81 FR 44924 - Privacy Act of 1974; Department of the Treasury, Internal Revenue Service Treasury/IRS 10.008, Certified Professional Employer Organizations System of Records

DEPARTMENT OF THE TREASURY

Federal Register Volume 81, Issue 132 (July 11, 2016)

In accordance with the Privacy Act of 1974, as amended, 5 U.S.C. 552a the Department of the Treasury (``Treasury'' or the ``Department'') proposes to establish a new Treasury system of records titled, ``Department of the Treasury, Internal Revenue Service Treasury/IRS 10.008, Certified Professional Employer Organizations System of Records.''

[Federal Register Volume 81, Number 132 (Monday, July 11, 2016)]
[Notices]
[Pages 44924-44926]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16128]



[[Page 44924]]

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DEPARTMENT OF THE TREASURY


Privacy Act of 1974; Department of the Treasury, Internal Revenue 
Service Treasury/IRS 10.008, Certified Professional Employer 
Organizations System of Records

AGENCY: Treasury, Internal Revenue Service (IRS).

ACTION: Notice of Privacy Act system of records.

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SUMMARY: In accordance with the Privacy Act of 1974, as amended, 5 
U.S.C. 552a the Department of the Treasury (``Treasury'' or the 
``Department'') proposes to establish a new Treasury system of records 
titled, ``Department of the Treasury, Internal Revenue Service 
Treasury/IRS 10.008, Certified Professional Employer Organizations 
System of Records.''

DATES: Submit comments on or before August 10, 2016. This new system 
will be effective August 10, 2016.

ADDRESSES: Comments should be sent to Office of Governmental Liaison, 
Disclosure and Safeguards, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20224, Attention: New Privacy Act Systems of 
Records. Comments will be available for inspection and copying at the 
above address by appointment only. Write to the above address or call 
(202) 317-4505 (not a toll free number) to schedule an appointment for 
inspection and/or copying. All comments received, including attachments 
and other supporting disclosure will be posted without change at 
www.regulations.gov. You should submit only information that you wish 
to make publicly available.

FOR FURTHER INFORMATION CONTACT: For general questions please contact: 
Nicole L. Young, Supervisory Financial Administrator and Program 
Specialist, SBSE, (240) 613-6407 (not a toll-free number). For privacy 
issues please contact: David Silverman, Management and Program Analyst, 
Privacy, Governmental Liaison and Disclosure, at 1111 Constitution Ave 
NW., Washington, DC 20224, (202) 317-6452 (not a toll free number).

SUPPLEMENTARY INFORMATION: In accordance with the Privacy Act of 1974, 
5 U.S.C. 552a, the Department of the Treasury (Treasury) Internal 
Revenue Service (IRS) proposes to establish a new Treasury system of 
records titled, ``Department of the Treasury, Internal Revenue Service 
Treasury/IRS 10.008, Certified Professional Employer Organizations 
System of Records.''
    The proposed system will allow the IRS to implement requirements 
pursuant to Title II (Section 206) of the Stephen Beck, Jr., Achieving 
a Better Life Experience Act of 2014 (ABLE Act), Public Law 113-295, to 
administer a program to certify professional employer organizations by 
conducting suitability checks of key individuals involved to protect 
the public. The ABLE Act provides certain tax benefits for certified 
professional employer organizations giving them statutory authority to 
collect and remit federal employment taxes under the certified 
professional employer organization's (CPEO's) employer identification 
number for wages the CPEO pays to individuals covered by a service 
contract. Individuals will have the opportunity to seek administrative 
review of issues related to the denial or revocation of certification.
    Professional employer organizations, including their owner(s), 
responsible individual(s), and authorized representative(s), will be 
subject to suitability checks, which may include background, 
fingerprint, and tax compliance checks. These organizations must also 
secure a bond and provide independent financial reviews on a periodic 
basis. Additionally, any changes that materially affect the information 
previously provided in the certification process must be provided to 
the IRS in a timely manner.
    This proposed system will contain information about individuals 
pertaining to the administration of certifying professional employer 
organizations and ensuring their compliance with 26 U.S.C. 3511 and 
7705. The IRS will collect information about responsible individuals, 
including background and tax compliance checks to protect the public 
and ensure the integrity of the certification process. Disclosure of 
information contained in these systems of records to unauthorized 
persons could result in a violation of privacy, have adverse financial 
consequences to individuals, and may bring personal and/or familial 
embarrassment to an individual.
    The IRS has established physical, system, and procedural safeguards 
to minimize the risk of unauthorized access. Only persons authorized by 
law will have access to these records. Physical safeguards will be 
provided in accordance with TD P 71-10, Department of the Treasury 
Security Manual, and access controls are not less than those published 
in IRM 10.2, Physical Security Program. Access will be permitted on a 
need to know basis and based on the routine uses in the system. The IRS 
will distribute security and privacy guidelines and training to its 
personnel and conduct random checks on the adequacy of security and 
privacy features.
    Below is the description of the Treasury/IRS 10.008, Certified 
Professional Employer Organizations System of Records.
    In accordance with 5 U.S.C. 552a(r), Treasury has provided a report 
of this system of records to the Office of Management and Budget and to 
Congress.
System of Records: IRS 10.008

System name:
    Department of the Treasury, Treasury/IRS 10.008, Certified 
Professional Employer Organizations System of Records.

