[Federal Register Volume 76, Number 50 (Tuesday, March 15, 2011)]
[Proposed Rules]
[Pages 13932-13937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6011]


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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.

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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

[[Page 13933]]

current Sec.  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

[[Page 13934]]

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 Sec.  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 Sec.  
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

[[Page 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:


Sec.  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.

[[Page 13936]]

    (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 Sec.  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

[[Page 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 Sec.  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