Internal Revenue Service: Privacy Act; Proposed Implementation

AGENCY:

Office of the Secretary, Department of the Treasury.

ACTION:

Proposed Rule.

SUMMARY:

In accordance with the requirements of the Privacy Act of 1974, 5 U.S.C. 552a, as amended, the Department of the Treasury, Internal Revenue Service, gives notice of a proposed amendment to this part to exempt a new system of records, the Third Party Contact Reprisal Records—Treasury/IRS 00.334, from certain provisions of the Privacy Act. The exemptions are intended to comply with the legal prohibitions against the disclosure of certain kinds of information and to protect certain information, about individuals, maintained in this system of records.

DATES:

Comments must be received no later than November 24, 2000.

ADDRESSES:

Please submit comments to Office of Governmental Liaison and Disclosure, Internal Revenue Service, 1111 Constitution Ave., NW., Washington, DC 20224. Persons wishing to review the comments should call 202-622-6240 to make an appointment with the Office of Governmental Liaison and Disclosure.

FOR FURTHER INFORMATION CONTACT:

David Silverman, Tax Law Specialist, 6103/Privacy Operations, Governmental Liaison and Disclosure, Internal Revenue Service at 202-622-3607.

SUPPLEMENTARY INFORMATION:

Under 5 U.S.C. 552a(k)(2), the head of an agency may promulgate rules to exempt a system of records from certain provisions of 5 U.S.C. 552a, if the system is investigatory material compiled for law enforcement purposes. The Internal Revenue Service compiles records in this system for law enforcement purposes. The Third Party Contact Reprisal Records—Treasury/IRS 00.334, contains records of third party contacts whose names are not revealed to the taxpayer because 7602(c) provides for an exception to third party contact notification when such notice may involve reprisal against any person.

The Internal Revenue Service is hereby giving notice of a proposed rule to exempt Treasury/IRS, 00.334—Third Party Contact Reprisal Records, from certain provisions of the Privacy Act pursuant to 5 U.S.C. 552a(k)(2). The provisions of the Privacy Act of 1974 from which exemption is claimed is as follows: 5 U.S.C. 552a(c)(3), 5 U.S.C. 552a(d)(1), (2), (3), and (4), 5 U.S.C. 552a(e)(1), 5 U.S.C. 552a(e)(4)(G), 5 U.S.C. 552a(e)(4)(H), 5 U.S.C. 552a(e)(4)(I), 5 U.S.C. 552a(f).

Pursuant to the provisions of 5 U.S.C. 552a(k)(2), it is proposed to exempt Treasury/IRS 00.334—Third Party Contact Reprisal Records, from certain provisions of the Privacy Act of 1974, because the system contains investigatory material compiled for law enforcement purposes. The data will be utilized to enforce 26 U.S.C. 6103 and 7602(c). The following are the reasons why this system of records maintained by the Internal Revenue Service is exempt pursuant to 5 U.S.C. 552a(k)(2) of the Privacy Act of 1974.

(1) 5 U.S.C. 552a(c)(3)

This provision of the Privacy Act provides for the release of the disclosure accounting required by 5 U.S.C. 552a(c)(1) and (2) to the individual named in the record at his/her request. The reasons for exempting this system of records from the foregoing provision are:

(i) Such release may lead to reprisal by the taxpayer against the third party contact or another person if the taxpayer guesses (correctly or incorrectly) who the third party contact was.

(ii) Such release would provide the subject of an investigation with an accurate accounting of the date, nature, and purpose of each disclosure and the name and address of the person or agency to whom the disclosure was made. The release of such information to the subject of an investigation would provide the subject with significant information concerning the nature of the investigation and could result in the altering or destruction of documentary evidence, the improper influencing of witnesses, and other activities that could impede or compromise the investigation.

(iii) Release to the individual of the disclosure accounting would alert the individual as to which agencies were investigating the subject and the scope of the investigation and could aid the individual in impeding or compromising investigations by those agencies.

(2) 5 U.S.C. 552a(d)(1), (d)(2), (d)(3), (d)(4), (e)(4)(G), (H), and (f)

These provisions of the Privacy Act relate to an individual's right to be notified of the existence of records pertaining to such individual; requirements for identifying an individual who requested access to records; the agency procedures relating to access to records and the contest of the information contained in such records and the administrative remedies available to the individual in the event of adverse determinations by an agency concerning access to or amendment of information contained in record systems. The reasons for exempting this system of records from the foregoing provisions are as follows: To notify an individual at the individual's request of the existence of an investigative file pertaining to such individual or grant access to an investigative file could lead to reprisal against the third party contact and/or others; interfere with investigative and enforcement proceedings; deprive co-defendants of a right to a fair trial or an impartial adjudication; constitute an unwarranted invasion of the personal privacy of others; disclose the identity of confidential sources and reveal confidential information supplied by such sources; and, disclose investigative techniques and procedures.

(3) 5 U.S.C. 552a(e)(4)(I)

This provision of the Privacy Act requires the publication of the categories of sources of records in each system of records. The reasons an exemption from this provision has been claimed are as follows:

(i) Revealing categories of sources of information could disclose investigative techniques and procedures;

(ii) Revealing categories of sources of information could cause sources who supply information to investigators to refrain from giving such information because of fear of reprisal, or fear of breach of promises of anonymity and confidentiality.

(4) U.S.C. 552a(e)(1)

This provision of the Privacy Act requires each agency to maintain in its records only such information about an individual as is relevant and necessary to accomplish a purpose of the agency required to be accomplished by statute or executive order. The reasons for exempting this system of records from the foregoing provision are as follows:

(i) The Internal Revenue Service will limit its inquiries to information that is necessary for the enforcement and administration of the Federal tax law. However, an exemption from the foregoing provision is needed because, particularly in the early stages of an investigation, it is not possible to determine the relevance or necessity of specific information.

(ii) Relevance and necessity are questions of judgment and timing. What appears relevant and necessary when collected may subsequently be determined to be irrelevant or unnecessary. It is only after the information is evaluated that the relevance and necessity of such information can be established with certainty.

(iii) When information is received by the Internal Revenue Service relating to violations of law within the jurisdiction of other agencies, the Internal Revenue Service processes this information through the Service systems in order to forward the material to the appropriate agencies.

The Department of the Treasury has determined that this proposed rule is not a “significant regulatory action” under Executive Order 12866.

Pursuant to the requirements of the Regulatory Flexibility Act, 5 U.S.C. 601-612, it is hereby certified that these regulations will not significantly affect a substantial number of small entities. The proposed rule imposes no duties or obligations on small entities.

List of Subjects in 31 CFR Part 1

• Privacy

Part 1 of Title 31 of the Code of Federal Regulations is amended as follows:

1. The authority citation for part 1 continues to read as follows:

Authority: 5 U.S.C. 301, 31 U.S.C. 321, Subpart A also issued under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C. 552a.