)(3)
of this section by executing the letter, which
conforms to the requirements of paragraph
(e)(1) of this section, and T attaches the letter
to T’s return in accordance with paragraph
(e)(2) of this section. In 2010, S revokes the
release of the claim in accordance with
paragraph (e)(3) of this section, and the
revocation takes effect in 2011, the taxable
year that begins in the first calendar year
after S provides written notice of the
revocation to T. Therefore, in 2011, section
152(e) and this section do not apply, and
whether Child is the qualifying child or
qualifying relative of S or T is determined
under section 152(c) or (d).
Example 16. The facts are the same as
Example 15, except that the letter expressly
states that S releases the right to claim Child
as a dependent only if T is current in the

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37803

payment of support for Child at the end of
the calendar year. The letter does not qualify
as a written declaration under paragraph
(b)(3) of this section because S’s agreement
not to claim Child as a dependent is
conditioned on T’s payment of support and,
under paragraph (e)(1)(i) of this section, a
written declaration must be unconditional.
Therefore, section 152(e) and this section do
not apply, and whether Child is the
qualifying child or qualifying relative of S or
T for 2009 as well as 2011 is determined
under section 152(c) or (d).
Example 17. (i) U and V are the divorced
parents of Child. Child resides with U for
more nights than with V in 2009 through
2011. In 2009, U provides a written statement
to V declaring that U will not claim Child as
a dependent, but the statement does not
specify the year or years it is effective. V
attaches the statement to V’s returns for 2009
through 2011.
(ii) Because the written statement does not
specify a year or years, under paragraph (e)(1)
of this section, it is not a written declaration
that conforms to the substance of Form 8332.
Under paragraph (e)(4) of this section, the
statement has no effect. Section 152(e) and
this section do not apply, and whether Child
is the qualifying child or qualifying relative
of U or V is determined under section 152(c)
or (d).
Example 18. (i) W and X are the divorced
parents of Child. In 2009, Child resides solely
with W. The divorce decree requires X to pay
child support to W and requires W to execute
a Form 8332 releasing W’s right to claim
Child as a dependent. W fails to sign a Form
8332 for 2009, and X attaches an unsigned
Form 8332 to X’s return for 2009.
(ii) The order in the divorce decree
requiring W to execute a Form 8332 is
ineffective to allocate the right to claim Child
as a dependent to X. Furthermore, under
paragraph (e)(1) of this section, the unsigned
Form 8332 does not conform to the substance
of Form 8332, and under paragraph (e)(4) of
this section, the Form 8332 has no effect.
Therefore, section 152(e) and this section do
not apply, and whether Child is the
qualifying child or qualifying relative of W or
X is determined under section 152(c) or (d).
(iii) If, however, W executes a Form 8332
for 2009, and X attaches the Form 8332 to X’s
return, then X may claim Child as a
dependent in 2009.
Example 19. (i) Y and Z are the divorced
parents of Child. In 2003, Y and Z enter into
a separation agreement, which is
incorporated into a divorce decree, under
which Y, the custodial parent, releases Y’s
right to claim Child as a dependent for all
future years. The separation agreement
satisfies the requirements for the form of a
written declaration in effect at the time it is
executed. Z attaches a copy of the separation
agreement to Z’s returns for 2003 through
2009.
(ii) Under paragraph (e)(1)(ii) of this
section, a separation agreement may not
serve as a written declaration. However,
under paragraph (e)(5) of this section, a
written declaration executed in a taxable year
beginning on or before July 2, 2008, that
satisfies the requirements for the form of a
written declaration in effect at the time the

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written declaration is executed, will be
treated as meeting the requirements of
paragraph (e)(1) of this section. Therefore, the
separation agreement may serve as the
written declaration required by paragraph
(b)(3)(i) of this section for 2009, and Z may
claim Child as a dependent in 2009 and later
years.
Example 20. (i) The facts are the same as
in Example 19, except that in 2009 Y
executes a Form 8332 revoking the release of
Y’s right to claim Child as a dependent for
2010. Y complies with all the requirements
of paragraph (e)(3) of this section.
(ii) Although Y executes the separation
agreement releasing Y’s right to claim Child
as a dependent in a taxable year beginning
on or before July 2, 2008, under paragraph
(e)(5) of this section, Y’s execution of the
Form 8332 in 2009 is effective to revoke the
release. Therefore, section 152(e) and this
section do not apply in 2010, and whether
Child is the qualifying child or qualifying
relative of Y or Z is determined under section
152(c) or (d).

(h) Effective/applicability date. This
section applies to taxable years
beginning after July 2, 2008.
§ 1.152–4T
■

[Removed]

Par. 3. Section 1.152–4T is removed.

