Disclosure of Return Information to the
Bureau of the Census

DEPARTMENT OF THE TREASURY
Internal Revenue Service 26 CFR Part 301 [TD 8943] RIN 1545-AY51

TITLE: Disclosure of Return Information to the Bureau of the Census

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains temporary regulations relating to
additions to the list of items of information disclosed to the
Bureau of the Census for use in the Longitudinal Employer-Household
Dynamics (LEHD) project and the Survey of Income and Program
Participation (SIPP) project. These regulations provide guidance to
IRS and Social Security Administration (SSA) personnel responsible
for disclosing the information. The text of the temporary
regulations also 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.

DATES: Effective Date: These regulations are effective January 13,
2001. Applicability Date: For dates of applicability, see
§301.6103(j)(1)-1T(e) of these regulations.

FOR FURTHER INFORMATION CONTACT: Stuart Murray, (202) 622-4580 (not
a toll-free number).

Background

Under section 6103(j)(1), upon written request from the Secretary of
Commerce, the Secretary is to furnish to the Bureau of the Census
(Bureau) tax return information that is prescribed by Treasury
regulations for the purpose of, but only to the extent necessary in,
structuring censuses and national economic accounts and conducting
related statistical activities authorized by law. Section
301.6103(j)(1)-1 of the regulations further defines such purposes by
reference to 13 U.S.C. Chapter 5 and provides an itemized
description of the return information authorized to be disclosed for
such purposes. Section 301.6103(j)(1)-1(b)(5) of the regulations
provides a list of information provided to the Social Security
Administration (SSA) pursuant to Internal Revenue Code section
6103(l)(1)(A) or (5) that officers or employees of SSA may disclose
to the Bureau. Periodically, the disclosure regulations are amended
to reflect the changing needs of the Bureau for data for its
statutorily authorized statistical activities.

This document adopts temporary regulations that authorize IRS and
SSA personnel to disclose the additional items of return information
that have been requested by the Secretary of Commerce for specified
purposes related to the LEHD and SIPP projects.

Except for §301.6103(j)(1)-1T(b)(2)(v) and (vi); (b)(3)(xxiii),
(xxiv),(xxv), (xxvi),. (xxvii) and (xxviii); and (b)(5)(iii) , (iv),
and (v); the text of the temporary regulations is the same as 26 CFR
301.6103(j)(1)-1. The changes made by §301.6103(j)(1)-1T(b)(2)
(v) and (vi); (b)(3)(xxiii), (xxiv), (xxv), (xxvi), (xxvii) and
(xxviii); and (b)(5)(iii), (iv), and (v); are discussed below.

Explanation of Provisions

By letter dated March 27, 2000, the Secretary of Commerce requested
that additional items of return information be disclosed to the
Bureau for purposes related to the Longitudinal Employer-Household
Dynamics (LEHD) project. The request indicates that the Bureau is
ready to begin a joint project with SSA to develop data files that
contain linked information, matching selected worker and employer
records for statistical research, in order to improve programs at
the Bureau and SSA. The linked information will come from the
Bureau's demographic and economic censuses and surveys, the Bureau's
Standard Statistical Establishment List (SSEL), which includes
business tax information, and SSA's administrative records. The
Bureau's component of this project, the LEHD project, will enable
the Bureau to conduct studies that are intended to improve the
quality of the Bureau's core demographic and economic censuses and
surveys, which are Bureau activities authorized under 13 U.S.C.
Chapter

The Bureau has specifically requested information from SSA's Master
Earnings File (MEF), which contains information from IRS Form W-2
and Form 1040SE. The IRS information contained in SSA's MEF will
permit the Bureau to link employee data. with employer data. The
Bureau has requested Social Security Numbers (SSNs) and Employer
Identification Numbers (EINs) to link the employee and employer
data. The Bureau has also requested the disclosure of wages, tips,
and other compensation and deferred wages from the Form W-2. The
Bureau indicated that it wants this detailed earnings record
information because it is provided separately for each employer of
the employee; it covers all persons with wages, including nonfilers
and other non-covered employees; and it provides specific
information on deferred compensation, such as retirement
contributions.

