13932 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

review its existing regulations and to 

identify whether any of its existing 

regulations should be modified or 

repealed. Second, the Department has 

created a link on the DOS Internet site 

to an e-mail in-box at 

RegulatoryReview@State.gov, which 

interested parties can use to identify to 

DOS—on a continuing basis— 

regulations that may be in need of 

review in the future. These steps will 

help the Department ensure that its 

regulations remain necessary, properly 

tailored, and have up-to-date 

requirements that effectively achieve 

regulatory objectives without imposing 

unwarranted costs. 

Request for Information 

Pursuant to the Executive Order, the 

Department is developing a preliminary 

plan for the periodic review of its 

existing regulations and reporting 

obligations. The Department’s goal is to 

create a systematic method for 

identifying those significant rules that 

are obsolete or simply no longer make 

sense. While this review will focus on 

the elimination of rules that are no 

longer warranted, DOS will also 

consider strengthening, complementing, 

or modernizing rules where necessary or 

appropriate—including, as relevant, 

undertaking new rulemakings. 

Consistent with the Department’s 

commitment to public participation in 

the rulemaking process, the Department 

is beginning this process by soliciting 

views from the public on how best to 

conduct its analysis of existing DOS 

rules and how best to identify those 

rules that might be modified or 

repealed. It is also seeking views from 

the public on specific rules or 

Department-imposed obligations that 

should be altered or eliminated. In 

short, engaging the public in an open, 

transparent process is a crucial first step 

in DOS’s review of its existing 

regulations. 

List of Questions for Commenters 

The following list of questions is 

intended solely to assist in the 

formulation of comments and is not 

intended to be exhaustive or restrict the 

issues that the public might want to 

address. The Department requests that 

anyone submitting comments specify 

the regulation or reporting requirement 

at issue, providing legal citation when 

known, and the reasons why the 

regulation or reporting requirement 

should be modified or repealed. 

(1) How can the Department best 

promote meaningful periodic reviews of 

its existing rules and how can it best 

identify those rules that might be 

modified or repealed? 

(2) What factors should the agency 

consider in selecting and prioritizing 

rules and reporting requirements for 

review? 

(3) Are there regulations that simply 

make no sense or have become 

unnecessary, ineffective, or ill advised 

and, if so, what are they? 

(4) Are there rules that are still 

necessary, but have not operated as well 

as expected such that a stronger or 

different approach is justified? 

(5) Does the Department currently 

collect information that it does not need 

or use effectively to achieve regulatory 

objectives? 

(6) Are there regulations, reporting 

requirements, or regulatory processes 

that are unnecessarily complicated or 

could be streamlined to achieve 

regulatory objectives in more efficient 

ways? 

(7) Can new technologies be leveraged 

to modify or do away with existing 

regulatory or reporting requirements? 

(8) How can the Department best 

obtain and consider accurate, objective 

information and data about the costs, 

burdens, and benefits of existing 

regulations? Are there existing sources 

of data the Department can use to 

evaluate the post-promulgation effects 

of regulations over time? 

(9) Are there regulations that are 

working well that can be expanded or 

used as a model to fill gaps in other 

DOS regulatory programs? 

(10) Are there other concerns that 

DOS should consider consistent with 

Executive Order 13563? 

The Department notes that this RFI is 

issued solely for information and 

program-planning purposes. While 

responses to this RFI do not bind DOS 

to any further actions related to the 

response, all submissions will be made 

publicly available on http:// 

www.regulations.gov. 

Dated: March 3, 2011. 

Patrick F. Kennedy, 

Under Secretary, Office of the Undersecretary 

for Management, Department of State. 

[FR Doc. 2011–5813 Filed 3–14–11; 8:45 am] 

BILLING CODE 4710–24–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[REG–140108–08] 

RIN 1545–BI29 

Disclosure of Information to State 

Officials Regarding Tax-Exempt 

Organizations 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations that amend 

existing regulations to reflect changes to 

section 6104(c) of the Internal Revenue 

Code (Code) made by the Pension 

Protection Act of 2006 (PPA). These 

rules provide guidance to states 

regarding the process by which they 

may obtain or inspect certain returns 

and return information (including 

information about final and proposed 

denials and revocations of tax-exempt 

status) for the purpose of administering 

state laws governing certain tax-exempt 

organizations and their activities. These 

regulations will affect such exempt 

organizations, as well as those state 

agencies choosing to obtain information 

from the Internal Revenue Service (IRS) 

under section 6104(c). 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by June 13, 2011. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–140108–08), Room 

5203, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–140108– 

08), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov (IRS REG–140108– 

08). 

