[Federal Register Volume 65, Number 207 (Wednesday, October 25, 2000)]
[Proposed Rules]
[Pages 63824-63826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27416]


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DEPARTMENT OF THE TREASURY

31 CFR Part 1


Internal Revenue Service: Privacy Act; Proposed Implementation

AGENCY: Office of the Secretary, Department of the Treasury.

ACTION: Proposed Rule.

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SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, 5 U.S.C. 552a, as amended, the Department of the Treasury, 
Internal Revenue Service, gives notice of a proposed amendment to this 
part to exempt a new system of records, the Third Party Contact 
Reprisal Records--Treasury/IRS 00.334, from certain provisions of the 
Privacy Act. The exemptions are intended to comply with the legal 
prohibitions against the disclosure of certain kinds of information and 
to protect certain information, about individuals, maintained in this 
system of records.

DATES: Comments must be received no later than November 24, 2000.

ADDRESSES: Please submit comments to Office of Governmental Liaison and 
Disclosure, Internal Revenue Service, 1111 Constitution Ave., NW., 
Washington, DC 20224. Persons wishing to review the comments should 
call 202-622-6240 to make an appointment with the Office of 
Governmental Liaison and Disclosure.

FOR FURTHER INFORMATION CONTACT: David Silverman, Tax Law Specialist, 
6103/Privacy Operations, Governmental Liaison and Disclosure, Internal 
Revenue Service at 202-622-3607.

SUPPLEMENTARY INFORMATION: Under 5 U.S.C. 552a(k)(2), the head of an 
agency

[[Page 63825]]

may promulgate rules to exempt a system of records from certain 
provisions of 5 U.S.C. 552a, if the system is investigatory material 
compiled for law enforcement purposes. The Internal Revenue Service 
compiles records in this system for law enforcement purposes. The Third 
Party Contact Reprisal Records--Treasury/IRS 00.334, contains records 
of third party contacts whose names are not revealed to the taxpayer 
because 7602(c) provides for an exception to third party contact 
notification when such notice may involve reprisal against any person.
     The Internal Revenue Service is hereby giving notice of a proposed 
rule to exempt Treasury/IRS, 00.334--Third Party Contact Reprisal 
Records, from certain provisions of the Privacy Act pursuant to 5 
U.S.C. 552a(k)(2). The provisions of the Privacy Act of 1974 from which 
exemption is claimed is as follows: 5 U.S.C. 552a(c)(3), 5 U.S.C. 
552a(d)(1), (2), (3), and (4), 5 U.S.C. 552a(e)(1), 5 U.S.C. 
552a(e)(4)(G), 5 U.S.C. 552a(e)(4)(H), 5 U.S.C. 552a(e)(4)(I), 5 U.S.C. 
552a(f).
    Pursuant to the provisions of 5 U.S.C. 552a(k)(2), it is proposed 
to exempt Treasury/IRS 00.334--Third Party Contact Reprisal Records, 
from certain provisions of the Privacy Act of 1974, because the system 
contains investigatory material compiled for law enforcement purposes. 
The data will be utilized to enforce 26 U.S.C. 6103 and 7602(c). The 
following are the reasons why this system of records maintained by the 
Internal Revenue Service is exempt pursuant to 5 U.S.C. 552a(k)(2) of 
the Privacy Act of 1974.

(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/her request. The reasons for 
exempting this system of records from the foregoing provision are:
    (i) Such release may lead to reprisal by the taxpayer against the 
third party contact or another person if the taxpayer guesses 
(correctly or incorrectly) who the third party contact was.
    (ii) Such release would provide the subject of an investigation 
with an accurate accounting of the date, nature, and purpose of each 
disclosure and the name and address of the person or agency to whom the 
disclosure was 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.
    (iii) Release to the individual of the disclosure accounting would 
alert the individual as to which agencies were investigating the 
subject 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(d)(1), (d)(2), (d)(3), (d)(4), (e)(4)(G), (H), 
and (f)

    These provisions of the Privacy Act relate to an individual's right 
to be notified of the existence of records pertaining to such 
individual; requirements for identifying an individual who requested 
access to records; the agency procedures relating to access to records 
and the contest of the information contained in such records and the 
administrative 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 an 
investigative file pertaining to such individual or grant access to an 
investigative file could lead to reprisal against the third party 
contact and/or others; 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. The reasons 
an exemption from this provision has been claimed 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) 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 that is necessary for the enforcement and administration of 
the Federal tax law. However, an exemption from the foregoing provision 
is needed because, particularly in the early stages of an 
investigation, it is not possible to determine the relevance or 
necessity of specific information.
    (ii) Relevance and necessity are questions of judgment and timing. 
What appears 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 and 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 Internal Revenue Service processes this information 
through the Service systems in order to forward the material to the 
appropriate agencies.
    The Department of the Treasury has determined that this proposed 
rule is not a ``significant regulatory action'' under Executive Order 
12866.
    Pursuant to the requirements of the Regulatory Flexibility Act, 5 
U.S.C. 601-612, it is hereby certified that these regulations will not 
significantly affect a substantial number of small entities. The 
proposed rule imposes no duties or obligations on small entities.

List of Subjects in 31 CFR Part 1

    Privacy.
    Part 1 of Title 31 of the Code of Federal Regulations is amended as 
follows:
    1. The authority citation for part 1 continues to read as follows:

    Authority: 5 U.S.C. 301, 31 U.S.C. 321, Subpart A also issued 
under 5 U.S.C. 552, 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 in numerical order to the table in paragraph (b)(1) under the 
heading THE INTERNAL REVENUE SERVICE:
* * * * *

[[Page 63826]]

    (b) * * *
    (1) * * *

------------------------------------------------------------------------
                        Name of system                           Number
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                  *        *        *        *        *
 
 
IRS Third Party Contact Reprisal Records.....................     00.334
 
                   *        *        *        *        *
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* * * * *

    Dated: August 29, 2000.
W. Earl Wright, Jr.,
Chief Management and Administrative Programs Officer.
[FR Doc. 00-27416 Filed 10-24-00; 8:45 am]
BILLING CODE 4810-01-P