[Federal Register Volume 65, Number 77 (Thursday, April 20, 2000)]
[Proposed Rules]
[Pages 21165-21167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9869]


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DEPARTMENT OF THE TREASURY

31 CFR Part 1


Internal Revenue Service; Privacy Act of 1974, Proposed 
Implementation

AGENCY: Office of the Secretary, Treasury.

ACTION: Proposed rule.

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SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, as amended, 5 U.S.C. 552a, the Treasury Department, Internal 
Revenue Service, gives notice of a proposed amendment to exempt the 
system of records entitled ``Criminal Investigation Audit Trail Records 
System--Treasury/IRS 46.051'' from certain provisions of the Privacy 
Act. The exemption is intended to comply with legal prohibitions 
against the disclosure of certain kinds of information and to protect 
certain information on individuals maintained in this system of 
records.

DATES: Comments must be received no later than May 22, 2000.

ADDRESSES: Comments should be sent to the Office of Governmental 
Liaison and Disclosure, Internal Revenue Service, 1111 Constitution 
Avenue, NW, Washington, DC 20224. Comments will be made available for 
inspection and copying in the Freedom of Information Reading Room upon 
request.

FOR FURTHER INFORMATION CONTACT: Fu-An Chao, Chief, Systems Development 
and Support, Criminal Investigation, (202) 622-7803.

SUPPLEMENTARY INFORMATION: The Internal Revenue Service's Criminal 
Investigation Division seeks to establish and maintain the proposed new 
system of records as a more comprehensive means of performing its 
responsibilities.
    Criminal Investigation carries out many law enforcement related 
functions. Among Criminal Investigation's principal responsibilities 
are investigating and referring for prosecution criminal cases, 
centering largely on violations of tax laws,

[[Page 21166]]

including income tax evasion, refund fraud, and other crimes 
contributing to the federal tax gap. Criminal Investigation also 
investigates violations of certain money laundering laws.
    Many of these law enforcement related functions have been automated 
and are available on Criminal Investigation computer systems. To ensure 
the integrity of the system data, audit records are maintained to 
identify all events that occur while users access or attempt to access 
the computer system.
    The returns and returns information contained within this system 
constitute investigatory material compiled for law enforcement purposes 
under Title 26 of the United States Code.
    Pursuant to the Privacy Act of 1974, the Department of the Treasury 
is publishing separately the notice of a new system of records, to be 
maintained by the Internal Revenue Service.
    Under 5 U.S.C. 552a(j)(2) and (k)(2), the head of an agency may 
promulgate rules to exempt any system of records within the agency from 
certain provisions of the Privacy Act of 1974 if the system contains 
investigatory material compiled for law enforcement purposes. The 
Criminal Investigation Audit Trail Records System--Treasury/IRS 46.051 
contains information relating to investigatory material compiled for 
law enforcement purposes pursuant to 26 U.S.C. 7213, 7213A and 18 
U.S.C. 1030(a)(2)(B). Such investigatory material includes: identities 
of individuals under investigation, identities of potential witnesses, 
and identities of investigating agents.
    The exemptions under 5 U.S.C. 552a(j)(2) and (k)(2), relating to 
investigatory material are hereby claimed for this system. The 
Department of the Treasury is hereby giving notice of a proposed rule 
to exempt this system of records described above from certain 
provisions of the Privacy Act pursuant to 5 U.S.C. 552a(j)(2) and 
(k)(2) and authority of 31 CFR 1.23(c). The reasons for exempting this 
system of records from certain provisions of 5 U.S.C. 552a are set 
forth below:
    (1) 5 U.S.C. 552a(c)(3). This provision of the Privacy Act provides 
for the release of the disclosure accounting required by 5 U.S.C. 
552a(c)(1) and (2) to the individual named in the record at the 
individual's request. The reasons for exempting the system of records 
from the foregoing provision are as follows:
    (i) The release of disclosure accounting would put the subject of 
an investigation on notice of the existence of an investigation and 
that such person is the subject of that investigation;
    (ii) Such release of the disclosure accounting would provide the 
subject of an investigation with an accurate accounting of the date, 
nature, name and address of the person or agency to whom the disclosure 
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 this 
person and the scope of the investigation, and could aid the individual 
in impeding or compromising investigations by those agencies.
    (2) 5 U.S.C. 552a(c)(4), (d)(1), (2), (3), and (4), (e)(4)(G) and 
(H), (f) and (g). These provisions of the Privacy Act relate to an 
individual's right to notification of the existence of records 
pertaining to such individual; requirements for identifying an 
individual who requests access to records; the agency procedures 
relating to access to records and the contents of the information 
contained in such records; and the civil remedies available to the 
individual in the event of adverse determinations by an agency 
concerning access to or amendment of information contained in record 
systems. The reasons for exempting the system of records from the 
foregoing provisions are as follows: To notify an individual at the 
individual's request of the existence of records in an investigative 
file pertaining to such individual or to grant access to an 
investigative file could interfere with investigative and enforcement 
proceedings; deprive co-defendants of a right to a fair trial or an 
impartial adjudication; constitute an unwarranted invasion of the 
personal privacy of others; disclose the identity of confidential 
sources and reveal confidential information supplied by such sources; 
and disclose investigative techniques and procedures.
    (3) 5 U.S.C. 552a(e)(4)(I). This provision of the Privacy Act 
requires the publication of the categories of sources of records in 
each system of records. In cases where an exemption from this provision 
has been claimed, the reasons are as follows:
    (i) Revealing categories of sources of information could disclose 
investigative techniques and procedures;
    (ii) Revealing categories of sources of information could cause 
sources who supply information to investigators to refrain from giving 
such information because of fear of reprisal, or fear of breach of 
promises of anonymity and confidentiality.
    (4) 5 U.S.C. 552a(e)(1). This provision of the Privacy Act requires 
each agency to maintain in its records only such information about an 
individual as is relevant and necessary to accomplish a purpose of the 
agency required to be accomplished by statute or executive order. The 
reasons for exempting the system of records from the foregoing 
provision are as follows:
    (i) The Internal Revenue Service will limit its inquiries to 
information which is necessary for the enforcement and administration 
of tax laws. However, an exemption from the foregoing provision is 
needed because, particularly in the early stages of 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 appear relevant and necessary when collected may subsequently be 
determined to be irrelevant or unnecessary. It is only after the 
information is evaluated that the relevance or necessity of such 
information can be established with certainty.
    (iii) When information is received by the Internal Revenue Service 
relating to violations of law within the jurisdiction of other 
agencies, the Internal Revenue Service processes this information 
through Internal Revenue Service systems in order to forward the 
material to the appropriate agencies.
    (5) 5 U.S.C. 552a(e)(2). This provision of the Privacy Act requires 
an agency to collect information to the greatest extent practicable 
directly from the subject individual when the information may result in 
an adverse determination about an individual's rights, benefits, and 
privileges under federal programs. The reasons for exempting the system 
of records from the foregoing provision are as follows:
    (i) In certain instances the subject of a criminal investigation 
cannot be required to supply information to investigators. In those 
instances, information relating to a subject's criminal activities must 
be obtained from other sources;
    (ii) In a criminal investigation it is necessary to obtain evidence 
from a variety of sources, other than the subject of the investigation, 
in order to accumulate and verify the evidence necessary for the 
successful prosecution of persons suspected of violating criminal laws.

