Tax Information Security Guidelines for Federal, State, and Local Agencies

PUBLICATION 1075
TAX INFORMATION SECURITY
GUIDELINES FOR FEDERAL, STATE
AND LOCAL AGENCIES AND ENTITIES

Safeguards for
Protecting Federal
Tax Returns and
Return Information

TAX INFORMATION SECURITY GUIDELINES FOR FEDERAL, STATE, AND LOCAL
AGENCIES AND ENTITIES OMB No. 1545-0962
Paperwork Reduction Act Notice
The Internal Revenue Service (IRS) asks for the information in the Safeguard
Procedures Report and the Safeguard Activity Report to carry out the requirements of
the Internal Revenue Code (IRC) Section 6103(p).
You are not required to provide the information requested on a form that is subject to the
Paperwork Reduction Act unless the form displays a valid Office of Management and
Budget (OMB) control number. Books or records relating to a form or its instructions
must be retained as long as their contents may become material in the administration of
any Internal Revenue law. Generally, Federal Tax Returns and return information are
confidential, as required by IRC Section 6103.
The information is used by the IRS to ensure that agencies, bodies, and commissions
are maintaining appropriate safeguards to protect the confidentiality of Federal Tax
Information (FTI). Your response is mandatory.
The time needed to provide this information will vary depending on individual
circumstances. The estimated average time is 40 hours.
If you have any comments concerning the accuracy of these time estimates or
suggestions for making this publication simpler, we would be happy to hear from you.
You can write to us at:
Tax Products Coordinating Committee
Internal Revenue Service, SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW, IR-6406
Washington, DC. 20224
Preface
This publication revises and supersedes Publication 1075 (February 2007).

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HIGHLIGHTS FOR 2007
COMPUTER SECURITY CONTROLS
This document provides updated
requirements using the National Institute of
Standards and Technology (NIST) Special
Publication (SP) 800-53, Recommended
Security Controls for Federal Information
Systems. In addition, this document
contains updated controls to include testing
of the computer security controls, and
additional physical and personnel security
controls based on NIST Special Publication
(SP) 800-53, Recommended Security
Controls for Federal Information Systems,
for the moderate impact level.
Note: While the Safeguards Office has
responsibility to ensure the protection of
Federal Tax Information, it is the
responsibility of the organization to build in
effective security controls into their own
Information Technology (IT) infrastructures
to ensure that this information is protected
at all points where Federal Tax Information
(FTI) is stored and/or maintained. It will not
be the intent of IRS to monitor each control
identified but to provide these to the
organization, identifying those controls
required for the protection of moderate risk
systems within the federal government.
SUBMITTING REPORTS AND
CORRESPONDENCE
All correspondence, reports, attachments,
etc., should be emailed to the Safeguard
mailbox using IRS approved encryption:

Unauthorized inspection or disclosure of
Federal tax information, including breeches
and security incidents, must be reported to
the appropriate Agent-in-Charge, Treasury
Inspector General for Tax Administration
(TIGTA).
Mailing Address:
Treasury Inspector General for Tax
Administration
Ben Franklin Station
P.O. Box 589
Washington, DC 20044-0589
Hotline Number:
1-800-366-4484
APPEAL PROCESS RELATED TO
POSSIBLE SUSPENSION AND/OR
TERMINATION OF TAX DATA
Title 26 U. S. Code Section 6103(p)(4)
requires external agencies and other
authorized recipients of Federal tax return
and return information (FTI) to establish
procedures to ensure the adequate
protection of the FTI they receive. That
provision of the Code also authorizes the
Internal Revenue Service (IRS) to take
actions, including suspending or terminating
FTI disclosures to any external agencies
and other authorized recipients, if there is
misuse and/or inadequate safeguards in
place to protect the confidentiality of the
information. New temporary Federal tax
regulation 26 CFR 301.6103(p)(7)-1T
establishes a consistent appeal process for
all authorized recipients of FTI. See Exhibit
1, Federal Register.

[email protected].
SECURE DATA TRANSFER
INTERNET ACCESS
Agencies can access Publication 1075 on
the Internet by going to http://www.irs.gov
and searching for “publication 1075.”
REPORTING UNAUTHORIZED
DISCLOSURES

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Secure Data Transfer (SDT) is an IRS
approved process for exchanging data with
trading partners. SDT provides encrypted
electronic transmission of IRS files to
external agencies.

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.

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TABLE OF CONTENTS
Section Title

INTRODUCTION
1.1
1.2

Page

SECTION 1.0 .................................................................................. 1

General.............................................................................................................................1
Overview of Publication 1075 ........................................................................................1

FEDERAL TAX INFORMATION AND REVIEWS

SECTION 2.0........ 3

2.1 General...................................................................................................................................3
2.2 Need and Use ........................................................................................................................3
2.3 Obtaining FTI.........................................................................................................................4
2.4 State Tax Agencies ...............................................................................................................4
2.5 Coordinating Safeguards within an Agency ......................................................................4
2.6 Safeguard Reviews ...............................................................................................................4
2.7 Conducting the Review ........................................................................................................4
Guide 1.........................................................................................................................................5
Eight Steps of the Review Process ...........................................................................................5

RECORD KEEPING REQUIREMENTS

SECTION 3.0 ............................................... 6

3.1 General...................................................................................................................................6
3.2 Electronic Files .....................................................................................................................6
3.3 Non-electronic Files..............................................................................................................6
3.4 Record Keeping of Disclosures to State Auditors.............................................................7

SECURE STORAGE - IRC 6103(p)(4)(B) SECTION 4.0 ............................................. 8
4.1 General...................................................................................................................................8
4.2 Minimum Protection Standards (MPS)................................................................................8
4.3 Security of Tax Information .................................................................................................8
4.3.1 Restricted Area ..................................................................................................................9
4.3.2 Controlling Physical Access to FTI..................................................................................9
4.3.3 Security Room..................................................................................................................10
4.3.4 Secured Interior/Secured Perimeter...............................................................................10
4.3.5 Containers ........................................................................................................................11
4.3.6 Locked Container.............................................................................................................11
4.3.7 Security Container ...........................................................................................................11
4.3.8 Safes/Vaults......................................................................................................................11
4.3.9 Locks.................................................................................................................................11
4.3.10 Control and Safeguarding Keys & Combinations.......................................................12
4.3.11 Locking Systems for Secured Areas ...........................................................................12
4.3.12 Intrusion Detection Equipment.....................................................................................12
4.4 Security During Office Moves............................................................................................12
4.5 Handling and Transporting Federal Tax Information ......................................................13
4.6 Physical Security of Computers, Electronic, and Removable Media.............................13
4.7 Alternate Work Sites...........................................................................................................13
4.7.1 Equipment ........................................................................................................................14
4.7.2 Storing Data......................................................................................................................14
4.7.3 Other Safeguards.............................................................................................................14
Guide 2.......................................................................................................................................15
PHYSICAL SECURITY - MINIMUM PROTECTION STANDARDS ...........................................15

RESTRICTING ACCESS IRC 6103(p)(4)(C)

SECTION 5.0................................... 16

5.1 General.................................................................................................................................16
5.2 A Need to Know ..................................................................................................................16

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5.3 Commingling .......................................................................................................................16
5.4 Access to FTI via State Tax Files or Through Other Agencies.......................................17
5.5 Control over Processing ....................................................................................................18
5.5.1 Agency Owned and Operated Facility ...........................................................................18
5.5.2 Contractor or Agency-Shared Facility for Tax Administration or Federal Debt
Collection...................................................................................................................................18
5.5.3 Contractor or Agency Shared Facility for Recipients under the Deficit Reduction Act
....................................................................................................................................................19
5.6 Computer System Security ................................................................................................19
5.6.1. Access Control................................................................................................................20
5.6.2 Audit & Accountability ....................................................................................................21
5.6.3 Awareness & Training .....................................................................................................22
5.6.4 Certification & Accreditation (C&A) ...............................................................................22
5.6.5 Configuration Management ............................................................................................23
5.6.6 Contingency Planning .....................................................................................................24
5.6.7 Identification & Authentication.......................................................................................24
5.6.8 Incident Response and Incident Reporting ...................................................................24
5.6.9 Maintenance .....................................................................................................................25
5.6.10 Media Access Protection ..............................................................................................25
5.6.11 Personnel Security ........................................................................................................25
5.6.12 Planning..........................................................................................................................26
5.6.13 Risk Assessment ...........................................................................................................26
5.6.14 System & Services Acquisition ....................................................................................26
5.6.15 System & Communications Protection........................................................................27
5.6.16 System & Information Integrity.....................................................................................28
5.6.17 Additional Computer Security Controls ......................................................................29
5.6.17.1 Data Warehouse..........................................................................................................29
5.6.17.2 Transmitting FTI..........................................................................................................29
5.6.17.3 Remote Access ...........................................................................................................29
5.6.17.4 Internet/Web Sites.......................................................................................................29
5.6.17.5 Electronic Mail.............................................................................................................30
5.6.17.6 Facsimile Machines (FAX)..........................................................................................30

OTHER SAFEGUARDS - IRC 6103(p)(4)(D)

SECTION 6.0 .................................. 31

6.1 General.................................................................................................................................31
6.2 Employee Awareness .........................................................................................................31
6.3 Internal Inspections ............................................................................................................31
6.3.1 Record Keeping ...............................................................................................................32
6.3.2 Secure Storage.................................................................................................................32
6.3.3 Limited Access.................................................................................................................32
6.3.4 Disposal ............................................................................................................................32
6.3.5 Computer Systems Security ...........................................................................................32

REPORTING REQUIREMENTS - IRC 6103(p)(4)(E)

SECTION 7.0....................... 33

7.1 General.................................................................................................................................33
7.2 Safeguard Procedures Report ...........................................................................................33
7.2.1 Responsible Officer(s).....................................................................................................33
7.2.2 Location of the Data ........................................................................................................33
7.2.3 Flow of the Data ...............................................................................................................33
7.2.4 System of Records ..........................................................................................................33
7.2.5 Secure Storage of the Data .............................................................................................34
7.2.6 Restricting Access to the Data .......................................................................................34
7.2.7 Disposal ............................................................................................................................34

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7.2.8 Information Technology (IT) Security ............................................................................34
7.2.9 Disclosure Awareness Program.....................................................................................34
7.3 Submitting Safeguard Procedures Report .......................................................................34
7.4 Annual Safeguard Activity Report.....................................................................................35
7.4.1 Changes to Information or Procedures Previously Reported .....................................35
7.4.2 Current Annual Period Safeguard Activities .................................................................35
7.4.3 Actions on Safeguard Review Recommendations .......................................................35
7.4.4 Planned Actions Affecting Safeguard Procedures .......................................................35
7.4.5 Agency Use of Contractors.............................................................................................36
7.5 Submission Dates for the Safeguard Activity Report......................................................36

DISPOSING FEDERAL TAX INFORMATION IRC 6103(p)(4)(F)

SECTION 8.0 ...... 37

8.1 General.................................................................................................................................37
8.2 Returning IRS Information to the Source .........................................................................37
8.3 Destruction Methods ..........................................................................................................37
8.4 Other Precautions...............................................................................................................37

RETURN INFORMATION IN STATISTICAL REPORTS IRC 6103(j)

SECTION 9.0 39

9.1 General.................................................................................................................................39
9.2 Making a Request ...............................................................................................................39

REPORTING IMPROPER INSPECTIONS OR DISCLOSURES

SECTION 10.0 ...... 40

10.1 General...............................................................................................................................40
DISCLOSURE TO OTHER PERSONS - 6103(n)
Section 11.0..........................................41
11.1 General...............................................................................................................................41
11.2 Authorized Disclosures - Precautions ............................................................................41
11.3 State Tax Officials and State and Local Law Enforcement Agencies IRC Section
6103(d) .......................................................................................................................................41
11.4 State and Local Child Support Enforcement Agencies IRC Section 6103(I)(6)...........41
11.5 Federal, State, and Local Welfare Agencies IRC Section 6103(I)(7).............................42
11.6 Deficit Reduction Agencies IRC Section 6103(I)(10) .....................................................42
11.7 The Center for Medicare and Medicaid Services IRC Section 6103(l)(12)(C) ..............42
11.8 Disclosures Under IRC Section 6103(m)(2) ....................................................................42

Exhibit 1 ....................................................................................................................... 43
FEDERAL REGISTER: ..............................................................................................................43

Exhibit 2 ....................................................................................................................... 47
IRC SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN
INFORMATION...........................................................................................................................47

Exhibit 3 ....................................................................................................................... 49
SEC. 6103(p)(4) SAFEGUARDS ...............................................................................................49

Exhibit 4 ....................................................................................................................... 51
NIST Moderate Risk Controls for Federal Information Systems ..........................................51

Exhibit 5 ....................................................................................................................... 69
IRC SEC. 7431 CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE OF RETURNS AND
RETURN INFORMATION...........................................................................................................69

Exhibit 6 ....................................................................................................................... 71
DATA WAREHOUSE CONCEPTS & SECURITY REQUIREMENTS........................................71

Exhibit 7 ....................................................................................................................... 77
CONTRACT LANGUAGE FOR GENERAL SERVICES ............................................................77

Exhibit 8 ....................................................................................................................... 79
PASSWORD MANAGEMENT GUIDELINES.............................................................................79

Exhibit 9 ....................................................................................................................... 81
SYSTEM AUDIT MANAGEMENT GUIDELINES .......................................................................81

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Exhibit 10 ..................................................................................................................... 83
IRC SEC. 7213 and 7213A UNAUTHORIZED DISCLOSURE OF INFORMATION..................83

Exhibit 11 ..................................................................................................................... 85
ENCRYPTION STANDARDS .....................................................................................................85

Exhibit 12 ..................................................................................................................... 87
GLOSSARY - KEY TERMS AND DEFINITIONS .......................................................................87

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INTRODUCTION

SECTION 1.0

1.1 General
The self-assessment feature is a
distinguishing characteristic and
principal strength of American tax
administration. The Internal Revenue
Service (IRS) is acutely aware that in
fostering our system of taxation, the
public must maintain a high degree of
confidence that the personal and
financial information furnished to us is
protected against unauthorized use,
inspection, or disclosure.
Therefore, we must administer the
disclosure provisions of the Internal
Revenue Code (IRC) according to the
spirit and intent of these laws, ever
mindful of this public trust. The IRC
makes the confidential relationship
between the taxpayer and the IRS quite
clear. It also stresses the importance of
this relationship by making it a crime to
violate this confidence. IRC Section
7213 prescribes criminal penalties for
Federal and State employees and
others who make illegal disclosures of
Federal tax returns and return
information (FTI). Additionally, IRC
Section 7213A makes the unauthorized
inspection of FTI a misdemeanor
punishable by fines, imprisonment, or
both. And finally, IRC Section 7431
prescribes civil damages for
unauthorized inspection or disclosure
and upon conviction, the notification to
the taxpayer that an unauthorized
inspection or disclosure has occurred.
The Internal Revenue Service is acutely
aware that in fostering our system of
taxation the public must have and
maintain a high degree of confidence
that the personal and financial
information furnished to us is protected
against unauthorized use, inspection, or
disclosure.

The sanctions of the IRC are designed
to protect the privacy of taxpayers.
Similarly, the IRS recognizes the
importance of cooperating to the fullest
extent permitted by law with other
Federal, State, and local authorities in
their administration and enforcement of
laws. The concerns of citizens and
Congress regarding individual rights to
privacy make it important that we
continuously assess our disclosure
practices and the safeguards we use to
protect the confidential information
entrusted to us.
Those agencies or agents that receive
FTI directly from either the IRS or from
secondary sources (e.g., Health and
Human Services, Federal entitlement
and lending agencies) must have
adequate programs in place to protect
the data received. Furthermore, as
agencies look more to “contracting out”
certain services, it becomes equally
important that those with whom
contracts exist protect that information
from unauthorized use, access, and
disclosure.
1.2 Overview of Publication 1075
This publication provides guidance in
ensuring that the policies, practices,
controls, and safeguards employed by
recipient agencies or agents and
contractors adequately protect the
confidentiality of the information they
receive from the IRS.
Enterprise security policies shall
address the purpose, scope,
responsibilities, and management
commitment to implement all applicable
security controls. This document
contains the managerial, operational,
and technical security controls that
should be implemented.
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Conforming to these guidelines meets
the safeguard requirements of IRC
Section 6103(p)(4) and makes our joint
efforts beneficial.

The guidelines outlined herein apply to
all FTI, no matter the amount or the
media in which it is recorded. FTI in
electronic form must be afforded the
same levels of protection given to paper
documents or any other media
containing FTI. Security policies and
procedures – systemic, procedural or
manual – should minimize
circumvention.

This publication provides the preliminary
steps to consider before submitting a
request to process FTI, provides
requirements to properly safeguard
information, explains what to expect
from the IRS once the information has
been disclosed, and suggests
miscellaneous topics that may be helpful
in setting up your program. Exhibits 1
through 12 are provided for additional
guidance.

A mutual interest exists in our
responsibility to ensure that FTI is
disclosed only to authorized persons
and used only as authorized by statute
or regulation. The IRS is confident of
your diligence in this area and believes
that Publication 1075 will be helpful.

Publication 1075 can be accessed
through the Internet at www.irs.gov.

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FEDERAL TAX INFORMATION AND REVIEWS

SECTION 2.0

2.1 General
Section 6103 of the IRC is a confidentiality
statute and generally prohibits the
disclosure of FTI (see Exhibit 2,
Confidentiality and Disclosure of Returns
and Return Information, for general rule and
definitions). However, exceptions to the
general rule authorize disclosure of FTI to
certain Federal, State, and local agencies.
Generally, these disclosures are made by
the IRS in response to written requests
signed by the head of the requesting
agency or delegate. FTI so disclosed may
be used by the receiving agency solely for
the purpose described in the exception
authorizing the disclosure. The statutes
providing authorization to disclose FTI
contain specific conditions that may require
different procedures in maintaining and
using the information. These conditions are
outlined under specific sections in this
publication.
As a condition of receiving FTI, the
receiving agency must show, to the
satisfaction of the IRS, the ability to protect
the confidentiality of that information.
Safeguards must be designed to prevent
unauthorized access and use. Besides
written requests, the IRS may require formal
agreements that specify, among other
things, how the information will be
protected. An agency must ensure its
safeguards will be ready for immediate
implementation upon receipt of FTI. Copies
of the initial and subsequent requests for
data and of any formal agreement must be
retained by the agency a minimum of five
years as a part of its record keeping system.
Agencies should always maintain the latest
Safeguard Procedures Report (SPR) on file.
The initial request should be followed up by
submitting an SPR. It should be submitted
to the IRS at least 45 days before the
scheduled or requested receipt of FTI (see
Section 7.0, Reporting Requirements).
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The SPR should include the processing and
safeguard procedures for all FTI received,
and it should distinguish between agency
programs and functional organizations using
FTI.
Multiple organizations or programs using
FTI may be consolidated into a single report
for that agency. Agencies requesting Form
8300 information must file separate
Safeguard Procedures Reports for this
program. Each Federal, State, and Local
agency must file separate reports because
they receive data under different sections of
the IRC and for different purposes.
An agency must ensure its safeguards will
be ready for immediate implementation
upon receipt of FTI. Enterprise security
policies shall address the purpose, scope,
responsibilities, and management
commitment to implement associated
controls.
Note: Agencies should use care in outlining
their safeguard program. Reports that lack
clarity or sufficient information will be
returned to the submitting agency.
2.2 Need and Use
Any agency that receives FTI for an
authorized use may not use that information
in any manner or for any purpose not
consistent with that authorized use. If an
agency needs FTI for a different authorized
use under a different provision of IRC
Section 6103, a separate request under that
provision is necessary. An unauthorized
secondary use is specifically prohibited and
may result in discontinuation of disclosures
to the agency and imposition of civil and/or
criminal penalties on the responsible
officials. Because more states are using
contractors to enhance existing systems
and processes, they may want to use IRS

data in the testing stage before
implementation. In this case, need and use
statements should be revised to cover this
use of IRS data, if not already addressed.
State taxing agencies should check their
statements (agreements) to see if “testing
purposes” is covered.
2.3 Obtaining FTI
The IRS has established a Secure Data
Transfer (SDT) program to provide
encrypted electronic transmission of FTI
between the IRS and trading partners. This
method is the approved method of receiving
information and replaces the tape transfer
process.
2.4 State Tax Agencies

FTI may be received and used by several
quasi-independent units within the agency’s
organizational structure. Where there is
such a dispersal of FTI, the agency should
centralize safeguard responsibility and
establish and maintain uniform safeguard
standards consistent with IRS guidelines.
The official assigned these responsibilities
should hold a position high enough in the
agency’s organizational structure to ensure
compliance with the agency safeguard
standards and procedures. The selected
official should also be responsible for
ensuring that internal inspections are
conducted (see Section 6.0, Other
Safeguards), for submitting required
safeguard reports to the IRS, and for any
necessary liaison with the IRS.
2.6 Safeguard Reviews

FTI may be obtained by State tax agencies
only to the extent the information is needed
for, and is reasonably expected to be used
for, State tax administration. An agency’s
records of the FTI requests should include
some account of the result of its use (e.g.,
disposition of closed cases and summary of
revenues generated) or include reasons
why the information was not used. If any
agency continually receives FTI that for any
reason it is unable to use, it should contact
the IRS official liaison with respect to
continuing disclosure and modify the
request. In any case, IRS will disclose FTI
only to the extent that a State taxing agency
satisfactorily establishes that the requested
information can reasonably be expected to
be used for an authorized purpose.
Note: IRS conducts “Need and Use” reviews
in conjunction with the on-site Safeguard
review.
2.5 Coordinating Safeguards within an
Agency
Because of the diverse purposes that
authorized disclosures may be made to an
agency and the division of responsibilities
among different components of an agency,
Page 4

A safeguard review is an on-site evaluation
of the use of FTI and the measures
employed by the receiving agency to protect
the data. This includes FTI received from
the IRS, the Social Security Administration
(SSA), or other agencies. Safeguard
reviews are conducted to determine the
adequacy of safeguards as opposed to
evaluating an agency’s programs. IRS
regularly conducts on-site reviews of
agency safeguards. Several factors will be
considered when determining the need for
and the frequency of reviews. Reviews are
conducted by the Office of Safeguards,
within the Communication, Liaison, and
Disclosure Office (CLD:S).
2.7 Conducting the Review
The IRS initiates the review by verbal
communication with an agency point of
contact. The preliminary discussion will be
followed by a formal engagement letter to
the agency head, giving official notification
of the planned safeguard review.

A safeguard review is an on-site evaluation
of the use of FTI received from the IRS, the
Social Security Administration, or other
agencies and the measures employed by
the receiving agency to protect that data.
The engagement letter outlines what the
review will encompass; for example, it will
include a list of records to be reviewed (e.g.,
training manuals, flowcharts, awareness
program documentation and organizational
charts relating to the processing of FTI), the
scope and purpose of the review, a list of
the specific areas to be reviewed, and
agency personnel to be interviewed.

may be spot-checked to determine if they
contain FTI. The actual review is followed
by a close-out meeting when the agency is
informed of all findings because of the
evaluation. An interim report will be issued
to document the on-site review findings and
those comments.
Note: All findings should be addressed in a
timely fashion. Outstanding issues should
be resolved and addressed by the next
reporting cycle in the Safeguard Activity
Report, or if necessary, the Safeguard
Procedures Report (see Section 7.4.3,
Actions on Safeguard Review
Recommendations).

Reviews cover the six requirements of IRC
Section 6103(p)(4): Record Keeping,
Secure Storage, Restricting Access, Other
Safeguards, Reporting Requirements, and
Disposal. Computer Security and Need and
Use, as it applies under IRC Section
6103(d) are a part of Restricting Access but
may appear in the report under their own
headings. The six requirements are covered
in depth in this publication.
The on-site review officially begins at the
opening meeting where procedures and
parameters will be communicated.
Observing actual operations is a required
step in the review process. Agency files
Guide 1
Eight Steps of the Review Process
Preliminary Discussions
Engagement Letter
Opening Meeting
On-site Evaluation
Close-out Meeting
Interim Report
Agency Response
Final Report

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RECORD KEEPING REQUIREMENTS

SECTION 3.0

3.1 General
Federal, State, and local agencies, bodies,
commissions, and agents authorized under
IRC Section 6103 to receive FTI are
required by IRC Section 6103(p)(4)(A) to
establish a permanent system of
standardized records of requests made by
or to them for disclosure of FTI (see Exhibit
3, Sec 6103(p)(4) Safeguards). This record
keeping should include internal requests
among agency employees as well as
requests outside of the agency. The records
are to be maintained for five years or the
applicable records control schedule must be
followed, whichever is longer.
3.2 Electronic Files
Authorized employees of the recipient
agency must be responsible for electronic
media before, during, and after processing.
Inventory records must be maintained for
purposes of control and accountability. Any
media containing FTI or any file resulting
from the processing will be recorded in a log
that identifies:
•
•
•
•
•
•

date received
control number and/or file name &
contents
recipient
number of records, if available
movement and
if disposed of, the date and method of
disposition.

Such a log will permit all media (including
those used only for backup) containing FTI
to be readily identified and controlled.