System location:
    Records are maintained at the IRS Office of the Commissioner, Small 
Business/Self Employed Division (SB/SE), National Office, Area Offices, 
Local Offices, Service Campuses, and Computing Centers. (See IRS 
Appendix A in the Federal Register Volume 80, Number 173, Tuesday, 
September 8, 2015 for addresses of IRS offices at pages 54063-54143.)

Categories of individuals covered by the system:
    These records include information about: (1) Responsible 
individuals and other individuals who are connected or related to an 
organization that applies for professional employer organization 
certification and records of approval, denial, suspension, or 
revocation of certification; (2) individual contractors involved with 
the Certified Professional Employer Organizations (CPEO) program; (3) 
individuals who communicate with the IRS regarding the certified 
professional employer organization program or about any specific 
professional employer organization, or about any responsible individual 
or other individual connected or related to any applicant organization 
(pursuant to definitions in 301.7705-1T); and (4) third party witnesses 
who may be interviewed as part of the suitability check.

Categories of records in the system:
    These records include information about responsible individuals and 
other individuals connected or related to organizations that apply for 
Professional Employer Organization (PEO) certification, including 
information related to approval, denial, suspension, or revocation of 
certification, records relating to applications for certification or 
annual verification; records

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pertaining to IRS investigation and evaluation of eligibility for 
certification; records related to suitability checks, including but not 
limited to, background, fingerprint, and tax compliance checks (which 
may include credit reports, reports of misconduct, law enforcement 
records and other information from investigations into suitability for 
certification); and records pertaining to received communications. 
Records will contain individuals' names, Social Security numbers, 
employer identification numbers, addresses, phone numbers, alternate 
names, points of contact, experience, and personal attestations.

Authority for maintenance of the system:
    26 U.S.C. 3511 and 7705; 5 U.S.C. 301.

Purpose(s):
    The purpose of this system is to administer records pertaining to 
the certification of professional employer organizations pursuant to 
Title II (Section 206) of the Stephen Beck, Jr., Achieving a Better 
Life Experience Act of 2014 (ABLE Act), Public Law 113-295. This system 
of records includes administrative, investigative, and tax records.

Routine uses of records maintained in the system, including categories 
of users and the purposes of such uses:
    Disclosure of return and return information may be made only as 
provided by 26 U.S.C. 6103. All other records may be disclosed as 
described below if the IRS deems that the purpose of the disclosure is 
compatible with the purpose for which the IRS collected the records, 
and no privilege is asserted:
    (1) To the Department of Justice (DOJ) when seeking legal advice, 
or for use in any proceeding, or in preparation for any proceeding, 
when: (a) The IRS or any component thereof; (b) any IRS employee in his 
or her official capacity; (c) any IRS employee in his or her individual 
capacity if the IRS or the DOJ has agreed to provide representation for 
the employee; or (d) the United States is a party to, has an interest 
in, or is likely to be affected by the proceeding, and the IRS 
determines that the records are relevant and useful.
    (2) In a proceeding (including discovery) before a court, 
administrative tribunal, or other adjudicative body when: (a) The IRS 
or any component thereof; (b) any IRS employee in his or her official 
capacity; (c) any IRS employee in his or her personal capacity if the 
IRS or DOJ has agreed to provide representation for the employee; or 
(d) the United States is a party to, has an interest in, or is likely 
to be affected by, the proceeding and the IRS or DOJ determines that 
the information is relevant and necessary to the proceeding. 
Information may be disclosed to the adjudicative body to resolve issues 
of relevancy, necessity, or privilege pertaining to the information.
    (3) To an appropriate federal, state, local, tribal, or foreign 
agency, or other public authority, responsible for implementing or 
enforcing, or for investigating or prosecuting the violation of, a 
statute, rule, regulation, order, or license, when a record on its 
face, or in conjunction with other records, indicates a potential 
violation of law or regulation and the information disclosed is 
relevant to any regulatory, enforcement, investigative, or 
prosecutorial responsibility of the receiving authority.
    (4) to third parties during the course of an investigation, which 
may include a suitability check, to the extent necessary to obtain 
information pertinent to the investigation.
    (5) To the news media as described in the IRS Policy Statement 11-
94 (formerly P-1-183), News Coverage to Advance Deterrent Value of 
Enforcement Activities Encouraged, IRM 1.2.19.1.9.
    (6) To a contractor, including an expert witness or a consultant, 
hired by the IRS, to the extent necessary for the performance of a 
contract.
    (7) To the public the names and addresses of responsible 
individuals and other individuals connected or related to organizations 
that have been certified, suspended, or revoked. The Service may also 
disclose the effective date of certification or revocation, the type of 
discipline, and the effective date and duration of suspension.
    (8) To appropriate agencies, entities, and persons when: (a) The 
IRS suspects or has confirmed that the security or confidentiality of 
information in the system of records has been compromised; (b) the IRS 
has determined that as a result of the suspected or confirmed 
compromise there is a risk of harm to economic or property interests, 
identity theft or fraud, or harm to the security or integrity of this 
system or other systems or programs (whether maintained by the IRS or 
another agency or entity) that rely upon the compromised information; 
and (c) the disclosure made to such agencies, entities, and persons is 
reasonably necessary to assist in connection with IRS efforts to 
respond to the suspected or confirmed compromise and prevent, minimize, 
or remedy such harm.

