CUNA Regulatory Comment Call
October 25, 1999
Treasury Study on Taxpayer Confidentiality
(NOT A MAJOR RULE)
The Department of the Treasury (Treasury) is soliciting comment on a study that is to be conducted regarding the scope and use of provisions regarding taxpayer confidentiality. A part of this study focuses on information disclosure by tax-exempt organizations. Comments are due to Treasury by November 15, 1999. Please submit your comments to CUNA by November 10. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn or Assistant General Counsel Jeffrey Bloch; or mail them to Mary or Jeff in c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. Click here for a copy of the solicitation or contact Jeff if you would like a copy sent to you.
BRIEF BACKGROUND
Section 6103 of the Internal Revenue Code (Code) prohibits disclosure of tax returns or returns information, except as otherwise authorized by the Code. Permitted disclosures include:
- disclosures to a taxpayer, or designee, pursuant to the taxpayer's consent;
- disclosures for purposes of tax administration;
- disclosures to government agencies for nontax purposes, such as child support programs and for verifying eligibility for certain programs; and
- disclosures for nontax law enforcement purposes.
Section 6104 of the Code permits the public to access information related to tax-exempt organizations. Such information includes the organization's application for tax exemption and the supporting documents, the Internal Revenue Service (IRS) determination letter, and the information returns filed under Section 6033. This information is available for public inspection at certain IRS offices and at the organization's principal office. Copies are also available upon request made to the organization or the IRS.
BRIEF DESCRIPTION OF THE SOLICITATION
Section 3802 of the IRS Restructuring and Reform Act of 1998 requires the Secretary of Treasury to study the scope and use of provisions regarding taxpayer confidentiality. The study will examine the following six topics:
- whether the public interest would be served by greater disclosure of information relating to tax-exempt organizations;
- the present protections for taxpayer privacy;
- the need for third parties to use tax return information;
- whether greater levels of voluntary compliance may be achieved by allowing the public to know who is not filing the legally required tax returns;
- the interrelationship of the taxpayer confidentiality provisions of the Internal Revenue Code of 1986 with other federal law (including the Freedom of Information Act); and
- the impact on taxpayer privacy of sharing tax return information for purposes of enforcing state and local tax laws, other than income tax laws.
Treasury is soliciting comments on the six topics described above and invites comments on the following questions:
- Would the public interest be served by allowing greater sharing between the IRS and other government agencies for joint investigations regarding laws affecting tax-exempt organizations? What restrictions should be imposed on the use of this information?
- Do the public inspection provisions of Section 6104 and Section 6110 of the Code provide adequate disclosure of IRS determinations affecting tax-exempt organizations? What additional information should be made available?
- Is the information currently reported by tax-exempt organizations adequate to ensure effective IRS oversight? What additional information should be reported? Should there be more detailed disclosures regarding transactions between tax-exempt organizations and their subsidiaries or affiliates?
- How is the privacy protection in Section 6103 of the Code beneficial or burdensome to taxpayers?
- Is the structure and/or administration of Section 6103 consistent, simple, and fair? What changes should be made?
- What is the relationship between taxpayer confidentiality in Section 6103 and tax law compliance? What effect would publishing the names of nonfilers have on compliance? What effect would broadening the scope of disclosures have on compliance?
- What is the impact of technology on the protection of taxpayer privacy and what safeguards may be necessary as a result?
- What is the impact of taxpayer privacy protection on government agencies' ability to receive critical information?
- Should tax information be used for nontax purposes? What factors should influence whether such information should be used? Should there be restrictions or conditions on the use of tax information that is obtained by consent?
- What factors should influence whether government agencies should be permitted to disclose tax information to private contractors?
- What changes should be made to either the safeguards or the consent process?
- What additional restrictions should be placed on recipients of tax information who later redisclose the information to other parties?
- How can privacy be balanced with information-sharing within the government?
QUESTIONS TO CONSIDER REGARDING TREASURY'S CONFIDENTIALITY STUDY
- Is there adequate public disclosure of IRS determinations affecting tax-exempt organizations?
- Is the information currently reported by tax-exempt organizations to the IRS adequate to ensure effective oversight?
- Is there a need for greater sharing between IRS and other government agencies regarding enforcement of laws affecting tax-exempt organizations? What restrictions should be placed on the use of such information?
- Other comments?
Leagues and credit unions should feel free to fax their responses to CUNA at 202-371-8240; e-mail them to Jeffrey Bloch at jbloch@cuna.com or mail them to CUNA's Regulatory Advocacy Department, Suite 300, 805 15th Street, NW, Washington, DC 20005. Thank you!!