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In instances where auditors read large
volumes of records containing FTI, whether
in paper or electronic format, the State tax
agency need only identify the bulk records
examined.
Responsible officials must ensure that
removal media containing FTI from the
storage area is properly recorded on
charge-out records. Semiannual inventories
of removable media must be conducted.
The agency must account for any missing
media by documenting search efforts and
notifying the initiator of the loss.
3.3 Non-electronic Files
A listing of all documents received from the
IRS must be identified by:
•
•
•
•
•
•
•
•
•

taxpayer name
tax year(s)
type of information (e.g., revenue agent
reports, Form 1040, work papers)
the reason for the request
date requested
date received
exact location of the FTI
who has had access to the data and
if disposed of, the date and method of
disposition.

The agency must account for any missing
media. This includes documenting the
incident and search efforts and notifying the
initiator of the loss.
If the authority to make further disclosures is
present (e.g., agents/contractors),
information disclosed outside the agency
must be recorded on a separate list that
reflects to whom the disclosure was made,
what was disclosed, and why and when it
was disclosed. Agencies transmitting FTI

from one mainframe computer to another,
as in the case of the SSA sending FTI to
State Welfare and in instances where the
auditors extract FTI for Child Support
agencies, need only identify the bulk
records transmitted. This identification will
contain the approximate number of taxpayer
records, the date of the transmissions, the
best possible description of the records, and
the name of the individual making/receiving
the transmission.

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3.4 Record Keeping of Disclosures to
State Auditors
When disclosures are made by a State tax
agency to State auditors, these
requirements pertain only in instances
where the auditors utilize FTI for further
scrutiny and inclusion in their work papers.
In instances where auditors read large
volumes of records containing FTI, whether
in paper or magnetic tape format, the State
tax agency need only identify bulk records
examined. This identification will contain the
approximate number of taxpayer records,
the date of inspection, a description of the
records, and the name of the individual(s)
making the inspection.

SECURE STORAGE - IRC 6103(p)(4)(B)
4.1 General
Security may be provided for a document, an
item, or an area in a number of ways. These
include, but are not limited to, locked containers
of various types, vaults, locked rooms, locked
rooms that have reinforced perimeters, locked
buildings, guards, electronic security systems,
fences, identification systems, and control
measures. How the required security is provided
depends on the facility, the function of the activity,
how the activity is organized, and what equipment
is available. Proper planning and organization will
enhance the security while balancing the costs.
The IRS has categorized Federal tax and privacy
information as moderate risk. Guide 2, Physical
Security – Minimum Protection Standards, within
this document, should be used as an aid in
determining the method of safeguarding highly
sensitive items. These controls are intended to
protect the systems that contain FTI. It is not the
intent of the IRS to mandate requirements to
those systems and/or areas that are not
processing FTI.
4.2 Minimum Protection Standards (MPS)
The Minimum Protection Standards (MPS)
establish a uniform method of protecting data and
items that require safeguarding. This system
contains minimum standards that will be applied
on a case-by-case basis. Since local factors may
require additional security measures,
management must analyze local circumstances
to determine space, container, and other security
needs at individual facilities. The MPS has been
designed to provide management with a basic
framework of minimum security requirements.
The objective of these standards is to prevent
unauthorized access to FTI. MPS requires two
barriers to access FTI under normal security:
secured perimeter/locked container, locked
perimeter/secured interior, or locked
perimeter/security container. Locked means an
area or container that has a lock and the keys or
combinations are controlled. A security container
is a lockable metal container with a resistance to
Page 8

SECTION 4.0
forced penetration, with a security lock and
keys or combinations are controlled. (See
section 4.3.4 for secured perimeter/interior.)
The two barriers provide an additional layer
of protection to deter, delay, or detect
surreptitious entry. Protected information
must be containerized in areas where other
than authorized employees may have
access after hours.
Using a common situation as an example,
often an agency desires or requires that
security personnel or custodial service
workers have access to locked buildings
and rooms. This may be permitted as long
as there is a second barrier to prevent
access to FTI. A security guard may have
access to a locked building or a locked
room if FTI is in a locked container. If FTI is
in a locked room, but not in a locked
container, the guard or janitor may have a
key to the building but not the room.
Additional controls have been integrated
into this document that map to guidance
received from the National Institute of
Standards & Technology (NIST). These are
identified in Exhibit 4, NIST Moderate Risk
Controls for Federal Information Systems.
Through this document, the exhibit will
simply be referenced as Exhibit 4.
Policies and procedures shall be developed,
documented, and disseminated, as
necessary, to facilitate implementing
physical and environmental protection
controls. (Exhibit 4 PE-1).
4.3 Security of Tax Information
Care must be taken to deny unauthorized
access to areas containing FTI during duty
and non-duty hours. This can be
accomplished by creating restricted areas,
security rooms, or locked rooms.
Additionally, FTI in any form (computer
printout, photocopies, tapes, notes, etc.)
must be protected during non-duty hours.
This can be done through a combination of

methods: secured or locked perimeter, secured
area, or containerization.
4.3.1 Restricted Area
A restricted area is an area that entry is restricted
to authorized personnel (individuals assigned to
the area). All restricted areas either must meet
secured area criteria or provisions must be made
to store high security items in appropriate
containers during non-duty hours. Using
restricted areas is an effective method for
eliminating unnecessary traffic through critical
areas, thereby reducing the opportunity for
unauthorized access and/or disclosure or theft of
FTI. All of the following procedures must be
implemented to qualify as a restricted area.
Restricted areas will be prominently posted and
separated from non-restricted areas by physical
barriers that control access. The number of
entrances should be kept to a minimum and must
have controlled access (electronic access control,
key access, door monitor) to prevent
unauthorized entry. The main entrance should be
controlled by locating the desk of a responsible
employee at the entrance to ensure that only
authorized personnel with an official need enter.

Using restricted areas is an effective method for
eliminating unnecessary traffic through critical
areas, thereby reducing the opportunity for
unauthorized disclosure or theft of Federal tax
information.
When unescorted, a restricted area register will
be maintained at a designated entrance to the
restricted area and all visitors (persons not
assigned to the area) entering the area shall be
directed to the designated entrance. Visitors
entering the area shall enter (in ink) in the
register: their name, signature, assigned work
area, escort, purpose of entry, and time and date
of entry.
The entry control monitor should verify the
identity of visitors by comparing the name and
signature entered in the register with the name
and signature of some type of photo identification
card, such as a driver’s license. When leaving the
Page 9

area, the entry control monitor or escort
should enter the visitor's time of departure.
Each restricted area register will be closed
out at the end of each month and reviewed
by the area supervisor/manager.
It is recommended that a second level of
management review the register. Each
review should determine the need for
access for each individual.
To facilitate the entry of employees who
have a frequent and continuing need to
enter a restricted area, but are not assigned
to the area, an Authorized Access List
(AAL) can be maintained. Each month a
new AAL should be posted at the front desk
and vendors should be required to sign and
the monitor should not be required to make
an entry in the Restricted Area Register. If
there is any doubt on the identity of the
individual prior to permitting entry, the entry
control clerk should verify the identity prior
to permitting entry.
4.3.2 Controlling Physical Access to FTI
Management or the designee shall maintain
an authorized list of all personnel who have
access to information system areas, where
these systems contains FTI. This shall not
apply to those areas within the facility
officially designated as publicly accessible.
In addition, the site shall issue appropriate
authorization credentials. In addition, a list
shall be maintained that identifies those
individuals who have authorized access to
any systems where FTI is housed. Access
authorizations and records maintained in
electronic form are acceptable.
Designated officials or designee within the
organization shall review and approve the
access list and authorization credentials.
The access list to the systems and areas
processing FTI must be updated at least
annually. (Exhibit 4, PE-2)
The entity shall control all access points to
the facility. This shall not apply to areas
officially designated as publicly accessible.
The agency shall ensure that individual

access is authorized and verified before granting
access to the facility. (Exhibit 4, PE-3)
Each agency shall control physical access to the
information system devices that display FTI
information or where FTI is processed to prevent
unauthorized individuals from observing the
display output. (Exhibit 4, PE-5).
The agency or designee shall monitor physical
access to the information system where FTI is
stored to detect and respond to physical security
incidents. (Exhibit 4, PE-6)
A visitor access log shall be used to authenticate
visitors before authorizing access to the facility
where the information system resides and
contains FTI. This does not apply to areas
designated as publicly accessible. (Exhibit 4, PE7)
The visitor access log shall contain the following
information:
(i)

name and organization of the visitor;

(ii)

signature of the visitor;

(iii)

form of identification;

(iv)

date of access;

(v)

time of entry and departure;

(vi)

purpose of visit; and

(vii)

name and organization of person
visited.

Designated officials or designees within the
organization review the visitor access records, at
least annually. (Exhibit 4, PE-8)
For all IT systems that house FTI, the agency
shall authorizes and controls information systemrelated items entering and exiting the facility and
maintains appropriate records of those items.
(Exhibit 4, PE-16)
For all areas that process FTI, the agency shall
position information system components within
the facility to minimize potential damage from
physical and environmental hazards and to
minimize the opportunity for unauthorized access.
(Exhibit 4, PE-18)
4.3.3 Security Room

Page 10

A security room is a room that has been
constructed to resist forced entry. The entire
room must be enclosed by slab-to-slab
walls constructed of approved materials—
masonry brick, dry wall, etc.—and
supplemented by periodic inspection. All
doors for entering the room must be locked
in accordance with requirements set forth
below in "Locking Systems for Secured
Areas," and entrance limited to specifically
authorized personnel. Door hinge pins must
be non-removable or installed on the inside
of the room.
Additionally, any glass in doors or walls will
be security glass [a minimum of two layers
of 1/8 inch plate glass with .060 inch (1/32)
vinyl interlayer, nominal thickness shall be
5/16 inch.] Plastic glazing material is not
acceptable.
Vents or louvers will be protected by an
Underwriters' Laboratory (UL) approved
electronic intrusion detection system that
will annunciate at a protection console, ULapproved central station, or local police
station and given top priority for
guard/police response during any alarm
situation.
Whenever cleaning and maintenance are
performed and there is FTI that may be
accessible, the cleaning and maintenance
must be done in the presence of an
authorized employee.
4.3.4 Secured Interior/Secured Perimeter
Secured areas are internal areas that have
been designed to prevent undetected entry
by unauthorized persons during duty and
non-duty hours. Non agency personnel may
not reside in computer rooms and/or areas
containing FTI unless the person is
authorized to access that FTI. Secured
perimeter/secured area must meet the
following minimum standards:
•

This area must be enclosed by slab-toslab walls constructed of approved
materials and supplemented by periodic
inspection or other approved protection

methods, or any lesser type partition
supplemented by UL-approved electronic
intrusion detection and fire detection systems.
•

•

•

Unless electronic intrusion detection devices
are used, all doors entering the space must
be locked and strict key or combination
control should be exercised.
In the case of a fence and gate, the fence
must have intrusion detection devices or be
continually guarded, and the gate must be
either guarded or locked with intrusion
alarms.
The space must be cleaned during duty hours
in the presence of a regularly assigned
employee.

4.3.5 Containers
The term container includes all file cabinets (both
vertical and lateral), safes, supply cabinets, open
and closed shelving or desk and credenza
drawers, carts, or any other piece of office
equipment designed for storing files, documents,
papers, or equipment. Some of these containers
are designed for storage only and do not provide
protection (e.g., open shelving). For purposes of
providing protection, containers can be grouped
into three general categories: locked containers,
security containers, and safes or vaults.
4.3.6 Locked Container
A lockable container is a commercially available
or prefabricated metal cabinet or box with riveted
or welded seams or metal desks with lockable
drawers. The lock mechanism may be either a
built-in key or a hasp and lock. A hasp is a hinged
metal fastening attached to the cabinet, drawer,
etc. that is held in place by a pin or padlock.
4.3.7 Security Container
Security containers are metal containers that are
lockable and have a tested resistance to
penetration. To maintain the integrity of the
security container, key locks should have only
two keys and strict control of the keys is
mandatory; combinations will be given only to
Page 11

those individuals who have a need to
access the container. Security containers
include the following:
•

Metal lateral key lock files

•

Metal lateral files equipped with lock
bars on both sides and secured with
security padlocks

•

Metal pull drawer cabinets with center or
off-center lock bars secured by security
padlocks

•

Key lock “Mini Safes” properly mounted
with appropriate key control.

If the central core of a security container
lock is replaced with a non-security lock
core, then the container no longer qualifies
as a security container.
4.3.8 Safes/Vaults
A safe is a General Services Administration
(GSA)-approved container of Class I, IV, or
V, or Underwriters Laboratories Listing of
TRTL-30, TRTL-60. A vault is a hardened
room with typical construction of reinforced
concrete floors, walls, and ceilings, uses
UL-approved vault doors, and meets GSA
specifications.
4.3.9 Locks
The lock is the most accepted and widely
used security device for protecting
installations and activities, personnel data,
tax data, classified material and government
and personal property. All containers,
rooms, buildings, and facilities containing
vulnerable or sensitive items should be
locked when not in actual use. However,
regardless of their quality or cost, locks
should be considered as delay devices only
and not complete deterrents. Therefore, the
locking system must be planned and used
in conjunction with other security measures.
A periodic inspection should be made on all
locks to determine each locking

mechanism’s effectiveness, to detect tampering
and to make replacement when necessary.
Accountability records will be maintained on keys
and will include taking an inventory of total keys
available and issuing keys.

•

Double cylinder design. Cylinders are to
have five or more pin tumblers

•

Hardened inserts or be made of steel if
bolt is visible when locked.

4.3.10 Control and Safeguarding Keys &
Combinations

Both the key and the lock must be “Off
Master.” Convenience type locking devices
such as card keys, sequenced button
activated locks used in conjunction with
electric strikes, etc., are authorized for use
only during duty hours. Keys to secured
areas not in the personal custody of an
authorized employee and any combinations
will be stored in a security container. The
number of keys or persons with knowledge
of the combination to a secured area will be
kept to a minimum. Keys and combinations
will be given only to those individuals,
preferably supervisors, who have a frequent
need to access the area after duty hours.

Access to a locked area, room, or container can
be controlled only if the key or combination is
controlled. Compromising a combination or losing
a key negates the security provided by that lock.
Combinations to locks should be changed when
an employee who knows the combination retires,
terminates employment, transfers to another
position, or at least once a year.
Combinations should be given only to those who
have a need to have access to the area, room, or
container and should never be written on a
calendar pad, desk blotters, or any other item
(even though it is carried on one's person or
hidden from view). The management should
maintain combinations (other than safes and
vaults). An envelope containing the combination
should be secured in a container with the same or
a higher security classification as the highest
classification of the material authorized for
storage in the container or area the lock secures.
Keys should be issued only to individuals having
a need to access an area, room, or container.
Accountability records should be maintained on
keys and should include an inventory of total keys
available and issuing keys. A periodic
reconciliation should be done on all key records.
4.3.11 Locking Systems for Secured Areas
Minimum requirements for locking systems for
secured areas and security rooms are high
security pin-tumbler cylinder locks that meet the
following requirements:
•

Key-operated mortised or rim-mounted dead
bolt lock

•

A dead bolt throw of one inch or longer

4.3.12 Intrusion Detection Equipment
Intrusion Detection Systems (IDS) are
designed to detect attempted breaches of
perimeter areas. IDS can be used in
conjunction with other measures to provide
forced entry protection for after-hours
security. Additionally, alarms for individual
and document safety (fire) and other
physical hazards (water pipe breaks) are
recommended. Alarms shall annunciate at
an on-site protection console, a central
station, or local police station. Intrusion
Detection Systems include, but are not
limited to, door and window contacts,
magnetic switches, motion designed to set
off an alarm at a given location when the
sensor is disturbed.
4.4 Security During Office Moves
When it is necessary for an office to move
to another location, plans must be made to
protect and account for all FTI properly. FTI
must be in locked cabinets or sealed
packing cartons while in transit.
Accountability will be maintained to ensure
that cabinets or cartons do not become

Page 12

misplaced or lost during the move. FTI must
remain in the custody of an agency employee and
accountability must be maintained throughout the
move.
4.5 Handling and Transporting Federal Tax
Information
Handling FTI must be such that the documents
do not become misplaced or available to
unauthorized personnel.
Only those employees who have a need to know
and to whom disclosure may be made under the
provisions of the statute should be permitted
access to FTI.
Any time FTI is transported from one location to
another, care must be taken to provide
safeguards. In the event the material is handcarried by an individual in connection with a trip
or in the course of daily activities, it must be kept
with that individual and protected from
unauthorized disclosures. For example, when not
in use, and definitely when the individual is out of
the room, the material is to be out of view,
preferably in a locked briefcase or suitcase.
All shipments of FTI (including electronic media
and microfilm) must be documented on a
transmittal form and monitored to ensure that
each shipment is properly and timely received
and acknowledged. All FTI transported through
the mail or courier/messenger service must be
double-sealed; that is one envelope within
another envelope. The inner envelope should be
marked confidential with some indication that only
the designated official or delegate is authorized to
open it. Using sealed boxes serves the same
purpose as double sealing and prevents anyone
from viewing the contents thereof.
4.6 Physical Security of Computers,
Electronic, and Removable Media
Because of the vast amount of data computers
and electronic media store and process, the
physical security and control of computers and
electronic media also must be addressed.
Whenever possible, computer operations must be
in a secure area with restricted access. In
situations such as home work sites, remote
Page 13

terminals, or office work sites where all of
the requirements of a secure area with
restricted access cannot be maintained, the
equipment should receive the highest level
of protection that is practical. Some security
requirements must be met, such as keeping
FTI locked up when not in use. Removable
media must be labeled as FTI when they
contain such information.

In the event the material is hand-carried by
an individual in connection with a trip or in
the course of daily activities, it must be kept
with that individual and protected from
unauthorized disclosures.
Electronic media and removable media
should be kept in a secured area under the
immediate protection and control of an
authorized employee or locked up. When
not in use, they should be promptly returned
to a proper storage area/container.
Good security practice requires that
inventory records of electronic media be
maintained for control and accountability.
Section 3 – Record Keeping Requirements
contains additional information on these
requirements.
4.7 Alternate Work Sites
If the confidentiality of FTI can be
adequately protected, alternative work sites,
such as employee’s homes or other nontraditional work sites can be used. Despite
location, FTI remains subject to the same
safeguard requirements and the highest
level of attainable security.
In all instances, the agency shall employ
appropriate management, operational, and
technical information system security
controls at alternate work sites. (Exhibit 4,
PE-17)
Note: Although the guidelines are written for
employees' homes, the requirements apply
to all alternate work sites.

4.7.1 Equipment
Only agency-owned computers, media, and
software will be used to process, access, and
store FTI. The agency must retain ownership and
control, for all hardware, software, and
telecommunications equipment connecting to
public communication networks, where these are
resident at all alternate work sites.

receiving regularly scheduled maintenance,
including upgrades, and is being used.
Access control should include password
security, an audit trail, encryption, virus
detection, and data overwriting capabilities.
Note: Additional information on Remote
Access can be found in Section 5.6.17.3,
Transmitting Federal Tax Information.
4.7.3 Other Safeguards

All computers and mobile devices that contain
FTI and are resident in an alternate work site
must employ encryption mechanisms to ensure
that this data may not be accessed, if the
computer is lost and/or stolen. (OMB Memo M16)
Employees should have a specific room or area
in a room that has the appropriate space and
facilities for the type of work done. Employees
also should have a way to communicate with their
managers or other members of the agency in
case security problems arise.
The agency should give employees locking file
cabinets or desk drawers so that documents,
disks, tax returns, etc., may be properly secured
when not in use. If agency furniture is not
furnished to the employee, the agency must
ensure that an adequate means of storage exists
at the work site.

Despite location, FTI remains subject to the same
safeguard requirements and the highest level of
attainable security.
The agency should provide "locking hardware" to
secure Automated Data Processing equipment to
large objects such as desks or tables. Smaller,
agency-owned equipment should be locked in a
filing cabinet or desk drawer when not in use.
4.7.2 Storing Data
FTI may be stored on hard disks only if agencyapproved security access control devices
(hardware/software) have been installed, are
Page 14

Only agency-approved security access
control devices and agency-approved
software will be used. Copies of illegal and
non-approved software will not be used.
Electronic media that are to be reused must
have files overwritten or degaussed.
The agency will prepare a plan for the
security of alternative work site. The agency
should coordinate with the managing host
system(s) and any networks, and maintain
documentation on the test. Before
implementation, the agency will certify that
the security controls are adequate for
security needs. Additionally, the agency will
promulgate rules and procedures to ensure
that employees do not leave computers
unprotected at any time. These rules should
address brief absences while employees
are away from the computer.
The agency should provide specialized
training in security, disclosure awareness,
and ethics for all participating employees
and managers. This training should cover
situations that could occur as the result of
an interruption of work by family, friends, or
other sources.
The agency should conduct periodic
inspections of alternative work sites during
the year to ensure that safeguards are
adequate. The results of each inspection
should be fully documented. IRS reserves
the right to visit alternative work sites while
conducting safeguard reviews. Changes in
safeguard procedures should be described
in detail by the agency in their Safeguard
Activity Report, or, if applicable, Safeguard
Procedures Report (see Section 7.0,
Reporting Requirements).

Guide 2
PHYSICAL SECURITY - MINIMUM PROTECTION STANDARDS
ALTERNATIVE 1:
Secured Perimeter - Enclosed by slab-to-slab walls constructed of approved materials
and supplemented by periodic inspection. Any lesser-type partition supplemented by ULapproved electronic intrusion detection and fire detection systems. Unless there is
electronic intrusion detection devices, all doors entering the space must be locked in
accordance with ‘Locking Systems for Secured Areas’. In the case of a fence/gate, the
fence must have intrusion detection devices or be continually guarded and the gate must
be either guarded or locked with intrusion alarms. Space must be cleaned during duty
hours. This requirement could apply to exterior or interior perimeters.
Locked Container - A commercially available or prefabricated metal cabinet or box with
riveted or welded seams or metal desks with lockable drawers.
ALTERNATIVE 2:
Locked Perimeter Locked means an area that is locked after business hours with keys
or combinations that are controlled.
Secured Interior Area - Same specifications as secured perimeter.
ALTERNATIVE 3:
Locked Perimeter - See above.
Security Container - Metal containers that are lockable and have a resistance to
penetration. The containers should have only two keys. Strict control of keys is
mandatory. Examples are mini safes, metal lateral key lock files, and metal pull drawer
cabinets with center/off center lock bars secured by padlocks.
Protection Alternative Chart
Perimeter Type
Alternate #1

Secured

Alternate #2

Locked

Alternate #3

Locked

Interior Area Type

Container Type
Locked

Secured
Security

Page 15

RESTRICTING ACCESS IRC 6103(p)(4)(C)

SECTION 5.0
Examples:

5.1 General
Agencies are required by IRC Section
6103(p)(4)(C) to restrict access to FTI only
to persons whose duties or responsibilities
require access (see Exhibit 3, Sec.
6103(p)(4) Safeguards and Exhibit 5, IRC
Sec. 7431 Civil Damages for Unauthorized
Disclosure of Returns and Return
Information). To assist with this
requirement, FTI should be clearly labeled
"Federal Tax Information" and handled in
such a manner that it does not become
misplaced or available to unauthorized
personnel. Additionally, warning banners
advising of safeguarding requirements
should be used for computer screens.

•

Good safeguard practice dictates that
access to FTI must be strictly on a need-toknow basis. FTI must never be
indiscriminately disseminated, even within
the recipient agency, body, or commission.
•

When information from a Federal tax
return is passed to a technical
employee, the employee should be
provided only that portion of the return
that the employee needs to examine.

•

In a data processing environment,
individuals may require access to media
used to store FTI to do their jobs but do
not require access to FTI (e.g., a tape
librarian or a computer operator).

5.2 A Need to Know
Good safeguard practice dictates that
access to FTI must be strictly on a need-toknow basis. FTI must never be
indiscriminately disseminated, even within
the recipient agency, body, or commission.
Agencies must evaluate the need for FTI
before the data is requested or
disseminated. This evaluation process
includes the agency as a whole, down to
individual employees and computer
systems/data bases.
Restricting access to designated personnel
minimizes improper access or disclosure.
An employee's background and security
clearance should be considered when
designating authorized personnel. The IRS
recognizes that often it is not feasible to limit
access to FTI to the individual who receives
it; the official may need to forward FTI to
technical and clerical employees for
necessary processing. However, no person
should be given more FTI than is needed for
performance of his or her duties.

When documents are given to a
clerk/typist, no FTI should be included
unless it is needed for performing
clerical or typing duties.

5.3 Commingling
It is recommended that FTI be kept
separate from other information to the
maximum extent possible to avoid
inadvertent disclosures. Agencies should
strive to avoid maintaining FTI as part of
their case files.
In situations where physical separation is
impractical, the file should be clearly labeled
to indicate that FTI is included and the file
should be safeguarded. The information
itself also will be clearly labeled. Before
releasing the file to an individual or agency
not authorized access to FTI, care must be
taken to remove all such FTI.
If FTI is recorded on electronic media with
other data, it should be protected as if it

Page 16

were entirely Federal tax information. Such
commingling of data on tapes should be
avoided if practicable. When data
processing equipment is used to process or
store FTI and the information is mixed with
agency data, access must be controlled by:
•

Systemic means, including labeling. See
Section 5.6 - Computer System Security
for additional information.

•

Restricting computer access only to
authorized personnel.

•

When technically possible, data files,
data sets, shares, etc. must be
overwritten after each use.

