[Federal Register Volume 64, Number 15 (Monday, January 25, 1999)]
[Rules and Regulations]
[Pages 3631-3632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1284]
[[Page 3631]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 8811]
RIN 1545-AV83
Disclosure of Return Information to the Bureau of the Census
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final and temporary regulations.
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SUMMARY: This document contains final and temporary regulations
relating to additions to, and deletions from, the list of items of
information disclosed to the Bureau of the Census for use in certain
statistical programs. These regulations provide guidance to IRS
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 25,
1999.
Applicability Date: For dates of applicability, see
Sec. 301.6103(j)(1)-1T(e) of these regulations.
FOR FURTHER INFORMATION CONTACT: Jamie Bernstein, (202) 622-4570 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
Under section 6103(j)(1) of the Internal Revenue Code, 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 structuring
censuses and national economic accounts and conducting related
statistical activities. Section 301.6103(j)(1)-1 of the regulations
provides an itemized description of the return information authorized
to be disclosed for this purpose. 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
personnel to disclose the additional items of return information that
have been requested by the Secretary of Commerce. The temporary
regulations also delete certain items of return information that are
enumerated in the existing regulations but that the Secretary of
Commerce has indicated are no longer needed.
Except for Sec. 301.6103(j)(1)-1T(b)(3), (b)(6)(i)(A) and
(b)(6)(iii), the text of the temporary regulations is the same as 26
CFR 301.6103(j)(1)-1. The changes made by Sec. 301.6103(j)(1)-1T(b)(3),
(b)(6)(i)(A) and (b)(6)(iii) are discussed below.
Explanation of Provisions
The request by the Secretary of Commerce for additional items of
return information has indicated several areas in which changes to
existing Bureau access to tax return information either would improve
present statistical programs or are necessary to implement new
programs.
To reduce small businesses' direct reporting burden in quinquennial
economic censuses and current economic surveys, and to improve the
quality of the data received, the Bureau needs certain items of
information set forth in tax returns. These items include total
expenses or deductions, beginning-and end-of-year inventories, net gain
from sales of business property, other income, and total income.
The Secretary of Commerce also has requested identity information
of parent corporations as shown on corporate tax returns. This
information will enable the Bureau to collect data for various economic
surveys at the subsidiary or division level rather than at the
establishment level. Restructuring data collection in accordance with
such new organizational linkages will reduce the burden on individual
business establishments to estimate data relating to their affiliates,
enhance the quality of the data collected, and provide the Bureau with
an efficient sampling frame for surveys collecting certain data, such
as capital expenditures, that are typically not available at the
establishment level.
To eliminate the follow-up contact of corporate taxpayers presently
required under the Quarterly Financial Report (QFR) program in order to
establish S corporation status, the Bureau needs the document code and
district office code from corporate returns. Another improvement to the
QFR program would be effected by the requested disclosure of parent
corporation identity information, because subsidiaries could then be
linked before a sample was selected and would be relieved of the
separate Census reporting requirements. Finally, the Bureau seeks to
enhance the quality and reduce the size of sample frames under the QFR
program by identifying inactive corporations so that they can be
excluded from the universe subject to sampling. This requires that
certain items of corporate employment tax information (employer
identification number, tax period, total compensation, and taxable
wages and tips), available to the Bureau under the existing regulations
for economic census purposes, be available to the Bureau as well for
QFR purposes.
The Secretary of Commerce has advised that the Bureau no longer
uses certain items of information listed in the existing regulations:
sales of livestock and produce raised, Schedule E information filed
with the Form 1120 series, and, with respect to the QFR program, net
income or loss. Accordingly, the temporary regulations have deleted
these items from the enumeration of return information to be disclosed
to the Bureau.
The transfer of the Census of Agriculture to the Department of
Agriculture under the Census of Agriculture Act of 1997 (Pub. L. 105-
113) has also obviated the need for the Secretary of Commerce to
receive certain items of information. These items are: Schedule F filed
with the Form 1040 series, net farm profits, agricultural activity
code, and answers to material participation questions. These items have
been deleted in the temporary regulations. For simplification and
consistency, the term ``loss'' is not expressly stated in these
regulations as an alternative to ``income'' or ``gain,'' but it is the
intent of the Secretary to interpret ``income'' or ``gain'' as
including negative or loss figures and to provide any such figures to
the Bureau.