Policies and practices for storing, retrieving, accessing, retaining, 
and disposing of records in the system:
Storage:
    Records in this system are stored in a secure electronic system or 
on paper in secure facilities in a locked drawer behind a locked door.

Retrievability:
    Records may be retrieved by individual or organization name, 
Taxpayer Identification Number (Social Security Number, Employer 
Identification Number, or other number assigned by the IRS), 
application number (number assigned upon submission of an application), 
or certification approval number. Records pertaining to contractors may 
be retrieved by contractor name or Taxpayer Identification Number, or 
by contract number. Records pertaining to communications with 
individuals regarding the certified professional employer organization 
program or a specific organization may be retrieved by the name of the 
individual, the name of a professional employer organization, or name 
of a responsible individual or other individual connected or related to 
that organization, or other identifying information of a professional 
employer organization identified in the communication, such as Taxpayer 
Identification Number and certification number. Records may also be 
retrieved by IRS employee assigned to the case, project, or 
determination.

Safeguards:
    Records in this system are safeguarded in accordance with 
applicable rules and policies, including all applicable Treasury 
automated systems security and access policies. Strict controls have 
been imposed to minimize the risk of compromising the information that 
is being stored. Access to the computer system containing the records 
in this system is limited to those individuals who have a need to know 
the information for the performance of their official duties and who 
have appropriate clearances.

Retention and disposal:
    Records are generally maintained for six years in accordance with 
IRM 1.15, Records and Information Management, Document 12829, General 
Records Schedules, and Document 12990, Records Control Schedules. There 
may be exceptions if records need to be retained longer at the request 
of a court if the records are pertinent to litigation or at the request 
of Congress for congressional oversight.

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System Manager and address:
    Commissioner, SB/SE., 1111 Constitution Avenue NW., Washington, DC 
20224.

Notification procedure:
    Individuals seeking to determine if this system of records contains 
a record pertaining to themselves may inquire in accordance with 
instructions appearing at 31 CFR part 1, subpart C, appendix B. 
Inquiries should be addressed as in ``Record Access Procedures'' below.
    Individuals must first verify their identity by providing their 
full name, current address and date and place of birth. Individuals 
must sign their request, and their signature must either be notarized 
or submitted under 28 U.S.C. 1746, a law that permits statements to be 
made under penalty of perjury as a substitute for notarization. In 
addition individuals should provide the following:
     An explanation of why he or she believes the IRS would 
have information about them;
     Specify when he or she believes the records would have 
been created;
     Provide any other information that will help the IRS or 
FOIA staff determine which IRS office may have responsive records; and
     If the request is seeking records pertaining to another 
living individual, he or she must include a statement from that 
individual certifying his/her agreement for the requestor to access 
his/her records.
    Without this bulleted information, the IRS may not be able to 
conduct an effective search, and the request may be denied due to lack 
of specificity or lack of compliance with applicable regulations.

Record access procedures:
    Individuals seeking access to any record contained in this system 
of records, or seeking to contest its content, may inquire in 
accordance with instructions appearing at 31 CFR part 1, subpart C, 
appendix B. Inquiries should be addressed to Internal Revenue Service 
Centralized Processing Unit--Stop 93A, Post Office Box 621506, Atlanta, 
GA 30362.

Contesting record procedures:
    26 U.S.C. 7852(e) prohibits Privacy Act amendment of tax records. 
See ``Record Access Procedures'' above for records that are not tax 
records.

Record source categories:
    Records are obtained from tax records of applicant organizations, 
responsible individuals, and other individuals connected or related to 
the applicant organization; public information sources; third parties 
including individuals, city and state governments, other federal 
agencies, applicant organization clients, licensing and other 
professional organizations. Employee information is obtained from IRS 
personnel records.

Exemptions claimed for the system:
    None.

    Dated: June 16, 2016.
Helen Goff Foster,
Deputy Assistant Secretary for Privacy, Transparency, and Records.
[FR Doc. 2016-16128 Filed 7-8-16; 8:45 am]
 BILLING CODE 4810-33-P