Note: Commingled data with multi-purpose
facilities results in security risks that must
be addressed. If your agency shares
physical and/or computer facilities with other
agencies, departments, or individuals not
authorized to have FTI, strict controls—
physical and systemic—must be maintained
to prevent unauthorized disclosure of this
information.
In the case of a Data Warehouse, FTI can
be commingled if the proper security
controls are installed. This would require
data monitoring software that can
administer security down to databases, data
profiles, data tables, or data columns and
rows. The FTI within any of the above can
be back-end labeled and tagged with an
IRS identifier. The same would pertain to
any reports generated from the Data
Warehouse. An example would be a server
with relational database security software.
It can be administered down to any of the
above levels and an end user without IRS
access permission will not see the data.
See Exhibit 6, Data Warehouse Concepts &
Security Requirements.
Examples of commingling include:

Page 17

•

If FTI is included in an inquiry or
verification letter or in an internal data
input form, the FTI never loses its
character as FTI even if it is
subsequently verified. If the document
has both FTI and information provided
by the individual or third party,
commingling has occurred and the
document must also be labeled and
safeguarded. If the individual or a third
party from their own source provides the
information, this is not return
information. "Provided" means actually
giving the information on a separate
document, not just verifying and
returning a document that includes
return information.

•

If a new address is received from
Internal Revenue Service records and
entered into a computer database, then
the address must be identified as FTI
and safeguarded. If the individual or
third party subsequently provides the
address, the information will not be
considered return information, as long
as the source code is revised. Again,
"provided" means using the individual's
or third party's knowledge or records as
the source of information.

5.4 Access to FTI via State Tax Files or
Through Other Agencies
Some State disclosure statutes and
administrative procedures permit access to
State tax files by other agencies,
organizations, or employees not involved in
tax matters. As a general rule, IRC Section
6103(d) does not permit access to FTI by
such employees, agencies, or other
organizations. The IRC clearly provides that
FTI will be furnished to State tax agencies
only for tax administration purposes and
made available only to designated State tax
personnel and legal representatives or to
the State audit agency for an audit of the tax
agency. If you have any questions about
particular State employees entitled to
access FTI, forward your inquiry to the

Disclosure Manager at the IRS Office that
serves your location. The IRC does not
permit State tax agencies to furnish FTI to
other State agencies, tax or non-tax, or to
political subdivisions, such as cities or
counties, for any purpose, including tax
administration. Likewise, State tax agencies
may not furnish FTI to any other states,
even where agreements have been made,
informally or formally, for the reciprocal
exchange of State tax information. Also,
non-government organizations, such as
universities or public interest organizations
performing research cannot have access to
FTI.

permit agencies or subdivisions of agencies
to exchange or make subsequent
disclosures of this information.
Each agency must have its own exchange
agreement with the IRS or with the SSA.
When an agency is participating in more
than one disclosure authorization, i.e.,
different programs or purposes, each
exchange or release of FTI must have a
separate agreement or be accomplished
directly with the IRS or SSA. Unless
specifically authorized by the IRC, agencies
are not permitted to allow access to FTI to
agents, representatives, or contractors.
5.5 Control over Processing

The IRC does not permit State tax agencies
to furnish FTI to other State agencies, tax or
non-tax, or to political sub-divisions, such as
cities or counties, for any purpose, including
tax administration.
State tax agencies are specifically
addressed in the previous paragraph for a
number of reasons.
However, the situation applies to all
agencies authorized to receive FTI.
Generally, statutes that authorize disclosure
of FTI do not authorize further disclosures.
Unless IRC Section 6103 provides for
further disclosures by the agency, the
agency cannot make such disclosures. This
applies both within the agency, such as
employees or divisions not involved in the
specific purpose that the disclosure is
authorized, and outside the agency,
including contractors or agencies with which
data exchange agreements exist. Agencies
may be authorized to obtain the same FTI
for the same purposes, such as State tax
agencies, and subdivisions of the same
agency may obtain the same type of FTI for
different purposes, such as welfare
agencies participating in both welfare
eligibility verification (IRC Section
6103(l)(7)) and child support enforcement
(IRC Section 6103(l)(6)). However, in most
cases, the disclosure authority does not
Page 18

Processing of FTI, in an electronic media
format, including removable media,
microfilms, photo impressions, or other
formats (including tape reformatting or
reproduction or conversion to punch cards
or hard copy printout) will be performed
pursuant to one of the following three
procedures:
5.5.1 Agency Owned and Operated
Facility
Processing under this method will take
place in a manner that will protect the
confidentiality of the information on the
electronic media. All safeguards outlined in
this publication also must be followed and
will be subject to IRS Safeguard Reviews.
5.5.2 Contractor or Agency-Shared
Facility for Tax Administration or Federal
Debt Collection
This method may be used only by an
agency that processes FTI for tax
administration or Federal debt collection
purposes. The requirements in Exhibit 7,
Contract Language for General Services,
must be included in the contract in
accordance with IRC Section 6103(n).

The agency must make periodic inspections
of the contractor or agency-shared
computer facility and keep a written record
of such inspections. The contractor or
agency-shared computer facility is also
subject to IRS Safeguard Reviews.
5.5.3 Contractor or Agency Shared
Facility for Recipients under the Deficit
Reduction Act
Examples of Deficit Reduction Act agencies
are those involved with eligibility verification
of welfare or other benefit’s program (IRC
Section 6103(l)(7)) or those to whom child
support obligations are sought to
established or enforced pursuant to the
provisions of part D of title IV of the Social
Security Act (IRC Section 6103(l)(6)), and
the refund offset disclosures (IRC Section
6103(l)(10)). Recipients of return
information disclosed by the IRS or by SSA
under the Deficit Reduction Act are allowed
to use a shared facility but only in a manner
that does not allow access to FTI to
employees of other agencies using the
shared facility, or by any other person not
entitled to access under provisions of the
Act.
Note: The above rules also apply to
releasing electronic media to a private
contractor or other agency office even if the
purpose is merely to erase the old media for
reuse.
5.6 Computer System Security
This section includes significant
enhancements to the computer security
standards agencies should meet to
adequately protect Federal tax information
under their administrative control.
The revised computer security framework
was primarily developed using applicable
guidelines specified in National Institute of
Standards & Technology (NIST) Special
Publication (SP) 800-30 Risk Management
Guide for Information Technology Systems
Page 19

and (NIST) Special Publication (SP) 800- 53
Recommended Security Controls for
Federal Information Systems. Only
applicable NIST SP 800-53 controls for a
moderate impact level are included in this
publication as a baseline. Applicability was
determined by selecting controls required to
protect the confidentiality and integrity of
FTI.
All agency information systems used for
processing, storing and transmitting Federal
tax information must enforce the security
provisions described in this section. Agency
information systems include the equipment,
facilities and people that collect, process,
store, display, and disseminate information.
This includes computers, hardware,
software, and communications, as well as
policies and procedures for their use.
Impact levels used in this document are
described in the Federal Information
Processing Standards (FIPS) Standards for
Security Categorizations of Federal
Information and Information Systems. NIST
documents are available at:
http://csrc.nist.gov/publications/nistpubs/ind
ex.html.
NIST categorizes computer security controls
into three main types: 1) Management, 2)
Operational, and 3) Technical.
Management security controls focus on
managing organizational risk and
information system security and devising
sufficient countermeasures or safeguards
for mitigating risk to acceptable levels.
Management security control families
include risk assessment, security planning,
system and services acquisition, and risk
assessment.
Operational security controls focus on
mechanisms primarily implemented by
people as opposed to systems. These
controls are established to improve the
security of a group, a specific system, or
group of systems. Operational security
controls require technical or specialized
expertise and often rely on management
and technical security controls. Operational

security control families include personnel
security, contingency planning,
configuration management, maintenance,
system and information integrity, incident
response, and awareness and training.
Technical security controls focus on the
security controls executed by the computer
system through mechanisms contained in
the hardware, software, and firmware
components of the system. Technical
security control families include
identification and authentication, access
control, audit and accountability, and
system and communications protection.
Exhibit 4, NIST Moderate Risk Controls for
Federal Information Systems; Exhibit 8,
Password Management Guidelines, and
Exhibit 9, System Audit Management
Guidelines contain information that is
intended to clarify the technical controls of
this document.
The following sections provide the security
controls that relate to protecting the
information system, relative to the
managerial, operational, and technical
controls. For ease of reference, these have
been placed in alphabetical order.
5.6.1. Access Control
Access control policy and procedures must
be developed, documented, disseminated,
and updated, as necessary, to facilitate
implementing access control security
controls. Security controls include account
management, access enforcement, limiting
access to those with a need-to-know,
information-flow enforcement, separation of
duties, least privilege, unsuccessful login
attempts, system use notification, session
locks, session termination, and remote
access. Please see Exhibit 4, Access
Controls for additional detail.
Agencies must manage information system
user accounts, including establishing,
activating, changing, reviewing, disabling,
and removing user accounts. The
Page 20

information system must enforce assigned
authorizations for controlling system access
and the flow of information within the
system and between interconnected
systems. Management must supervise and
review the activities of the users as this
relates to information system access.
(Exhibit 4, AC-13)
In addition, the agency must identify and
document specific user actions that can be
performed on the information system
without identification or authentication.
Examples of access without identification
and authentication would be instances in
which the agency maintains a publicly
accessible web site for which no
authentication is required. (Exhibit 4, AC-14)
Agencies must ensure the information
system enforces separation of duties
through assigned access authorizations.
The information system must enforce the
most restrictive access capabilities users
need (or processes acting on behalf of
users) to perform specified tasks.
The information system must limit the
number of consecutive unsuccessful access
attempts allowed in a specified period and
automatically perform a specific function
(e.g., account lockout, delayed logon) when
the maximum number of attempts is
exceeded. The information system must
display an approved system usage
notification before granting system access
informing potential users that (i) the system
contains U.S. Government information; (ii)
users actions are monitored and audited;
and (iii) unauthorized use of the system is
prohibited and subject to criminal and civil
penalties. Policy must be enforced so that a
workstation and/or application are locked
after a pre-defined period. This will ensure
that unauthorized staff or staff without a
need-to-know cannot access FTI.
The following paragraphs address access
controls when the system is accessed
remotely. Virtual Private Network (VPN) (or
similar technology providing similar
protection (e.g., end-to-end encryption))

should be used when remotely accessing
the system.

5.6.2 Audit & Accountability

The information system shall automatically
terminate any remote session after fifteen
minutes of inactivity, where these systems
contain FTI. For instances of interactive
and/or batch processing, compensating
controls must be implemented. (Exhibit 4,
AC-12)

Audit and accountability policy and
procedures must be developed,
documented, disseminated, and updated as
necessary to facilitate implementing audit
and accountability security controls. Such
audit and accountability security controls
include auditable events; content of audit
records; audit storage capacity; audit
processing; audit monitoring, analysis and
reporting; time stamps; protecting audit
information and audit retention.

Agencies must authorize, document, and
monitor all remote access capabilities used
on the system, where these systems
containing FTI. (Exhibit 4, AC-17).
Agencies must develop policies for any
allowed wireless access, where these
systems contain FTI. (Exhibit 4, AC-18)
As part of the wireless access, the agency
shall authorize, document, and monitor all
wireless access to the information system.
Guides to secure wireless access
implementation for this control are
contained in NIST SP 800-48 Revision 1
(Wireless Network Security for IEEE
802.11a/b/g and Bluetooth) and NIST SP
800-97 (Establishing Wireless Robust
Security Networks: A Guide to IEEE
802.11i), at a minimum.
Agencies must develop policies for any
allowed portable and mobile devices, where
these systems contain FTI. (Exhibit 4, AC19) As part of this, the agency shall
authorize, document, and monitor all device
access to organizational information
systems.
Agencies must develop policies for
authorized individuals to access the
information systems from an external
system, such as access allowed from an
alternate work site. This policy shall address
the authorizations allowed to transmit, store,
and/or process FTI. As part of this, the
agency shall authorize, document, and
monitor all access to organizational
information systems, where these systems
contain FTI. (Exhibit 4, AC-20)

Page 21

The information system must generate audit
records for all security-relevant events,
including all security and system
administrator accesses. An example of an
audit activity is reviewing the administrator
actions whenever security or system
controls may be modified to ensure that all
actions are authorized. Security-relevant
events must enable the detection of
unauthorized access to FTI data. System
and/or security administrator processes will
include all authentication processes to
access the system, for both operating
system and application-level events.
Audit logs must enable tracking activities
taking place on the system. Exhibit 9,
System Audit Management Guidelines,
contains guidelines that can be used for
creating audit-related processes.
The information system shall alert
appropriate organizational officials in the
event of an audit processing failure and
takes the additional actions. (Exhibit 4, AU5)
Agencies must configure the information
system to allocate sufficient audit record
storage capacity to record all necessary
auditable items. At a minimum, the
information system shall provide date and
time stamps for use in audit record
generation. (Exhibit 4, AU-8)
Agencies must routinely review audit
records for indications of unusual activities,
suspicious activities or suspected violations,
and report findings to appropriate officials

for prompt resolution. To enable review of
audit records, the information system
provides an audit reduction and report
generation capability. (Exhibit 4, AU-7)
To support the audit of activities, all
agencies must ensure that audit information
is archived for six years to enable the
recreation of computer-related accesses to
both the operating system and to the
application wherever FTI is stored.
The information system protects audit
information and audit tools from
unauthorized access, modification, and
deletion. (Exhibit 4, AU-9)
5.6.3 Awareness & Training
Awareness and training policy and
procedures must be developed,
documented, disseminated, and updated as
necessary to facilitate implementing
awareness and training security controls.
Such awareness and training security
controls include security awareness and
security training. Agencies must ensure all
information system users and managers are
knowledgeable of security awareness
material before authorizing access to the
system. Agencies must identify personnel
with significant information system security
roles and responsibilities, document those
roles and responsibilities and provide
sufficient security training before authorizing
access to the information system and FTI.
Agencies must document and monitor
individual information system security
training activities including basic security
awareness training and specific information
system security training. (Exhibit 4, AT-4)
5.6.4 Certification & Accreditation (C&A)
The agency shall develop and update a
policy that addresses the processes used to
test, validate, and authorize the security
controls used to protect FTI. While state
and local agencies are not required to
conduct a NIST compliant C&A, the agency
shall accredit in writing that the security
Page 22

controls have been adequately implemented
to protect FTI. The written accreditation
constitutes the agency’s acceptance of the
security controls and associated risks.
However for federal agencies that receive
FTI, a NIST compliance C&A is required in
accordance with FISMA. (Exhibit 4, CA-1)
The agency shall conduct an assessment of
the security controls in the information
system, periodically but at least annually, to
ensure the controls are implemented
correctly, operating as intended, and
producing the desired outcome with respect
to meeting the security requirements for the
system. This assessment shall complement
the certification process to ensure that
periodically the controls are validated as
being operational. (Exhibit 4, CA-2)
The agency shall authorize and document
all connections from the information system
to other information systems outside of the
accreditation boundary through the use of
system connection agreements and
monitors/controls the system connections
on an ongoing basis. (Exhibit 4, CA-3)
The agency shall conduct a formal
assessment of the security controls in the
information system to determine the extent
to which the controls are implemented
correctly, operating as intended, and
producing the desired outcome with respect
to meeting the security requirements for the
system. (Exhibit 4, CA-4)
As recipients of FTI, the agency is
responsible to develop and update a Plan of
Action and Milestones (POA&M) that shall
identify any deficiencies related to FTI
processing. The POA&M shall identify
planned, implemented, and evaluated
remedial actions to correct deficiencies
noted during the review processes, either
internal or external. The POAM shall
address implementation of security controls
to reduce or eliminate known vulnerabilities
in the system. (Exhibit 4, CA-5)

Owners of FTI shall accredit the security
controls used to protect FTI before initiating
operations. This shall be done for any
infrastructure associated with FTI. The
accreditation shall occur every three (3)
years or whenever there is a significant
change to the control structure. A senior
agency official shall sign and approve the
security accreditation. All information
regarding the accreditation shall be
provided to the Office of Safeguards as part
of the Safeguard Activity Report. (Exhibit 4,
CA-6)
While the Safeguard Procedures Report
shall identify the security controls, the
authorization of the system must come from
an agency official validating that the system
is ready for operation. [Note: This control
requirement does not apply to non-federal
systems.]
All agencies shall periodically, at least
annually, monitor the security controls within
the information system hosting FTI to
ensure that the controls are operating, as
intended. (Exhibit 4, CA-7)

and enforces physical and logical
access restrictions associated with
changes to the information system and
generates, retains, and reviews records
reflecting all such changes. (Exhibit 4,
CM-5)
•

The agency shall establish mandatory
configuration settings for information
technology products employed within
the information system, which (i)
configures the security settings of
information technology products to the
most restrictive mode consistent with
operational requirements; (ii) documents
the configuration settings; and (iii)
enforces the configuration settings in all
components of the information system.
(Exhibit 4, CM-6)

•

Restrict access for change,
configuration settings, and provide the
least functionality necessary

•

Enforce access restrictions associated
with changes to the information system

•

Configure the security settings of
information technology products to the
most restrictive mode consistent with
information system operational
requirements (for additional guidance
see NIST SP 800-70 Security
Configuration Checklists Program for IT
Products- Guidance for Checklists
Users and Developers)

•

Configure the information system to
provide only essential capabilities

•

Prohibit the use of functions, ports,
protocols, and services not required to
perform essential capabilities for
processing, storing, or transmitting
Federal tax information.

•

Develop, document, and maintain a
current inventory of the components of
the information system and relevant
ownership information. (Exhibit 4, CM-8)

5.6.5 Configuration Management
Configuration management policy and
procedures must be developed,
documented, disseminated and updated as
necessary to facilitate implementing
configuration management security controls.
Such configuration management security
controls include:
•

The organization develops, documents,
and maintains a current baseline
configuration of the information system.
(Exhibit 4,CM-2)

•

Authorize, document, and control
changes to the information system.
(Exhibit 4, CM-3)

•

Monitor changes to the information
system conducting security impact
analysis to determine the effects of the
changes. (Exhibit 4, CM-4)

•

Approve individual access privileges
Page 23

5.6.6 Contingency Planning
All FTI information that is transmitted to the
states is backed up and protected within
IRS facilities. As such, the controls of IT
Contingency Planning are not required at
the federal, state, or local agency. The
primary contingency shall be to contact the
IRS to obtain updated FTI data. If this
timeframe extends beyond the IRS normal
60 day recovery period, agencies may not
have immediate recovery of this information.
Agencies must develop applicable
contingencies for ensuring that FTI is
available, based upon their individual riskbased approaches.
If FTI is included in contingency planning;
policy and procedures must be developed,
documented, disseminated, and updated as
necessary to facilitate implementing
contingency planning security controls.
In addition, plans must be periodically
tested to ensure procedures and staff
personnel are able to provide recovery
capabilities within established timeframes.
Such contingency planning security controls
include alternate storage sites, alternate
processing sites, telecommunications
services, and information system and
information backups. Agencies must
identify alternate storage sites and initiate
necessary agreements to permit the secure
storage of information system and FTI
backups. Agencies must identify alternate
processing sites and/or telecommunications
capabilities, and initiate necessary
agreements to facilitate secure resumption
of information systems used to process,
store and transmit FTI if the primary
processing site and/or primary
telecommunications capabilities become
unavailable. Agencies must conduct
backups of user-level information, systemlevel information, and FTI and store such
backups at a secure location.
5.6.7 Identification & Authentication

Page 24

Identification and authentication policy and
procedures must be developed,
documented, disseminated, and updated,
as necessary, to facilitate implementing
identification and authentication security
controls. The information system must be
configured to uniquely identify users,
devices, and processes via the assignment
of unique user accounts and validate users
(or processes acting on behalf of users)
using standard authentication methods such
as passwords, tokens, smart cards, or
biometrics.
Agencies also must manage the user
accounts assigned to the information
system. Examples of effective user-account
management practices include (i) obtaining
authorization from appropriate officials to
issue user accounts to intended individuals;
(ii) disabling user accounts timely; (iii)
archiving inactive or terminated user
accounts; and (iv) developing and
implementing standard operating
procedures for validating system users who
request reinstatement of user account
privileges suspended or revoked by the
information system.
The information system obscures feedback
of authentication information during the
authentication process to protect the
information from possible exploitation/use
by unauthorized individuals. (Exhibit 4, IA-6)
Whenever agencies are employing
cryptographic modules, the agency shall
work to ensure these modules are compliant
with NIST guidance, including FIPS 140-2
compliance. (Exhibit 4, IA-7)
5.6.8 Incident Response and Incident
Reporting
Incident response policy and procedures
must be developed, documented,
disseminated, and updated as necessary to
facilitate the implementing incident
response security controls. Such incident
response security controls include incident
response training and incident reporting and
monitoring.

Agencies must train personnel in their
incident response roles on the information
system and FTI. Incident response training
must provide individuals with an
understanding of incident handling
capabilities for security events, including
preparation, detection and analysis,
containment, eradication, and recovery.
Agencies must routinely track and
document information system security
incidents potentially affecting the
confidentiality of FTI.

The agency must ensure that maintenance
is scheduled, performed, and documented.
The agency must review records of routine
preventative and regular maintenance
(including repairs) on the components of the
information system in accordance with
manufacturer or vendor specifications
and/or organizational requirements. (Exhibit
4, MA-2)

The agency shall test and/or exercise the
incident response capability for the
information system at least annually to
determine the incident response
effectiveness and documents the results.
(Exhibit 4, IR-3)

Media access policy and procedures must
be developed, documented, disseminated,
and updated as necessary to facilitate
implementing media protection policy.
Policies shall address the purpose, scope,
responsibilities, and management
commitment to implement associated
controls. (Exhibit 4, MP-1)

Any time there is a compromise to FTI, the
agency promptly reports incident
information to the appropriate Agent-inCharge, TIGTA. (Exhibit 4, IR-6)
The agency shall also provide an incident
response support resource that offers
advice and assistance to users of the
information system for the handling and
reporting of security incidents. The support
resource is an integral part of the agency’s
incident response capability. (Exhibit 4, IR7)
5.6.9 Maintenance
Maintenance policy and procedures must be
developed, documented, disseminated, and
updated as necessary to facilitate
implementing maintenance security
controls. Such maintenance security
controls include identifying and monitoring a
list of maintenance tools and remote
maintenance tools. Agencies must
approve, control, and routinely monitor the
use of information system maintenance
tools and remotely-executed maintenance
and diagnostic activities. The agency allows
only authorized personnel to perform
maintenance on the information system.
(Exhibit 4, MA-5)
Page 25

5.6.10 Media Access Protection

The agency shall restrict access to
information system media to authorized
individuals, where this media contains FTI.
(Exhibit 4, MP-2)
The agency will physically control and
securely store information system media
within controlled areas, where this media
contains FTI. (Exhibit 4, MP-4)
The agency must protect and control
information system media during transport
outside of controlled areas and restrict the
activities associated with transport of such
media to authorized personnel.
All media being transmitted from the IRS
must employ the use of encryption. (Exhibit
4, MP-5)
The agency shall sanitize information
system media prior to disposal or release
for reuse. (Exhibit 4, MP-6)
5.6.11 Personnel Security
Personnel security policy and procedures
must be developed, documented,
disseminated, and updated as necessary to
facilitate implementing personnel security
controls. Such personnel security controls
include position categorization, personnel

screening, personnel termination, personnel
transfer, and access agreements.
Agencies must assign risk designations to
all positions and establish screening criteria
for individuals filling those positions.
Individuals must be screened before
authorizing access to information systems
and information.
Agencies must terminate information
system access, conduct exit interviews, and
ensure return of all information systemrelated property when employment is
terminated.
Agencies must review information system
access authorizations and initiate
appropriate actions when personnel are
reassigned or transferred to other positions
within the organization. Appropriate access
agreements must be completed before
authorizing access to users requiring
access to the information system and
Federal Tax Information. Agencies must
also establish a formal sanctions process
for personnel who fail to comply with
established information security policies, as
this relates to FTI. Personnel security
requirements must be established for thirdparty providers and monitored for provider
compliance.
5.6.12 Planning
Security planning policy and procedures
must be developed, documented,
disseminated and updated as necessary to
facilitate implementing security planning
controls. Such security planning controls
include system security plans, system
security plan updates and rules of behavior.
Agencies must develop, document, and
establish a system security plan (see
Section 7.2, Safeguard Procedures Report)
by describing the security requirements,
current controls and planned controls, for
protecting agency information systems and
Federal tax information. The system
security plan must be updated to account
for significant changes (see Section 7.4,
Annual Safeguard Activity Report) in the
Page 26

security requirements, current controls and
planned controls for protecting agency
information systems and Federal tax
information. Agencies must develop,
document, and establish a set of rules
describing their responsibilities and
expected behavior for information system
use for users of the information system.
The organization shall plan and coordinate
security-related activities affecting the
information system before conducting such
activities in order to reduce the impact on
organizational operations (i.e., mission,
functions, image, and reputation),
organizational assets, and individuals.
(Exhibit 4, PL-6)
5.6.13 Risk Assessment
Risk assessment policy and procedures
must be developed, documented,
disseminated and updated as necessary to
facilitate implementing risk assessment
controls. Such risk assessment controls
include risk assessments and risk
assessment updates. Agencies must
conduct assessments of the risk and
magnitude of harm that could result from the
unauthorized access, use, disclosure,
disruption, modification, or destruction of
information and information systems that
support the operations and assets of the
agency regarding the use of FTI (Exhibit 4,
RA-3).
The agency must update the risk
assessment periodically or whenever there
are significant changes to the information
system, the facilities where the system
resides, or other conditions that may impact
the security or accreditation status of the
system (Exhibit 4, RA-4).
Periodically, systems that contain FTI shall
be scanned to identify any vulnerabilities in
the information system. The agency shall
identify the timeframe on how often scans
are conducted. (Exhibit 4, RA-5)
5.6.14 System & Services Acquisition

System and services acquisition policy and
procedures must be developed,
documented, disseminated, and updated as
necessary to facilitate implementing system
and services acquisition controls. Such
system and services acquisition controls
include information system documentation
and outsourced information system
services. Agencies must ensure that there
is sufficient information system
documentation, such as a Security Features
Guide. Agencies must ensure third-party
providers of information systems, who are
used to process, store and transmit Federal
tax information, employ security controls
consistent with Safeguard computer security
requirements.
The agency shall document, and allocate as
part of its capital planning and investment
control process, the resources required to
adequately protect the information system.
(Exhibit 4, SA-2)
Whenever information systems contain FTI,
the agency manages the information system
using a system development life cycle
methodology that includes information
security considerations. (Exhibit 4, SA-3)
Whenever information systems contain FTI,
the agency shall include security
requirements and/or security specifications,
either explicitly or by reference, in
information system acquisition contracts
based on an assessment of risk (Exhibit 4,
SA-4)
Whenever information systems contain FTI,
the agency shall obtain, protect as required,
and make available to authorized personnel,
adequate documentation for the information
system. (Exhibit 4, SA-5)
Whenever information systems contain FTI,
the agency complies with software usage
restrictions. (SA-6 SOFTWARE USAGE
RESTRICTIONS)
Whenever information systems contain FTI,
the agency shall enforce explicit rules
governing the installation of software by
users. (Exhibit 4, SA-7)
Page 27

Whenever information systems contain FTI,
the agency shall design and implement the
information system using security
engineering principles. (Exhibit 4, SA-8)
The information system developers shall
create a security test and evaluation plan,
implement the plan, and document the
results. (Exhibit 4, SA-11)
5.6.15 System & Communications
Protection
System and communications policy and
procedures must be developed,
documented, disseminated and updated as
necessary to facilitate implementing
effective system and communications.
(Exhibit 4, SC-1)
These controls shall include the following:
•
•

procedures to remove residual data
procedures to provide transmission
confidentiality and to validate
cryptography.

