Disclosure of Returns &
Return Information to Designee of Taxpayer

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 301 [REG -103320-00 ] RIN 1545-
AX85

TITLE: Disclosure of Returns and Return Information to Designee of
Taxpayer

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: In the Rules and Regulations section of this issue of
Federal Register, the IRS is issuing a temporary regulation relating
to the disclosure of returns and return information to the designee
of a taxpayer. The text of that temporary regulation also serves as
the text of this regulation.

DATES: Written and electronic comments and requests for a public
hearing must be received by April 11, 2001.

ADDRESSES: Send submissions to: CC:M&SP:RU (REG-103320-00), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, D.C. 20044. Submissions may be hand delivered Monday
through Friday between the hours of 8 a.m. and 5 p.m. to :
CC:M&SP:RU (REG-103320-00), 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: Joseph Conley (202) 622-4580 (not a
toll- free number).

SUPPLEMENTARY INFORMATION:

Background

      Section 6103(c), as amended by section 1207 of the Taxpayer
Bill of Rights II, Public Law 104-168 (110 Stat. 1452), authorizes
the IRS to disclose returns and return information to such person or
persons as the taxpayer may designate in a request for or consent to
disclosure or to any other person at the taxpayer's request to the
extent necessary to comply with a request for information or
assistance made by the taxpayer to such other person. Disclosure is
permitted subject to such requirements and conditions as may be
prescribed by regulations. With the amendment in 1996, Congress
eliminated the longstanding requirement that disclosures to
designees of the taxpayer must be pursuant to the written request or
consent of the taxpayer. The purpose of this amendment to section
6103(c) was to assist the IRS in developing a paperless tax
administration system that relies on, among other things, electronic
communication. H.R. Rep. No. 104-506, at 49 (1996), reprinted in
1996 U.S.C.A.N. 1143, 1172.

      On October 3, 1980, a final regulation (TD 7723) relating to
the disclosure of tax returns and return information to a person
designated by the taxpayer in a written request or consent was
published in the Federal Register (45 FR 65564). Since the
publication of this final regulation, the IRS has determined that
further guidance on written consent requirements is necessary.

       This document contains a proposed regulation that authorizes
the disclosure of tax returns and return information to a designee
of the taxpayer pursuant to nonwritten requests or consents
authorizing the disclosures. Such proposed regulation also amends
the existing regulation to clarify the rules applicable to written
requests or consents to disclosure.

       The text of the temporary regulation published in this issue
of the Federal Register serves as the text of this proposed
regulation. The preamble to the temporary regulation explains the
regulation.

Special Analysis

       It has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It is hereby
certified that this proposed regulation will not impose a
significant economic impact on a substantial number of small
entities. The regulation is intended to reduce the burden on
taxpayers and to facilitate the development of a paperless tax
administration system. The prior regulation required that a taxpayer
provide a written request or consent before the IRS could disclose
the taxpayer's return information to a designee of the taxpayer;
this regulation permits such a disclosure, under certain specified
circumstances, pursuant to the taxpayer's nonwritten request or
consent. The regulation also provides parameters for the development
of consents for the electronic filing program, and it reduces the
burden on taxpayers in combined Federal-State return filing programs
by facilitating the electronic filing of a Federal-State return by
means of a single electronic transmission.

      Pursuant to section 7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking will be submitted to the Chief Counsel
of Small Business Administration for comment on its impact on small
businesses.

Comments and Requests for a Public Hearing

      Before the 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. The IRS and Treasury Department
specifically request comments on consents or notices authorizing
disclosures in an electronic environment. Additionally, the IRS and
Treasury Department specifically request comments on the clarity of
the proposed regulation and how it 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
that 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.

Drafting Information

      The principal author of this regulation is Jamie Bernstein,
Office of the Associate Chief Counsel, Procedure and Administration
(Disclosure & Privacy Law Division). However, other personnel from
the IRS and Treasury Department participated in its development.

List of Subjects in 26 CFR part 301

     Employment taxes, Estate taxes, Excise taxes, Gift taxes,
Income taxes, Penalties, Reporting and record keeping requirements.

Adoption of 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 * * *

     Section 301.6103(c)-1 also issued under 26 U.S.C. 6103(c). ***

     Par. 2. Section 301.6103(c)-1 is added to read as follows:
§301.6103(c)-1 Disclosure of returns and return information to
designee of taxpayer.

     [The text of this proposed section is the same as the text of
§301.6103(c)-1T published elsewhere in this issue of the
Federal Register ].

Robert E. Wenzel
Deputy Commissioner of Internal Revenue.

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