FOR FURTHER INFORMATION CONTACT: 

Concerning submission of comments, 

Oluwafunmilayo Taylor, (202) 622–7180 

(not a toll-free number); concerning the 

proposed regulations, Casey Lothamer, 

(202) 622–6070 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

I. In General 

This document contains proposed 

amendments to 26 CFR part 301 under 

section 6104(c), which will replace 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 13933 

current § 301.6104(c)-1 in its entirety. 

Section 6104(c) governs when the IRS 

may disclose to state officials certain 

information about organizations 

described in section 501(c)(3) 

(‘‘charitable organizations’’), 

organizations that have applied for 

recognition as organizations described 

in section 501(c)(3) (‘‘applicants’’), and 

certain other exempt organizations. 

Section 6104(c) was added to the Code 

by section 101(e) of the Tax Reform Act 

of 1969 (Pub. L. 91–172, 83 Stat. 523) 

and significantly amended by section 

1224(a) of the PPA (Pub. L. 109–280, 

120 Stat. 1091). 

Section 501(c)(3) organizations may 

be affected by the expanded disclosures 

to state officials authorized under the 

statute and proposed regulations. First, 

the IRS is now authorized (under new 

section 6104(c)(2), as added by the PPA) 

to disclose information about certain 

proposed revocations and proposed 

denials before an administrative appeal 

has been made and a final revocation or 

denial has been issued. For those 

organizations that have received a 

determination letter stating that they are 

described in section 501(c)(3), the IRS 

may disclose a proposed revocation 

(before any administrative appeal) to an 

appropriate state officer (ASO). This 

broader authority applies both where 

the organization was required under 

section 508 to apply for the 

determination letter and where the 

organization elected to apply for a 

determination letter even though it was 

not required to do so. The IRS continues 

to be authorized to disclose final 

revocations and final denials issued 

after any administrative appeal has been 

concluded for any section 501(c)(3) 

organization. 

Second, under the authority of new 

section 6104(c)(2)(D), as added by the 

PPA, the IRS may disclose returns or 

return information of any section 

501(c)(3) organization to ASOs on its 

own initiative, regardless of whether it 

has initiated an examination, if it 

determines that the information may be 

evidence of noncompliance with state 

laws under the jurisdiction of the ASO. 

Thus, if the IRS believes these 

conditions are met, it may, for example, 

disclose to ASOs a proposed revocation 

of exemption for a section 501(c)(3) 

organization that does not have a 

determination letter. All disclosures 

authorized under section 6104(c) may 

be made only if the state receiving the 

information is following applicable 

disclosure, recordkeeping and safeguard 

procedures. 

The statute and proposed regulations 

also permit disclosure of information to 

state officials about all applicants for 

section 501(c)(3) status. 

Exempt organizations other than 

section 501(c)(3) organizations also may 

be affected by the disclosures to state 

officials authorized under the statute 

and proposed regulations. The IRS is 

authorized to disclose returns and 

return information of these 

organizations to ASOs upon written 

request, but only to the extent necessary 

to administer state laws regulating the 

solicitation or administration of 

charitable funds or charitable assets. 

Again, all such disclosures may be made 

only if the state receiving the 

information is following applicable 

disclosure, recordkeeping and safeguard 

procedures. 

Section 6104(c)(1), which is 

unchanged by the PPA, directs the IRS 

to share certain information with ASOs 

regarding charitable organizations and 

applicants. Specifically, section 

6104(c)(1) provides that the IRS is to 

notify the ASO of the following final 

determinations: (1) A refusal to 

recognize an entity as an organization 

described in section 501(c)(3); (2) the 

operation of a section 501(c)(3) 

organization in a manner not meeting, 

or no longer meeting, the requirements 

of its exemption; and (3) the mailing of 

a notice of deficiency for any tax 

imposed under section 507, chapter 41, 

or chapter 42. See section 6104(c)(1)(A) 

and (c)(1)(B). The directive under 

section 6104(c)(1)(A) to notify ASOs of 

an organization no longer meeting the 

requirements for exemption under 

section 501(c)(3) includes not only 

notice of a revocation of exemption, but 

also notice (when the IRS is so 

informed) that a charitable organization 

is terminating or has dissolved in 

accordance with its governing 

documents. Upon request, an ASO may 

inspect and copy the returns, filed 

statements, records, reports, and other 

information relating to a final 

determination as described in this 

paragraph, as are relevant to any 

determination under state law. See 

section 6104(c)(1)(C). 

II. PPA Changes to Section 6104(c) 

The PPA amended section 6104(c) by 

striking paragraph (2) and inserting new 

paragraphs (2) through (6) as follows. 