This reallocation of memory (storage) for
reuse by the information system is known
as object reuse. Information systems must
be configured to prevent residual data from
being shared with, recovered, or accessed
by unauthorized users (or processes acting
on behalf of users) once such data is
removed from the information system and
the memory once occupied by such data is
reallocated to the information system for
reuse, as applicable.
The information system shall separate front
end interface from the back end processing
and data storage. (Exhibit 4, SC-2)
The information system shall prevent
unauthorized and unintended information
transfer via shared system resources.
(Exhibit 4, SC-4)
The information system shall be configured
to monitor and control communications at
the external boundary of the information
system and at key internal boundaries
within the system. (Exhibit 4, SC-7)

The information system must protect the
confidentiality of FTI during electronic
transmission. When cryptography
(encryption) is employed within the
information system, the system must
perform all cryptographic operations using
Federal Information Processing Standard
(FIPS) 140-2 validated cryptographic
modules with approved modes of operation.
Cryptographic data transmissions are
ciphered and consequently unreadable until
deciphered by the recipient.
Whenever there is a network connection,
the information system shall terminate the
network connection at the end of a session
or after no more than fifteen minutes of
inactivity. (Exhibit 4, SC-10)
When Public Key Infrastructure (PKI) is
used, the agency shall establish and
manage cryptographic keys using
automated mechanisms with supporting
procedures or manual procedures. (Exhibit
4, SC-12)
The information system shall prohibit
remote activation of collaborative computing
mechanisms and provides an explicit
indication of use to the local users.
Collaborative mechanisms include cameras
and microphones that may be attached to
the information system. Users must be
notified if there are collaborative devices
connected to the system. (Exhibit 4, SC-15)
The agency shall establish PKI policies and
practices, as necessary. (Exhibit 4, SC-17)
The agency shall establish usage
restrictions and implementation guidance for
mobile code technologies based on the
potential to cause damage to the
information system if used maliciously. All
mobile code must be authorized by the
agency official. (Exhibit 4, SC-18)
The agency shall establish, document and
control usage restrictions and
implementation guidance for Voice over
Internet Protocol (VoIP) technologies.
(Exhibit 4, SC-19)

Page 28

The information system shall provide
mechanisms to protect the authenticity of
communications sessions. (Exhibit 4, SC23)
5.6.16 System & Information Integrity
System and information integrity policy and
procedures must be developed,
documented, disseminated and updated as
necessary to facilitate implementing system
and information integrity security controls.
Such system and information integrity
security controls include flaw remediation,
intrusion detection tools and techniques,
information input restrictions, and
information output handling and retention.
The information system must implement
protection against malicious code (e.g.,
viruses, worms, Trojan horses) that, to the
extent possible, includes a capability for
automatic updates. Intrusion detection tools
and techniques must be employed to
monitor system events, detect attacks, and
identify unauthorized use of the information
system and FTI.
Agencies must restrict information system
input to authorized personnel (or processes
acting on behalf of such personnel)
responsible for processing, storing, or
transmitting FTI.
Agencies must identify, report, and correct
information system flaws. (Exhibit 4, SI-2)
The agency shall receive and review
information system security alerts/advisories
on a regular basis, issues alerts/advisories
to appropriate personnel, and takes
appropriate actions in response. (Exhibit 4,
SI-5)
Agencies must handle and retain output
from the information system, as necessary
to document that specific actions have been
taken. (Exhibit 4, SI-12).

conduits, and cabling are within the control
of agency personnel and that access to
routers and network monitors are strictly
controlled.

5.6.17 Additional Computer Security
Controls
5.6.17.1 Data Warehouse
The concept of data warehousing consists
of a collection of multi-dimensional
integrated databases that are used to
provide accessible information to clients or
end users. The data can be manipulated
through different categories or dimensions
to facilitate analyzing data in relational
databases. The result can provide the client
or end user with an enterprise view or
snapshot of the information.
Security requirements apply to data
warehousing environments, as well as to
typical networked environments.

5.6.17.3 Remote Access
Accessing databases containing FTI from a
remote location, i.e., a location not directly
connected to the Local Area Network (LAN),
will require adequate safeguards to prevent
unauthorized entry. The IRS policy for
allowing access to systems containing FTI
is outlined below.
•

Authentication is provided through ID
and password encryption for use over
public telephone lines.

•

Authentication is controlled by
centralized Key Management
Centers/Security Management Centers
with a backup at another location.

•

Standard access is provided through a
toll-free number and through local
telephone numbers to local data
facilities.

Exhibit 6, Data Warehouse Concepts &
Security Requirements, provides those
unique requirements for this environment.
5.6.17.2 Transmitting FTI
All FTI data in transit must be encrypted,
when moving across a Wide Area Network
(WAN).
Generally, FTI transmitted within the Local
Area Network (LAN) should be encrypted. If
encryption is not used, the agency must use
other compensating mechanisms (e.g.,
switched vLAN technology, fiber optic
medium, etc.) to ensure that FTI is not
accessible to unauthorized users.
Unencrypted cable circuits of copper or fiber
optics is an acceptable means of
transmitting FTI. Measures are to be taken
to ensure that circuits are maintained on
cable and not converted to unencrypted
radio (microwave) transmission. Additional
precautions should be taken to protect the
cable, (e.g., burying the cable underground
or in walls or floors and providing access
controls to cable vaults, rooms, and
switching centers).
In instances where encryption is not used,
the agency must ensure that all wiring,
Page 29

Both access methods (toll free and local
numbers) require a special (encrypted)
modem and/or Virtual Private Network
(VPN) for every workstation and a smart
card (microprocessor) for every user. Smart
cards should have both identification and
authentication features and should provide
data encryption as well. Two-factor
authentication is recommended whenever
FTI is being accessed from an alternate
work location.
5.6.17.4 Internet/Web Sites
Federal, State, and Local agencies that
have Internet capabilities and connections
to host servers are cautioned to perform risk
analysis on their computer system before
subscribing to their use. Connecting the
agency's computer system to the Internet
will require that adequate security measures
are employed to restrict access to sensitive

data. (See Section 5.6, Computer System
Security).

To reduce the threat of intrusion, observe
the following:

5.6.17.5 Electronic Mail

•

Have a trusted staff member at both the
sending and receiving fax machines.

Generally, FTI shall not be transmitted or
used on E-mail systems. If necessary, the
following precautions must be taken to
protect FTI sent via E-mail:

•

Accurately maintain broadcast lists and
other preset numbers of frequent
recipients of FTI. Place fax machines in
a secured area.

•

Do not send FTI unencrypted in any
email messages

•

•

Messages containing FTI must be
attached and encrypted

Include a cover sheet on fax
transmissions that explicitly provides
guidance to the recipient, which
includes:

•

Ensure that all messages sent are to the
proper address, and

•

Employees should log off the computer
when away from the area.

5.6.17.6 Facsimile Machines (FAX)
Generally, the telecommunication lines used
to send fax transmissions are not secure.

Page 30

-

A notification of the sensitivity of
the data and the need for
protection and

-

A notice to unintended recipients
to telephone the sender—collect
if necessary—to report the
disclosure and confirm
destruction of the information.

OTHER SAFEGUARDS - IRC 6103(p)(4)(D)
6.1 General
IRC Section 6103(p)(4)(D) requires that
agencies receiving FTI provide other
safeguard measures as appropriate to
ensure the confidentiality of the FTI. A good
security awareness program is by far the
most effective and least expensive method
agencies can use to protect sensitive
information.

SECTION 6.0
•

Place security articles in employee
newsletters

•

Route pertinent articles that appear in
the technical or popular press to
members of the management staff

•

Display posters with short simple
educational messages (e.g., instructions
on reporting unauthorized access
“UNAX” violations, address, and hotline
number)

•

Use warning banners during initial logon
on computers housing FTI

•

Send e-mail and other electronic
messages to inform users.

6.2 Employee Awareness
Granting agency employee access to FTI
should be preceded by certifying that each
employee understands the agency’s
security policy and procedures for
safeguarding IRS information. As a follow
up, employees should be required to
maintain their authorization to access FTI
through annual recertification. The initial
certification and recertification should be
documented and placed in the agency's
files for review. As part of the certification
and at least annually afterwards, employees
should be advised of the provisions of IRC
Sections 7431, 7213(a), and 7213A (see
Exhibit 5, IRC Sec. 7431 Civil Damages for
Unauthorized Disclosure of Returns and
Return Information and Exhibit 10, IRC Sec.
7213 Unauthorized Disclosure of
Information).
Note: Agencies should make employees
aware that disclosure restrictions and the
penalties apply even after employment with
the agency has ended. Security information
and requirements can be expressed to
appropriate personnel by using a variety of
methods, such as:
•

Formal and informal training

•

Discussion at group and managerial
meetings

•

Install security bulletin boards
throughout the work areas
Page 31

6.3 Internal Inspections
Another measure IRS requires is Internal
Inspections by the recipient agency. The
purpose is to ensure that adequate
safeguard or security measures have been
maintained. The agency should submit
copies of these inspections to the IRS with
the annual Safeguard Activity Report (see
Section 7.4 – Annual Safeguard Activity
Report). To provide an objective
assessment, the inspection should be
conducted by a function other than the
using function.
It should be certified that employees
understand security policy and procedures
requiring their awareness and compliance.
To provide reasonable assurance that FTI is
adequately safeguarded, the inspection
should address the safeguard requirements
the IRC and the IRS impose. Agencies
should establish a review cycle so that all
local offices receiving FTI are reviewed
within a three-year cycle. Headquarters

office facilities housing FTI and the agency
computer facility should be reviewed within
an 18-month cycle.

6.3.4 Disposal

These requirements are discussed in
greater detail throughout this publication.
Key areas that should be addressed
include:

Upon completion of use, agencies should
ensure that the FTI is destroyed or returned
to the IRS or the SSA according to the
guidelines contained in Section 8.0,
Disposal of Federal Tax Information.

6.3.1 Record Keeping

6.3.5 Computer Systems Security

Each agency, and functions within that
agency, shall maintain a log of all requests
for return information, including receipt
and/or disposal of returns or return
information. Return information will include
any medium containing FTI, such as
computer tapes, cartridges, or compact
disks (CDs), or data received electronically.
Receipt of information shall include all
information received either directly or
indirectly.

The agency’s review of the adequacy of
their computer security provisions should
provide reasonable assurance that:

6.3.2 Secure Storage
FTI (including tapes, cartridges, or other
removable media) must be stored in a
secure location, safe from unauthorized
access.
6.3.3 Limited Access
Access to returns and return information
(including tapes, cartridges, or other
removable media) must be limited to only
those employees or officers who are
authorized access by law or regulation and
whose official duties require such access.
The physical and systemic barriers to
unauthorized access should be reviewed
and reported. An assessment of facility
security features should be included in the
report.

Page 32

•

Access to FTI is limited to those
personnel who have a need-to-know.
This need-to-know must be enforced
electronically as well as physically. (See
Section 5.6, Computer Security).

Note: The review of the computer facility
also should include the evaluation of
computer security and physical security
controls.
Inspection reports, including a record of
corrective actions, should be retained by the
agency for a minimum of three years from
the date the inspection was completed. IRS
personnel may review these reports during
an on-site Safeguard Review. A summary of
the agency's findings and the corrective
actions taken to correct any deficiencies
should be included with the annual
Safeguard Activity Report submitted to the
IRS.
Note: Exhibits 11, Encryption Standards
and Exhibit 12, Glossary have been
included in this document to clarify the
terms and concepts used within.

REPORTING REQUIREMENTS - IRC 6103(p)(4)(E)
SECTION 7.0
The name, title, address, and telephone
7.1 General
number of the agency official authorized to
request Federal tax information from the
IRC Section 6103(p)(4)(E) requires
IRS, the SSA, or other authorized agency.
agencies receiving FTI to file a report that
The name, title, address, and telephone
describes the procedures established and
number of the agency official responsible for
used by the agency for ensuring the
implementing the safeguard procedures.
confidentiality of the information received
from the IRS. The Safeguard Procedures
7.2.2 Location of the Data
Report (SPR) is a record of how FTI is
processed by the agency; it states how it is
An organizational chart or narrative
protected from unauthorized disclosure by
description of the receiving agency, that
that agency.
includes all functions within the agency
Annually thereafter, the agency shall file a
where FTI will be processed or maintained.
Safeguard Activity Report (SAR). This
If the information is to be used or processed
report advises the IRS of minor changes to
by more than one function, then the
the procedures or safeguards described in
pertinent information must be included for
the SPR. It also advises the IRS of future
each function.
actions that will affect the agency's
safeguard procedures, summarizes the
agency's current efforts to ensure the
The Safeguard Procedures Report is a
confidentiality of FTI, and finally, certifies
record of how FTI is processed by the
that the agency is protecting FTI pursuant to
agency; it states how it is protected from
IRC Section 6103(p)(4) and the agency's
unauthorized disclosure by that agency.
own security requirements.
Note: Agencies must submit a new SPR
whenever significant changes occur in their
safeguard program or every six (6) years.
Significant changes would include, but are
not limited to, new computer equipment,
facilities, or systems.
7.2 Safeguard Procedures Report
Agencies shall submit their SPR on the
template developed by the Office of
Safeguards. The most current template
may be requested by contacting
[email protected] .
The SPR shall be accompanied by a letter
on the agency’s letterhead signed by the
head of the agency or delegate. Information
requested on the template includes:
7.2.1 Responsible Officer(s)

Page 33

7.2.3 Flow of the Data
A chart or narrative describing the flow of
FTI through the agency from its receipt
through its return to the IRS or its
destruction, how it is used or processed,
and how it is protected along the way (See
specific safeguard requirements below.)
Indicate if FTI is commingled or transcribed
into data kept by the agency. Any data
turned over to an agency contractor for
processing must be fully disclosed and
provide accurate accounting.
7.2.4 System of Records
A description of the permanent record(s)
used to document requests for, receipt of,
distribution of (if applicable), and disposition
(return to IRS or destruction) of the FTI
(including tapes or cartridges or other

removable media). Agencies are expected
to be able to provide an "audit trail" for
information requested and received,
including any copies or distribution beyond
the original document or media.
7.2.5 Secure Storage of the Data
A description of the security measures
employed to provide secure storage for the
data when it is not in current use. Secure
storage encompasses such considerations
as locked files or containers, secured
facilities, key or combination controls, offsite storage, and restricted areas.
Note: It is requested that Federal Agencies
submit a Vulnerability Assessment based on
General Services Administration standards
for their building(s) as it addresses physical
security.
7.2.6 Restricting Access to the Data
A description of the procedures or
safeguards to ensure access to FTI is
limited to those individuals who are
authorized access and have a need to
know. Describe how the information will be
protected from unauthorized access when in
use by the authorized recipient.
The physical barriers to unauthorized
access should be described (including the
security features where FTI is used or
processed) and systemic or procedural
barriers.
7.2.7 Disposal
A description of the method(s) of disposal of
the different types of FTI provided by the
IRS when not returned to the IRS. The IRS
will request a written report that documents
the method of destruction and that the
records were destroyed (See 7.2.4 above.)
7.2.8 Information Technology (IT)
Security

A description of all automated information
systems and networks that receive,
process, store, or transmit FTI. These
systems must have safeguard measures in
place to restrict access to sensitive data
(see Section 5.6). These safeguards should
address all key components of IT security.
They should:
•

Describe the systemic controls
employed to ensure all IRS data is
safeguarded from unauthorized access
or disclosure.

•

Include the procedures to be employed
to ensure secure storage of the disks
and the data, limit access to the disk(s),
or computer screens, and the
destruction of the data.

•

Have additional comments regarding the
safeguards employed to ensure the
protection of the computer.

•

Describe in detail the security
precautions undertaken if the agency’s
computer systems are connected or
planned to be connected to other
systems.

The Safeguard Procedures Report must
include procedures for ensuring that all data
is safeguarded from unauthorized access or
disclosure.
7.2.9 Disclosure Awareness Program
Each agency receiving FTI should have an
awareness program that annually notifies all
employees having access to FTI of the
confidentiality provisions of the IRC, a
definition of what returns and return
information is, and the civil and criminal
sanctions for unauthorized inspection or
disclosure. A description of the formal
program should be included in the SPR.
7.3 Submitting Safeguard Procedures
Report
Federal, Child Support Enforcement, State
Welfare agencies, Revenue Agencies, and

Page 34

Local Taxing Authorities requesting FTI
should submit their report electronically to:
[email protected]

imposed for unauthorized inspection or
disclosure of return information.
B. Reports of Internal Inspections

NOTE: Reports should be sent
electronically and encrypted via IRS
approved encryption techniques. Paper
submissions will no longer be accepted.

Copies of a representative sampling of the
Inspection Reports and a narrative of the
corrective actions taken (or planned) to
correct any deficiencies should be included
with the annual SAR.

7.4 Annual Safeguard Activity Report

C. Disposal of FTI

Agencies shall submit their SAR on the
template developed by the Office of
Safeguards. The most current template
may be requested by contacting
[email protected].
The SAR should be accompanied by a letter
on the agency’s letterhead signed by the
head of the agency or delegate, dated.
7.4.1 Changes to Information or
Procedures Previously Reported

Report the disposal or the return of FTI to
the IRS or source. The information should
be adequate to identify the material
destroyed and the date and manner of
destruction, including copies of destruction
logs.
Note: Including taxpayer information in the
disposal record is not necessary and should
be avoided.
D. Other information to support the
protection of FTI, in accordance with IRC
6103 (p)(4) requirements.

A. Responsible Officers or Employees
B. Functional Organizations Using the
Data
C. Computer Facilities or Equipment and
System Security – Changes or
Enhancements

7.4.3 Actions on Safeguard Review
Recommendations

D. Physical Security – Changes or
Enhancements

The agency should report all actions taken,
or being initiated, regarding
recommendations in the Final Safeguard
Review Report issued because of the latest
safeguard review.

E. Retention or Disposal Policy or
Methods

7.4.4 Planned Actions Affecting
Safeguard Procedures

7.4.2 Current Annual Period Safeguard
Activities
A. Agency Disclosure Awareness
Program:
Describe the efforts to inform all employees
having access to FTI of the confidentiality
requirements of the IRC, the agency's
security requirements, and the sanctions
Page 35

Any planned agency action that would
create a major change to current
procedures or safeguard considerations
should be reported. Such major changes
would include, but are not limited to, new
computer equipment, facilities, or systems.

7.4.5 Agency Use of Contractors
Agencies must account for the use of all
contractors, permitted by law or regulation,
to do programming, processing, or
administrative services requiring access to
FTI.

Other State Agencies (i.e., Departments of
Labor, Departments of Transportation, etc.)
receiving FTI under IRC 6103(d) and
agencies receiving FTI under IRC 6104(c)
with charitable organization oversight
should submit their reports for the
processing year by (June 1 through May 31)
by June 30.

7.5 Submission Dates for the Safeguard
Activity Report

State Tax Agencies should submit their
reports for the calendar year by January 31
of the following year.

Agencies must submit their reports to the
Office of Safeguards electronically. Reports
must be sent encrypted via IRS approved
encryption techniques. The email address
for all reports is:

State Welfare Agencies and the
DC Retirement Board should submit their
reports for the processing year (September
1 through August 31) by September 30.

[email protected].
Federal Agencies should submit their
reports for the calendar year by January 31
of the following year.
Law Enforcement Agencies receiving
Form 8300, under IRC Section 6103(l)(15),
information should submit their reports for
the processing year (May 1 through April
30) by June 30.

Page 36

State Child Support Enforcement
Agencies should submit their reports for the
calendar year by (March 31 through
February 28) by March 31.
Note: Educational institutions receiving FTI
under IRC Section 6103(m)(4)(B) should
send reports to the oversight agency.

DISPOSING FEDERAL TAX INFORMATION IRC 6103(p)(4)(F)
8.1 General
Users of FTI are required by IRC Section
6103(p)(4)(F) to take certain actions after
using Federal tax information to protect its
confidentiality (see Exhibit 3, Sec 6103(p)(4)
Safeguards, and Exhibit 5, IRC Sec. 7431
Civil Damages for Unauthorized Disclosures
of Returns and Return Information). Agency
officials and employees either will return the
information (including any copies made) to
the office that it was originally obtained or
make the information “undisclosable.”
Agencies will include in their annual report
(SAR) a description of the procedures used.
8.2 Returning IRS Information to the
Source
Agencies electing to return IRS information,
must use a receipt process and ensure that
the confidentiality is protected at all times
during transport (see Section 4.5, Handling
and Transporting Federal Tax Information).
8.3 Destruction Methods
FTI furnished to the user and any material
generated therefrom, such as extra copies,
photo impressions, computer printouts,
carbon paper, notes, stenographic notes,
and work papers should be destroyed by
burning, mulching, pulping, shredding, or
disintegrating.
The following precautions should be
observed when destroying FTI:
•

Burning precautions: The material is to
be burned in either an incinerator that
produces enough heat to burn the entire
bundle or the bundle should be
separated to ensure that all pages are
consumed.

•

Shredding precautions: To make
reconstruction more difficult, the paper
should be inserted so that lines of print
Page 37

SECTION 8.0

are perpendicular to the cutting line and not
maintain small amounts of shredded paper.
The paper should be shredded to effect
5/16 inch wide or smaller strips; microfilm
and microfiche should be shredded to effect
a 1/35- inch by 3/8- inch strips. If shredding
is part of the overall destruction of FTI,
strips can in effect be set at the industry
standard (currently ½"). However, when
deviating from IRS’ 5/16" requirement, FTI
as long as it is in this condition (i.e., strips
larger than 5/16"), must be safeguarded
until it reaches the stage where it is
rendered unreadable.
•

Pulping of data should be accomplished
only after material has been shredded.

Note: NIST SP 800-088, Guidelines for
Media Sanitization, contains supplemental
information for media disposal.
8.4 Other Precautions
FTI must never be disclosed to an agency’s
agents or contractors during disposal unless
authorized by the Internal Revenue Code.
Generally, destruction should be witnessed
by an agency employee. The Department of
Justice, State tax agencies, and the Social
Security Administration may be exempted
from the requirement of having agency
personnel present during destruction by a
contractor, if the contract includes the
safeguard provisions required by the Code
of Treasury Regulations (CTR) 301.6103(n)1. The required safeguard language is
contained in Exhibit 7, Contract Language
for General Services. If this method is used,
it is recommended that periodically the
agency observe the process to ensure
compliance. Destruction of FTI should be
certified by the contractor when agency
participation is not present.
Magnetic tape containing FTI must not be
made available for reuse by other offices or
released for destruction without first being

subjected to electromagnetic erasing. If
reuse is not intended, the tape should be
destroyed by cutting into lengths of 18
inches or less or by burning to effect
complete incineration.
Whenever disk media leaves the physical or
systemic control of the agency for
maintenance, exchange, or other servicing,
any FTI on it must be destroyed by:
•

Completely overwriting all data tracks a
minimum of three times using maximum
current that will not damage or impair
the recording equipment; or

Page 38

•

Running a magnetic strip, of sufficient
length to reach all areas of the disk over
and under each surface a minimum of
three times. If the information cannot be
destroyed as suggested, the disk will be
damaged in an obvious manner to
prevent use in any disk drive unit and
discarded.

Note: Hand tearing, recycling, or burying
information in a landfill are unacceptable
methods of disposal.

