83 FR 10811 - Disclosure of Returns and Return Information in Connection With Written Contracts or Agreements for the Acquisition of Property or Services for Tax Administration Purposes

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 83, Issue 49 (March 13, 2018)

This document contains proposed regulations under section 6103(n) of the Internal Revenue Code (Code) to authorize the Department of State to disclose returns and return information to its contractors who assist the Department of State in carrying out its responsibilities under section 32101 of the Fixing America's Surface Transportation (FAST) Act. The FAST Act requires the IRS to notify the Department of State of certified seriously delinquent tax debts, and the Department of State procures services from outside contractors in connection with carrying out its responsibilities under the FAST Act.

[Federal Register Volume 83, Number 49 (Tuesday, March 13, 2018)]
[Proposed Rules]
[Pages 10811-10813]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-04971]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-129260-16]
RIN 1545-BN96


Disclosure of Returns and Return Information in Connection With 
Written Contracts or Agreements for the Acquisition of Property or 
Services for Tax Administration Purposes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations under section 
6103(n) of the Internal Revenue Code (Code) to authorize the Department 
of State to disclose returns and return information to its contractors 
who assist the Department of State in carrying out its responsibilities 
under section 32101 of the Fixing America's Surface Transportation 
(FAST) Act. The FAST Act requires the IRS to notify the Department of 
State of certified seriously delinquent tax debts, and the Department 
of State procures services from outside contractors in connection with 
carrying out its responsibilities under the FAST Act.

DATES: Written and electronic comments and requests for a public 
hearing must be received by April 12, 2018.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-129260-16), Room 
5207, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered Monday through 
Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR 
(REG-129260-16), Courier's Desk, Internal Revenue Service, 1111 
Constitution Avenue NW, Washington, DC 20224. Alternatively, taxpayers 
may submit comments electronically via the Federal eRulemaking Portal 
at www.regulations.gov (IRS REG-129260-16).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Brittany Harrison of the Office of Associate Chief Counsel (Procedure 
and Administration), (202) 317-6833; concerning the submission of 
comments and requests for a public hearing, Regina Johnson, (202) 317-
6901 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    This document contains proposed amendments to the Procedure and 
Administration Regulations (26 CFR part 301) under section 6103(n) of 
the Code. On December 4, 2015, the FAST Act, Public Law 114-94, 129 
Stat. 1312, was enacted into law. Section 32101 of the FAST Act adds 
section 7345 to the Internal Revenue Code. Section 7345 requires the 
IRS to notify the Department of State of tax debts that the IRS 
certifies as seriously delinquent. Section 7345(b) generally defines a 
seriously delinquent tax debt as an unpaid, legally enforceable Federal 
tax liability of an individual that has been assessed, is greater than 
$50,000 (as indexed for inflation), and with respect to which a notice 
of lien has been filed pursuant to section 6323 and the administrative 
rights under section 6320 with respect to such filing have been 
exhausted or have lapsed, or a levy has been made pursuant to section 
6331. Section 32101 of the FAST Act generally requires the Department 
of State to deny a passport (or the renewal of a passport) in the case 
of an individual if notified by the IRS that the individual has been 
certified as having a seriously delinquent tax debt and permits the 
Department of State to revoke a passport previously issued to such 
person.
    Under section 6103(a) of the Code, returns and return information 
are confidential unless the Code otherwise authorizes disclosure. The 
FAST Act added section 6103(k)(11), which provides that, upon 
certification under section 7345, the IRS is authorized to disclose 
return information to the Department of State with respect to a 
taxpayer who has a seriously delinquent tax debt. Specifically, upon 
certification under section 7345, section 6103(k)(11)(A) authorizes the 
IRS to disclose to officers and employees of the Department of State 
(i) the taxpayer identity information with respect to the certified 
taxpayer and (ii) the amount of such seriously delinquent tax debt. 
Section 6103(k)(11)(A). Section 6103(k)(11)(B) limits the use of return 
information disclosed under subparagraph (A) for the purposes of, and 
to the extent necessary in, carrying out the requirements of section 
32101 of the FAST Act.