(1) The IRS may disclose to an ASO 

proposed refusals to recognize 

organizations as charitable 

organizations, and proposed revocations 

of such recognition. The PPA also 

allows disclosure of notices of proposed 

deficiencies of excise taxes imposed by 

section 507 and chapters 41 and 42 

relating to charitable organizations. See 

section 6104(c)(2)(A)(i) and (c)(2)(A)(ii). 

Previously, only final determinations of 

this kind (denials of recognition, 

revocations, and notices of deficiency) 

could be disclosed under section 

6104(c). 

(2) The IRS may disclose to an ASO 

the names, addresses, and taxpayer 

identification numbers of applicants. 

See section 6104(c)(2)(A)(iii). 

Previously, information on applicants, 

other than information relating to a 

denial of recognition, could not be 

disclosed under section 6104(c). 

(3) The IRS may disclose to an ASO 

the returns and return information of 

organizations with respect to which 

information is disclosed as described in 

paragraphs (1) and (2) of this section II 

(proposed determinations and applicant 

identifying information). See section 

6104(c)(2)(B). Prior law allowed for 

disclosure under section 6104(c) only of 

returns and return information related 

to final determinations. 

(4) Proposed determinations, 

identifying information, and the related 

returns and return information with 

respect to charitable organizations and 

applicants may be disclosed to an ASO 

only upon the ASO’s written request 

and only as necessary to administer 

state laws regulating charitable 

organizations, such as laws governing 

tax-exempt status, charitable trusts, 

charitable solicitation, and fraud. See 

section 6104(c)(2)(C). Prior law 

provided for automatic disclosure 

(without a request), but only of final 

determinations and their related returns 

and return information. 

(5) The IRS may disclose to an ASO 

on its own initiative (without a written 

request) returns and return information 

with respect to charitable organizations 

and applicants if the IRS determines 

that this information might constitute 

evidence of noncompliance with the 

laws under the jurisdiction of the ASO. 

See section 6104(c)(2)(D). There was no 

such provision under section 6104(c) 

previously. 

(6) The IRS may disclose returns and 

return information of section 501(c) 

organizations other than those described 

in section 501(c)(1) or (c)(3) to an ASO 

upon the ASO’s written request, but 

only to the extent necessary in 

administering state laws relating to the 

solicitation or administration of 

charitable funds or charitable assets of 

such organizations. See section 

6104(c)(3). Previously, only information 

relating to charitable organizations or 

applicants was disclosed under section 

6104(c). 

(7) Returns and return information of 

organizations and taxable persons 

disclosed under section 6104(c) may be 

disclosed in civil administrative and 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

13934 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

civil judicial proceedings pertaining to 

the enforcement of state laws regulating 

such organizations, under procedures 

prescribed by the IRS similar to those 

under section 6103(h)(4). See section 

6104(c)(4). There was no such provision 

under section 6104(c) previously. 

(8) No return or return information 

may be disclosed under section 6104(c) 

to the extent the IRS determines that 

such disclosure would seriously impair 

federal tax administration. See section 

6104(c)(5). This disclosure prohibition, 

though new in the PPA, was provided 

previously by regulation. See current 

§ 301.6104(c)–1(b)(3)(ii). 

(9) The IRS may disclose returns and 

return information under section 

6104(c) to a state officer or employee 

designated by the ASO to receive such 

information on the ASO’s behalf. See 

section 6104(c)(2)(C) (flush language) 

and (c)(3). Prior law did not provide for 

IRS disclosures to persons other than 

ASOs. 

(10) An ASO is defined as the state 

attorney general, state tax officer, any 

state official charged with overseeing 

charitable organizations (in the case of 

charitable organizations and applicants), 

and the head of the state agency charged 

with the primary responsibility for 

overseeing the solicitation of funds for 

charitable purposes (in the case of 

section 501(c) organizations other than 

those described in section 501(c)(1) or 

(c)(3)). See section 6104(c)(6)(B). Before 

its amendment by the PPA, section 

6104(c)(2) defined ASO as the state 

attorney general, state tax officer, or any 

state official charged with overseeing 

organizations of the type described in 

section 501(c)(3). 