RETURN INFORMATION IN STATISTICAL REPORTS IRC 6103(j)

SECTION 9.0

9.1 General

•

IRC Section 6103 authorizes the
disclosure of FTI for use in statistical
reports, for tax administration purposes,
and certain other purposes specified in
IRC Section 6103(j). However, such
statistical reports may only be released
in a form that cannot be associated with,
or otherwise identify, directly or
indirectly, a particular taxpayer.

Statistical tabulations prepared for
geographic areas below the State
level may not be released with cells
containing data from fewer than 10
returns, and

•

Tabulations that would pertain to
specifically identified taxpayers or
that would tend to identify a
particular taxpayer, either directly or
indirectly, may not be released.

Agencies authorized to produce
statistical reports must adhere to the
following guidelines or an equivalent
alternative that has been approved by
the IRS:
•

Access to FTI must be restricted to
authorized personnel;

•

No statistical tabulation may be
released with cells containing data
from fewer than three returns;

9.2 Making a Request
Agencies seeking statistical information
from IRS should make their requests
under IRC 6103(j). The requests should
be addressed to:
Director, Statistics of Income Division
Internal Revenue Service, OS:P:S
1111 Constitution Avenue, NW.
Washington, DC 20224.

Page 39

REPORTING IMPROPER INSPECTIONS OR DISCLOSURES

SECTION 10.0

10.1 General
Upon discovering a possible improper inspection or disclosure of FTI, including breeches
and security incidents, by a Federal employee, a State employee, or any other person,
the individual making the observation or receiving information should contact the office
of the appropriate Special Agent-in-Charge, Treasury Inspector General for Tax
Administration (TIGTA).
Field Division
Atlanta

Chicago

Dallas
Denver

New York

San Francisco
Washington
Special Inquiries and
Inspection

States Served by
Field Division
Alabama, Florida, Georgia,
North Carolina, South
Carolina, Tennessee
Illinois, Indiana, Iowa,
Kentucky, Michigan,
Minnesota, Ohio, North
Dakota, South Dakota,
Wisconsin
Arkansas, Kansas, Louisiana,
Mississippi, Missouri,
Nebraska, Oklahoma, Texas
Alaska, Arizona, Colorado,
Idaho, Montana, New Mexico,
Nevada, Oregon, Utah,
Washington, Wyoming
Connecticut, Maine,
Massachusetts, New
Hampshire, New York, Rhode
Island, Vermont
California, Hawaii

Telephone Number

Delaware, Maryland, New
Jersey, Pennsylvania, Virginia,
Washington DC, West Virginia
Commonwealth of Puerto
Rico, Virgin Islands, Guam,
American Samoa,
Commonwealth of Northern
Mariana Islands, Trust
Territory of the Pacific Islands

(202) 283-3001

(404) 338-7449
(312) 886-0620

(972) 308-1400
(303) 446-1880

(917) 408-5641

(510) 637-2558

(703) 812-1688

Mailing Address:

Treasury Inspector General for Tax Administration
Ben Franklin Station
P.O. Box 589
Washington, DC 20044-0589

Hotline Number:

1-800-366-4484

Web Site:

www.treas.gov/tigta

Page 40

DISCLOSURE TO OTHER PERSONS - 6103(n)
11.1 General
Disclosure of FTI is generally prohibited
unless authorized by statute. Agencies
having access to FTI are not allowed to
make further disclosures of that information
to their agents or to a contractor unless
authorized by statute. The terms agent and
contractor are not synonymous.
Agencies are encouraged to use specific
language in their contractual agreements to
avoid ambivalence or ambiguity.
Note: Absent specific language in the IRC
or where the IRC is silent in authorizing an
agency to make further disclosures, IRS’
position is that further disclosures are
unauthorized.
11.2 Authorized Disclosures Precautions
When disclosure is authorized, the agency
should take certain precautions prior to
engaging a contractor, namely:
•

Has the IRS been given sufficient prior
notice before releasing information to a
contractor?

•

Has the agency been given reasonable
assurance through an on-site visitation
or received a report certifying that all
security standards (physical and
computer) have been addressed?

•

Does the contract requiring the
disclosure of FTI have the appropriate
safeguard language (see Exhibit 7,
Contract Language for General
Services).

Agencies should fully report to the IRS all
disclosures of FTI to contractors in their
SPR. Additional disclosures to contractors
should be reported on the annual SAR.

Page 41

Section 11.0
Engaging a contractor who may have
incidental or inadvertent access to FTI does
not come under these requirements. Only
those contractors whose work will involve
disclosing FTI in performing their duties are
required to address these issues.
11.3 State Tax Officials and State and
Local Law Enforcement Agencies IRC
Section 6103(d)
State taxing authorities are authorized by
statute to disclose information to contractors
for the purpose of, and to the extent
necessary in, administering State tax laws.
However, the IRS, pursuant to Treasury
Regulation 301.6103(n)-1, requires that
agencies notify the IRS prior to executing
any agreement to disclose to such a person
(contractor), but in no event less than 45
days prior to the disclosure of FTI. See
Section 5.4 Access to Federal Tax
Information via State Tax Files or Through
Other Agencies for additional information.
11.4 State and Local Child Support
Enforcement Agencies IRC Section
6103(I)(6)
In general, no officer or employee of any
State and local child support enforcement
agency can make further disclosures of FTI.
However, the Welfare Reform Act of 1998
gave authorization to disclose limited
information to agents or contractors of the
agency for the purpose of, and to the extent
necessary in, establishing and collecting
child support obligations from, and locating
individuals owing such obligations.
The information that may be disclosed to an
agent or a contractor is limited to:
•

the address

•

social security number(s) of an
individual with respect to whom child
support obligations are sought to be
established or enforced, and

•

the amount of any reduction under IRC
Section 6402(c) in any overpayment
otherwise payable to such individual.

Note: Forms 1099 and W-2 information is
not authorized by statute to be disclosed to
contractors under the IRC Section
6103(I)(6) program.
11.5 Federal, State, and Local Welfare
Agencies IRC Section 6103(I)(7)
No officer or employee of any Federal,
State, or local agency administering certain
programs under the Social Security Act, the
Food Stamp Act of 1977, or Title 38, United
States Code, or certain housing assistance
programs is permitted to make further
disclosures of FTI.
Note: Forms 1099 and W-2 information is
not authorized by statute to be disclosed to
contractors under the IRC Section
6103(I)(7) program.
11.6 Deficit Reduction Agencies IRC
Section 6103(I)(10)
Agencies receiving FTI under deficit
reduction IRC Section 6402(c) and IRC

Page 42

Section 6402(d) are prohibited from making
further disclosures to contractors.
11.7 The Center for Medicare and
Medicaid Services IRC Section
6103(l)(12)(C)
The Center for Medicare and Medicaid
Services (CMS) is authorized under IRC
Section 6103(l)(12) to disclose FTI it
receives from SSA to its agents for the
purpose of, and to the extent necessary in,
determining the extent that any Medicare
beneficiary is covered under any group
health plan. A contractual relationship must
exist between CMS and the agent. The
agent, however, is not authorized to make
further disclosures of IRS information.
11.8 Disclosures Under IRC Section
6103(m)(2)
Disclosures to agents of a Federal agency
under IRC Section 6103(m)(2) are
authorized for the purposes of locating
individuals in collecting or compromising a
Federal claim against the taxpayer in
accordance with sections 3711, 3717, and
3718 of Title 31.

Exhibit 1
FEDERAL REGISTER:

PROCEDURES FOR
ADMINISTRATIVE REVIEW OF
A DETERMINATION THAT AN
AUTHORIZED RECIPIENT HAS
FAILED TO SAFEGUARD TAX
RETURNS OR RETURN
INFORMATION AND
PROCEDURES FOR
ADMINISTRATIVE REVIEW OF
A DETERMINATION THAT AN
AUTHORIZED RECIPIENT HAS
FAILED TO SAFEGUARD TAX
RETURNS OR RETURN
INFORMATION
Federal Register / Vol. 71, No. 37 /
Friday, February 24, 2006 / Proposed
Rules 9487

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).

[REG–157271–05]

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).

RIN 1545–BF21

SUPPLEMENTARY INFORMATION:

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

Background

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301

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

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 § 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 43

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.

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:

Drafting Information

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

Federal Register / Vol. 71, No. 37 /
Friday, February 24, 2006 / Rules and
Regulations 9449

recipients) whose receipt of returns and
return information may be suspended or
terminated because they do not

DEPARTMENT OF THE TREASURY

maintain proper safeguards. The
temporary regulations provide guidance
to responsible IRS personnel and
authorized recipients as to these
administrative procedures. The text of
these temporary regulations serves as
the text of the proposed regulations set
forth in the notice of proposed rulemaking on
this subject in the Proposed Rules section of
this issue of the Federal Register.

Internal Revenue Service
26 CFR Part 301
[TD 9252]
RIN 1545–BF22
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.
ACTIONS: Temporary regulations.
SUMMARY: This document contains
temporary regulations regarding
administrative review procedures for
certain government agencies and other
authorized recipients of tax returns or
return information (authorized

DATES: Effective Date: These regulations
are effective February 24, 2006.
Applicability Date: For dates of
applicability, see § 301.6103(p)(7)–1T(e).
FOR FURTHER INFORMATION
CONTACT:
Melinda Fisher, (202) 622–4580 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:

(q); * * *
Par. 2. Section 301.6103(p)(4)–1 is
added to read as follows:
§ 301.6103(p)(4)–1 Procedures relating to
safeguards for returns or return
information.
[The text of proposed § 301.6103(p)(4)–1 is
the same as the text of § 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:
§ 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 § 301.6103(p)(7)–1 is
the same as the text of § 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

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 § 301.6103(p)(7)–1 set forth the
procedures for terminating future
disclosures to these authorized
recipients. These temporary regulations
provide the intermediate review and
termination procedures for all
authorized recipients identified in
section 6103(p)(4).

Background
Under section 6103 of the Internal

Page 44

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 without
appropriate administrative review
procedures. These temporary
regulations set forth procedures to
ensure that authorized recipients
provide the proper security and
protection to returns and return
information.
Explanation of Provisions
There are four basic parts to the
statutory scheme Congress created in
section 6103 of the Code to protect the
confidentiality of tax returns and return
information:
1. The general rule that makes returns
and return information confidential
except as expressly authorized in the
Code;
2. The exceptions to the general rule
detailing permissible disclosures;
3. Technical, administrative, and
physical safeguard provisions to prevent
authorized recipients of returns and
return information from inspecting,
using, or disclosing the returns and
return information in an unauthorized
manner, and accounting, recordkeeping
and reporting requirements that detail
what inspections and disclosures are
made for certain purposes to assist in
oversight; and
4. Criminal penalties for the willful
unauthorized inspection or disclosure of
returns and return information and a
civil cause of action for the taxpayer
whose returns or return information has
been inspected or disclosed in a manner
not authorized by the Code.
Section 6103(p)(4) provides that no
returns or return information may be

disclosed by the IRS to certain
government agencies and other
authorized recipients unless they
establish procedures satisfactory to the
IRS for safeguarding the returns and
return information they receive. These
procedures are set forth in Publication
1075, Tax Information Security
Guidelines for Federal, State and Local
Agencies, which is available at http://
www.irs.gov/formspubs/list. Disclosure
of returns and return information to the
authorized recipients described in
section 6103(p)(4) is conditioned on the
recipient maintaining a secure place for
storing the returns and return
information, restricting access to returns
and return information to persons
whose duty requires access and to
whom disclosure can be made under the
internal revenue laws, providing other
safeguards necessary to keeping the
returns and return information
confidential, reporting to the IRS on the
safeguard procedures, and returning to
the IRS or destroying the returns and
return information upon completion of
use. The IRS reviews, on a regular basis,
safeguards established by authorized
recipients of returns and return
information.
If there are any unauthorized
inspections or disclosures of returns or
return information by authorized
recipients, further disclosures may be
terminated or suspended until the IRS is
satisfied that adequate protective
measures have been taken to prevent a
recurrence of unauthorized inspection
or disclosure. In addition, the IRS may
terminate or suspend disclosure to any
authorized recipient if the IRS
determines that adequate safeguards are
not being maintained.
The Code, in section 6103(p)(4),
(p)(7), and (q) authorizes the IRS to
promulgate regulations to carry out its
statutory safeguard responsibilities.
More specifically, section 6103(p)(7)
requires that the IRS promulgate
regulations establishing procedures for
an administrative review of any
determination by the IRS under section
6103(p)(4) that a State tax agency
authorized to receive returns and return
information under section 6103(d) has
failed to meet the requirements of
section 6103(p)(4). See Tax Reform Act
of 1976, S. Rep. 94–938, 94th Cong., 2d
Sess. 345 (1976). Under current

Page 45

§ 301.6103(p)(7)–1 of the Procedure and
Administration Regulations (26 CFR
Part 301), the IRS has established
procedures whereby State tax agencies
that receive returns and return
information pursuant to section 6103(d)
have an opportunity, prior to a
suspension or termination of disclosure,
to contest a preliminary finding by the
IRS of inadequate safeguards or
unauthorized disclosure, or to establish
that a State tax agency has taken steps
to prevent a recurrence of the violation.
This document adopts temporary
regulations that extend the
administrative review procedure
applicable to State tax agencies to any
authorized recipient specified in section
6103(p)(4) with respect to which the IRS
has made a preliminary finding of
inadequate safeguards or unauthorized
disclosure. The temporary regulations
also apply this administrative review
procedure to any such authorized
recipient with respect to which the IRS
has made a preliminary finding as to
unauthorized inspection of returns or
return information. The temporary
regulations treat unauthorized
inspection in the same manner as
unauthorized disclosure because both
unauthorized acts are proscribed by the
Code. In particular, section 7213A,
enacted by the Taxpayer Browsing
Protection Act of 1997, Public Law 105–
35 (111 Stat. 1104), specifically treats
the unauthorized inspection of a return
or return information as a misdemeanor.
Special Analyses
It has been determined that these
temporary regulations are not a
significant regulatory action as defined
in Executive Order 12866. Therefore, a
regulatory assessment is not required.
Pursuant to 5 U.S.C. 553(b)(B) it has
been determined that prior notice and
public comment on these temporary
regulations are unnecessary and
contrary to the public interest. These
regulations do not impose any burdens
or obligations on any person, but
instead provide certain rights of
administrative review. Moreover, these
regulations are necessary to protect
taxpayer confidentiality and the
integrity of return information. For the
same reasons, it has been determined
pursuant to 5 U.S.C. 553(d)(3) that good
cause exists to dispense with a delayed
effective date for these regulations. For

applicability of the Regulatory
Flexibility Act (5 U.S.C. chapter 6),
please refer to the cross-reference notice
of proposed rulemaking published
elsewhere in this issue of the Federal
Register. Pursuant to section 7805(f) of
the Code, these temporary regulations
will be submitted to the Chief Counsel
for Advocacy of the Small Business
Administration for comment on their
impact on small business.
Drafting Information
The principal author of these
temporary 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.
Amendments to the Regulations
Accordingly, 26 CFR Part 301 is
amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation
for part 301 is amended by adding an
entry in numerical order to read, in part,
as follows:
Authority: 26 U.S.C. 7805 * * *
Sections 301.6103(p)(4)–1 and
301.6103(p)(7)–1T also issued under 26
U.S.C. 6103(p)(4) and (7) and (q), * * *
Par. 2. Section 301.6103(p)(4)–1T is
added to read as follows:
§ 301.6103(p)(4)–1T Procedures
relating to safeguards for returns or
return information
(temporary).
For security guidelines and other
safeguards for protecting returns and
return information, see guidance
published by the Internal Revenue
Service. For procedures for
administrative review of a
determination that an authorized
recipient has failed to safeguard returns
or return information, see
§ 301.6103(p)(7)–1T.
§ 301.6103(p)(7)–1 [Removed]
Par. 3. Section 301.6103(p)(7)–1 is

(b) of this section. The appeal shall be
made directly to the Commissioner.

removed.
Par. 4. Section 301.6103(p)(7)–1T is
added to read as follows:
§ 301.6103(p)(7)–1T Procedures for
administrative review of a determination
that an authorized recipient has failed to
safeguard returns or return information
(temporary).
(a) In general. Notwithstanding any
section of the Internal Revenue Code,
the Internal Revenue Service (IRS) may
terminate or suspend disclosure of
returns and return information to any
authorized recipient specified in
subsection (p)(4) of section 6103, if the
IRS makes a determination that:
(1) The authorized recipient has
allowed an unauthorized inspection or
disclosure of returns or return
information and that the authorized
recipient has not taken adequate
corrective action to prevent the
recurrence of an unauthorized
inspection or disclosure, or
(2) The authorized recipient does not
satisfactorily maintain the safeguards
prescribed by section 6103(p)(4), and
has made no adequate plan to improve
its system to maintain the safeguards
satisfactorily.
(b) Notice of IRS’s intention to
terminate or suspend disclosure. Prior
to terminating or suspending authorized
disclosures, the IRS will notify the
authorized recipient in writing of the
IRS’s preliminary determination and of
the IRS’s intention to discontinue
disclosure of returns and return
information to the authorized recipient.
Upon so notifying the authorized
recipient, the IRS, if it determines that
tax administration otherwise would be
seriously impaired, may suspend further
disclosures of returns and return
information to the authorized recipient
pending a final determination by the
Commissioner or a Deputy
Commissioner described in paragraph
(d)(2) of this section.
(c) Authorized recipient’s right to
appeal. An authorized recipient shall
have 30 days from the date of receipt of
a notice described in paragraph (b) of
this section to appeal the preliminary
determination described in paragraph

Page 46

(d) Procedures for administrative
review. (1) To appeal a preliminary
determination described in paragraph
(b) of this section, the authorized
recipient shall send a written request for
a conference to: Commissioner of
Internal Revenue (Attention:
SE:S:CLD:GLD), 1111 Constitution
Avenue, NW., Washington, DC 20224.
The request must include a complete
description of the authorized recipient’s
present system of safeguarding returns
or return information, as well as a
complete description of its practices
with respect to the inspection,
disclosure, and use of the returns or
return information it (including any
authorized contractors or agents)
receives under the Internal Revenue
Code. The request then must state the
reason or reasons the authorized
recipient believes that such system, or
practice, including improvements, if
any, to such system or practice expected
to be made in the near future, is or will
be adequate to safeguard returns or
return information.
(2) Within 45 days of the receipt of
the request made in accordance with the
provisions of paragraph (d)(1) of this
section, the Commissioner or Deputy
Commissioner personally will hold a
conference with representatives of the
authorized recipient, after which the
Commissioner or Deputy Commissioner
will make a final determination with
respect to the appeal.
(e) Effective date. This section is
applicable to all authorized recipients of
returns and return information that are
subject to the safeguard requirements set
forth in section 6103(p)(4) on or after
February 23, 2006.
Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement.
Approved: February 11, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary of the
Treasury (Tax Policy).
[FR Doc. 06–1713 Filed 2–23–06; 8:45 am]
BILLING CODE 4830–01–U

EXHIBIT 2

IRC SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF
RETURNS AND RETURN INFORMATION.
(a) General rule
Returns and return information shall be confidential, and except as authorized by this
title—
(1) no officer or employee of the United States,
(2) no officer or employee of any State, any local law enforcement agency receiving
information under subsection (i)(7)(A), any local child support enforcement agency, or
any local agency administering a program listed in subsection (l)(7)(D) who has or had
access to returns or return information under this section, and
(3) no other person (or officer or employee thereof) who has or had access to returns or
return information under subsection (e)(1)(D)(iii), paragraph (6), (12), (16), (19), or (20)
of subsection (l), paragraph (2) or (4)(B) of subsection (m), or subsection (n),
shall disclose any return or return information obtained by him in any manner in
connection with his service as such an officer or an employee or otherwise or under the
provisions of this section. For purposes of this subsection, the term “officer or employee”
includes a former officer or employee.
(b) Definitions
For purposes of this section—
(1) Return
The term “return” means any tax or information return, declaration of estimated tax, or
claim for refund required by, or provided for or permitted under, the provisions of this title
which is filed with the Secretary by, on behalf of, or with respect to any person, and any
amendment or supplement thereto, including supporting schedules, attachments, or lists
which are supplemental to, or part of, the return so filed.
(2) Return information
The term “return information” means—
(A) a taxpayer’s identity, the nature, source, or amount of his income, payments,
receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax
withheld, deficiencies, overassessments, or tax payments, whether the taxpayer’s return
was, is being, or will be examined or subject to other investigation or processing, or any
other data, received by, recorded by, prepared by, furnished to, or collected by the
Secretary with respect to a return or with respect to the determination of the existence,
or possible existence, of liability (or the amount thereof) of any person under this title for
any tax, penalty, interest, fine, forfeiture, or other imposition, or offense,
(B) any part of any written determination or any background file document relating to
such written determination (as such terms are defined in section 6110 (b)) which is not
open to public inspection under section 6110,
(C) any advance pricing agreement entered into by a taxpayer and the Secretary and
any background information related to such agreement or any application for an advance
pricing agreement, and
(D) any agreement under section 7121, and any similar agreement, and any background
information related to such an agreement or request for such an agreement,
but such term does not include data in a form which cannot be associated with, or
otherwise identify, directly or indirectly, a particular taxpayer. Nothing in the preceding
sentence, or in any other provision of law, shall be construed to require the disclosure of
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standards used or to be used for the selection of returns for examination, or data used or
to be used for determining such standards, if the Secretary determines that such
disclosure will seriously impair assessment, collection, or enforcement under the internal
revenue laws.
(3) Taxpayer return information
The term “taxpayer return information” means return information as defined in paragraph
(2) which is filed with, or furnished to, the Secretary by or on behalf of the taxpayer to
whom such return information relates.
(4) Tax administration
The term “tax administration”—
(A) means—
(i) the administration, management, conduct, direction, and supervision of the execution
and application of the internal revenue laws or related statutes (or equivalent laws and
statutes of a State) and tax conventions to which the United States is a party, and
(ii) the development and formulation of Federal tax policy relating to existing or proposed
internal revenue laws, related statutes, and tax conventions, and
(B) includes assessment, collection, enforcement, litigation, publication, and statistical
gathering functions under such laws, statutes, or conventions.
(5) State
The term “State” means—
(A) any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the
Virgin Islands, the Canal Zone, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands, and
(B) for purposes of subsections (a)(2), (b)(4), (d)(1), (h)(4), and (p) any municipality—
(i) with a population in excess of 250,000 (as determined under the most recent
decennial United States census data available),
(ii) which imposes a tax on income or wages, and
(iii) with which the Secretary (in his sole discretion) has entered into an agreement
regarding disclosure.
(6) Taxpayer identity
The term “taxpayer identity” means the name of a person with respect to whom a return
is filed, his mailing address, his taxpayer identifying number (as described in section
6109), or a combination thereof.
(7) Inspection
The terms “inspected” and “inspection” mean any examination of a return or return
information.
(8) Disclosure
The term “disclosure” means the making known to any person in any manner whatever a
return or return information.
(9) Federal agency
The term “Federal agency” means an agency within the meaning of section 551 (1) of
title 5, United States Code.
(10) Chief executive officer
The term “chief executive officer” means, with respect to any municipality, any elected
official and the chief official (even if not elected) of such municipality
(11) Terrorist incident, threat, or activity: The term “terrorist incident, threat, or activity”
means an incident, threat, or activity involving an act of domestic terrorism (as defined in
section 2331 (5) of title 18, United States Code) or international terrorism (as defined in
section 2331(1) of such title).

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EXHIBIT 3

SEC. 6103(p)(4) SAFEGUARDS
Any Federal agency described in subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or (7), (j)(1),
(2), or (5), (k)(8), (l)(1), (2), (3), (5), (10), (11), (13), (14), or (17), or (o)(1), the General
Accounting Office, the Congressional Budget Office, or any agency, body, or
commission described in subsection (d), (i)(3)(B)(i) or (7)(A)(ii), or (l)(6), (7), (8), (9),
(12), (15), or (16) or any other person described in subsection (l)(16), (17), (19), or (20)
shall, as a condition for receiving returns or return information—
(A) establish and maintain, to the satisfaction of the Secretary, a permanent system of
standardized records with respect to any request, the reason for such request, and the
date of such request made by or of it and any disclosure of return or return information
made by or to it;
(B) establish and maintain, to the satisfaction of the Secretary, a secure area or place in
which such returns or return information shall be stored;
(C) restrict, to the satisfaction of the Secretary, access to the returns or return
information only to persons whose duties or responsibilities require access and to whom
disclosure may be made under the provisions of this title;
(D) provide such other safeguards which the Secretary determines (and which he
prescribes in regulations) to be necessary or appropriate to protect the confidentiality of
the returns or return information;
(E) furnish a report to the Secretary, at such time and containing such information as the
Secretary may prescribe, which describes the procedures established and utilized by
such agency, body, or commission, the General Accounting Office, or the Congressional
Budget Office for ensuring the confidentiality of returns and return information required
by this paragraph; and
(F) upon completion of use of such returns or return information—
(i) in the case of an agency, body, or commission described in subsection (d), (i)(3)(B)(i),
or (l)(6), (7), (8), (9), or (16), or any other person described in subsection (l)(16), (17),
(19), or (20) return to the Secretary such returns or return information (along with any
copies made therefrom) or make such returns or return information undisclosable in any
manner and furnish a written report to the Secretary describing such manner,
(ii) in the case of an agency described in subsections [5] (h)(2), (h)(5), (i)(1), (2), (3), (5)
or (7), (j)(1), (2), or (5), (k)(8), (l)(1), (2), (3), (5), (10), (11), (12), (13), (14), (15), or (17),
or (o)(1),,[6] the General Accounting Office, or the Congressional Budget Office, either—
(I) return to the Secretary such returns or return information (along with any copies made
therefrom),
(II) otherwise make such returns or return information undisclosable, or
(III) to the extent not so returned or made undisclosable, ensure that the conditions of
subparagraphs (A), (B), (C), (D), and (E) of this paragraph continue to be met with
respect to such returns or return information, and
(iii) in the case of the Department of Health and Human Services for purposes of
subsection (m)(6), destroy all such return information upon completion of its use in
providing the notification for which the information was obtained, so as to make such
information undisclosable;
except that the conditions of subparagraphs (A), (B), (C), (D), and (E) shall cease to
apply with respect to any return or return information if, and to the extent that, such
return or return information is disclosed in the course of any judicial or administrative
proceeding and made a part of the public record thereof. If the Secretary determines that
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any such agency, body, or commission, including an agency or any other person
described in subsection (l)(16), (17), (19), or (20), or the General Accounting Office or
the Congressional Budget Office has failed to, or does not, meet the requirements of this
paragraph, he may, after any proceedings for review established under paragraph (7),
take such actions as are necessary to ensure such requirements are met, including
refusing to disclose returns or return information to such agency, body, or commission,
including an agency or any other person described in subsection (l)(16), (17), (19), or
(20), or the General Accounting Office or the Congressional Budget Office until he
determines that such requirements have been or will be met. In the case of any agency
which receives any mailing address under paragraph (2), (4), (6), or (7) of subsection
(m) and which discloses any such mailing address to any agent or which receives any
information under paragraph (6)(A), (12)(B), or (16) of subsection (l) and which discloses
any such information to any agent, or any person including an agent described in
subsection (l)(16), this paragraph shall apply to such agency and each such agent or
other person (except that, in the case of an agent, or any person including an agent
described in subsection (l)(16), any report to the Secretary or other action with respect to
the Secretary shall be made or taken through such agency). For purposes of applying
this paragraph in any case to which subsection (m)(6) applies, the term “return
information” includes related blood donor records (as defined in section 1141(h)(2) of the
Social Security Act).