[[Page 10812]]

    The Department of State engages contractors to assist in carrying 
out its responsibilities with respect to passports, including 
responsibilities related to implementation of section 32101 of the FAST 
Act. Because such contractors are not ``officers and employees'' of the 
Department of State, section 6103(k)(11) of the Code does not authorize 
the disclosure of return information to such contractors.
    Section 6103(n) of the Code authorizes, pursuant to regulations 
prescribed by the Secretary, the disclosure of returns and return 
information to any person for purposes of tax administration to the 
extent necessary in connection with, among other things, a written 
contract for services. The definition of the term ``tax 
administration'' includes ``the administration, management, conduct, 
direction, and supervision of the execution and application of the 
internal revenue laws or related statutes. . . .'' Section 6103(b)(4). 
Because implementation of the FAST Act relates to the administration, 
management, conduct, direction, and supervision of the execution and 
application of the internal revenue laws and related statutes, 
disclosure of return information for the purpose of carrying out 
responsibilities under the FAST Act is a tax administration purpose.
    The Treasury regulations provide that, pursuant to the provisions 
of section 6103(n) of the Code and subject to certain conditions, 
officers and employees of the Treasury Department, a State tax agency, 
the Social Security Administration, or the Department of Justice are 
authorized to disclose returns and return information to any person or 
to an officer or employee of the person, for purposes of tax 
administration (as defined in section 6103(b)(4)), to the extent 
necessary in connection with a written contract or an agreement for the 
acquisition of the providing of services. Section 301.6103(n)-1(a)(1). 
Any person, or officer or employee of the person, who receives such 
disclosed returns or return information may further disclose the 
returns or return information to its own officers or employees whose 
duties or responsibilities require such information in order to provide 
the services. Section 301.6103(n)-1(a)(2)(i). When authorized in 
writing by the IRS, such person, or officer or employee of the person, 
may further disclose such information to the extent necessary to 
provide services, including to its agents or subcontractors (or such 
agents' or subcontractors' officers or employees). Section 301.6103(n)-
1(a)(2)(ii). Agents or subcontractors (or their officers or employees) 
who receive such returns or return information may further disclose the 
returns or return information to their officers or employees whose 
duties or responsibilities require the returns or return information 
for a purpose described in Sec.  301.6103(n)-1(a). Section 301.6103(n)-
1(a)(3). The regulations under section 6103(n) of the Code provide a 
number of rules related to limitations on such disclosures, penalties 
potentially applicable to recipients of returns and return information, 
notification requirements applicable to recipients of returns and 
return information, and safeguards requirements. See section 
301.6103(n)-1(b), -1(c), -1(d), -1(e).
    These proposed regulations add the Department of State to the list 
of agencies in current Sec.  301.6103(n)-1(a)(1) whose officers and 
employees may disclose returns and return information to any person or 
to an officer or employee of such person for tax administration 
purposes to the extent necessary in connection with a written contract 
for the acquisition of property or services. These proposed regulations 
authorize the Department of State to disclose returns and return 
information to its contractors providing services in connection with 
the revocation or denial of passports pursuant to the requirements of 
section 7345 and the FAST Act.

Special Analyses

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required.
    The purpose of these regulations is to allow the Department of 
State to share tax return information with its contractors for tax 
administration purposes. As a recipient of tax return information, the 
Department of State is required to comply with the reporting and other 
requirements under section 6103(p)(4). The Department of State is also 
responsible for the training and inspection of its contractors and 
ensuring that all safeguarding standards are met. These proposed 
regulations do not impose a reporting burden on the Department of 
State's contractors and will not require the contractors to file 
information with the IRS. Because the proposed regulations do not 
impose a collection of information on entities other than the 
Department of State, they do not impose a collection of information on 
small entities. Accordingly, it is hereby certified that these 
regulations will not have a significant economic impact on a 
substantial number of small entities. Accordingly, a regulatory 
flexibility analysis is not required under the Regulatory Flexibility 
Act (5 U.S.C. chapter 6).
    Pursuant to section 7805(f) of the Code, these proposed regulations 
have been submitted to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on their impact on small business.

Comments and Requests for Public Hearing

    Before the regulations proposed herein are adopted as final 
regulations, consideration will be given to any electronic and written 
comments that are submitted timely to the IRS as prescribed in this 
preamble under the ADDRESSES heading. The Treasury Department and the 
IRS request comments on all aspects of the proposed regulations. All 
comments submitted will be made available at www.regulations.gov or 
upon request. 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 of the hearing will 
be published in the Federal Register.

Drafting Information

    The principal author of these proposed regulations is Brittany 
Harrison of the Office of the Associate Chief Counsel (Procedure and 
Administration).

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

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

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

0
Par. 2. Sections 6103(n)-1(a)(1) and (e)(4)(i) are amended by removing 
the language ``or the Department of Justice'' and adding the language 
``the Department of Justice, or the Department of State'' in its place.
0
Par. 3. Section 301.6103(n)-1(g) is amended to read as follows:

[[Page 10813]]

    (g) Applicability date. This section is applicable on June 5, 2007, 
except that paragraphs (a) and (e)(4)(i) of this section apply to the 
Department of State on or after March 12, 2018.

Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2018-04971 Filed 3-12-18; 8:45 am]
BILLING CODE 4830-01-P