[[Page 21167]]

    (6) 5 U.S.C. 552a(e)(3). This provision of the Privacy Act requires 
that an agency must inform the subject of an investigation who is asked 
to supply information of (A) the authority under which the information 
is sought and whether disclosure of the information is mandatory or 
voluntary, (B) the purposes for which the information is intended to be 
used, (C) the routine uses which may be made of the information, and 
(D) the effects on the subject, if any, of not providing the requested 
information. The reasons for exempting the system of records from the 
foregoing provision are as follows:
    (i) The disclosure to the subject of an investigation of the 
purposes for which the requested information is intended to be used 
would provide the subject with significant information concerning the 
nature of the investigation and could result in impeding or 
compromising the investigation.
    (ii) Individuals may be contacted during preliminary information 
gathering, surveys, or compliance projects concerning the 
administration of the internal revenue laws before any individual is 
identified as the subject of an investigation. Informing the individual 
of the matters required by this provision could impede or compromise 
subsequent investigations.
    (7) 5 U.S.C. 552a(e)(5). This provision of the Privacy Act requires 
an agency to maintain all records which are used in making any 
determination about an individual with such accuracy, relevance, 
timeliness, and completeness as is reasonably necessary to assure 
fairness to the individual in the determination. The reasons for 
exempting the system of records from the foregoing provision are as 
follows: Since the law defines ``maintain'' to include the collection 
of information, compliance with the foregoing provision would prohibit 
the initial collection of any data not shown to be accurate, relevant, 
timely, and complete at the moment of its collection. In gathering 
information during the course of a criminal investigation, it is not 
always feasible or possible to determine completeness, accuracy, 
timeliness, or relevancy prior to collection of the information. Facts 
are first gathered and then placed into a cohesive order which 
objectively proves or disproves criminal behavior on the part of a 
suspect. Seemingly irrelevant, untimely, or incomplete information when 
gathered may acquire new significance as an investigation progresses. 
The restrictions of the foregoing provision could impede investigators 
in the preparation of a complete investigative report.
    (8) 5 U.S.C. 552a(e)(8). This provision of the Privacy Act requires 
an agency to make reasonable efforts to serve notice on an individual 
when any record on such individual is made available to any person 
under compulsory legal process when such process becomes a matter of 
public record. The reasons for exempting the system of records from the 
foregoing provision are as follows: The notice requirement of the 
foregoing provision could prematurely reveal the existence of criminal 
investigations to individuals who are the subjects of such 
investigations.
    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, for the reasons set forth above, it is hereby certified 
that this rule will not have significant economic impact on a 
substantial number of small entities.
    In accordance with the provisions of the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.), the Department of the Treasury has 
determined that this proposed rule would not impose new recordkeeping, 
application, reporting, or other types of information collection 
requirements.

List of Subjects in 31 CFR Part 1

    Privacy.
    Part 1 of Title 31 of the Code of Federal Regulations is amended as 
follows:

Part 1--[Amended]

    1. The authority citation for Part 1 continues to read as follows:

    Authority: 5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued 
under 5 U.S.C. 552a 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 paragraphs (a)(1) and (b)(1) 
under the heading THE INTERNAL REVENUE SERVICE
* * * * *
    (a) * * *
    (1) * * *

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                         Name of system                            No.
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                  *        *        *        *        *
Criminal Investigation Audit Trail Records System..............   46.051
 
                  *        *        *        *        *
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* * * * *
    (b) * * *
    (1) * * *

------------------------------------------------------------------------
                         Name of system                            No.
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                  *        *        *        *        *
Criminal Investigation Audit Trail Records System..............   46.051
 
                  *        *        *        *        *
 
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* * * * *

    Dated: March 7, 2000.
Shelia Y. McCann,
Deputy Assistant Secretary (Administration).
[FR Doc. 00-9869 Filed 4-19-00; 8:45 am]
BILLING CODE 4830-01-P