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Exhibit 4
NIST Moderate Risk Controls for Federal Information Systems
Note: Missing or asterisked controls are not required for Publication 1075 compliance.
SECURITY CONTROLS AND ENHANCEMENTS: MODERATE-IMPACT
INFORMATION SYSTEMS
FAMILY: ACCESS CONTROL CLASS: TECHNICAL
AC-1 ACCESS CONTROL POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, access control policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the access control policy and associated access controls.
AC-2 ACCOUNT MANAGEMENT
Control: The organization manages information system accounts, including establishing,
activating, modifying, reviewing, disabling, and removing accounts. The organization
reviews information system accounts [Assignment: organization-defined frequency, at
least annually].
AC-3 ACCESS ENFORCEMENT
Control: The information system enforces assigned authorizations for controlling access
to the system in accordance with applicable policy.
AC-4 INFORMATION FLOW ENFORCEMENT
Control: The information system enforces assigned authorizations for controlling the flow
of information within the system and between interconnected systems in accordance
with applicable policy.
AC-5 SEPARATION OF DUTIES
Control: The information system enforces separation of duties through assigned access
authorizations.
AC-6 LEAST PRIVILEGE
Control: The information system enforces the most restrictive set of rights/privileges or
accesses needed by users (or processes acting on behalf of users) for the performance
of specified tasks.
AC-7 UNSUCCESSFUL LOGIN ATTEMPTS
Control: The information system enforces a limit of [Assignment: organization-defined
number] consecutive invalid access attempts by a user during a [Assignment:
organization-defined time period] time period. The information system automatically
[Selection: locks the account/node for an [Assignment: organization-defined time period],
delays next login prompt according to Assignment: organization-defined delay
algorithm.]] when the maximum number of unsuccessful attempts is exceeded.
AC-8 SYSTEM USE NOTIFICATION
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Control: The information system displays an approved, system use notification message
before granting system access informing potential users: (i) that the user is accessing a
U.S. Government information system; (ii) that system usage may be monitored,
recorded, and subject to audit; (iii) that unauthorized use of the system is prohibited and
subject to criminal and civil penalties; and (iv) that use of the system indicates consent to
monitoring and recording. The system use notification message provides appropriate
privacy and security notices (based on associated privacy and security policies or
summaries) and remains on the screen until the user takes explicit actions to log on to
the information system.
AC-11 SESSION LOCK
Control: The information system prevents further access to the system by initiating a
session lock after [Assignment: organization-defined time period] of inactivity, and the
session lock remains in effect until the user reestablishes access using appropriate
identification and authentication procedures.
AC-12 SESSION TERMINATION
Control: The information system automatically terminates a remote session after
[Assignment: organization-defined time period] of inactivity.
AC-13 SUPERVISION AND REVIEW — ACCESS CONTROL
Control: The organization supervises and reviews the activities of users with respect to
the enforcement and usage of information system access controls.
AC-14 PERMITTED ACTIONS WITHOUT IDENTIFICATION OR AUTHENTICATION
Control: The organization identifies and documents specific user actions that can be
performed on the information system without identification or authentication.
AC-17 REMOTE ACCESS
Control: The organization authorizes, monitors, and controls all methods of remote
access to the information system.
AC-18 WIRELESS ACCESS RESTRICTIONS
Control: The organization: (i) establishes usage restrictions and implementation
guidance for wireless technologies; and (ii) authorizes, monitors, controls wireless
access to the information system.
AC-19 ACCESS CONTROL FOR PORTABLE AND MOBILE DEVICES
Control: The organization: (i) establishes usage restrictions and implementation
guidance for organization-controlled portable and mobile devices; and (ii) authorizes,
monitors, and controls device access to organizational information systems.
AC-20 USE OF EXTERNAL INFORMATION SYSTEMS
Control: The organization establishes terms and conditions for authorized individuals to:
(i) access the information system from an external information system; and (ii) process,
store, and/or transmit organization-controlled information using an external information
system.
FAMILY: AWARENESS AND TRAINING CLASS: OPERATIONAL
AT-1 SECURITY AWARENESS AND TRAINING POLICY AND PROCEDURES

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Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, security awareness and training policy that addresses purpose,
scope, roles, responsibilities, management commitment, coordination among
organizational entities, and compliance; and (ii) formal, documented procedures to
facilitate the implementation of the security awareness and training policy and
associated security awareness and training controls.
AT-2 SECURITY AWARENESS
Control: The organization provides basic security awareness training to all information
system users (including managers and senior executives) before authorizing access to
the system, when required by system changes, and [Assignment: organization-defined
frequency, at least annually] thereafter.
AT-3 SECURITY TRAINING
Control: The organization identifies personnel that have significant information system
security roles and responsibilities during the system development life cycle, documents
those roles and responsibilities, and provides appropriate information system security
training: (i) before authorizing access to the system or performing assigned duties; (ii)
when required by system changes; and (iii) [Assignment: organization-defined
frequency] thereafter.
AT-4 SECURITY TRAINING RECORDS
Control: The organization documents and monitors individual information system
security training activities including basic security awareness training and specific
information system security training.
FAMILY: AUDIT AND ACCOUNTABILITY CLASS: TECHNICAL
AU-1 AUDIT AND ACCOUNTABILITY POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, audit and accountability policy that addresses purpose, scope,
roles, responsibilities, management commitment, coordination among organizational
entities, and compliance; and (ii) formal, documented procedures to facilitate the
implementation of the audit and accountability policy and associated audit and
accountability controls.
AU-2 AUDITABLE EVENTS
Control: The information system generates audit records for the following events:
[Assignment: organization-defined auditable events].
AU-3 CONTENT OF AUDIT RECORDS
Control: The information system produces audit records that contain sufficient
information to establish what events occurred, the sources of the events, and the
outcomes of the events.
AU-4 AUDIT STORAGE CAPACITY
Control: The organization allocates sufficient audit record storage capacity and
configures auditing to reduce the likelihood of such capacity being exceeded.
AU-5 RESPONSE TO AUDIT PROCESSING FAILURES
Control: The information system alerts appropriate organizational officials in the event of
an audit processing failure and takes the following additional actions: [Assignment:
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organization-defined actions to be taken (e.g., shut down information system, overwrite
oldest audit records, stop generating audit records)].
AU-6 AUDIT MONITORING, ANALYSIS, AND REPORTING
Control: The organization regularly reviews/analyzes information system audit records
for indications of inappropriate or unusual activity, investigates suspicious activity or
suspected violations, reports findings to appropriate officials, and takes necessary
actions.
AU-7 AUDIT REDUCTION AND REPORT GENERATION
Control: The information system provides an audit reduction and report generation
capability.
AU-8 TIME STAMPS
Control: The information system provides time stamps for use in audit record generation.
AU-9 PROTECTION OF AUDIT INFORMATION
Control: The information system protects audit information and audit tools from
unauthorized access, modification, and deletion.
AU-11 AUDIT RECORD RETENTION
Control: The organization retains audit records for [Assignment: organization-defined
time period] to provide support for after-the-fact investigations of security incidents and
to meet regulatory and organizational information retention requirements.
FAMILY: CERTIFICATION, ACCREDITATION, AND SECURITY CLASS:
MANAGEMENT
ASSESSMENTS
CA-1 CERTIFICATION, ACCREDITATION, AND SECURITY ASSESSMENT POLICIES
AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i)
formal, documented, security assessment and certification and accreditation policies that
address purpose, scope, roles, responsibilities, management commitment, coordination
among organizational entities, and compliance; and (ii) formal, documented procedures
to facilitate the implementation of the security assessment and certification and
accreditation policies and associated assessment, certification, and accreditation
controls.
CA-2 SECURITY ASSESSMENTS
Control: The organization conducts an assessment of the security controls in the
information system [Assignment: organization-defined frequency, at least annually] to
determine the extent to which the controls are implemented correctly, operating as
intended, and producing the desired outcome with respect to meeting the security
requirements for the system.
CA-3 INFORMATION SYSTEM CONNECTIONS
Control: The organization authorizes all connections from the information system to
other information systems outside of the accreditation boundary through the use of
system connection agreements and monitors/controls the system connections on an
ongoing basis.
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CA-4 SECURITY CERTIFICATION
Control: The organization conducts an assessment of the security controls in the
information system to determine the extent to which the controls are implemented
correctly, operating as intended, and producing the desired outcome with respect to
meeting the security requirements for the system.
CA-5 PLAN OF ACTION AND MILESTONES
Control: The organization develops and updates [Assignment: organization-defined
frequency], a plan of action and milestones for the information system that documents
the organization’s planned, implemented, and evaluated remedial actions to correct
deficiencies noted during the assessment of the security controls and to reduce or
eliminate known vulnerabilities in the system.
CA-6 SECURITY ACCREDITATION
Control: The organization authorizes (i.e., accredits) the information system for
processing before operations and updates the authorization [Assignment: organizationdefined frequency, at least every three years] or when there is a significant change to
the system. A senior organizational official signs and approves the security accreditation.
CA-7 CONTINUOUS MONITORING
Control: The organization monitors the security controls in the information system on an
ongoing basis.
FAMILY: CONFIGURATION MANAGEMENT CLASS: OPERATIONAL
CM-1 CONFIGURATION MANAGEMENT POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, configuration management policy that addresses purpose, scope,
roles, responsibilities, management commitment, coordination among organizational
entities, and compliance; and (ii) formal, documented procedures to facilitate the
implementation of the configuration management policy and associated configuration
management controls.
CM-2 BASELINE CONFIGURATION
Control: The organization develops, documents, and maintains a current baseline
configuration of the information system.
CM-3 CONFIGURATION CHANGE CONTROL
Control: The organization authorizes, documents, and controls changes to the
information system.
CM-4 MONITORING CONFIGURATION CHANGES
Control: The organization monitors changes to the information system conducting
security impact analyses to determine the effects of the changes.
CM-5 ACCESS RESTRICTIONS FOR CHANGE
Control: The organization: (i) approves individual access privileges and enforces
physical and logical access restrictions associated with changes to the information
system; and (ii) generates, retains, and reviews records reflecting all such changes.
CM-6 CONFIGURATION SETTINGS
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Control: The organization: (i) establishes mandatory configuration settings for
information technology products employed within the information system; (ii) configures
the security settings of information technology products to the most restrictive mode
consistent with operational requirements; (iii) documents the configuration settings; and
(iv) enforces the configuration settings in all components of the information system.
CM-7 LEAST FUNCTIONALITY
Control: The organization configures the information system to provide only essential
capabilities and specifically prohibits and/or restricts the use of the following functions,
ports, protocols, and/or services: [Assignment: organization-defined list of prohibited
and/or restricted functions, ports, protocols, and/or services].
CM-8 INFORMATION SYSTEM COMPONENT INVENTORY
Control: The organization develops, documents, and maintains a current inventory of the
components of the information system and relevant ownership information.
FAMILY: CONTINGENCY PLANNING CLASS: OPERATIONAL
CP-1 CONTINGENCY PLANNING POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, contingency planning policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the contingency planning policy and associated contingency planning controls.
CP-2 CONTINGENCY PLAN
Control: The organization develops and implements a contingency plan for the
information system addressing contingency roles, responsibilities, assigned individuals
with contact information, and activities associated with restoring the system after a
disruption or failure. Designated officials within the organization review and approve the
contingency plan and distribute copies of the plan to key contingency personnel.
*CP-3 CONTINGENCY TRAINING
Control: The organization trains personnel in their contingency roles and responsibilities
with respect to the information system and provides refresher training [Assignment:
organization-defined frequency, at least annually].
CP-4 CONTINGENCY PLAN TESTING AND EXERCISES
Control: The organization: (i) tests and/or exercises the contingency plan for the
information system [Assignment: organization-defined frequency, at least annually] using
[Assignment: organization-defined tests and/or exercises] to determine the plan’s
effectiveness and the organization’s readiness to execute the plan; and (ii) reviews the
contingency plan test/exercise results and initiates corrective actions.
CP-5 CONTINGENCY PLAN UPDATE
Control: The organization reviews the contingency plan for the information system
[Assignment: organization-defined frequency, at least annually] and revises the plan to
address system/organizational changes or problems encountered during plan
implementation, execution, or testing.
CP-6 ALTERNATE STORAGE SITE

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Control: The organization identifies an alternate storage site and initiates necessary
agreements to permit the storage of information system backup information.
CP-7 ALTERNATE PROCESSING SITE
Control: The organization identifies an alternate processing site and initiates necessary
agreements to permit the resumption of information system operations for critical
mission/business functions within [Assignment: organization-defined time period] when
the primary processing capabilities are unavailable.
*CP-8 TELECOMMUNICATIONS SERVICES
Control: The organization identifies primary and alternate telecommunications services
to support the information system and initiates necessary agreements to permit the
resumption of system operations for critical mission/business functions within
[Assignment: organization-defined time period] when the primary telecommunications
capabilities are unavailable.
*CP-9 INFORMATION SYSTEM BACKUP
Control: The organization conducts backups of user-level and system-level information
(including system state information) contained in the information system [Assignment:
organization-defined frequency] and protects backup information at the storage location.
*CP-10 INFORMATION SYSTEM RECOVERY AND RECONSTITUTION
Control: The organization employs mechanisms with supporting procedures to allow the
information system to be recovered and reconstituted to a known secure state after a
disruption or failure.
FAMILY: IDENTIFICATION AND AUTHENTICATION CLASS: TECHNICAL
IA-1 IDENTIFICATION AND AUTHENTICATION POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, identification and authentication policy that addresses purpose,
scope, roles, responsibilities, management commitment, coordination among
organizational entities, and compliance; and (ii) formal, documented procedures to
facilitate the implementation of the identification and authentication policy and
associated identification and authentication controls.
IA-2 USER IDENTIFICATION AND AUTHENTICATION
Control: The information system uniquely identifies and authenticates users (or
processes acting on behalf of users).
IA-3 DEVICE IDENTIFICATION AND AUTHENTICATION
Control: The information system identifies and authenticates specific devices before
establishing a connection.
IA-4 IDENTIFIER MANAGEMENT
Control: The organization manages user identifiers by: (i) uniquely identifying each user;
(ii) verifying the identity of each user; (iii) receiving authorization to issue a user identifier
from an appropriate organization official; (iv) issuing the user identifier to the intended
party; (v) disabling the user identifier after [Assignment: organization-defined time
period] of inactivity; and (vi) archiving user identifiers.
IA-5 AUTHENTICATOR MANAGEMENT
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Control: The organization manages information system authenticators by: (i) defining
initial authenticator content; (ii) establishing administrative procedures for initial
authenticator distribution, for lost/compromised, or damaged authenticators, and for
revoking authenticators; (iii) changing default authenticators upon information system
installation; and (iv) changing/refreshing authenticators periodically.
IA-6 AUTHENTICATOR FEEDBACK
Control: The information system obscures feedback of authentication information during
the authentication process to protect the information from possible exploitation/use by
unauthorized individuals.
IA-7 CRYPTOGRAPHIC MODULE AUTHENTICATION
Control: The information system employs authentication methods that meet the
requirements of applicable laws, Executive Orders, directives, policies, regulations,
standards, and guidance for authentication to a cryptographic module.
FAMILY: INCIDENT RESPONSE CLASS: OPERATIONAL
IR-1 INCIDENT RESPONSE POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, incident response policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the incident response policy and associated incident response controls.
IR-2 INCIDENT RESPONSE TRAINING
Control: The organization trains personnel in their incident response roles and
responsibilities with respect to the information system and provides refresher training
[Assignment: organization-defined frequency, at least annually].
IR-3 INCIDENT RESPONSE TESTING AND EXERCISES
Control: The organization tests and/or exercises the incident response capability for the
information system [Assignment: organization-defined frequency, at least annually] using
[Assignment: organization-defined tests and/or exercises] to determine the incident
response effectiveness and documents the results.
IR-4 INCIDENT HANDLING
Control: The organization implements an incident handling capability for security
incidents that includes preparation, detection and analysis, containment, eradication,
and recovery.
IR-5 INCIDENT MONITORING
Control: The organization tracks and documents information system security incidents
on an ongoing basis.
IR-6 INCIDENT REPORTING
Control: The organization promptly reports incident information to appropriate
authorities.
IR-7 INCIDENT RESPONSE ASSISTANCE
Control: The organization provides an incident response support resource that offers
advice and assistance to users of the information system for the handling and reporting
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of security incidents. The support resource is an integral part of the organization’s
incident response capability.
FAMILY: MAINTENANCE CLASS: OPERATIONAL
MA-1 SYSTEM MAINTENANCE POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, information system maintenance policy that addresses purpose,
scope, roles, responsibilities, management commitment, coordination among
organizational entities, and compliance; and (ii) formal, documented procedures to
facilitate the implementation of the information system maintenance policy and
associated system maintenance controls.
MA-2 CONTROLLED MAINTENANCE
Control: The organization schedules, performs, documents, and reviews records of
routine preventative and regular maintenance (including repairs) on the components of
the information system in accordance with manufacturer or vendor specifications and/or
organizational requirements.
MA-3 MAINTENANCE TOOLS
Control: The organization approves, controls, and monitors the use of information
system maintenance tools and maintains the tools on an ongoing basis.
MA-4 REMOTE MAINTENANCE
Control: The organization authorizes, monitors, and controls any remotely executed
maintenance and diagnostic activities, if employed.
MA-5 MAINTENANCE PERSONNEL
Control: The organization allows only authorized personnel to perform maintenance on
the information system.
*MA-6 TIMELY MAINTENANCE
Control: The organization obtains maintenance support and spare parts for [Assignment:
organization-defined list of key information system components] within [Assignment:
organization-defined time period] of failure.
FAMILY: MEDIA PROTECTION CLASS: OPERATIONAL
MP-1 MEDIA PROTECTION POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, media protection policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the media protection policy and associated media protection controls.
MP-2 MEDIA ACCESS
Control: The organization restricts access to information system media to authorized
individuals.
MP-4 MEDIA STORAGE
Control: The organization physically controls and securely stores information system
media within controlled areas.
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MP-5 MEDIA TRANSPORT
Control: The organization protects and controls information system media during
transport outside of controlled areas and restricts the activities associated with transport
of such media to authorized personnel.
MP-6 MEDIA SANITIZATION AND DISPOSAL
Control: The organization sanitizes information system media, both digital and nondigital, prior to disposal or release for reuse.
FAMILY: PHYSICAL AND ENVIRONMENTAL PROTECTION CLASS: OPERATIONAL
PE-1 PHYSICAL AND ENVIRONMENTAL PROTECTION POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, physical and environmental protection policy that addresses
purpose, scope, roles, responsibilities, management commitment, coordination among
organizational entities, and compliance; and (ii) formal, documented procedures to
facilitate the implementation of the physical and environmental protection policy and
associated physical and environmental protection controls.
PE-2 PHYSICAL ACCESS AUTHORIZATIONS
Control: The organization develops and keeps current a list of personnel with authorized
access to the facility where the information system resides (except for those areas within
the facility officially designated as publicly accessible) and issues appropriate
authorization credentials. Designated officials within the organization review and
approve the access list and authorization credentials [Assignment: organization-defined
frequency, at least annually].
PE-3 PHYSICAL ACCESS CONTROL
Control: The organization controls all physical access points (including designated
entry/exit points) to the facility where the information system resides (except for those
areas within the facility officially designated as publicly accessible) and verifies individual
access authorizations before granting access to the facility. The organization controls
access to areas officially designated as publicly accessible, as appropriate, in
accordance with the organization’s assessment of risk.
PE-5 ACCESS CONTROL FOR DISPLAY MEDIUM
Control: The organization controls physical access to information system devices that
display information to prevent unauthorized individuals from observing the display
output.
PE-6 MONITORING PHYSICAL ACCESS
Control: The organization monitors physical access to the information system to detect
and respond to physical security incidents.
PE-7 VISITOR CONTROL
Control: The organization controls physical access to the information system by
authenticating visitors before authorizing access to the facility where the information
system resides other than areas designated as publicly accessible.
PE-8 ACCESS RECORDS

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Control: The organization maintains visitor access records to the facility where the
information system resides (except for those areas within the facility officially designated
as publicly accessible) that includes: (i) name and organization of the person visiting; (ii)
signature of the visitor; (iii) form of identification; (iv) date of access; (v) time of entry and
departure; (vi) purpose of visit; and (vii) name and organization of person visited.
Designated officials within the organization review the visitor access records
[Assignment: organization-defined frequency].
*PE-9 POWER EQUIPMENT AND POWER CABLING
Control: The organization protects power equipment and power cabling for the
information system from damage and destruction.
*PE-10 EMERGENCY SHUTOFF
Control: The organization provides, for specific locations within a facility containing
concentrations of information system resources, the capability of shutting off power to
any information system component that may be malfunctioning or threatened without
endangering personnel by requiring them to approach the equipment.
*PE-11 EMERGENCY POWER
Control: The organization provides a short-term uninterruptible power supply to facilitate
an orderly shutdown of the information system in the event of a primary power source
loss.
*PE-12 EMERGENCY LIGHTING
Control: The organization employs and maintains automatic emergency lighting that
activates in the event of a power outage or disruption and that covers emergency exits
and evacuation routes.
*PE-13 FIRE PROTECTION
Control: The organization employs and maintains fire suppression and detection
devices/systems that can be activated in the event of a fire.
*PE-14 TEMPERATURE AND HUMIDITY CONTROLS
Control: The organization regularly maintains, within acceptable levels, and monitors the
temperature and humidity within the facility where the information system resides.
*PE-15 WATER DAMAGE PROTECTION
Control: The organization protects the information system from water damage resulting
from broken plumbing lines or other sources of water leakage by providing master
shutoff valves that are accessible, working properly, and known to key personnel.
PE-16 DELIVERY AND REMOVAL
Control: The organization authorizes and controls information system-related items
entering and exiting the facility and maintains appropriate records of those items.
PE-17 ALTERNATE WORK SITE
Control: The organization employs appropriate management, operational, and technical
information system security controls at alternate work sites.
PE-18 LOCATION OF INFORMATION SYSTEM COMPONENTS

