[Federal Register Volume 61, Number 188 (Thursday, September 26, 1996)]
[Proposed Rules]
[Pages 50461-50463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24668]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
31 CFR Part 1
Privacy Act of 1974; Proposed Rule Exempting A System of Records
from Certain Provisions
AGENCY: Internal Revenue Service, Treasury.
ACTION: Proposed Rule.
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SUMMARY: In accordance with the requirements of the Privacy Act of
1974, as amended, 5 U.S.C. 552a, the Department of the Treasury gives
notice of a proposed amendment of 31 CFR 1.36 to exempt the system of
records entitled the Automated Information
[[Page 50462]]
Analysis System--Treasury/IRS 46.050 from certain provisions of the
Privacy Act. The exemption is intended to comply with legal
prohibitions against the disclosure of certain kinds of information and
to protect certain information on individuals maintained in this system
of records.
DATES: Comments must be received no later than October 28, 1996.
ADDRESSES: Please submit comments to the Director, Office of
Disclosure, Internal Revenue Service, 1111 Constitution Avenue, NW,
Washington, DC 20224. Comments will be made available for inspection
and copying in the Freedom of Information Reading Room upon request.
FOR FURTHER INFORMATION CONTACT: Carman L. Gannotti, Director, Office
of Disclosure, Internal Revenue Service at (202) 622-6200.
SUPPLEMENTARY INFORMATION: The Automated Information Analysis System is
a computerized system that will automatically identify potential leads
to money laundering and income tax violations which might not otherwise
surface through traditional intelligence gathering efforts or auditing
techniques. Access to this system would enable individuals to attempt
to elude detection or otherwise frustrate any investigatory actions.
The returns and return information contained within this system
constitute investigatory material compiled for law enforcement purposes
under Title 26 of the United States Code.
Pursuant to the Privacy Act of 1974, the Department of the
Treasury is publishing separately the Notice of a New System of
Records, to be maintained by the IRS.
Under 5 U.S.C. 552a(j)(2), the head of any agency may promulgate
rules to exempt any system of records within the agency from certain
provisions of the Privacy Act of 1974 if the agency or component
thereof that maintains the system performs as its principal function
any activities pertaining to the enforcement of criminal laws. Certain
components of the Internal Revenue Service have as their principal
function activities pertaining to the enforcement of criminal laws.
Under 5 U.S.C. 552a (k)(2), the head of any agency may promulgate
rules to exempt any system of records within the agency from certain
provisions of the Privacy Act of 1974 if the system is investigatory
material compiled for law enforcement purposes. To the extent that
information contained in the above-named systems has as its principal
purpose the enforcement of criminal laws, exemption for such
information under 5 U.S.C. 552a (j)(2) is hereby claimed.
The Department of the Treasury is hereby giving notice of a
proposed rule to exempt this system of records described above from
certain provisions of the Privacy Act pursuant to 5 U.S.C. 552a(j)(2)
and (k)(2) and the authority of 31 CFR 1.23(c).
The reasons for exempting this system of records from certain
provisions of 5 U.S.C. 552a are set forth below:
(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
request. The reasons for exempting this system of records from the
foregoing provision are as follows: (i) The release of disclosure
accounting would put the subject of an investigation on notice of the
existence of an investigation and that such person is subject of that
investigation; (ii) Such release of disclosure accounting would provide
the subject of an investigation with an accurate accounting of the
date, nature, name and address of the person or agency to whom the
disclosure is 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. In the case of a delinquent account, such
release might enable the subject of the investigation to dissipate
assets before levy; (iii) Release to the individual of the disclosure
accounting would alert the individual as to which agencies were
investigating this person 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(c)(4),(d)(1),(2),(3), and (4), (e)(4)(G) and (H),
(f) and (g). These provisions of the Privacy Act relate to an
individual's right to notification of the existence of records
pertaining to such individual; requirements for identifying an
individual who request access to records; the agency procedures
relating to access to records and the contest of the information
contained in such records; and the civil 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 records in an investigative
file pertaining to such individual or to grant access to an
investigative file could 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. In cases where an exemption from this provision
has been claimed, the reasons 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) 5 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 which is necessary for
the enforcement and administration of tax laws. However, an exemption
from the foregoing provision is needed because, particularly in the
early stages of a tax audit or other investigation, it is not possible
to determine the relevance or necessity of specific information. (ii)
Relevance and necessity are questions of judgement and timing. What
appear 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 or 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 Service processes
this information through Service systems in order to forward the
material to the appropriate agencies.
