Reg-105344-01

Federal Register, Volume 66 Issue 240 (Thursday, December 13, 2001)

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[Federal Register Volume 66, Number 240 (Thursday, December 13, 2001)]
[Proposed Rules]
[Pages 64386-64387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30620]
----------------------------------------------------------------------DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 301 and 602
[REG-105344-01]
RIN 1545-AY77
Disclosure of Returns and Return Information by Other Agencies
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 a temporary regulation to enable
the Commissioner to authorize Federal, state and local agencies with
access to returns and return information under section 6103 of the
Internal Revenue Code to redisclose such returns and return
information, with the Commissioner's approval, to any authorized
recipient set forth in section 6103 of the Internal Revenue Code,
subject to the same restrictions and for the same purposes, as if the
recipient had received the information from the IRS directly.
DATES: Written comments and electronic comments and requests for a
public hearing must be received by February 14, 2002.
ADDRESSES: Send submissions to CC:ITA:RU (REG-105344-01), room 5226,
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington,
DC 20044. Submissions may be delivered Monday through Friday between
the hours of 8 a.m. and 5 p.m. to CC:ITA:RU (REG-105344-01), Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW.,
Washington, DC. Alternatively, taxpayers may submit comments
electronically via the Internet by selecting the ``Tax Regs'' option on
the IRS Home Page, or by submitting comments directly to the IRS
Internet site: http://www.irs.gov/prod/tax_regs/comments/html.
FOR FURTHER INFORMATION CONTACT: Julie C. Schwartz, 202-622-4570 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in this notice of proposed

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rulemaking has been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the collection of information should be
sent to the Office of Management and Budget, Attn: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503, with copies to the Internal Revenue
Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:FP:S,
Washington, DC 20224. Comments on the collection of information should
be received by February 11, 2002.
Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the
proper performance of the functions of the Internal revenue Service,
including whether the information will have practical utility;
The accuracy of the estimated burden associated with the proposed
collection of information (see below);
How the quality, utility, and clarity of the information to be
collected may be enhanced;
How the burden of complying with the proposed collection of
information may be minimized, including through the application of
automated collection techniques or other forms of information
technology; and
Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of service to provide information.
The collection of information in this proposed regulation is in 26
CFR 301.6103(p)(2)(B)-1T. This information is required for the
Commissioner to authorize agencies with access to returns and return
information under section 6103 to disclose such to other authorized
recipients of returns and return information in accordance with section
6103. The collection of information is required to obtain a benefit.
The likely respondents and recordkeepers are federal agencies and state
or local governments.
Estimated total annual reporting and/or recordkeeping burden: 11
hours.
Estimated average annual burden hours per respondent and/or
recordkeeper: 1 hour.
Estimated number of respondents and/or recordkeepers: 11.
Estimated annual frequency of responses: Once.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a valid
control number assigned by the Office of Management and Budget.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of an internal revenue law. Generally, tax returns and
return information are confidential, as required by 26 U.S.C. 6103.
Background
Section 6103(p)(2)(B) provides that return information disclosed
pursuant to the Code may be disclosed by any mode or means that the
Secretary determines necessary or appropriate. 26 CFR
301.6103(p)(2)(B)-1 currently permits certain recipients of returns and
return information under section 6103, with the Commissioner's
approval, to disclose returns and return information to certain other
permissible recipients under section 6103. Specifically, the existing
regulation permits disclosure by Federal agencies, with the
Commissioner's approval, to (1) other Federal agencies, (2) state tax
agencies, (3) the General Accounting Office, (4) Federal, state and
local child support enforcement agencies, (5) persons described in
section 6103(c) (person designated in a taxpayer consent), and (6)
persons described in section 6103(e) (person with a material interest).