III. Related PPA Provisions 

The PPA amended section 6103(p) to 

make the disclosure of returns and 

return information under section 

6104(c) subject to the disclosure, 

recordkeeping, and safeguard provisions 

of section 6103. These provisions 

include— 

(1) section 6103(a), which is the 

general prohibition on the disclosure of 

returns and return information, except 

as authorized by Title 26 of the United 

States Code; 

(2) section 6103(p)(3), which requires 

the IRS to maintain permanent 

standardized records of all requests for 

inspection or disclosure of returns or 

return information under section 

6104(c) and of all such information 

inspected or disclosed pursuant to those 

requests; and 

(3) section 6103(p)(4), which requires 

an ASO, as a condition for receiving 

returns or return information under 

section 6104(c), to establish and 

maintain certain safeguards, such as 

keeping permanent standardized 

records of all requests and disclosures, 

maintaining a secure information 

storage area, restricting access to the 

information, and providing whatever 

other safeguards the IRS deems 

necessary to protect the confidentiality 

of the information. See 

§ 301.6103(p)(4)–1 and IRS Publication 

1075, Tax Information Security 

Guidelines for Federal, State and Local 

Agencies and Entities. Publication 1075 

can be found at http://www.irs.gov/ 

formspubs. 

The PPA also included amendments 

to sections 7213, 7213A, and 7431 to 

impose civil and criminal penalties for 

the unauthorized disclosure or 

inspection of section 6104(c) 

information. 

IV. IRS Disclosure Procedures 

In general, before any federal or state 

agency may receive returns and return 

information from the IRS under a 

particular Code provision, it must file 

with the IRS a report detailing the 

physical, administrative, and technical 

safeguards implemented by the agency 

to protect this information from 

unauthorized inspection or disclosure. 

Only upon approval of these safeguards 

by the IRS, as well as satisfaction of any 

other statutory requirements (such as 

submission of a written request), may an 

agency receive the information to which 

it is entitled under the Code, and then 

only for the use specified by the 

relevant statute. See section 6103(p)(4). 

Under various disclosure programs, 

the IRS and other federal and state 

agencies often execute agreements 

detailing the responsibilities of the 

parties and the terms and parameters of 

the disclosure arrangement. For 

example, under section 6103(d), the IRS 

executes a disclosure agreement (the 

‘‘Basic Agreement’’) with each state tax 

agency to which it discloses 

information. The Basic Agreement, 

which serves as the written request 

required by section 6103(d), has been 

the foundation of the state tax 

disclosure program under this provision 

of the Code for over 30 years. See 

Internal Revenue Manual Exhibit 

11.3.32–1 (sample Basic Agreement). 

After the PPA, the IRS revised its 

disclosure procedures under section 

6104(c) to model them after the highly 

successful section 6103(d) program. The 

section 6104(c) program uses a 

disclosure agreement patterned after the 

Basic Agreement but tailored to the 

specific requirements and restrictions of 

section 6104(c). 

Explanation of Provisions 

These proposed regulations provide 

guidance regarding disclosures under 

section 6104(c), as amended by the PPA. 

The PPA amendments to sections 

6104(c) and 6103 expand the scope of 

information the IRS may disclose to an 

ASO, but make such disclosures 

contingent on the ASO adopting the 

safeguard standards and procedures of 

section 6103 that apply to federal and 

state agencies that receive returns and 

return information under other 

provisions of the Code. Accordingly, 

these proposed regulations provide that, 

without prior safeguard approval, the 

IRS will not give automatic notification 

of any determinations or other 

information that may be disclosed under 

section 6104(c). 

Under these proposed regulations, the 

IRS may (and currently does) require an 

ASO to enter into a disclosure 

agreement with the IRS, which will 

stipulate the procedures for disclosure 

under section 6104(c), as well as the 

restrictions on use and redisclosure. 

These proposed regulations provide that 

this agreement, or any similar 

document, satisfies the requirement 

under section 6104(c) for a written 

request for disclosure. 

An ASO who meets the safeguard and 

other procedural requirements of 

section 6103(p)(4) may receive 

information from the IRS to be used in 

the administration of state laws 

governing charitable organizations, as 

well as laws governing the solicitation 

or administration of charitable funds or 

charitable assets of certain 

noncharitable exempt organizations. 

The information available to ASOs 

under these proposed regulations not 

only is greater in scope than what was 

available under section 6104(c) before 

its amendment by the PPA, but comes 

at an earlier stage in the IRS 

administrative and enforcement 

processes. Thus, the IRS may disclose 

such information as whether an 

organization has applied for recognition 

as a charitable organization and, if so, 

whether the IRS proposes to deny such 

recognition, or the organization has 

withdrawn its application; whether an 

organization’s charitable status has 

terminated; whether the IRS proposes to 

assess any chapter 42 excise taxes (for 

example, the tax on excess benefit 

transactions under section 4958); and 

whether the IRS has revoked an 

organization’s exemption, or proposes to 

revoke the recognition of its exemption. 