By letter dated August 2, 2000, the Secretary of Commerce requested
additional items of information for purposes related to the Bureau's
Survey of Income and Program Participation (SIPP) demographic
survey. This request indicates that the Bureau and SSA want to
ensure that the regulations authorize the continuation of a joint
project to develop data files that contain linked information from
the SIPP with information from SSA's Master Earnings File. The
linkage of Census survey information on family relationships with
SSA's earnings histories allows for the study and assessment of
welfare and social security/retirement proposals. Specifically, the
Bureau intends to improve the quality of the SIPP by adding a series
of projected

Primary Insurance Amounts (PIAs) to the public-use version of each
available SIPP. In order to adjust for misreported data related to
earnings, employment, and pensions from the Bureau's SIPP, the
Bureau also requested data from Forms W-2 and 1099R or data derived
from these forms. Some of the information requested for LEHD. is
also requested for SIPP, such as the social security number;
employer identification number; wages, tips and other compensation;
and deferred wages.

As provided in the Commissioner of Internal Revenue's responses to
the LEHD and SIPP requests dated September 25, 2000, and October 27,
2000, respectively, information will be furnished under these
temporary regulations only for the purposes of conducting the LEHD
project and/or the SIPP/SSA project as specified in the request
letters and with the understanding that the information will be used
strictly in accordance with the provisions of the Internal Revenue
Code pertaining to confidentiality.

Special Analyses

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 also has been
determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) does not apply to these regulations, and
because no notice of proposed rulemaking is required, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to
section 7805(f) of the Internal Revenue 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 regulations is Jamie G. Bernstein,
Office of the Associate Chief Counsel, Procedure & Administration
(Disclosure & Privacy Law. Division) Internal Revenue Service.
However, other personnel from the IRS and Treasury Department
participated in their development.

List of Subjects in 26 CFR Part 301

Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping 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 as follows:

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

Section 301.6103(j)(1)-1T also issued under 26 U.S.C. 6103(j)(1);

Par. 2. Section 301.6103(j)(1)-1T is added to read as follows:

§301.6103(j)(1)-1T Disclosure of return information to officers
and employees of the Department of Commerce for certain statistical
purposes and related activities (temporary).

(a) through (b)(2)(iv)[Reserved]. For further guidance, see
§301.6103(j)(1)-1(a) through (b)(2)(iv).

(b)(2)(v) Total Social Security Taxable Earnings;

(vi) Quarters of Social Security coverage.

(b)(3)(i) through (xxii) [Reserved]. For further guidance, see.
§301.6103(j)(1)-1(b)(3)(i) through (xxii).

(xxiii) Wages, tips, and other compensation;

(xxiv) Social Security Wages;

(xxv) Deferred wages;

(xxvi) Social Security Tip Income;

(xxvii) Total Social Security Taxable Earnings;

(xxviii) Gross Distributions from Form 1099R.

(b)(4) through (b)(5)(ii) [Reserved]. For further guidance, see
§301.6103(j)(1)-1(b)(4) through (b)(5)(ii).

(b)(5)(iii) From Form W-2, and related forms and schedules--

(A) Social Security Number;

(B) Employer Identification Number;

(C) Wages, tips, and other compensation;

(D) Social Security Wages;

(E) Deferred wages.

(b)(5)(iv) Total Social Security Taxable Earnings.

(v) Quarters of Social Security Coverage.

* * * * *

(b)(6) through(d) [Reserved]. For further guidance, see
§301.6103(j)(1)-1(b)(6) through (d).

(e) Effective date. This section is applicable to the Bureau of the
Census on January 13, 2001 through January 12, 2004.

Robert E. Wenzel
Deputy Commissioner of Internal Revenue

Approved: January 16, 2001

Jonathan Talisman
Assistant Secretary of the Treasury

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