[Federal Register Volume 66, Number 46 (Thursday, March 8, 2001)]
[Proposed Rules]
[Pages 13865-13866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5686]


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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, as amended, 5 U.S.C. 552a, the Department of the Treasury gives 
notice of a proposed amendment to this section to exempt a proposed new 
Internal Revenue Service (IRS) system of records, the Employee Tax 
Compliance Records (ETC--Treasury/IRS 36.888, from certain provisions 
of the Privacy Act. The exemption is intended to increase the value of 
the system of records for law enforcement purposes.

DATES: Comments must be received no later than April 9, 2001.

ADDRESSES: Please submit comments to the National Director, 
Governmental Liaison and Disclosure, 1111 Constitution Avenue, 
Washington, DC 20224. Comments will be made available for inspection at 
the IRS Freedom of Information Reading Room also located at Room 1621, 
1111 Constitution Avenue, NW. The telephone number for the Reading Room 
is (202) 622-5164.

FOR FURTHER INFORMATION CONTACT: David Silverman, Office of 
Governmental Liaison and Disclosure, IRS, 1111 Constitution Avenue, 
NW., Washington, DC 20224. Telephone number (202) 622-6200. This is not 
a toll free number.

SUPPLEMENTARY INFORMATION: Under 5 U.S.C. 552a(k)(2), the head of an 
agency 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 IRS is hereby giving notice 
of a proposed rule to exempt the Employee Tax Compliance Records 
(ETC)--IRS 36.888, from certain provisions of the Privacy

[[Page 13866]]

Act of 1974 pursuant to 5 U.S.C. 552a(k)(2). The proposed exemption is 
from provisions 552a(c)(3), (d)(1), (d)(2), (d)(3), (d)(4), (e)(1), 
(e)(4)(G), (H), (I), and (f) because the system contains investigatory 
material compiled for law enforcement purposes. The following are the 
reasons why this system of records maintained by the IRS 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) The release of disclosure accounting would put the subject of 
an investigation on notice that an investigation exists and that such 
person is the subject of that investigation.
    (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 to grant access to 
an investigative file pertaining to such individual 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)(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 are as 
follows:
    (i) The IRS will limit the Employee Tax Compliance Records to those 
relevant and necessary for identifying, monitoring, and responding to 
employee tax compliance. However, an exemption from the foregoing 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 first received 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 IRS relating to 
violations of law within the jurisdiction of other agencies, the IRS 
processes this information through IRS systems in order to forward the 
material to the appropriate agencies.
    (4) 5 U.S.C. 552a(e)(4)(1). 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 that 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.
    As required by Executive Order 12866, it has been determined that 
this proposed rule is not a significant regulatory action and, 
therefore, does not require a Regulatory Impact Analysis.
    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.
    In accordance with the provisions of the Paperwork Reduction Act of 
1995, the Department of 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, Subpart C 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. 552 as amended. Subpart C also issued under 5 U.S.C. 
552a.

    2. Section 1.36 paragraph (g)(v)(iii) is amended by adding the 
following text in numerical order to the table under the heading 
INTERNAL REVENUE SERVICE.


Sec. 1.36  Systems exempt in whole or in part from provisions of 5 
U.S.C. 522a and this part.

* * * * *
    (g) * * *
    (v) * * *
    (iii) * * *

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                  Number                             System name
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                  *        *        *        *        *
IRS 36 .888...............................  Employee Tax Compliance
                                             Records
 
                  *        *        *        *        *
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    Dated: February 7, 2001.
W. Earl Wright, Jr.,
Chief Management and Administrative Programs Officer.
[FR Doc. 01-5686 Filed 3-7-01; 8:45 am]
BILLING CODE 4810-25-P