Without a written request, but still 

subject to the safeguard requirements of 

section 6103(p)(4), the IRS has the 

authority under section 6104(c)(2)(D) to 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 13935 

disclose returns and return information 

of charitable organizations and 

applicants if it determines that such 

information may constitute evidence of 

noncompliance with the laws under the 

ASO’s jurisdiction. The IRS may make 

these disclosures on its own initiative. 

These proposed regulations clarify that 

the IRS’ authority under section 

6104(c)(2)(D) is in addition to its 

disclosure authority under other 

provisions of section 6104(c)(1) and 

(c)(2), to the effect that discretionary 

disclosures may be made before the IRS 

issues a proposed determination or 

takes other action. The proposed 

regulations also make clear that the 

determination required by the statute 

concerns possible noncompliance with 

state laws regulating charitable 

organizations and not just any state law 

violation. 

The disclosure provisions of section 

6104(c), as amended by the PPA, offer 

significant advantages to states in their 

enforcement efforts. The ability of the 

IRS to disclose returns and return 

information early in its own 

administrative and enforcement 

processes, as well as the IRS’ authority 

under section 6104(c)(2)(D) to disclose 

information on its own initiative, greatly 

enhance the administration and 

enforcement of state laws, both tax and 

nontax, governing charitable activities, 

funds, and assets. 

These proposed regulations define 

certain key terms for purposes of section 

6104(c), including ‘‘appropriate state 

officer’’, ‘‘return’’, ‘‘return information’’, 

and ‘‘taxable person.’’ 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is 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) and the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) do not apply to the proposed 

regulations; therefore, a regulatory 

flexibility analysis is not required. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, the proposed 

regulations have been submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comments 

regarding their impact on small 

businesses. 

Comments and Requests for a Public 

Hearing 

Before these proposed regulations are 

adopted as final, any written (signed 

original and 8 copies) or electronic 

comments timely submitted to the IRS 

will be considered. The IRS and 

Treasury Department request comments 

on the clarity of these proposed 

regulations and how they might be 

made easier to understand. Of particular 

interest are comments on whether 

paragraph (e) of these proposed 

regulations, describing the organizations 

to which disclosure applies, lists all the 

organizations with respect to which 

ASOs might legitimately need 

information. All comments will be 

available for public inspection and 

copying. A public hearing will be 

scheduled if requested in writing by any 

person who timely submits written 

comments. If a public hearing is 

scheduled, notice of the date, time, and 

place for the public hearing will be 

published in the Federal Register. 

Drafting Information 

The principal author of these 

regulations is Casey Lothamer of the 

Office of Division Counsel/Associate 

Chief Counsel (Tax Exempt and 

Government Entities), though other 

persons in 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. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 301 is 

proposed to be 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 301.6104(c)–1 also issued under 26 

U.S.C. 6104(c). * * * 

Par. 2. Section 301.6104(c)-1 is 

revised to read as follows: 

§ 301.6104(c)-1 Disclosure of certain 

information to state officials. 

(a) In general. (1) Subject to the 

disclosure, recordkeeping, and 

safeguard provisions of section 6103, 

and upon written request by an 

appropriate state officer (ASO, as 

defined in paragraph (i)(1) of this 

section), the IRS may disclose or make 

available to the ASO the returns and 

return information described in 

paragraph (c) of this section with 

respect to— 

(i) any organization described or 

formerly described in section 501(c)(3) 

and exempt or formerly exempt from 

taxation under section 501(a) (a 

charitable organization); or 

(ii) any organization that has applied 

for recognition as an organization 

described in section 501(c)(3) (an 

applicant). 

Such information shall be disclosed 

or made available only as necessary to 

administer state laws regulating 

charitable organizations. 

(2) Subject to the disclosure, 

recordkeeping, and safeguard provisions 

of section 6103, and upon written 

request by an ASO, the IRS may disclose 

or make available to the ASO returns 

and return information regarding any 

organization described or formerly 

described in section 501(c) other than 

section 501(c)(1) or (c)(3). Such 

information shall be disclosed or made 

available only as necessary to 

administer state laws regulating the 

solicitation or administration of the 

charitable funds or charitable assets of 

these organizations. 