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Control: The organization positions information system components within the facility to
minimize potential damage from physical and environmental hazards and to minimize
the opportunity for unauthorized access.
FAMILY: PLANNING CLASS: MANAGEMENT
PL-1 SECURITY PLANNING POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, security planning policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the security planning policy and associated security planning controls.
PL-2 SYSTEM SECURITY PLAN
Control: The organization develops and implements a security plan for the information
system that provides an overview of the security requirements for the system and a
description of the security controls in place or planned for meeting those requirements.
Designated officials within the organization review and approve the plan.
PL-3 SYSTEM SECURITY PLAN UPDATE
Control: The organization reviews the security plan for the information system
[Assignment: organization-defined frequency, at least annually] and revises the plan to
address system/organizational changes or problems identified during plan
implementation or security control assessments.
PL-4 RULES OF BEHAVIOR
Control: The organization establishes and makes readily available to all information
system users a set of rules that describes their responsibilities and expected behavior
with regard to information and information system usage. The organization receives
signed acknowledgement from users indicating that they have read, understand, and
agree to abide by the rules of behavior, before authorizing access to the information
system and its resident information.
*PL-5 PRIVACY IMPACT ASSESSMENT
Control: The organization conducts a privacy impact assessment on the information
system in accordance with OMB policy.
PL-6 SECURITY-RELATED ACTIVITY PLANNING
Control: The organization plans and coordinates security-related activities affecting the
information system before conducting such activities in order to reduce the impact on
organizational operations (i.e., mission, functions, image, and reputation), organizational
assets, and individuals.
FAMILY: PERSONNEL SECURITY CLASS: OPERATIONAL
PS-1 PERSONNEL SECURITY POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, personnel security policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the personnel security policy and associated personnel security controls.
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PS-2 POSITION CATEGORIZATION
Control: The organization assigns a risk designation to all positions and establishes
screening criteria for individuals filling those positions. The organization reviews and
revises position risk designations [Assignment: organization-defined frequency].
PS-3 PERSONNEL SCREENING
Control: The organization screens individuals requiring access to organizational
information and information systems before authorizing access.
PS-4 PERSONNEL TERMINATION
Control: The organization, upon termination of individual employment, terminates
information system access, conducts exit interviews, retrieves all organizational
information system-related property, and provides appropriate personnel with access to
official records created by the terminated employee that are stored on organizational
information systems.
PS-5 PERSONNEL TRANSFER
Control: The organization reviews information systems/facilities access authorizations
when personnel are reassigned or transferred to other positions within the organization
and initiates appropriate actions.
PS-6 ACCESS AGREEMENTS
Control: The organization completes appropriate signed access agreements for
individuals requiring access to organizational information and information systems
before authorizing access and reviews/updates the agreements [Assignment:
organization-defined frequency].
PS-7 THIRD-PARTY PERSONNEL SECURITY
Control: The organization establishes personnel security requirements including security
roles and responsibilities for third-party providers and monitors provider compliance.
PS-8 PERSONNEL SANCTIONS
Control: The organization employs a formal sanctions process for personnel failing to
comply with established information security policies and procedures.
FAMILY: RISK ASSESSMENT CLASS: MANAGEMENT
RA-1 RISK ASSESSMENT POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented risk assessment policy that addresses purpose, scope, roles,
responsibilities, management commitment, coordination among organizational entities,
and compliance; and (ii) formal, documented procedures to facilitate the implementation
of the risk assessment policy and associated risk assessment controls.
RA-2 SECURITY CATEGORIZATION
Control: The organization categorizes the information system and the information
processed, stored, or transmitted by the system in accordance with applicable federal
laws, Executive Orders, directives, policies, regulations, standards, and guidance and
documents the results (including supporting rationale) in the system security plan.
Designated senior-level officials within the organization review and approve the security
categorizations.
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RA-3 RISK ASSESSMENT
Control: The organization conducts assessments of the risk and magnitude of harm that
could result from the unauthorized access, use, disclosure, disruption, modification, or
destruction of information and information systems that support the operations and
assets of the agency (including information and information systems managed/operated
by external parties).
RA-4 RISK ASSESSMENT UPDATE
Control: The organization updates the risk assessment [Assignment: organizationdefined frequency] or whenever there are significant changes to the information system,
the facilities where the system resides, or other conditions that may impact the security
or accreditation status of the system.
RA-5 VULNERABILITY SCANNING
Control: The organization scans for vulnerabilities in the information system
[Assignment: organization-defined frequency] or when significant new vulnerabilities
potentially affecting the system are identified and reported.
FAMILY: SYSTEM AND SERVICES ACQUISITION CLASS: MANAGEMENT
SA-1 SYSTEM AND SERVICES ACQUISITION POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, system and services acquisition policy that includes information
security considerations and that addresses purpose, scope, roles, responsibilities,
management commitment, coordination among organizational entities, and compliance;
and (ii) formal, documented procedures to facilitate the implementation of the system
and services acquisition policy and associated system and services acquisition controls.
SA-2 ALLOCATION OF RESOURCES
Control: The organization determines, documents, and allocates as part of its capital
planning and investment control process, the resources required to adequately protect
the information system.
SA-3 LIFE CYCLE SUPPORT
Control: The organization manages the information system using a system development
life cycle methodology that includes information security considerations.
SA-4 ACQUISITIONS
Control: The organization includes security requirements and/or security specifications,
either explicitly or by reference, in information system acquisition contracts based on an
assessment of risk and in accordance with applicable federal laws, Executive Orders,
directives, policies, regulations, and standards.

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SA-5 INFORMATION SYSTEM DOCUMENTATION
Control: The organization obtains, protects as required, and makes available to
authorized personnel, adequate documentation for the information system.
SA-6 SOFTWARE USAGE RESTRICTIONS
Control: The organization complies with software usage restrictions.
SA-7 USER INSTALLED SOFTWARE
Control: The organization enforces explicit rules governing the installation of software by
users.
SA-8 SECURITY ENGINEERING PRINCIPLES
Control: The organization designs and implements the information system using security
engineering principles.
SA-9 EXTERNAL INFORMATION SYSTEM SERVICES
Control: The organization: (i) requires that providers of external information system
services employ adequate security controls in accordance with applicable laws,
Executive Orders, directives, policies, regulations, standards, guidance, and established
service-level agreements; and (ii) monitors security control compliance.
SA-11 DEVELOPER SECURITY TESTING
Control: The organization requires that information system developers create a security
test and evaluation plan, implement the plan, and document the results.
FAMILY: SYSTEM AND COMMUNICATIONS PROTECTION CLASS: TECHNICAL
SC-1 SYSTEM AND COMMUNICATIONS PROTECTION POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, system and communications protection policy that addresses
purpose, scope, roles, responsibilities, management commitment, coordination among
organizational entities, and compliance; and (ii) formal, documented procedures to
facilitate the implementation of the system and communications protection policy and
associated system and communications protection controls.
SC-2 APPLICATION PARTITIONING
Control: The information system separates user functionality (including user interface
services) from information system management functionality.
SC-4 INFORMATION REMNANCE
Control: The information system prevents unauthorized and unintended information
transfer via shared system resources.
SC-5 DENIAL OF SERVICE PROTECTION
Control: The information system protects against or limits the effects of the following
types of denial of service attacks: [Assignment: organization-defined list of types of
denial of service attacks or reference to source for current list].
SC-7 BOUNDARY PROTECTION
Control: The information system monitors and controls communications at the external
boundary of the information system and at key internal boundaries within the system.
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SC-8 TRANSMISSION INTEGRITY
Control: The information system protects the integrity of transmitted information.
SC-9 TRANSMISSION CONFIDENTIALITY
Control: The information system protects the confidentiality of transmitted information.
SC-10 NETWORK DISCONNECT
Control: The information system terminates a network connection at the end of a session
or after [Assignment: organization-defined time period] of inactivity.
SC-12 CRYPTOGRAPHIC KEY ESTABLISHMENT AND MANAGEMENT
Control: When cryptography is required and employed within the information system, the
organization establishes and manages cryptographic keys using automated mechanisms
with supporting procedures or manual procedures.
SC-13 USE OF CRYPTOGRAPHY
Control: For information requiring cryptographic protection, the information system
implements cryptographic mechanisms that comply with applicable federal laws,
Executive Orders, directives, policies, regulations, standards, and guidance.
*SC-14 PUBLIC ACCESS PROTECTIONS
Control: The information system protects the integrity and availability of publicly available
information and applications.
SC-15 COLLABORATIVE COMPUTING
Control: The information system prohibits remote activation of collaborative computing
mechanisms and provides an explicit indication of use to the local users.
SC-17 PUBLIC KEY INFRASTRUCTURE CERTIFICATES
Control: The organization issues public key certificates under an appropriate certificate
policy or obtains public key certificates under an appropriate certificate policy from an
approved service provider.
SC-18 MOBILE CODE
Control: The organization: (i) establishes usage restrictions and implementation
guidance for mobile code technologies based on the potential to cause damage to the
information system if used maliciously; and (ii) authorizes, monitors, and controls the use
of mobile code within the information system.
SC-19 VOICE OVER INTERNET PROTOCOL
Control: The organization: (i) establishes usage restrictions and implementation
guidance for Voice over Internet Protocol (VoIP) technologies based on the potential to
cause damage to the information system if used maliciously; and (ii) authorizes,
monitors, and controls the use of VoIP within the information system.
*SC-20 SECURE NAME / ADDRESS RESOLUTION SERVICE (AUTHORITATIVE
SOURCE)
Control: The information system that provides name/address resolution service provides
additional data origin and integrity artifacts along with the authoritative data it returns in
response to resolution queries.
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*SC-22 ARCHITECTURE AND PROVISIONING FOR NAME / ADDRESS
RESOLUTION SERVICE
Control: The information systems that collectively provide name/address resolution
service for an organization are fault tolerant and implement role separation.
SC-23 SESSION AUTHENTICITY
Control: The information system provides mechanisms to protect the authenticity of
communications sessions.
Control Enhancements: None.
FAMILY: SYSTEM AND INFORMATION INTEGRITY CLASS: OPERATIONAL
SI-1 SYSTEM AND INFORMATION INTEGRITY POLICY AND PROCEDURES
Control: The organization develops, disseminates, and periodically reviews/updates: (i) a
formal, documented, system and information integrity policy that addresses purpose,
scope, roles, responsibilities, management commitment, coordination among
organizational entities, and compliance; and (ii) formal, documented procedures to
facilitate the implementation of the system and information integrity policy and
associated system and information integrity controls.
SI-2 FLAW REMEDIATION
Control: The organization identifies, reports, and corrects information system flaws.
SI-3 MALICIOUS CODE PROTECTION
Control: The information system implements malicious code protection.
SI-4 INFORMATION SYSTEM MONITORING TOOLS AND TECHNIQUES
Control: The organization employs tools and techniques to monitor events on the
information system, detect attacks, and provide identification of unauthorized use of the
system.
SI-5 SECURITY ALERTS AND ADVISORIES
Control: The organization receives information system security alerts/advisories on a
regular basis, issues alerts/advisories to appropriate personnel, and takes appropriate
actions in response.
*SI-8 SPAM PROTECTION
Control: The information system implements spam protection.
SI-9 INFORMATION INPUT RESTRICTIONS
Control: The organization restricts the capability to input information to the information
system to authorized personnel.
*SI-10 INFORMATION ACCURACY, COMPLETENESS, VALIDITY, AND
AUTHENTICITY
Control: The information system checks information for accuracy, completeness, validity,
and authenticity.
*SI-11 ERROR HANDLING
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Control: The information system identifies and handles error conditions in an expeditious
manner without providing information that could be exploited by adversaries.
SI-12 INFORMATION OUTPUT HANDLING AND RETENTION
Control: The organization handles and retains output from the information system in
accordance with applicable laws, Executive Orders, directives, policies, regulations,
standards, and operational requirements.

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EXHIBIT 5
IRC SEC. 7431 CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE OF
RETURNS AND RETURN INFORMATION.
(a) IN GENERAL.(1) INSPECTION OR DISCLOSURE BY EMPLOYEE OF UNITED STATES.-If
any officer or employee of the United States knowingly, or by reason of negligence,
inspects or discloses any return or return information with respect to a taxpayer in
violation of any provision of section 6103, such taxpayer may bring a civil action for
damages against the United States in a district court of the United States.
(2) INSPECTION OR DISCLOSURE BY A PERSON WHO IS NOT AN
EMPLOYEE OF UNITED STATES.-If any person who is not an officer or employee of
the United States knowingly, or by reason of negligence, inspects or discloses any return
or return information with respect to a taxpayer in violation of any provision of section
6103, such taxpayer may bring a civil action for damages against such person in a
district court of the United States.
(b) EXCEPTIONS.-No liability shall arise under this section with respect to any
inspection or disclosure (1) which results from good faith, but erroneous, interpretation of section
6103, or
(2) which is requested by the taxpayer.
(c) DAMAGES.-In any action brought under subsection (a), upon a finding of liability on
the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal
to the sum of(1) the greater of(A) $1,000 for each act of unauthorized inspection or disclosure of a
return or return information with respect to which such defendant is found liable,
or
(B) the sum of(i) the actual damages sustained by the plaintiff as a result of such
unauthorized inspection or disclosure, plus
(ii) in the case of a willful inspection or disclosure or an inspection
or disclosure which is the result of gross negligence, punitive damages,
plus
(2) the cost of the action.
(d) PERIOD FOR BRINGING ACTION.-Notwithstanding any other provision of law, an
action to enforce any liability created under this section may be brought, without regard
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to the amount in controversy, at any time within 2 years after the date of discovery by the
plaintiff of the unauthorized inspection or disclosure.
(e) NOTIFICATION OF UNLAWFUL INSPECTION AND DISCLOSURE.-If any person is
criminally charged by indictment or information with inspection or disclosure of a
taxpayer's return or return information in violation of(1) paragraph (1) or (2) of section 7213(a),
(2) section 7213A(a), or
(3) subparagraph (B) of section 1030(a)(2) of title 18, United States Code, the
Secretary shall notify such taxpayer as soon as practicable of such inspection or
disclosure.
(f) DEFINITIONS.-For purposes of this section, the terms "inspect", "inspection”, “return"
and "return information" have the respective meanings given such terms by section
6103(b).
(g) EXTENSION TO INFORMATION OBTAINED UNDER SECTION 3406.-For purposes
of this section(1) any information obtained under section 3406 (including information with
respect to any payee certification failure under subsection (d) thereof) shall be treated as
return information, and
(2) any inspection or use of such information other than for purposes of meeting
any requirement under section 3406 or (subject to the safeguards set forth in 6103) for
purposes permitted under section 6103 shall be treated as a violation of section 6103.
For purposes of subsection (b), the reference to section 6103 shall be treated as
including a reference to section 3406.

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EXHIBIT 6
DATA WAREHOUSE CONCEPTS & SECURITY REQUIREMENTS
Purpose
The purpose of this document is to provide an overview of Data Warehousing and data
storage concepts and to define the security requirements necessary to protect these
environments. While some security controls may appear redundant to those contained in
the Publication 1075, this is necessary to allow Exhibit 7 to be used as a stand-alone
document. As a rule, all requirements contained within the main text of Publication 1075
will also apply to any Data Warehousing environments that are being used by Federal,
state, or local agencies and these environments incorporate FTI. This will apply to
authorized third parties or contractors who accept Federal Tax Information (FTI).
This document is intended to describe the controls that are specific to Data
Warehousing-type environments. As the term Data Warehousing is used, the concepts
will be applied to all complex data environments, including Data Warehousing, data
mining, and data marts.
Audience
This document is intended for Federal, State, and local agencies, as well as contractor
personnel and third party personnel who use FTI. The document is to be used as a
planning document and is intended to support the development and deployment of Data
Warehousing architectures and/or architectures of a similar environment, such as Data
Marts.
Background
The IRS often uses specialized taxpayer data resources for the purpose of research,
trend analysis, and specialized studies which enhance the agency’s ability to
recommend changes and improvements to the tax code, and for other purposes. These
resources may take the form of Data Warehouses (DW) and Data Marts (DM) solutions.
Similarly, Federal, State, and local agencies may use the data warehousing
opportunities to improve tax code compliance or to conduct similar research, trend
analysis, and specialized studies.
A Data Warehouse is a structure that is designed to distribute data from multiple arenas
to the primary enterprise system. A DW collects, extracts, transforms, transports, and
loads data for a distribution to various DM. A Data Mart is a structure designed for
access, which is used to facilitate client user support.
In the context of FTI within agencies, the DW stores sets of historical data, which
contains specific taxpayer information, as well as summary information and historical
data.
A DW concept is different from a traditional networked enterprise in four ways: 1) a DW
is subject oriented instead of application oriented; 2) has its data summarized instead of
detailed, 3) is analysis driven instead of transaction driven, and 4) has general allinclusive data structures rather than narrow, restricted data structures.
A DW is structured to separate analysis work from transaction work and allows large
amount of data to be consolidated from several sources. The security controls remain
constant with operational enterprises and will be applicable to a DW.
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In a DW the scope of security changes for the different dimensions of data management.
Information enters a DW through a staging area where it goes through a process of
extraction, transformation, and loading. This is referred to as Extract/Transform/Load
(ETL). Additionally, a DW is operated by query or search engine tool. The use of endto-end security, the Data Warehouse ensures the confidentiality, privacy and integrity of
FTI. The security of the Data Warehouse should include all aspects of the warehouse,
including hardware, software, data transport, and data storage.
Data Warehousing Implications
FTI placed in a Data Warehouse environment may only be used for "tax administration"
purpose or for other authorized purposed defined within Publication 1075. As part of the
Data Warehouse, FTI data must retain its identity as FTI (i.e., it must be obvious that the
IRS is the source of the data). Whenever calculations or data manipulations are being
performed that could commingle FTI with any other data, the access to the FTI must be
restricted to agency staff with a need-to-know and their contractors/agents as authorized
by law. This is defined in the primary publication but is being reinforced for clarification.
Security
Security controls for Data Warehousing concepts are derived from NIST SP 800-53,
Recommended Security Controls for Federal Information Systems. These controls
address the areas of management, operational, and technical controls.
When all controls are implemented and managed, these controls provide effective
safeguards for the confidentiality, integrity reliability, and availability of the data. For this
document, the defined controls have been mapped to the classes and families of the
NIST SP 800-53 to allow technical personnel to easily review NIST controls and
understand how these apply to security environments.
The next sections will define specific controls related to Data Warehousing
environments. If no additional controls are required, the section will identify this fact.
These controls provide unique controls for Data Warehousing environments. Otherwise,
the requirements in Publication 1075 will apply.
Management Controls
The following section identifies high-level management controls that shall be used within
a data warehousing environment.
Risk Assessment:
The agency shall have a Risk Management Program in place to ensure each program is
assessed for risk. Risks of the data warehousing environments shall be assessed. Any
risk documents shall identify and document all vulnerabilities, associated with the Data
Warehousing environment.
Planning:
Planning is crucial to the development of a new environment. A Security Plan shall be in
place to address organizational policies, security testing, rules of behavior, contingency
plans, architecture/network diagrams, and requirements for security reviews. While the
plan will provide planning guidelines, this will not replace requirements documents,
which contain specific details and procedures for security operations.
Policies and procedures are required to define how activities and day-to-day procedures
will occur. This will contain the specific policies, relevant for all of the security disciplines
covered in this document. As this relates to data warehousing, any Data Warehousing
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documents can be integrated into overall security procedures. A section shall be
dedicated to data warehouses to define the controls specific to that environment.
Develop policies and procedures to document all existing business processes. Ensure
that roles are identified for the organization, regarding the specific roles being created
and the responsibilities for these roles.
Within the security planning and policies, the purpose or function of the warehouse shall
be defined. The business process shall include a detailed definition of configurations and
the functions of the hardware and software involved. In general, the planning shall
define any unique issues related to data warehousing.
Define how “legacy system data” will be brought into the data warehouse and how the
legacy data that is FTI will be cleansed for the ETL transformation process.
The policy shall ensure that FTI will not be subject to Public Disclosure. Only clients or
end users can query FTI data with a concrete “need to know”.
System and Services Acquisition:
Acquisition security needs to be explored. As FTI is used within data warehousing
environments, it will be important that the services and acquisitions have adequate
security in place, including blocking information to contractors, where these contractors
are not authorized to access FTI.
Certification, Accreditation, and Security Assessments:
Certification, accreditation, and security and risk assessments are accepted best
practices used to ensure that appropriate levels of control exist, are being managed and
are compliant with all Federal and State laws or statutes.
State and local agencies shall develop a process or policy to ensure that data
warehousing security meets the baseline security requirements defined in NIST SP 80053, February 2005. The process or policy must contain the methodology being used by
the State or local agency to inform management, define accountability and address
known security vulnerabilities.
Risk assessments should follow the guidelines provided in NIST Publication 800-30 Risk
Management Guide for Information Technology Systems, July 2002.
Operational Controls
The following section identifies high-level operational controls that shall be used within a
Data Warehousing environment:
Personnel Security
Personnel clearances may vary from agency to agency. As a rule, personnel with access
to FTI shall have a completed background investigation. In addition, when a staff
member has administrator access to access the entire set of FTI records, additional
background checks may be determined necessary. All staff interacting with DW and DM
resources are subject to background investigations in order to ensure their
trustworthiness, suitability, and work role need-to-know. Access to these resources must
be authorized by operational supervisors, granted by the resource owners, and audited
by internal security auditors.
Physical Security and Environmental Protection
There are no special physical security controls for a Data Warehousing environment.
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Contingency Planning
On line data resources shall be provided adequate tools for the back-up, storage,
restoration, and validation of data. By using new technologies, agencies will ensure the
data being provided is reliable. As necessary, based upon risk and cost, these tools shall
be implemented.
Both incremental and special purpose data back-up procedures are affected,
accompanied by off-site storage protections and regular test-status restoration to
validate disaster recovery and business process continuity. Standards and guidelines for
these processes are bound by agency policy, and are tested and verified. Though
already addressed in the Publication 1075, this needs to be evaluated to ensure that all
data resources are synchronized and restored to allow recreation of the data to take
place.
Configuration Management
The agency shall have a process and documentation to identify and analyze how
existing FTI is used and how FTI is queried or targeted by end users. FTI parts of the
system shall be mapped to follow the flow of the query from a client through the
authentication server to the release of the query from the database server. During the
life cycle of the DW, on-line and architectural adjustments and changes will occur. The
agency shall document these changes and assure that FTI is always secured from
unauthorized access or disclosure.
Maintenance
There are no unique maintenance requirements for Data Warehousing environments.
System and Information Integrity
There are no unique system and information integrity requirements for Data
Warehousing environments.
Media Protection
The agency shall have policy and procedures in place describing the Cleansing Process
at the staging area and how the ETL process cleanses the FTI when it is extracted,
transformed and loaded. Additionally, describe the process of object re-use once FTI is
replaced from data sets. IRS requires all FTI is removed by a random overwrite software
program.
Incident Response
Intrusion detection software shall be installed and maintained to monitor networks for
any unauthorized attempt to access tax data.
Awareness & Training
The agency shall have a “training program” in place that will include how FTI security
requirements will be communicated for end users. Training shall be user specific to
ensure all personnel receive appropriate training for a particular job, such as training
required for administrators or auditors.
Technical Controls
The following section identifies high-level technical controls that shall be used within a
data warehousing environment.

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Identification & Authentication
The agency shall configure the web services to be authenticated before access is
granted to users via an authentication server.
Business roles and rules shall be imbedded at either the authentication level or
application level. In either case, roles must be in place to ensure only authorized
personnel have access to FTI information.
Authentication shall be required both at the operating system level and at the application
level, when accessing the data warehousing environment.
Access Control
Access to systems shall be granted based upon the need to perform job functions.
Agencies shall identify which application programs use FTI and how access to FTI is
controlled. The access control to application programs relates to how file shares and
directories apply file permissions to ensure only authorized personnel have access to the
areas containing FTI.
The agency shall have security controls in place that include preventative measures to
keep an attack from being a success. These security controls shall also include
detective measures in place to let the IT staff know there is an attack occurring. If an
interruption of service occurs, the agency shall have additional security controls in place
that include recovery measures to restore operations.
Within the DW, the agency shall protect FTI as sensitive data and be granted access to
FTI for the aspects of their job responsibility. The agency shall enforce effective access
controls so that end users have access to programs with the least privilege needed to
complete the job. The agency shall set up access controls in their DW based on
personnel clearances. Access controls in a data warehouse are generally classified as
1) General Users; 2) Limited Access Users; and 3) Unlimited Access Users. FTI shall
always fall into the Limited Access Users category.
All FTI shall have an owner assigned so that there is responsibility and accountability in
protecting FTI. Typically, this role will be assigned to a management official such as an
accrediting authority.
The agency shall configure control files and datasets to enable the data owner to
analyze and review both authorized and unauthorized accesses.
The database servers that control FTI applications will copy the query request and load it
to the remote database to run the application and transform its output to the client.
Therefore, access controls must be done at the authentication server.
Web-enabled application software shall:
1. Prohibit generic meta-characters from being present in input data
2. Have all database queries constructed with parameterized stored procedures to
prevent SQL injection
3. Protect any variable used in scripts to prevent direct OS commands attacks
4. Have all comments removed for any code passed to the browser
5. Not allow users to see any debugging information on the client, and

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6. Be checked before production deployment to ensure all sample, test and unused
files have been removed from the production system.
Audit & Accountability
The agency shall ensure that audit reports are created and reviewed for datawarehousing-related access attempts.
A data warehouse must capture all changes made to data, including: additions,
modifications, or deletions. If a query is submitted, the audit log must identify the actual
query being performed, the originator of the query, and relevant time/stamp information.
For example, if a query is made to determine the number of people making over
$50,000, by John Doe, the audit log would store the fact that John Doe made a query to
determine the people who made over $50,000. The results of the query are not as
significant as the types of query being performed.
System & Communication Protection
Whenever FTI is located on both production and test environments, these environments
will be segregated. This is especially important in the development stages of the data
warehouse.
All Internet transmissions will be encrypted using HTTPS protocol utilizing Secure
Sockets Layer (SSL) encryption based on a certificate containing a key no less than 128
bits in length, or FIPS 140-2 compliant, whichever is stronger. This will allow information
to be protected between the server and the workstation. During the Extract, Transform
and Load stages of data entering a warehouse, data is at its highest risk. Encryption
shall occur as soon as possible. All sessions shall be encrypted and provide end-to-end
encryption, i.e., from workstation to point of data.
Web server(s) that receive online transactions shall be configured in a “Demilitarized
Zone” (DMZ) in order to receive external transmissions but still have some measure of
protection against unauthorized intrusion.
Application server(s) and database server(s) shall be configured behind the firewalls for
optimal security against unauthorized intrusion. Only authenticated applications and
users shall be allowed access to these servers.
Transaction data shall be “swept” from the web server(s) at frequent intervals consistent
with good system performance, and removed to a secured server behind the firewalls, to
minimize the risk that these transactions could be destroyed or altered by intrusion.
Anti-virus software shall be installed and maintained with current updates on all servers
and clients that contain tax data.
For critical online resources, redundant systems shall be employed with automatic
failover capability.