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The Consolidated Appropriations Act, 2001, Pub. L. No. 106-554 (114
Stat. 2763), was signed into law on December 21, 2000. Section 1 of
that Act enacted into law H.R. 5662, the Community Renewal Tax Relief
Act of 2000. Section 310 of the Community Renewal Tax Relief Act of
2000 added section 6103(j)(6) to the Code, authorizing the
[[Page 64387]]
Commissioner to disclose return information to the Congressional Budget
Office (CBO) for the purpose of, but only to the extent necessary for,
long term models of the Social Security and Medicare programs. The
conference report, H. R. Conf. Rep. No. 106-1033, at 1020-21 (2000),
provides that it is the intent of Congress that all requests for
information made by CBO under this provision be made to the
Commissioner, who will use his authority under section 6103(p)(2) such
that the Social Security Administration (SSA) or other agency can
furnish the information directly to CBO for the purpose of CBO's long
term models of Social Security and Medicare. SSA, not IRS, collects and
maintains much of the information sought by CBO and also receives the
tax information CBO seeks under other provisions of section 6103.
However, section 301.6103(p)(2)(B)-1 in its current form would not
allow the Commissioner to authorize SSA to redisclose return
information properly in its possession to CBO, an authorized recipient
of the information under section 6103(j)(6). Updating the regulation
would allow SSA to make return information in its possession available
to CBO to the extent authorized by section 6103(j)(6).
There are other situations, similar to that found under section
6103(j)(6), where it is more efficient for returns and return
information in the possession of one authorized agency recipient, to be
disclosed by such agency to another statutorily authorized recipient.
The inability of agencies, including Federal, state and local agencies,
to share returns and return information between themselves or even
inside a single agency, even where the information is more readily
available from an agency other than the IRS, was highlighted by the
Department of the Treasury on pages 89-90 of its October 2000 Report to
the Congress on the Scope and Use of Taxpayer Confidentiality and
Disclosure Provisions. The report notes, for example, that currently a
single agency within a state (or even a single caseworker) may be
administering both child support under Title IV-D of the Social
Security Act and welfare under Title IV-A of the Social Security Act.
The agency may receive return information under both section 6103(l)(6)
and section 6103(l)(7) to aid the agency in making determinations of
eligibility for these programs, but the current regulation does not
permit even intra-agency pooling or sharing of these data. The report
notes that both intra- and inter-agency data sharing with respect to
common data elements could be authorized by amendment to the Treasury
regulations. Updating the regulation would allow the IRS to authorize
such redisclosure in appropriate situations.
The text of the proposed temporary regulation also serves as the
text of this proposed regulation. The preamble to the temporary
regulation contains a full explanation of the reasons underlying the
issuance of the proposed regulation.
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. It also has
been determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C.

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chapter 6) do not apply to these regulations, and, therefore, a
Regulatory Flexibility Analysis is not required. Pursuant to section
7805(f) of the Code, this notice of proposed rulemaking will be
submitted to the Chief Counsel of the Small Business Administration for
comment on its impact on small businesses.
Comments and Request for a Public Hearing
Before this proposed regulation is adopted as a final regulation,
consideration will be given to any electronic and written comments (a
signed original and eight (8) copies) that are submitted timely to the
IRS. All comments will be available for public inspection and copying.
A public hearing may be scheduled if requested in writing by a person
that timely submits written comments. If a public hearing is scheduled,
notice of the date, time, and place for the hearing will be published
in the Federal Register.
Drafting Information
The principal author of this regulation is Julie C. Schwartz,
Office of the Associate Chief Counsel (Procedure and Administration),
Disclosure and Privacy Law Division.
List of Subjects
26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
26 CFR Part 602
Reporting and recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR parts 301 and 602 are proposed to be 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 as follows:
Authority: 26 U.S.C. 7805 * * *.
Section 301.6103(p)(2)(B)-1 also issued under 26 U.S.C. 6103(p)(2);
* * *.
Sec. 301.6103(p)(2)(B)-1

[Removed]

Par. 2. Section 301.6103(p)(2)(B)-1 is removed.
Par. 3. Section 301.6103(p)(2)(B)-1T is added to read as follows:
[The text of this proposed section is the same as the text of
Sec. 301.6103(p)(2)(B)-1T published elsewhere in this issue of the
Federal Register].
PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

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Par. 4. The authority citation for part 602 continues to read as
follows:
Authority: 26 U.S.C. 7805 * * *.
Par. 5. In Sec. 602.101, paragraph (b) is amended by adding an
entry to the table in numerical order to read as follows:
[The text of this proposed section is the same as the text of
Sec. 602.101 published elsewhere in this issue of the Federal
Register].
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 01-30620 Filed 12-12-01; 8:45 am]
BILLING CODE 4830-01-P

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