(b) Disclosure agreement. The IRS 

may require an ASO to execute a 

disclosure agreement or similar 

document specifying the procedures, 

terms, and conditions for the disclosure 

or inspection of information under 

section 6104(c), including compliance 

with the safeguards prescribed by 

section 6103(p)(4), as well as specifying 

the information to be disclosed. Such an 

agreement or similar document shall 

constitute the request for disclosure 

required by section 6104(c)(1)(C), as 

well as the written request required by 

section 6104(c)(2)(C)(i) and (c)(3). For 

security guidelines and other safeguards 

for protecting returns and return 

information, see guidance published by 

the IRS. See, for example, IRS 

Publication 1075, ‘‘Tax Information 

Security Guidelines for Federal, State 

and Local Agencies and Entities.’’ 

(c) Disclosures regarding charitable 

organizations and applicants. (1) With 

respect to any organization described in 

paragraph (d) of this section, the IRS 

may disclose or make available for 

inspection under section 6104(c)(1) and 

(c)(2) to an ASO the following returns 

and return information with respect to 

a charitable organization or applicant: 

(i) A refusal or proposed refusal to 

recognize an organization’s exemption 

as a charitable organization (a final or 

proposed denial letter). 

(ii) Information regarding a grant of 

exemption following a proposed denial. 

(iii) A revocation of exemption as a 

charitable organization (a final 

revocation letter), including a notice of 

termination or dissolution. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

13936 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 

(iv) A proposed revocation of 

recognition of exemption as a charitable 

organization (a proposed revocation 

letter). 

(v) Information regarding the final 

disposition of a proposed revocation of 

recognition other than by final 

revocation. 

(vi) A notice of deficiency or 

proposed notice of deficiency of tax 

imposed under section 507 or chapter 

41 or 42 on the organization or a taxable 

person (as described in paragraph (i)(4) 

of this section). 

(vii) Information regarding the final 

disposition of a proposed notice of 

deficiency of tax imposed under section 

507 or chapter 41 or 42 on the 

organization other than by issuance of a 

final notice of deficiency. 

(viii) The names, addresses, and 

taxpayer identification numbers of 

applicants for charitable status, 

provided on an applicant-by-applicant 

basis or by periodic lists of applicants. 

Under this provision the IRS may 

respond to inquiries from an ASO as to 

whether a particular organization has 

applied for recognition of exemption as 

a charitable organization. 

(ix) Information regarding the final 

disposition of an application for 

recognition of exemption where no 

proposed denial letter is issued, 

including whether the application was 

withdrawn or whether the applicant 

failed to establish its exemption. 

(x) Returns and other return 

information relating to the return 

information described in this paragraph 

(c)(1), except for returns and return 

information relating to proposed notices 

of deficiency described in paragraph 

(c)(1)(vi) of this section with respect to 

taxable persons. 

(2) The IRS may disclose or make 

available for inspection returns and 

return information of a charitable 

organization or applicant, if the IRS 

determines that such information might 

constitute evidence of noncompliance 

with the laws under the jurisdiction of 

the ASO regulating charitable 

organizations and applicants. Such 

information may be disclosed on the 

IRS’ own initiative. Disclosures under 

this paragraph (c)(2) may be made 

before the IRS issues a proposed 

determination (denial of recognition, 

revocation, or notice of deficiency) or 

any other action by the IRS described in 

this section. 

(d) Organizations to which disclosure 

applies. Regarding the information 

described in paragraphs (a)(2) and (c) of 

this section, the IRS will disclose or 

make available for inspection to an ASO 

such information only with respect to— 

(1) an organization formed under the 

laws of the ASO’s state; 

(2) an organization, the principal 

office of which is located in the ASO’s 

state; 

(3) an organization that, as 

determined by the IRS, is or might be 

subject to the laws of the ASO’s state 

regulating charitable organizations or 

the solicitation or administration of 

charitable funds or charitable assets; or 

(4) a private foundation required by 

§ 1.6033–2(a)(iv) to list the ASO’s state 

on any of the foundation’s returns filed 

for its last five years. 

(e) Disclosure limitations. 

Notwithstanding any other provision of 

this section, the IRS will not disclose or 

make available for inspection under 

section 6104(c) any information, the 

disclosure of which it determines would 

seriously impair federal tax 

administration, including, but not 

limited to— 

(1) identification of a confidential 

informant or interference with a civil or 

criminal tax investigation; and 

(2) information obtained pursuant to a 

tax convention between the United 

States and a foreign government (see 

section 6105(c)(2) for the definition of 

tax convention). 

(f) Disclosure recipients—(1) In 

general. The IRS may disclose returns 

and return information under section 

6104(c) to, or make it available for 

inspection by— 

(i) an ASO, as defined in paragraph 

(i)(1) of this section, or 

(ii) a person other than an ASO, but 

only if that person is a state officer or 

employee designated by the ASO to 

receive information under section 

6104(c) on behalf of the ASO, as 

specified in paragraph (f)(2) of this 

section. 