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EXHIBIT 7
CONTRACT LANGUAGE FOR GENERAL SERVICES
I. PERFORMANCE
In performance of this contract, the contractor agrees to comply with and assume
responsibility for compliance by his or her employees with the following requirements:
(1) All work will be done under the supervision of the contractor or the contractor's
employees.
(2) Any return or return information made available in any format shall be used only for
the purpose of carrying out the provisions of this contract. Information contained in such
material will be treated as confidential and will not be divulged or made known in any
manner to any person except as may be necessary in the performance of this contract.
Disclosure to anyone other than an officer or employee of the contractor will be
prohibited.
(3) All returns and return information will be accounted for upon receipt and properly
stored before, during, and after processing. In addition, all related output will be given
the same level of protection as required for the source material.
(4) The contractor certifies that the data processed during the performance of this
contract will be completely purged from all data storage components of his or her
computer facility, and no output will be retained by the contractor at the time the work is
completed. If immediate purging of all data storage components is not possible, the
contractor certifies that any IRS data remaining in any storage component will be
safeguarded to prevent unauthorized disclosures.
(5) Any spoilage or any intermediate hard copy printout that may result during the
processing of IRS data will be given to the agency or his or her designee. When this is
not possible, the contractor will be responsible for the destruction of the spoilage or any
intermediate hard copy printouts, and will provide the agency or his or her designee with
a statement containing the date of destruction, description of material destroyed, and the
method used.
(6) All computer systems processing, storing, or transmitting Federal tax information
must meet the requirements defined in IRS Publication 1075. To meet functional and
assurance requirements, the security features of the environment must provide for the
managerial, operational, and technical controls. All security features must be available
and activated to protect against unauthorized use of and access to Federal tax
information.
(7) No work involving Federal tax information furnished under this contract will be
subcontracted without prior written approval of the IRS.
(8) The contractor will maintain a list of employees authorized access. Such list will be
provided to the agency and, upon request, to the IRS reviewing office.
(9) The agency will have the right to void the contract if the contractor fails to provide the
safeguards described above.
(10) (Include any additional safeguards that may be appropriate.)

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II. CRIMINAL/CIVIL SANCTIONS:
(1) Each officer or employee of any person to whom returns or return information is or
may be disclosed will be notified in writing by such person that returns or return
information disclosed to such officer or employee can be used only for a purpose and to
the extent authorized herein, and that further disclosure of any such returns or return
information for a purpose or to an extent unauthorized herein constitutes a felony
punishable upon conviction by a fine of as much as $5,000 or imprisonment for as long
as 5 years, or both, together with the costs of prosecution. Such person shall also notify
each such officer and employee that any such unauthorized further disclosure of returns
or return information may also result in an award of civil damages against the officer or
employee in an amount not less than $1,000 with respect to each instance of
unauthorized disclosure. These penalties are prescribed by IRC sections 7213 and 7431
and set forth at 26 CFR 301.6103(n)-1.
(2) Each officer or employee of any person to whom returns or return information is or
may be disclosed shall be notified in writing by such person that any return or return
information made available in any format shall be used only for the purpose of carrying
out the provisions of this contract. Information contained in such material shall be treated
as confidential and shall not be divulged or made known in any manner to any person
except as may be necessary in the performance of the contract. Inspection by or
disclosure to anyone without an official need to know constitutes a criminal
misdemeanor punishable upon conviction by a fine of as much as $1,000 or
imprisonment for as long as 1 year, or both, together with the costs of prosecution. Such
person shall also notify each such officer and employee that any such unauthorized
inspection or disclosure of returns or return information may also result in an award of
civil damages against the officer or employee [United States for Federal employees] in
an amount equal to the sum of the greater of $1,000 for each act of unauthorized
inspection or disclosure with respect to which such defendant is found liable or the sum
of the actual damages sustained by the plaintiff as a result of such unauthorized
inspection or disclosure plus in the case of a willful inspection or disclosure which is the
result of gross negligence, punitive damages, plus the costs of the action. These
penalties are prescribed by IRC section 7213A and 7431.
(3) Additionally, it is incumbent upon the contractor to inform its officers and employees
of the penalties for improper disclosure imposed by the Privacy Act of 1974, 5 U.S.C.
552a. Specifically, 5 U.S.C. 552a(i)(1), which is made applicable to contractors by 5
U.S.C. 552a(m)(1), provides that any officer or employee of a contractor, who by virtue
of his/her employment or official position, has possession of or access to agency records
which contain individually identifiable information, the disclosure of which is prohibited by
the Privacy Act or regulations established thereunder, and who knowing that disclosure
of the specific material is prohibited, willfully discloses the material in any manner to any
person or agency not entitled to receive it, shall be guilty of a misdemeanor and fined not
more than $5,000.
III. INSPECTION:
The IRS and the Agency shall have the right to send its officers and employees into the
offices and plants of the contractor for inspection of the facilities and operations provided
for the performance of any work under this contract. On the basis of such inspection,
specific measures may be required in cases where the contractor is found to be
noncompliant with contract safeguards.
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Exhibit 8
PASSWORD MANAGEMENT GUIDELINES
Control Password Management Guidance
No.
01
Passwords shall be a minimum length of 8 characters in a combination of alpha and
numeric or special characters.
02

Passwords shall be changed every 90 days, at a minimum, for standard user accounts
to reduce the risk of compromise through guessing, password cracking or other attack
& penetration methods.

03

Passwords shall be changed every 60 days, at a minimum, for privileged user
accounts to reduce the risk of compromise through guessing, password cracking or
other attack and penetration methods.

04

Password changes for standard and privileged users shall be systematically enforced
where possible.

05

Passwords shall be systematically disabled after 90 days of inactivity to reduce the
risk of compromise through guessing, password cracking or other attack and
penetration methods.

06

Users shall be prohibited from using their last six passwords to deter reuse of the
same password.

07

Users shall be prohibited from changing their passwords for at least 15 days after a
recent change. Meaning, the minimum password age limit shall be 15 days after a
recent password change.

08

Privileged users shall be able to override the minimum password age limit for users
when necessary to perform required job functions.

09

The information system shall routinely prompt users to change their passwords within
5-14 days before such password expires.

10

User account lockout feature shall disable the user account after 3 unsuccessful login
attempts.

11

Account lockout duration shall be permanent until an authorized system administrator
reinstates the user account.

12

Default vendor passwords shall be changed upon successful installation of the
information system product.

13

System initialization (boot) settings shall be password-protected.

14

Clear-text representation of passwords shall be suppressed (blotted out) when entered
at the login screen.

15

Passwords shall not be automated through function keys, scripts or other methods
where passwords may be stored on the system.

16

Null passwords shall be prohibited to reduce the risk of compromise through rogue
enticement techniques or other attack and penetration methods.

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Control Password Management Guidance
No.
17
Use of dictionary words, popular phrases, or obvious combinations of letters and
numbers in passwords shall be prohibited when possible. Obvious combinations of
letters and numbers include first names, last names, initials, pet names, user accounts
spelled backwards, repeating characters, consecutive numbers, consecutive letters,
and other predictable combinations and permutations.
18

Users shall commit passwords to memory, avoid writing passwords down and never
disclose passwords to others (e.g., with a co-worker in order to share files).

Page 80

Exhibit 9
SYSTEM AUDIT MANAGEMENT GUIDELINES
Event
No.

System Auditing Guidance

01

The audit trail shall capture all successful login and logoff attempts.

02

The audit trail shall capture all unsuccessful login and authorization attempts.

03

The audit trail shall capture all identification and authentication attempts.

04

The audit trail shall capture all actions, connections and requests performed by
privileged users (a user who, by virtue of function, and/or seniority, has been allocated
powers within the computer system, which are significantly greater than those available
to the majority of users. Such persons will include, for example, the system
administrator(s) and network administrator(s) who are responsible for keeping the
system available and may need powers to create new user profiles as well as add to or
amend the powers and access rights of existing users).

05

The audit trail shall capture all actions, connections and requests performed by
privileged functions.

06

The audit trail shall capture all changes to logical access control authorities (e.g., rights,
permissions).

07

The audit trail shall capture all system changes with the potential to compromise the
integrity of audit policy configurations, security policy configurations and audit record
generation services.

08

The audit trail shall capture the creation, modification and deletion of objects including
files, directories and user accounts.

09

The audit trail shall capture the creation, modification and deletion of user accounts and
group accounts.

10

The audit trail shall capture the creation, modification and deletion of user account and
group account privileges.

11

The audit trail shall capture: i) the date of the system event; ii) the time of the system
event; iii) the type of system event initiated; and iv) the user account, system account,
service or process responsible for initiating the system event.

12

The audit trail shall capture system startup and shutdown functions.

13

The audit trail shall capture modifications to administrator account(s) and administrator
group account(s) including: i) escalation of user account privileges commensurate with
administrator-equivalent account(s); and ii) adding or deleting users from the
administrator group account(s).

14

The audit trail shall capture the enabling or disabling of audit report generation services.

15

The audit trail shall capture command line changes, batch file changes and queries
made to the system (e.g., operating system, application, database).

16

The audit trail shall be protected from unauthorized access, use, deletion or
Page 81

Event
No.

System Auditing Guidance
modification.

17

The audit trail shall be restricted to personnel routinely responsible for performing
security audit functions.

Page 82

EXHIBIT 10
IRC SEC. 7213 and 7213A UNAUTHORIZED DISCLOSURE OF INFORMATION.
(a) RETURNS AND RETURN INFORMATION.
(1) FEDERAL EMPLOYEES AND OTHER PERSONS.-It shall be unlawful for any officer
or employee of the United States or any person described in section 6103(n) (or an
officer or employee of any such person), or any former officer or employee, willfully to
disclose to any person, except as authorized in this title, any return or return information
[as defined in section 6103(b)]. Any violation of this paragraph shall be a felony
punishable upon conviction by a fine in any amount not exceeding $5,000, or
imprisonment of not more than 5 years, or both, together with the costs of prosecution,
and if such offense is committed by any officer or employee of the United States, he
shall, in addition to any other punishment, be dismissed from office or discharged from
employment upon conviction for such offense.
(2) STATE AND OTHER EMPLOYEES.-It shall be unlawful for any person [not
described in paragraph (1)] willfully to disclose to any person, except as authorized in
this title, any return or return information [as defined in section 6103(b)] acquired by him
or another person under subsection (d), (i)(3)(B)(i), (1)(6), (7), (8), (9), (10), (12), (15) or
(16) or (m)(2), (4), (5), (6), or (7) of section 6103. Any violation of this paragraph shall be
a felony punishable by a fine in any amount not exceeding $5,000, or imprisonment of
not more than 5 years, or both, together with the cost of prosecution.
(3) OTHER PERSONS.-It shall be unlawful for any person to whom any return or return
information [as defined in section 6103(b)] is disclosed in an manner unauthorized by
this title thereafter willfully to print or publish in any manner not provided by law any such
return or return information. Any violation of this paragraph shall be a felony punishable
by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5
years, or both, together with the cost of prosecution.
(4) SOLICITATION.-It shall be unlawful for any person willfully to offer any item of
material value in exchange for any return or return information [as defined in 6103(b)]
and to receive as a result of such solicitation any such return or return information. Any
violation of this paragraph shall be a felony punishable by a fine in any amount not
exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the
cost of prosecution.
(5) SHAREHOLDERS.--It shall be unlawful for any person to whom return or return
information [as defined in 6103(b) ] is disclosed pursuant to the provisions of
6103(e)(1)(D)(iii) willfully to disclose such return or return information in any manner not
provided by law. Any violation of this paragraph shall be a felony punishable by a fine in
any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both,
together with the cost of prosecution.
SEC. 7213A. UNAUTHORIZED INSPECTION OF RETURNS OR RETURN
INFORMATION
(a) PROHIBITIONS.(1) FEDERAL EMPLOYEES AND OTHER PERSONS.-It shall be unlawful for(A) any officer or employee of the United States, or
Page 83

(B) any person described in section 6103(n) or an officer willfully to inspect, except as
authorized in this title, any return or return information.
(2) STATE AND OTHER EMPLOYEES.-It shall be unlawful for any person [not
described in paragraph (l)] willfully to inspect, except as authorized by this title, any
return information acquired by such person or another person under a provision of
section 6103 referred to in section 7213(a)(2).
(b) PENALTY.(1) IN GENERAL.-Any violation of subsection (a) shall be punishable upon conviction by
a fine in any amount not exceeding $1000, or imprisonment of not more than 1 year, or
both, together with the costs of prosecution.
(2) FEDERAL OFFICERS OR EMPLOYEES.-An officer or employee of the United
States who is convicted of any violation of subsection (a) shall, in addition to any other
punishment, be dismissed from office or discharged from employment.
(c) DEFINITIONS.-For purposes of this section, the terms "inspect", "return", and "return
information" have respective meanings given such terms by section 6103(b).

Page 84

Exhibit 11

ENCRYPTION STANDARDS
Federal Security Standards
•

The Digital Encryption Standard (FIPS 46-3)

•

Computer Data Authentication (FIPS 113)

•

Security Requirements for Cryptographic Modules (FIPS 140-2)

•

Key Management Using ANSI X9.17 (FIPS 171)

•

The Digital Hash Standard (FIPS 180-1)

•

Secure Hash Standard (FIPS 180-2)

•

Escrowed Encryption Standard (FIPS 185)

•

The Digital Signature Standard (FIPS 186-2)

•

Public Key Cryptographic Entity Authentication Mechanism (FIPS 196)

•

Advanced Encryption Standard (FIPS 197)
Industry Security Standards

•

Digital Certificate (ANSI X5.09)

•

Public Key Cryptography Using Irreversible Algorithms (ANSI X9.30)

•

Symmetric Algorithm Keys Using Diffie-Hellman (ANSI X9.42)

•

Extension to Public Key Certificates and Certificate Renovation List (ANSI X9.55)

•

Message Confidentiality (ANSI X9.23)

•

Message Authentication Codes (ANSI X9.9)

•

Management Controls (ANSI X9.45)

•

Financial Institution Key Management (ANSI X9.17)

KEY MANAGEMENT STANDARDS
•

Key Management Using ANSI X9.17 (FIPS 171)

•

Financial Institution Key Management (ANSI X9.17)

Note: The Federal Security Standards above are based on the Federal Information
Security Management Act of 2002 (FISMA) P.L. 107-347 Title III, OMB A-130.

Page 85

FIPS publications are sold by the National Technical Information Services, U.S.
Department of Commerce, 5285 Port Royal Road, Springfield, VA 22161 and are
available on-line at http://csrc.nist.gov.

Page 86

Exhibit 12
GLOSSARY - KEY TERMS AND DEFINITIONS
A
ACCOUNTABILITY: A process of holding users responsible for actions performed on an
information system.
ADEQUATE SECURITY: Security commensurate with the risk and magnitude of harm
resulting from the loss, misuse, unauthorized access to, or modification of information.
ALTERNATE WORK SITE: Any working area that is attached to the Wide Area Network
(WAN) either through a Public Switched Data Network (PSDN) or through the Internet.
ASSURANCE: A measure of confidence that management, operational and technical
controls are operating as intended and achieving the security requirements for the
system.
ASSURANCE TESTING: A process used to determine if security features of a system
are implemented as designed, and are adequate for the proposed operating
environment. This process may include hands-on functional testing, penetration testing,
and/or verification.
AUDIT: An independent examination of security controls associated with a
representative subset of organizational information systems to determine the operating
effectiveness of system controls; ensure compliance with established policy and
operational procedures; and recommend changes in controls, policy, or procedures
where needed.
AUDIT TRAIL: A chronological record of system activities sufficient to enable the
reconstruction, reviewing and examination of security events related to an operation,
procedure or event in a transaction, from its inception to final results.
AUTHENTICATION: Verifying the identity of a user, process, or device, often as a
prerequisite to allowing access to resources in an information system. See
IDENTIFICATION.
AUTHORIZATION: Access privileges granted to a user, program or process.
AVAILABILITY: Timely, reliable access to information and information services for
authorized users.
B
BANNER: Display of an information system outlining the parameters for system or
information use.
BASELINE SECURITY REQUIREMENTS: A description of the minimum security
requirements necessary for an information system to enforce the security policy and
maintain an acceptable risk level.
C
CLASSIFIED INFORMATION: National security information classified pursuant to
Executive Order 12958.

Page 87

COMPROMISE: The disclosure of sensitive information to persons not authorized to
receive such information.
CONFIDENTIALITY: Preserving authorized restrictions on information access and
disclosure.
CONFIGURATION MANAGEMENT: A structured process of managing and controlling
changes to hardware, software, firmware, communications and documentation
throughout the system development life cycle.
COUNTERMEASURES: Actions, devices, procedures, mechanisms, techniques, or
other measures that reduce the vulnerability of an information system.
CRYPTOGRAPHY: The process of rendering plain text information unreadable and
restoring such unreadable information to a readable form.
D
DATA: A representation of facts, concepts, information or instruction suitable for
communication, processing or interpretation by people or information systems.
DECRYPTION: The process of converting encrypted information into a readable form.
Also called deciphering.
DIGITAL SUBSCRIBER LINE: A public telecommunications technology delivering high
bandwidth over conventional copper wire covering limited distances.
DISCRETIONARY ACCESS CONTROL: A method of restricting logical access to
information system objects (e.g., files, directories, devices, permissions, rules) based on
the identity and need-to-know of users, groups or processes.
E
ENCRYPTION: See CRYPTOGRAPHY.
ENCRYPTION ALGORITHM: A formula used to convert information into an unreadable
format.
ENTERPRISE LIFE CYCLE: A robust methodology used to implement business change
and information technology modernization.
EXTERNAL NETWORK: Any network residing outside the security perimeter
established by the telecommunications system.
EXTRANET: A private data network using the public telephone network to establish a
secure communications medium among authorized users (e.g., organization, vendors,
business partners). An Extranet extends a private network (often referred to as an
Intranet) to external parties in cases where both parties may be benefit from exchanging
information quickly and privately.
F
FILE PERMISSIONS: A method of implementing discretionary access control by
establishing and enforcing rules to restrict logical access of information system
resources to authorized users and processes.
FILE SERVER: A local area network computer dedicated to providing files and data
storage to other network stations.
FIREWALL: Telecommunication device used to regulate logical access authorities
between network systems.
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FIRMWARE: Microcode programming instructions permanently embedded into the
Read Only Memory (ROM) control block of a computer system. Firmware is a machine
component of computer system, similar to a computer circuit component.
G
GATEWAY: Interface providing compatibility between heterogeneous networks by
converting transmission speeds, protocols, codes or security rules. This is sometimes
referred to as a protocol converter.
H
HOST: A computer dedicated to providing services to many users. Examples of such
systems include mainframes, minicomputers or servers providing Dynamic Host
Configuration Protocol (DHCP) services.
I
IDENTIFICATION: A mechanism used to request access to system resources by
providing a recognizable unique form of identification such as a loginid, userid or token.
See AUTHENTICATION.
INFORMATION: See DATA.
INFORMATION SYSTEM: A collection of computer hardware, software, firmware,
applications, information, communications and personnel organized to accomplish a
specific function or set of functions under direct management control.
INFORMATION SYSTEM SECURITY: The protection of information systems and
information against unauthorized access, use modification or disclosure -- ensuring
confidentiality, integrity and availability of information systems and information.
INTEGRITY: Protection of information systems and information from unauthorized
modification; ensuring quality, accuracy, completeness, non-repudiation and authenticity
of information.
INTERNET: Two or more networks connected by a router; the world’s largest network
using TCP/IP to connect government, university and commercial institutions.
INTRANET: A private network using TCP/IP, the Internet and world-wide-web
technologies to share information quickly and privately between authorized user
communities, including organizations, vendors and business partners.
K
KEY: Information used to establish and periodically change the operations performed in
cryptographic devices for the purpose of encrypting and decrypting information.
L
LEAST PRIVILEGE: A security principle stating users or processes are assigned the
most restrictive set of privileges necessary to perform routine job responsibilities.
M
MANAGEMENT CONTROLS: Security controls focused on managing organizational
risk and information system security, and devising sufficient countermeasures or
safeguards for mitigating risk to acceptable levels. Management control families include
risk assessment, security planning, system and services acquisition, and security
assessment.
Page 89

MALICIOUS CODE: Rogue computer programs designed to inflict a magnitude of harm
by diminishing the confidentiality, integrity and availability of information systems and
information.
N
NETWORK: A communications infrastructure and all components attached thereto
whose primary objective is to transfer information among a collection of interconnected
systems. Examples of networks include local area networks, wide area networks,
metropolitan area networks and wireless area networks.
NODE: A device or object connected to a network.
NON-REPUDIATION: The use of audit trails or secure messaging techniques to ensure
the origin and validity of source and destination targets. That is, senders and recipients
of information can not deny their actions.
O
OBJECT REUSE: The reassignment of storage medium, containing residual
information, to potentially unauthorized users or processes.
OPERATIONAL CONTROLS: Security controls focused on mechanisms primarily
implemented by people as opposed to systems. These controls are established to
improve the security of a group, a specific system or group of systems. Operational
controls require technical or specialized expertise and often rely on management and
technical controls. Operational control families include personnel security, contingency
planning, configuration management, maintenance, system and information integrity,
incident response, and awareness and training.
ORGANIZATION: An agency or, as appropriate, any of its operational elements.
P
PACKET: A unit of information traversing a network.
PASSWORD: A private, protected, alphanumeric string used to authenticate users or
processes to information system resources.
PENETRATION TESTING: A testing method where security evaluators attempt to
circumvent the technical security features of the information system in efforts to identify
security vulnerabilities.
PERSONALLY IDENTIFIABLE INFORMATION: Any information about an individual
maintained by an agency, including, but not limited to, education, financial transactions,
medical history, and criminal or employment history and information which can be used
to distinguish or trace an individual's identity, such as their name, social security number,
date and place of birth, mother’s maiden name, biometric records, etc., including any
other personal information which is linked or linkable to an individual.
PLAN OF ACTION AND MILESTONES (POA&M): A management tool used to assist
organizations in identifying, assessing, prioritizing, and monitoring the progress of
corrective actions for security weaknesses found in programs and systems. (Defined in
OMB Memorandum 02-01)
POTENTIAL IMPACT: The loss of confidentiality, integrity, or availability could be
expected to have a limited adverse effect, a serious adverse effect, or a catastrophic
adverse effect on organizational operations, organizational assets, or individuals.
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PROTOCOL: A set of rules and standards governing the communication process
between two or more network entities.
R
REMNANTS: Residual information remaining on storage media after reallocation or
reassignment of such storage media to different organizations, organizational elements,
users or processes. See OBJECT REUSE.
RESIDUAL RISK: Portions of risk remaining after security controls or countermeasures
are applied.
RISK: The potential adverse impact to the operation of information systems affected by
threat occurrences on organizational operations, assets and people.
RISK ASSESSMENT: The process of analyzing threats to and vulnerabilities of an
information system to determining the potential magnitude of harm, and identify costeffective countermeasures to mitigate the impact of such threats and vulnerabilities.
RISK MANAGEMENT: The routine process of identifying, analyzing, isolating,
controlling, and minimizing security risk to achieve and maintain an acceptable risk level.
A risk assessment is an instrumental component of the risk management life cycle.
S
SAFEGUARDS: Protective measures prescribed to enforce the security requirements
specified for an information system. This is synonymous with security controls and
countermeasures.
SECURITY POLICY: The set of laws, rules, directives and practices governing how
organizations protect information systems and information.
SECURITY REQUIREMENT: The description of a specification necessary to enforce
the security policy. See BASELINE SECURITY REQUIREMENTS.
SENSITIVE BUT UNCLASSIFIED (SBU) INFORMATION: Any information, the loss,
misuse, or unauthorized access to or modification of which could adversely affect the
national interest or the conduct of Federal programs, or the privacy to which individuals
are entitled under section 552a of title 5, United States Code (USC) (the Privacy Act of
1974), but which has not been specifically authorized under criteria established by an
Executive Order (E.O.) or Congress to be kept secret in the interest or national defense
for foreign policy.
SYSTEM: See INFORMATION SYSTEM.
SYSTEM SECURITY PLAN: An official document that provides an overview of the
security requirements for an information system and describes the security controls in
place or planned for meeting those requirements. (NIST SP 800-18)
T
TECHNICAL CONTROLS: Security controls executed by the computer system through
mechanisms contained in the hardware, software and firmware components of the
system. Technical security control families include identification and authentication,
access control, audit and accountability, and system and communications protection.
THREAT: An activity, event or circumstance with the potential for causing harm to
information system resources.
U
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USER: A person or process authorized to access an information system.
USER IDENTIFIER: A unique string of characters used by an information system to
identify a user or process for authentication.
V
VIRUS: A self-replicating, malicious program that attaches itself to executable
programs.
VULNERABILITY: A known deficiency in an information system that threat agents can
exploit to gain unauthorized access to sensitive or classified information.
VULNERABILITY ASSESSMENT: Systematic examination of an information system to
determine its’ security posture, identify control deficiencies, propose countermeasures,
and validate the operating effectiveness of such security countermeasures after
implementation.

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IRS
Department of the Treasury
Internal Revenue Service
publish.no.irs.gov
Publication 1075 (10-2007)
Catalog Number 46937O