Special Analyses
It has been determined that this Treasury decision is not a
significant regulatory action as defined in EO 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. For the applicability of the
Regulatory Flexibility Act (5 U.S.C. chapter 6) see the Special
Analyses section of the preamble to the cross reference notice of
proposed rulemaking published in the Proposed Rules section in this
issue of the Federal Register. 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 Douglas Giblen, Office
of the Associate Chief Counsel
[[Page 3632]]
(International) (formerly of the Office of Assistant Chief Counsel
(Disclosure Litigation)). 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)-1 is amended by revising paragraphs
(b)(3) and (b)(6)(i)(A) to read as follows:
Sec. 301.6103(j)(1)-1 Disclosures of return information to officers
and employees of the Department of Commerce for certain statistical
purposes and related activities.
* * * * *
(b)(3)[Reserved]. For further guidance, see Sec. 301.6103(j)(1)-
1T(b)(3).
* * * * *
(b)(6)(i)(A)[Reserved]. For further guidance, see
Sec. 301.6103(j)(1)-1T(b)(6)(i)(A).
* * * * *
Par. 3. Section 301.6103(j)(1)-1T is added to read as follows:
Sec. 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)[Reserved]. For further guidance, see
Sec. 301.6103(j)(1)-1(a) through (b)(2).
(b)(3) Officers or employees of the Internal Revenue Service will
disclose the following business related return information reflected on
the return of a taxpayer to officers and employees of the Bureau of the
Census for purposes of, but only to the extent necessary in, conducting
and preparing, as authorized by chapter 5 of title 13, United States
Code, demographic, economic, and agricultural statistics programs,
censuses, and surveys. The ``return of a taxpayer'' includes, but is
not limited to, Form 941; Form 990 series; Form 1040 series and
Schedules C and SE; Form 1065 and all attending schedules and Form
8825; Form 1120 series and all attending schedules and Form 8825; Form
851; Form 1096; and other business returns, schedules and forms that
the Internal Revenue Service may issue--
(i) Taxpayer identity information (as defined in section
6103(b)(6)) including parent corporation, shareholder, partner, and
employer identity information;
(ii) Gross income, profits, or receipts;
(iii) Returns and allowances;
(iv) Cost of labor, salaries, and wages;
(v) Total expenses or deductions;
(vi) Total assets;
(vii) Beginning- and end-of-year inventory;
(viii) Royalty income;
(ix) Interest income, including portfolio interest;
(x) Rental income, including gross rents;
(xi) Tax-exempt interest income;
(xii) Net gain from sales of business property;
(xiii) Other income;
(xiv) Total income;
(xv) Percentage of stock owned by each shareholder;
(xvi) Percentage of capital ownership of each partner;
(xvii) End-of-year code;
(xviii) Months actively operated;
(xix) Principal industrial activity code, including the business
description;
(xx) Total number of documents and the total amount reported on the
Form 1096 transmitting Forms 1099-MISC;
(xxi) Form 941 indicator and business address on Schedule C; and
(xxii) Consolidated return indicator.
(b)(4) and (5)[Reserved]. For further guidance, see
Sec. 301.6103(j)(1)-1(b)(4) and (5).
(b)(6)(i) Officers or employees of the Internal Revenue Service
will disclose the following return information (but not including
return information described in section 6103(o)(2)) reflected on the
return of a corporation with respect to the tax imposed by Chapter 1 to
officers and employees of the Bureau of the Census for purposes of, but
only to the extent necessary in, developing and preparing, as
authorized by law, the Quarterly Financial Report--
(A) From the business master files of the Internal Revenue
Service--
(1) Taxpayer identity information (as defined in section
6103(b)(6)), including parent corporation identity information;
(2) Document code;
(3) District office code;
(4) Consolidated return and final return indicators;
(5) Principal industrial activity code;
(6) Partial year indicator;
(7) Annual accounting period;
(8) Gross receipts less returns and allowances; and
(9) Total assets.
(b)(6)(i)(B) and (ii)[Reserved]. For further guidance, see
Sec. 301.6103(j)(1)-1(b)(6)(i)(B) and (ii).
(iii) Information from an employment tax return disclosed pursuant
to Sec. 301.6103(j)(1)-1(b)(2)(iii)(A), (B), (D), (I) and (J) may be
used by officers and employees of the Bureau of the Census for the
purpose described in and subject to the limitations of this paragraph
(b)(6).
(c) and (d) [Reserved]. For further guidance, see
Sec. 301.6103(j)(1)-1(c) and (d).
(e) Effective date. This section is applicable to the Bureau of the
Census on January 25, 1999 through January 22, 2002.
Approved: December 29, 1998.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Donald C. Lubick,
Assistant Secretary of the Treasury.
[FR Doc. 99-1284 Filed 1-22-99; 8:45 am]
BILLING CODE 4830-01-P