(2) Designation by ASO. An ASO may 

designate state officers or employees to 

receive information under section 

6104(c) on the ASO’s behalf by 

specifying in writing each person’s 

name and job title, and the name and 

address of the person’s office. The ASO 

must promptly notify the IRS in writing 

of any additions, deletions, or other 

changes to the list of designated 

persons. 

(g) Redisclosure. An ASO to whom a 

return or return information has been 

disclosed may thereafter disclose such 

information— 

(1) to another state officer or 

employee only as necessary to 

administer state laws governing 

charitable organizations or state laws 

regulating the solicitation or 

administration of charitable funds or 

charitable assets of noncharitable 

exempt organizations; or 

(2) except as provided in paragraph 

(h)(1) of this section, to another state 

officer or employee who is personally 

and directly preparing for a civil 

proceeding before a state administrative 

body or court in a matter involving the 

enforcement of state laws regulating 

organizations with respect to which 

information can be disclosed under this 

section, solely for use in such a 

proceeding, but only if— 

(i) the organization or a taxable person 

is a party to the proceeding, or the 

proceeding arose out of, or in 

connection with, determining the civil 

liability of the organization or a taxable 

person, or collecting such civil liability, 

under state laws governing 

organizations with respect to which 

information can be disclosed under this 

section; 

(ii) the treatment of an item reflected 

on such a return is directly related to 

the resolution of an issue in the 

proceeding; or 

(iii) the return or return information 

directly relates to a transactional 

relationship between the organization or 

a taxable person and a person who is a 

party to the proceeding that directly 

affects the resolution of an issue in the 

proceeding. 

(h) Redisclosure limitations. (1) Before 

disclosing in a state administrative or 

judicial proceeding, or to any party as 

provided by paragraph (g)(2) of this 

section, any return or return information 

received under section 6104(c), the ASO 

shall notify the IRS of the intention to 

make such a disclosure. No state officer 

or employee shall make such a 

disclosure except in accordance with 

any conditions the IRS might impose in 

response to the ASO’s notice of intent. 

No such disclosure shall be made if the 

IRS determines that the disclosure 

would seriously impair Federal tax 

administration. 

(2) An ASO to whom a return or 

return information has been disclosed 

shall not disclose that information to an 

agent or contractor. 

(i) Definitions. (1) Appropriate state 

officer means— 

(i) the state attorney general; 

(ii) the state tax officer; 

(iii) with respect to a charitable 

organization or applicant, any state 

officer other than the attorney general or 

tax officer charged with overseeing 

charitable organizations; and 

(iv) with respect to a section 501(c) 

organization that is not described in 

section 501(c)(1) or (c)(3), the head of 

the agency designated by the state 

attorney general as having primary 

responsibility for overseeing the 

solicitation of funds for charitable 

purposes. A state officer described in 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Proposed Rules 13937 

paragraph (i)(1)(iii) or (i)(1)(iv) of this 

section must show that the officer is an 

ASO by presenting a letter from the state 

attorney general describing the 

functions and authority of the officer 

under state law, with sufficient facts for 

the IRS to determine that the officer is 

an ASO. 

(2) Return has the same meaning as in 

section 6103(b)(1). 

(3) Return information has the same 

meaning as in section 6103(b)(2). 

(4) Taxable person means any person 

who is liable or potentially liable for 

excise taxes under chapter 41 or 42. 

Such a person includes— 

(i) a disqualified person described in 

section 4946(a)(1), 4951(e)(4), or 4958(f); 

(ii) a foundation manager described in 

section 4946(b); 

(iii) an organization manager 

described in section 4955(f)(2) or 

4958(f)(2); 

(iv) a person described in section 

4958(c)(3)(B); 

(v) an entity manager described in 

section 4965(d); and 

(vi) a fund manager described in 

section 4966(d)(3). 

(j) Failure to comply. Upon a 

determination that an ASO has failed to 

comply with the requirements of section 

6103(p)(4), the IRS may take the actions 

it deems necessary to ensure 

compliance, including the refusal to 

disclose any further returns or return 

information to the ASO until the IRS 

determines that the requirements have 

been met. For procedures for the 

administrative review of a 

determination that an authorized 

recipient has failed to safeguard returns 

or return information, see 

§ 301.6103(p)(7)-1. 

(k) Effective/applicability date. The 

rules of this section apply to taxable 

years beginning on or after the date of 

publication in the Federal Register of 

the Treasury decision adopting these 

rules as final regulations. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2011–6011 Filed 3–14–11; 8:45 am] 

BILLING CODE 4830–01–P 

POSTAL SERVICE 

39 CFR Part 952 

Rules of Practice in Proceedings 

Relative to False Representation and 

Lottery Orders 

AGENCY: Postal Service. 

