E6-9556. Disclosure of Return Information to the Bureau of Economic Analysis

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Temporary regulations.

SUMMARY:

This document contains temporary regulations regarding additional items of return information disclosable to the Bureau of Economic Analysis (Bureau) of the Department of Commerce. The text of these temporary regulations 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 temporary regulations are effective July 6, 2006. Applicability Date: For dates of applicability, see § 301.6103(j)(1)-1T(f).

FOR FURTHER INFORMATION CONTACT:

Joel D. McMahan, [phone] (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Under section 6103(j)(1)(B) of the Internal Revenue Code (Code), upon written request from the Secretary of Commerce, the Secretary of the Treasury shall furnish to the Bureau return information that is prescribed by Treasury regulations for the purpose of, but only to the extent necessary in, structuring of national economic accounts and conducting related statistical activities authorized by law. This document adopts temporary regulations that authorize the IRS to disclose the additional items of return information that have been requested by the Department of Commerce for purposes related to measuring economic change in the U.S. national economic accounts.

Temporary regulations in the Rules and Regulations section of this issue of the Federal Register amend the Procedure and Administration Regulations (26 CFR part 301) under Code section 6103(j)(1)(B). The temporary regulations contain rules relating to the disclosure of return information reflected on returns to officers and employees of the Department of Commerce for structuring national economic accounts and conducting related statistical activities authorized by law.

Explanation of Provisions

By letter dated December 18, 2003, the Department of Commerce requested that additional items of return information be disclosed to the Bureau for purposes related to measuring economic change in the U.S. national economic accounts. Specifically, the Department of Commerce requested access to return information, obtained from all corporate returns, not just those processed by the IRS's Statistics of Income Division for its corporate sample file. Under this temporary regulation, the IRS will disclose to the Bureau's officers and employees designated items of return information from returns filed by all corporations.

Special Analyses

It has been determined that these temporary regulations are 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. For applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), please refer to the cross-referenced notice of proposed rulemaking published elsewhere in this issue of the Federal Register. Pursuant to section 7805(f) of the 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.

Draft Information

The principal author of these temporary regulations is Joel D. McMahan, Office of the Associate Chief Counsel (Procedure & Administration), Disclosure and Privacy Law Division.

List of Subjects in 26 CFR Part 301

• Employment taxes
• Estate taxes
• Excise taxes
• Gift taxes
• Income taxes
• Penalties
• Reporting and recordkeeping requirements

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(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 (c) introductory text to read as follows:

§ 301.6103(j)(1)-1

Disclosures of return information reflected on returns to officers and employees of the Department of Commerce for certain statistical purposes and related activities.

* * * * *

(c) * * * (1) [Reserved]. For further guidance, see § 301.6103(j)(1)-1T(c).

* * * * *

Par. 3. Section 301.6103(j)(1)-1T is revised to read as follows:

§ 301.6103(j)(1)-1T

Disclosures of return information reflected on returns to officers and employees of the Department of Commerce for certain statistical purposes and related activities (temporary).

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

(c) Disclosure of return information reflected on returns of corporations to officers and employees of the Bureau of Economic Analysis.

(1) The Internal Revenue Service will disclose to officers and employees of the Bureau of Economic Analysis for purposes of, but only to the extent necessary in, conducting and preparing statistical analyses, as authorized by law, all return information from the Statistics of Income sample, including edited information and regardless of format or medium, of designated classes or categories of corporations with respect to the tax imposed by chapter 1 of the Internal Revenue Code.

(2) [Removed and Reserved]

(3) The Internal Revenue Service will disclose the following return information reflected on returns filed by corporations to officers and employees of the Bureau of Economic Analysis:

(i) From the business master files of the Internal Revenue Service—

(A) Taxpayer identity information (as defined in section 6103(b)(6) of the Internal Revenue Code) with respect to corporate taxpayers;

(B) Business or industry activity codes;

(C) Filing requirement code; and

(D) Physical location.

(ii) From Form SS-4 filed by an entity identifying itself on the form as a corporation or a private services corporation—

(A) Taxpayer identity information (as defined in section 6103(b)(6), including legal, trade, and business name);

(B) Physical location;

(C) State or Country of incorporation;

(D) Entity Type (Corporate only);

(E) Estimated highest number of employees expected in the next 12 months;

(F) Principal activity of the business;

(G) Principal line of merchandise;

(H) Posting cycle date relative to filing; and

(I) Document code.

(iii) From an employment tax return filed by a corporation—

(A) Taxpayer identity information (as defined in section 6103(b)(6));

(B) Total compensation reported;

(C) Taxable wages paid for purposes of Chapter 21 to each employee;

(D) Master file tax account code (MFT);

(E) Total number of individuals employed in the taxable period covered by the return;

(F) Posting cycle date relative to filing;

(G) Accounting period covered; and

(H) Document code.

(iv) From returns of corporate taxpayer, including Forms 1120, 851, and other business returns, schedules and forms that the Internal Revenue Service may issue—

(A) Taxpayer identity information (as defined in section 6103(b)(6)), including that of parent corporation, affiliate or subsidiary, and shareholder;

(B) Gross sales and receipts;

(C) Returns and allowances;

(D) Cost of labor, salaries, and wages;

(E) Total assets;

(F) Posting cycle date relative to filing;

(G) Accounting period covered;

(H) Master file tax account code (MFT);

(I) Document code; and

(J) Principal industrial activity code.

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

(e) [Reserved]. For further guidance, see § 301.6103(j)(1)-1(e).

(f) Effective date. This section is applicable to disclosures to the Bureau of Economic Analysis on or after July 6, 2006.

Mark E. Matthews,

Deputy Commissioner for Services and Enforcement.

Approved: June 5, 2006.

Eric Solomon,

Acting Deputy Assistant Secretary of the Treasury (Tax Policy).