Linda E. Stiff,
Deputy Commissioner for Services and
Enforcement.
Approved: June 23, 2008.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. E8–15044 Filed 7–1–08; 8:45 am]
BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9409]
RIN 1545–BI01

Amendments to the Section 7216
Regulations—Disclosure or Use of
Information by Preparers of Returns
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.

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AGENCY:

SUMMARY: This document contains final
and temporary regulations that provide
rules relating to the disclosure and use
of tax return information by tax return
preparers. These regulations provide
updated guidance regarding the
disclosure of a taxpayer’s social security
number to a tax return preparer located
outside of the United States. The text of
these regulations also serves as the text
of the proposed regulations set forth in

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the notice of proposed rulemaking on
this subject in the Proposed Rules
section in this issue of the Federal
Register.
DATES: Effective Date: These regulations
are effective on July 2, 2008.
Applicability Date: See § 301.7216–
3T(d).
FOR FURTHER INFORMATION CONTACT:
Lawrence E. Mack, (202) 622–4940 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document amends 26 CFR part
301 to provide modified rules relating to
the ability of a tax return preparer
located within the United States to
disclose a taxpayer’s social security
number constituting tax return
information with the taxpayer’s consent
to a tax return preparer located outside
of the United States. In the
accompanying and cross-referenced
notice of proposed rulemaking, the
Treasury Department and IRS request
comments on the proposed rule from all
interested persons.
On December 8, 2005, the Treasury
Department and IRS published a notice
of proposed rulemaking (REG–137243–
02) in the Federal Register (70 FR
72954) proposing amendments to the
regulations under section 7216
(regarding the use or disclosure of tax
return information by income tax return
preparers). On January 3, 2008, the
Treasury Department and IRS issued
final regulations under section 7216 (TD
9375) applicable to disclosures or uses
of tax return information occurring on
or after January 1, 2009. Thus, TD 9375
replaces previously issued final
regulations that remain applicable to
disclosures or uses of tax return
information occurring prior to January
1, 2009.
TD 9375 included the revision of
§ 301.7216–3(b)(4), which, for
disclosures and uses of tax return
information occurring on or after
January 1, 2009, provides that an
income tax return preparer located in
the United States may not disclose the
taxpayer’s social security number (SSN)
to a tax return preparer located outside
of the United States even if the taxpayer
consents to the disclosure. These
temporary regulations modify the rules
under § 301.7216–3(b)(4).
Explanation of Provisions
The Treasury Department and IRS are
amending the regulations under section
7216 applicable to disclosures and uses
of tax return information occurring on
or after January 1, 2009, to provide a
limited exception to the general rule

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that an income tax return preparer
located in the United States may not
disclose a taxpayer’s SSN to a tax return
preparer located outside of the United
States. Section 301.7216–3(b)(4)
provides that a tax return preparer
located within the United States,
including any territory or possession of
the United States, may not obtain
consent to disclose a taxpayer’s SSN to
a tax return preparer located outside of
the United States or any territory or
possession of the United States. Thus,
with one exception, if a tax return
preparer located within the United
States obtains consent from a taxpayer
to disclose tax return information to
another tax return preparer located
outside of the United States, as provided
under §§ 301.7216–3(a)(3)(i)(D),
301.7216–2(c)(2) and 301.7216–2(d), the
tax return preparer located in the United
States may not disclose the taxpayer’s
SSN, and must redact or otherwise mask
the taxpayer’s SSN before the tax return
information is disclosed outside of the
United States. The exception is limited
to the circumstance in which a tax
return preparer located inside the
United States initially receives the SSN
from a tax return preparer located
outside the United States and the
preparer within the United States
retransmits the SSN to the preparer that
provided the SSN. When a taxpayerclient requests that a tax return preparer
within the United States transfer the
return preparation engagement to a tax
return preparer located outside the
United States, the preparer still must
redact or otherwise mask the taxpayer’s
SSN before the information is disclosed
and, in this situation, it will be
incumbent upon the taxpayer to provide
the SSN directly to the tax return
preparer located abroad.
The revisions containing the SSN
disclosure prohibition in § 301.7216–
3(b)(4) were explained in the preamble
to the final regulations. The regulation
was adopted in light of factors
including: (1) The fact that it is not
necessary for tax return preparers to
disclose certain taxpayer identifying
information to other tax return preparers
who are assisting them in preparing a
return; (2) the important role an SSN
plays in the tax administration process,
and the heightened potential for misuse
when an SSN is readily associated with
confidential information, such as tax
return information; and 3) the
heightened concern about the theft of
taxpayer identifying information
resulting from disclosures outside the
United States.
Upon further consideration, the
Treasury Department and IRS have
concluded that § 301.7216–3(b)(4) can

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