(5) 5 U.S.C. 552a(e)(2). This provision of the Privacy Act
requires an agency to
[[Page 50463]]
collect information to the greatest extent practicable directly from
the subject individual when the information may result in an adverse
determination about the individual's rights, benefits, and privileges
under Federal programs. The reasons for exempting this system of
records from the foregoing provision are as follows: (i) In certain
instances the subject of a criminal investigation cannot be required to
supply information to investigators. In those instances, information
relating to a subject's criminal activities must be obtained from other
sources; (ii) In a criminal investigation it is necessary to obtain
evidence from a variety of sources other than the subject of the
investigation in order to accumulate and verify the evidence necessary
for the successful prosecution of person(s) suspected of violating
criminal laws.
(6) 5 U.S.C. 552a(e)(3). This provision of the Privacy Act
requires that an agency must inform the subject of an investigation who
is asked to supply information of (A) the authority under which the
information is sought and whether disclosure of the information is
mandatory or voluntary, (B) the purposes for which the information is
intended to be used, (C) the routine uses which may be made of the
information, and (D) the effects on the subject, if any , of not
providing the requested information. The reasons for exempting this
system of records from the foregoing provision are as follows: (i) The
disclosure to the subject of an investigation of the purposes for which
the requested information is intended to be used would provide the
subject with significant information concerning the nature of the
investigation and could result in impeding or compromising the
investigation. (ii) Informing the subject of an investigation of the
matters required by this provision could seriously undermine the
actions of undercover officers, requiring them to disclose their
identity and impairing their safety, as well as impairing the
successful conclusion of the investigation. (iii) Individuals may be
contacted during preliminary information gathering, surveys, or
compliance projects concerning the administration of the internal
revenue laws before any individual is identified as the subject of an
investigation. Informing the individual of the matters required by this
provision would impede or compromise subsequent investigation.
(7) 5 U.S.C. 552a(e)(5). This provision of the Privacy Act
requires an agency to maintain all records which are used in making any
determination about an individual with such accuracy, relevance,
timeliness, and completeness as is reasonably necessary to assure
fairness to the individual in the determination. The reasons for
exempting this system of records from the foregoing provisions are as
follows: Since the law defines ``maintain'' to include the collection
of information, compliance with the foregoing provision would prohibit
the initial collection of any data not shown to be accurate, relevant,
timely, and complete at the moment of its collection. In gathering
information during the course of a criminal investigation, it is not
feasible or possible to determine completeness, accuracy, timeliness,
or relevancy prior to collection of the information. Facts are first
gathered and then placed into a cohesive order which objectively proves
or disproves criminal behavior on the part of a suspect. Seemingly
nonrelevant, untimely, or incomplete information when gathered may
acquire new significance as an investigation progresses. The
restrictions of the foregoing provision could impede investigators in
the preparation of a complete investigative report.
(8) 5 U.S.C. 552a(e)(8). This provision of the Privacy Act
requires an agency to make reasonable efforts to serve notice on an
individual when any record on such individual is made available to any
person under compulsory legal process when such process becomes a
matter of public record. The reason for exempting this system of
records from the foregoing provision is as follows: The notice
requirement of the foregoing provision could prematurely reveal the
existence of criminal investigations to individuals who are the subject
of such investigations.
As required by Executive Order 12291, it has been determined that
this proposed rule is not a ``major'' rule and, therefore, does not
require a Regulatory Impact Analysis.
Pursuant to the requirements of the Regulatory Flexibility Act, 5
U.S.C. 601-612, it is hereby certified that this rule will not have
significant economic impact on a substantial number of small entities.
In accordance with the provisions of the Paperwork Reduction Act
of 1980, the Department of the Treasury has determined that this
proposed rule would not impose new recordkeeping, application,
reporting, or other types of information collection requirements.
Lists of Subjects in 31 CFR Part 1
Privacy.
Part 1 of Title 31 of the Code of Federal Regulations is amended
as follows:
PART 1--[AMENDED]
1. The authority citation for part 1 continues to read as follows:
Authority: 5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued
under 5 U.S.C. as amended. Subpart C also issued under 5 U.S.C.
552a.
Sec. 1.36 [Amended]
2. Section 1.36 of subpart C is amended by adding the following
text to the table in paragraphs (a)(1) and (b)(1) under the heading THE
INTERNAL REVENUE SERVICE
* * * * *
(a) * * *
(1) * * *
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Name of System No.
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* * * * *
Automated Information Analysis System........................ 46.050
* * * * *
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* * * * *
(b) * * *
(1) * * *
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Name of System No.
------------------------------------------------------------------------
* * * * *
Automated Information Analysis System........................ 46.050
* * * * *
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* * * * *
Dated: August 21, 1996.
Alex Rodriguez,
Deputy Assistant Secretary (Administration).
[FR Doc. 96-24668 Filed 9-25-96: 8:45 am]
BILLING CODE 4830-01-F