ACTION: Proposed rule. 

SUMMARY: The Postal Service is 

proposing to adopt revised rules for 

proceedings relative to false 

representation and lottery orders. The 

primary purpose of this exercise is to 

update and align the rules with current 

practices. 

DATES: Comments must be received on 

or before April 14, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Diane M. Mego, Esq., 703–812–1905. 

SUPPLEMENTARY INFORMATION: The Postal 

Service is proposing to adopt revised 

rules for 39 CFR Part 952. These revised 

rules of procedure have the same 

general coverage as the existing rules. 

However, the revised rules have been 

updated, are more comprehensive than 

the existing rules, and are intended to 

reflect more precisely current practice. 

These revised rules will completely 

replace the existing rules of practice and 

once adopted as a final rule, will be 

effective immediately in accordance 

with section 952.2. While the language 

of the proposed rules may have changed 

considerably for clarity, and to reflect 

more precisely the practices in these 

matters, we here identify the most 

significant changes of substance. 

Section 952.7 is renamed from ‘‘Notice 

of answer and hearing’’ to ‘‘Notice of 

docketing and answer.’’ Under the 

previous rules, a hearing was 

automatically scheduled for hearing 

thirty days from receipt of the 

complaint. Hearings are now scheduled 

as needed by the presiding officer after 

the pleadings have been received. The 

notice from the Recorder will include 

the notice that the matter has been 

docketed and advise Respondent that an 

answer is required within 30 days. 

Section 952.8 is modified to simplify 

service of the complaint and now 

requires Complainant to complete 

service of the notice of docketing and 

answer due date along with a copy of 

the complaint. Previously, the Recorder 

was required to forward the complaint 

and the notice of docketing and hearing 

due date to the local postmaster, who in 

turn served Respondent. The local 

postmasters have been removed from 

the procedure. The Recorder will now 

forward a copy of the notice of 

docketing and answer due date (see 

revised section 952.7), a copy of these 

rules and a docketed copy of the 

complaint to Complainant. Complainant 

is then responsible for obtaining service 

through certified mail, return receipt 

requested. Service is now complete 

upon mailing. Complainant is required 

to file either a receipt acknowledging 

the delivery of the notice or an affidavit 

of service if the mail is returned. Service 

may also be accomplished by hand. 

Section 952.9 is modified to require 

the parties, after the filing of the initial 

complaint, to serve all pleadings, 

motions, proposed orders and other 

documents for the record on the 

opposing party and provide an 

appropriate affidavit of service. The new 

rule clarifies that discovery does not 

need to be filed with the presiding 

officer unless the parties are seeking to 

include it in the record or the presiding 

officer so orders. In addition, the rule is 

changed to allow the filing of pleadings, 

motions, proposed orders and other 

documents by facsimile and electronic 

mail at the discretion of the presiding 

officer. 

Section 952.11 is modified to 

authorize the presiding officer to rule 

that a party that fails to respond to or 

comply with any order is in default. 

Currently, only a Respondent can be 

found in default and only for either 

failing to file an answer or for failing to 

appear at a hearing. The new rule will 

allow the presiding officer to enter a 

default against a non-responding party 

even if the initial pleadings have been 

received. 

Section 952.16 requires an attorney 

representing Respondent to file a notice 

of appearance. An attorney for either 

party who is seeking to withdraw from 

representation must file a motion to 

withdraw, which will be granted at the 

discretion of the presiding officer. If a 

successor attorney is not appointed at 

the same time for Respondent, the 

withdrawn attorney must provide 

adequate contact information for 

Respondent. 

Section 952.17(b)(10) is added to 

allow the presiding officer to resolve the 

proceeding on the written record 

without a hearing either at the request 

of the parties or on the presiding 

officer’s own initiative. The current 

rules do not specifically allow for 

proceeding on the written record 

without a hearing. 

Section 952.17(b)(11) is added to 

allow for a hearing to be conducted by 

telephone, video conference, or other 

appropriate means. 

Section 952.21 is modified to allow 

the parties to participate in voluntary 

discovery without the intervention of 

the presiding officer and to clarify the 

discovery rules. 

Accordingly, the Postal Service 

invites public comment on the 

following proposed rules. 

List of Subjects in 39 CFR Part 952 

Administrative practice and 

procedure, Fraud, False 

Representations, Lotteries, Penalties, 

Postal Service. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS