Source: https://www.irs.gov/irm/part11/irm_11-003-002
Timestamp: 2019-04-21 16:19:32+00:00

Document:
(1) This transmits revised text for IRM 11.3.2, Disclosure of Official Information, Disclosure to Persons with a Material Interest.
(1) Editorial changes have been made throughout to update IRM/statute/organizational/Form references, titles and terms. Web and citation references were added/updated throughout to make the text easier to research in electronic media.
(2) Added information to (3) of section 11.3.2.3, Processing Requests for Returns and Return Information, to capture time frames for processing IRC §§6103(c) and 6103(e) requests.
(3) Updated guidance in 11.3.2.3 to incorporate access to tax information using the Transcript Delivery System (TDS), contacting accounts management, and following the Get Transcript procedures on irs.gov. Added Note to (1) of this section to indicate IRS accepts electronic signature on Form 4506-T for certain financial and lending institutions.
(4) Included guidance in 11.3.2.3(2) for IRS employees to make copies of files available, upon request, to taxpayers.
(5) Added Note to 11.3.2.3(3) to indicate Disclosure Managers must ensure Disclosure employees prepare interim release of records, as appropriate, in response to a request under IRC §6103(c) and (e).
(6) Subsection 11.3.2.3.3 was deleted in full since it was a duplication of the information in 11.3.2.2. Paragraph (10) of the deleted subsection 11.3.2.3.3 was incorporated in 11.3.2.3(3).
(7) Deleted Item b from 11.3.2.4.1(1) since this Internal Revenue Code provision no longer applies to disclosures to individuals. Subsequent items listed were renumbered accordingly.
(8) Deleted Reminder under 11.3.2.4.1(2).
(9) Deleted (3) through (11) of section 11.3.2.4.1 and incorporated and updated that guidance into new subsection 11.3.2.4.1.1 titled, Disclosure of Collection Activities with Respect to Joint Returns. Subsequent subsection was renumbered.
(10) Prior subsection 11.3.2.4.1.1 was renumbered to 11.3.2.4.1.2 and title was changed to, Identity Theft and Access to Tax Returns and Information Returns.
(11) Added new (2), (3) and (7) to subsection 11.3.2.4.1.2 to provide additional guidance on disclosure of tax returns to a victim of identity theft. All other paragraphs were renumbered accordingly.
(12) Added second Note under 11.3.2.4.2(1) to include guidance on disclosure of partnership information which may be considered for release under IRC §6103(h)(4).
(13) Added new (3) to 11.3.2.4.8 to provide guidance on disclosures pertaining to a grantor trust. Subsequent paragraphs were renumbered accordingly.
(14) Added Note to 11.3.2.4.8(5) to provide additional information on releases to a fiduciary.
(15) Added Note to 11.3.2.4.11(3) to indicate information can be provided to the person listed on the second name line on the IDRS Entity screen.
(16) Added information to 11.3.2.4.15 to provide additional guidance on classification of Limited Liability Companies (LLC) and treatment of LLC’s as disregarded entities.
(17) Added subsection 11.3.2.4.17 titled, Unauthorized Disclosure Investigations, to include information about the material interest provisions and procedures pertaining to IRC §6103(e)(11). Incorporated guidance regarding §6103(e)(11) throughout IRM section, where relevant.
(18) Updated information in 11.3.2.5.3 to further clarify material interest for businesses and individuals as it pertains to disclosure of Information Returns.
(19) Added section 11.3.2.6 titled, File Documentation, to capture guidance provided in the Case Note Documentation Memorandum issued by Director, Disclosure on September 22, 2016. Subsequent sections were renumbered accordingly.
This material supersedes IRM 11.3.2, Disclosure of Official Information, Disclosure to Persons with a Material Interest, dated January 5, 2016.
All Operating Divisions and Functions.
IRC §6103(e), Disclosure to Persons Having Material Interest, provides a listing of persons who may generally request and receive returns and return information. IRC §6103(e)(1)-(6) and IRC §6103(e)(10) concern disclosure of "returns." IRC §6103(e)(7) through (e)(9) as well as (e)(11) refer to disclosure of "return information."
Delegation Order 11-2 (found in IRM 1.2.49.3) indicates the IRS employees who may disclose, or authorize the disclosure of, returns and return information under IRC §6103(e). It also outlines the extent to which this authority may be redelegated.
Persons described in IRC §6103(e) always have access to the appropriate return as specified in IRC §6103(e)(1) through IRC §6103(e)(6), subject to the limitations in IRC §6103(e)(10) for partnership, estates, trust or Subchapter S returns which are discussed in this IRM. Generally, these persons authorized under §6103(e)(1) through (e)(6) may also have access to return information. A request for a copy of a return must be made in writing.
IRC §6103(e)(7) provides that return information will be disclosed if the IRS determines that disclosure would not seriously impair Federal tax administration. Return information will be denied under this provision only if disclosure will impair an imminent or ongoing tax administration function in some significant way, or have an adverse impact on the IRS's ability to administer the tax laws.
Disclosure of information which would reveal the nature, scope, limit or direction of the IRS's examination, investigation, collection activities, or disclosure of the identity of confidential informants or prospective witnesses.
Some of the provisions of IRC §6103(e) require that the requester demonstrate that he or she has a material interest in the information to be disclosed. A material interest is an important interest and is generally, but not always, financial in nature. However, in the legal sense, the interest needs to be substantial or of consequence.
IRC §6103(e) does not restrict IRS personnel from disclosing tax information to the extent permitted by other provisions of the Internal Revenue Code, such as for investigative purposes (IRC §6103(k)(6)), or in administrative and judicial tax proceedings, (IRC §6103(h)(4)).
It is not necessary in all situations for an individual to be authorized to have access to returns or return information in order to engage in face-to-face or telephone discussions with IRS employees.
There are many situations where employees of corporations may contact the IRS to inquire as to the meaning of a bill, notice or other written communication from the IRS. In the majority of these cases, the communication can be discussed without the need for independent reference to or disclosure of confidential tax information by an IRS employee. IRS employees who handle contacts of this nature should not hesitate to provide the general information the caller requests. Note that IRS employees may accept information from third parties without disclosure being an issue.
Tax treaty information obtained by the IRS from a foreign tax authority may usually be disclosed to the taxpayer to whom it relates on written request in accordance with IRC §6103(e). Disclosure will not be made to the taxpayer if the foreign tax authority providing the information objects to the disclosure or if the IRS deems that disclosure would seriously impair Federal tax administration under IRC §6103(e)(7). See IRM 11.3.25.2, Information Received from Foreign Tax Authorities.
Requests under IRC §6103(e) that involve documents related to the Simultaneous Examination Program, or an Industry-wide Exchange of Information or a Spontaneous Exchange of Information, will be handled by the Large Business and International (LB&I) Division in accordance with the procedures contained in IRM 11.3.25, Disclosure to Foreign Countries Pursuant to Tax Treaties.
If a Freedom of Information Act request for tax treaty information is received, follow the procedure established in IRM 11.3.13, Freedom of Information Act (FOIA).
IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes, discusses the use and disclosure of third party comparable information. Such comparable third party tax information does not lose its individual confidentiality protection simply because it is used to help determine another taxpayer's tax liability.
The IRS accepts electronic signature on Form 4506-T requests for tax transcripts received from banks, credit unions, mortgage brokers, credit card companies and other lending institutions using DocuSign technology.
Other IRS employees may also handle requests for returns and return information. Under the Open Government initiative and IRC §6103(e), taxpayers have a right to receive copies of their files to the extent it will not impair enforcement. IRS employees can and should make copies of files available to taxpayers or their authorized representatives upon request, after any necessary redactions have been made.
Requests by taxpayers for information in open collection, examination, and criminal investigation files may be received and processed by those functions. IRM 21.3.6, Forms and Information Requests, contains specific instructions for Customer Service personnel.
Disclosure personnel are responsible for ensuring that requests for returns and return information received in Disclosure are processed in accordance with all disclosure rules and regulations. Disclosure personnel processing requests pursuant to IRC §§6103(e) and 6103(c) will ensure that an interim response letter or a status report is initiated by the 30th business date from the IRS received date. If a final response is not provided by the expected final response date of the initial interim response letter or status report, an additional status report must be provided every 30 business days until a final response is issued. For further information regarding the responsibilities of Disclosure personnel, see IRM 11.3.38, Role and Responsibilities of Disclosure Managers.
Disclosure Managers must ensure that whenever possible caseworkers prepare interim releases of records in response to requests for returns and return information under IRC §6103(c) and (e).
IRC §6103(e) requires written requests for copies of tax returns. Although it is preferable that requests for return information also be in writing, the statute permits disclosure of return information without a written request.
After verifying identity, Customer Service personnel may divulge return information to taxpayers concerning their refund checks.
Information furnished to the IRS by third parties (e.g., informants) may be returned to the third party upon request in most instances, provided the material has remained in its original state. This is not considered a disclosure under IRC §6103(b)(8), since nothing is being made "known" to the providing party. However, if it was integrated with other return information or if the information has been used and this use of the information by the IRS is in any way reflected on the document, it may be returned only as provided by IRC §6103. Additionally, the document or information must be withheld from the third party if the return of such document or information would impair or interfere with tax administration.
IRS personnel processing requests for returns and return information must be reasonably satisfied that the requester is who he or she claims to be.
Identification is not normally required for written requests. If there are doubts about a person's identity, IRS employees must request additional identity information or offer to mail the requested information to the taxpayer's name and address of record.
When responding to verbal or electronic inquiries from taxpayers, no return information may be disclosed until IRS personnel have asked sufficient questions and received adequate information to make certain that the person making the inquiry is the taxpayer, the taxpayer's authorized representative, or some other person authorized under IRC §6103(e). In the case of electronic access, the system will ask the necessary questions. See IRM 11.3.2.4 below, for more specific guidance as to who can have access to various types of returns and return information.
Authentication requirements vary based on the IRS program, the identity of the requester, and the information sought. The appropriate IRM, business unit or functional office procedures will be followed. After the taxpayer is authenticated, it is still necessary to determine whether the requested information may be disclosed to that person in accordance with IRC §6103.
An in-person requester must be asked to present a driver's license or other acceptable proof of identity (e.g., other photo ID or 2 non-photo documents/cards). A telephone requester should be given the option of calling back, making a written request, or having the information mailed to the address of record if there are doubts about the caller's identity. Information must not be mailed to a taxpayer, even at his or her address of record, if the requester is clearly not the taxpayer or other authorized IRC §6103 recipient.
Notwithstanding the guidance above, functions may establish internal policies and implement procedures allowing tax information to be sent to the address of record based upon a request from a third party who does not represent the taxpayer or who does not hold a tax information authorization. These decisions are based upon the function’s assessment of the risks and vulnerabilities concerning the possibility that an unauthorized individual could gain access to such information and their willingness to accept the level of risk involved.
Responses to verbal inquiries must be limited to the disclosure of return information.
Copies of tax returns cannot be disclosed upon verbal request. Requests for copies of returns must be made in writing.
This subsection covers the persons to whom returns and return information may be disclosed upon proper request, and the circumstances under which the disclosures can take place.
Community property rules alone do not allow a spouse to access the single return or return information of the other spouse pursuant to IRC §6103(e). However, this does not preclude disclosure, where appropriate, under other provisions of IRC §6103. See IRC §6103(h)(4), IRC §6103(k)(6), IRM 11.3.21, Investigative Disclosure, and IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes.
Returns and return information of individuals filing income tax returns jointly may be disclosed to either of the individuals with respect to whom the return is filed.
If a wife signs a joint income tax return for her husband, the husband may make a written request and receive the return since it was filed with respect to him.
Information documents posted to an individual's Information Return Master File account are individual, not joint, information returns. The fact that information on a joint return is derived from such individual returns does not convert the individual character of the data. If such individual returns are filed with the joint return and as long as the disclosure is made from the joint return filing, then joint return disclosure rules apply. This is not meant to preclude disclosures, where appropriate, under other provisions of IRC §6103. See IRC §6103(h)(4), IRC §6103(k)(6), and IRM 11.3.21 and IRM 11.3.22.
Even if a jointly filed return liability is converted to a separate spousal assessment (e.g., under Innocent Spouse or Offer-In-Compromise provisions), IRC §6103(e)(1)(B) still applies to return information developed relative to the new separate assessment. However, in these situations the non-assessed spouse would ordinarily be entitled to only IRC §6103(e)(8) type information due to the application of IRC §6103(e)(7).
The Form 4506, Request for Copy of Tax Return, procedures for requesting Form W-2 are for the individual W-2 copies and do not involve information taken from the income tax return.
IRC §6103(e)(8) provides for disclosures pertaining to deficiencies assessed with respect to persons who have filed jointly but are no longer married or no longer reside in the same household. IRC §6103(e)(8) provides that certain limited collection information regarding one spouse must be disclosed to the other spouse relative to tax deficiencies with respect to a jointly filed return. It does not apply to deficiencies which may not be collected by reason of IRC §6502.
Because information provided pursuant to IRC §6103(e)(8) would be otherwise available to either spouse due to IRC §6103(e)(1), and to the extent IRC §6103(e)(7) does not prohibit release, a written or verbal request can be accepted. Written requests can be signed by either spouse or his/her duly authorized attorney-in-fact. Verbal requests can be honored if received from either spouse and/or his/her authorized attorney-in-fact, after verifying the identity of the person making the request to determine his/her right to the information.
Any employee having delegated authority to make disclosures pursuant to IRC §6103(e) as detailed in Delegation Order 11-2 (found in IRM 1.2.49.3) may make disclosures pursuant to IRC §6103(e)(8).
Disclosures made pursuant to IRC §6103(e)(8) must be limited to the specific tax period associated with the requester's joint deficiency.
If a requester is seeking information beyond what can be obtained pursuant to IRC §6103(e)(8), or that is otherwise statutorily available pursuant to IRC §6103(e)(1), contact the appropriate Disclosure Office for guidance.
The IRS has the authority to develop procedures controlling the frequency with which any requester can make requests pursuant to IRC §6103(e)(8). See IRM 5.1.22.3(4) for additional information.
Situations may arise when an individual’s Social Security Number (SSN) or other personal information may be compromised, resulting in a fraudulently filed tax return or report of income being earned by that individual when in reality it was not.
A victim of identity theft or a person authorized to obtain the identity theft victim’s tax information may request a redacted copy of a fraudulent return that was filed and accepted by the IRS using the identity theft victim’s name and SSN. The victim’s name and SSN must be listed as either the primary or secondary taxpayer on the fraudulent return.
The Form 4506-F must be used by taxpayers to request a copy of the fraudulent return.
IRS will not process the Form 4506-F if the address listed on the form does not match the IRS address of record.
IRS policy provides that Information Returns such as Form W-2 and Form 1099 reflecting earned or unearned income that are extracted and placed on the Information Return database can be disclosed to the individual who has been assigned the SSN listed on the information return though the income was presumably earned by another individual. This is allowed because the IRS would hold the person assigned the SSN responsible for the payment of any tax on the reported income.
Once it has been determined that the income contained in the information return(s) was not earned by the person to whom the SSN is assigned, such that the IRS does not pursue compliance actions against that person as a result of the income reported on this information return(s), no further disclosures of information related to this information return may be made to that person.
If an individual states that income information reported as earned by another individual is actually his or her income and wants access to the information, do not release any information unless the requesting individual is able to show he or she was employed by or received income from the business entity filing the W-2 or Form 1099. This is best evidenced by a pay stub or other documentation from the employer, the filing of a Federal Trade Commission (FTC) Identity Theft Affidavit, a copy of a police report relating to an identity theft issue, or other acceptable documentation.
The disclosure of income information reported is only ever made to the individual associated with the Taxpayer Identification Number (TIN) and not an individual using someone else’s TIN for employment purposes.
If the requester establishes that he or she earned the income, only the information regarding the particular information return or returns at issue may be released. See Note in (5) above.
Form 8821-A, IRS Disclosure Authorization for Victims of Identity Theft, can be signed by the taxpayer to authorize IRS to disclose tax return or return information to state or local law enforcement in the event of possible identity theft.
Returns and return information of a partnership may be disclosed to any person who was a member of the partnership during any part of the period covered by the return. Both general and limited partners are entitled to request and receive partnership returns and return information. IRC §6103(e)(10) limits the disclosure of certain information attached to partnership returns. IRC §6103(e)(10) provides that information to be disclosed cannot include any supporting schedule, attachment, or list that contains third party taxpayer identifying information other than that of the individual making the request for access. A requesting partner can not receive any Form K-1 or other attachments that include identifying information of other partners or other individuals. The partner can receive only the Form K-1 that pertain to his or her interest in the partnership. See Exhibit 11.3.2-2, which contains detailed guidance about information that can be released to partners seeking access to partnership returns, including schedules that must be restricted or sanitized prior to release.
Any information in transcript form or in administrative files that may include other third party information extracted from or attached to Form 1065 must also be evaluated in accordance with IRC §6103(e)(10).
IRC §6103(h)(4) may allow disclosures of returns or return information to partners as it pertains to an administrative proceeding, as long as the requirements of §6103(h)(4) are met. In this situation a partner’s information that would normally be limited under (e)(10) may be considered for disclosure.
Before disclosing tax information concerning a partnership, verify that the person who has asked for the information was a partner during the requested tax year or has been authorized to receive Federal tax information. For example, if the person requests partnership tax information for the year 2015, that person must establish that he or she was a partner at some time during 2015. To determine whether a requester was a member of the partnership for the year requested, verify that a schedule K-1 was filed for the requester. Partners may also file a power of attorney authorizing other individuals to receive partnership information or represent the partnership. The individual holding the power of attorney cannot have any greater access to the return or return information of the partnership than the individual granting the power of attorney. All rules in IRC §6103(e)(10) relating to the restrictions of the disclosure of 3rd party tax information apply to the power of attorney as well. The IRS employee must verify the person's status as a partner by following the identification procedures and techniques outlined in IRM 21.1.3.2.3, Required Taxpayer Authentication, and IRM 21.1.3.2.4, Additional Taxpayer Authentication. The disclosure of information concerning employment tax matters relating to partnerships follows the same rules. If a question concerns an employment tax matter and no partnership return has yet been filed, the IRS must still verify that the individual was a partner for the year in question by analyzing whatever information the individual may be able to provide. It is up to the requester to provide sufficient identifying information for the IRS to verify that he or she is a partner or is otherwise authorized to receive tax information about the partnership. As always, the decision concerning whether or not to disclose the requested information will depend on a reasonable analysis of the best information provided by the requester and from IDRS or other available information.
A Form 941, Employer's Quarterly Federal Tax Return, submitted by a partnership must be signed by a responsible and duly authorized member or officer having knowledge of the partnership’s affairs. A Form 941 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed (See Treas. Reg. §31.6061-1 and Treas. Reg. §31.6011(a)(7)). Because the Internal Revenue Code restricts disclosure of partnership returns and return information to partners and does not make any exception for Forms 941 filed by partnerships, the IRS may not disclose any tax information to an officer of the partnership (who is not a partner) even though that officer may have the authority to sign and may in fact have signed the Form 941. The partnership may submit a power of attorney permitting the officer, as a full time employee, to act on its behalf or may authorize disclosure of the partnership's Federal return and return information to the officer.
Requests for returns must be made in writing.
Ask a corporate officer who is not the president or other chief executive officer of a corporation if he/she can legally bind the corporation. If there is a question whether the requester is authorized to receive the requested return information, mail it to the corporation at the corporate address of record.
Any person designated by resolution of the corporate board of directors or other similar governing body.
Any officer or employee of the corporation, upon submitting a written request which is signed by a principal officer and attested to by the secretary or any other officer.
To the extent that (1)-(3) above do not apply, any officer or employee who signed the return on behalf of the corporation under forms or regulations prescribed by the Secretary or signed a corporate income tax return under IRC §6062, and who is still employed by the corporation in the same capacity with the same authority. See IRC §6061 and Treas. Reg. §301.6061-1. Processing information relating solely to the filing of the return signed by that person may be disclosed as long as that person continues to act on behalf of the corporation in the same capacity (with the same authority) as when he/she signed the corporate return. IRC §6103(k)(6) disclosures may also be made when appropriate, if the IRS personnel need to obtain information from the corporation. See IRM 11.3.21, Investigative Disclosure, for additional information.
Any bona fide shareholder of record owning one percent or more of the outstanding stock of the corporation, upon submitting documentation which reasonably demonstrates such ownership. Such shareholders may have access to returns and return information for all years. However, they have no access rights when they are no longer shareholders. See IRM 11.3.2.5.1 for additional information and guidelines about requests from one percent shareholders.
If a corporation was an electing small business corporation under Subchapter S of chapter 1, any person who was a shareholder during any part of the period covered by such return during which an S corporation election was in effect. All types of shareholders, regardless of the percentage of shares held, may receive Subchapter S returns and return information. A return or return information cannot be disclosed to a person who was not a shareholder during some part of the year for which the return in question was filed. Nor may a shareholder receive returns or return information for any period during which the election was not in effect.
Not all Schedules K-1 attached to the Sub-Chapter S return (Form 1120S) can be provided in response to a written request for access. Only the Schedule K-1 for the person making the request can be released. Any other schedules or attachments containing other 3rd party information must be sanitized or withheld per IRC §6103(e)(10). See Exhibit 11.3.2-3 for more details about what can be released and what needs to be edited or sanitized prior to release. This restriction also applies to any information extracted from Schedules K-1 found in various transcripts or administrative files.
If the corporation has been dissolved, any person authorized by applicable State law to act for the corporation, or any person whom the IRS finds to have a material interest that will be affected by information contained in the return or return information. Material interest is an important interest and is generally, but not always, financial in nature.
To the extent that a subsidiary filed a separate return, the disclosure of the subsidiary's return and return information is governed by the same rules as those set out in IRM 11.3.2.4.3, above.
If a corporation has filed a consolidated return which includes the return of the subsidiary, the entire return and return information is the return or return information of the subsidiary. Disclosures are governed by the rules set out in IRM 11.3.2.4.3, above.
Whether or not consolidated returns have been filed, persons authorized to act for the parent corporation may request and receive returns and return information of the subsidiary. A parent corporation is one having over 50% ownership of the subsidiary.
Returns and return information of a Federal, State or local government agency may be disclosed to any person legally authorized to act for such agency. Generally, verification that the requester is a government official, such as a director of taxation or personnel, will be sufficient.
Tribal council members and other officials of Federally recognized Indian tribes and Alaskan Native villages are also entitled to receive returns and return information. Revenue Procedure 2008-55 references lists of currently recognized tribal and native village governments. Non-federally recognized tribes or native organizations are treated like any other non-governmental organization.
Requests for returns must be made in writing on appropriate government letterhead.
Returns and return information of a tax exempt organization that are not publicly available under IRC §6104 may be disclosed to any person legally authorized to act for the organization. A requester’s right of access is based upon the structure of the organization. If the organization is a corporation, the rules for access to a corporate return or return information must be followed. If the entity is a trust or other type of entity, those rules must be followed. See IRM 11.3.9, Exempt Organizations, for additional information.
Requests for returns must be made in writing on appropriate organizational letterhead.
The administrator, executor, or trustee of an estate may receive returns and return information of the estate.
Any heir at law, next of kin, or beneficiary who establishes a material interest which will be affected by the return or return information may also receive returns and return information. A material interest is an important interest and is generally, but not always, financial in nature.
Submission of a copy of a will by a beneficiary who is described in the will as entitled to "x" percent of the decedent’s gross estate, together with a statement that the decedent's return is needed to assist the beneficiary in determining whether he/she has received a proper share of the estate, would generally be sufficient to permit disclosure. The merits of an action, such as a law suit brought by a beneficiary, will generally, but not always, have no bearing on the material interest determination.
The requester must furnish satisfactory evidence that he/she is an administrator, executor, trustee, heir at law, or next of kin under applicable state law, or is named as a beneficiary in the decedent's will. Generally, written evidence such as a copy of the will, proof of relationship, or letters testamentary will be furnished to show satisfactory proof of entitlement.
See IRM 11.3.3.3, Distinction between Disclosure to Designees and the Conference and Practice Requirements, regarding representatives for estates.
The trustee or trustees, jointly or separately, may receive returns and return information of a trust.
Any beneficiary of a trust may receive returns and return information of the trust, but only if the beneficiary shows a material interest which will be affected by the tax information. A material interest is an important interest and is generally, but not always, financial in nature.
Releases of Form 1041 trust returns to a beneficiary must comply with the requirements of IRC §6103(e)(10). Generally all Forms K-1 cannot be released in response to a request for access to a trust tax return. Provide only a copy of the Form K-1 pertaining to the person making the request to that individual or his/her legal representative. Do not release any other schedule or attachment to the return that contains other 3rd party identifying information. See Exhibit 11.3.2-1 for more details about the various forms and schedules and how they should be edited or withheld prior to release. This restriction also applies to any information extracted from those schedules that may be found in various transcripts or administrative files.
The grantor of a grantor type trust has a material interest in the trust as long as the grantor is a trustee or beneficiary. The return information of the trust can be disclosed to the grantor in this situation as long as the IRS does not determine that disclosure would seriously impair federal tax administration. If the trust is not a grantor type trust then the grantor cannot have access to the trust returns or return information unless the grantor establishes they are also a trustee and/or beneficiary to the trust.
The requester must furnish satisfactory evidence that he/she is a trustee or beneficiary of the trust. A person with a reversionary interest in a trust will be considered a "beneficiary" or "trustee" only if he or she is accorded such status by the law of the state where the trust was established.
If the beneficiary of the trust submits a copy of the trust document together with a statement that the requested information is needed to help him/her determine whether to bring action against the trustees for breach of their fiduciary duty, that information would generally be sufficient to permit disclosure. The merits of an action or a contemplated action will usually not have a bearing on the material interest determination.
Tax information may be disclosed to a person identified on Form 56, Notice Concerning Fiduciary Relationship, if that person is acting in a fiduciary capacity for the trust, and only if he/she can establish a material interest in the tax information being requested. The filing of Form 56 is not by itself sufficient to substantiate a material interest. Be sure the information presented establishes a valid material interest. Discuss any questions with your Disclosure office.
Because a fiduciary steps in and acts as the taxpayer, a fiduciary is entitled to disclosure of the taxpayers return information under section 6103(e)(1)(F) of the code, unless such disclosure would impair tax administration.
Trustees often use a bank's Trust Department to manage or control the assets of a trust. Employees assigned to these departments are acting in a fiduciary capacity. Form 56 should be filed identifying the person who is acting in a fiduciary relationship. A "person" in this case can be an individually named employee or all employees in a bank’s trust department, depending on the wording of Form 56.
If there is doubt that the person seeking tax information is who he or she claims to be, ask for a copy of Form 56 to be sure the person is individually listed or that the Form 56 references the "bank Trust Department," and the person is actually a Trust Department employee.
IRM 3.13.2.18.1 indicates that a processed Form 56 is evidenced by the input of TC 098 on the account along with the trustee’s name and address. This may be researched on the IDRS entity module. To the extent that the validity of the Form 56 can be established by using IDRS research, do not ask the requester to provide other verification without good reason.
If there are indications that the person seeking tax information is not individually named or a Trust Department employee, then do not disclose any tax information to that person. Alternatively, you could send the information in a sealed envelope to the Trust’s address of record or the address of the person/department listed on Form 56, if the requester first establishes a material interest.
A person seeking tax information can have access to the information of a Trust limited to just processing issues if he or she signed the Form 1041, is an employee of the bank’s Trust Department and is employed in the same capacity he or she held when the return was signed. In order to obtain access to tax information not related to processing issues, the person seeking tax information must show a "material interest" as discussed above.
If an individual is legally incompetent, a return or return information that would be available to him or her (See IRM 11.3.2.4.1 through 11.3.2.4.8, above, or IRM 11.3.2.4.10, below), can be disclosed to the committee, trustee or guardian of his or her estate.
Situations where an individual may be legally incompetent include those where the individual is a minor, or is senile, disabled, insane, or otherwise incapable of fully administering his or her own affairs.
Generally, we look to appropriate state law for the definition of a guardian, trustee or committee of the estate of an incompetent.
Court appointed guardians, trustees, and committees, as well as fiduciaries, administrators and executors, may also have access to returns and return information on behalf of incompetents, if they produce copies of the appropriate documents establishing their rights and authority.
To the extent necessary, Disclosure personnel should coordinate with Area Counsel to identify pertinent portions of state statutes, common law and Federal law to help determine entitlement to returns and return information.
When handling requests for returns and return information of incompetents, use discretion so as not to impose an undue burden on the requester. If there is a significant question about the requester's entitlement, IRS employees may offer to mail the return information to the taxpayer's name and address of record.
Returns and return information of a minor may be disclosed to the minor.
Returns and return information of a minor may be disclosed to the signer of the return. Generally, this is a parent of the child, but the child may sign the return. Rev. Rul. 82–206, 1982-2 C.B. 356, advises that if the child cannot prepare and file his/her own tax return, the parent must do so on behalf of the child, using the following language to sign the return: "By (signature) Parent (or guardian) for minor child." The revenue ruling is derived from IRC §6012 and the regulations. Treasury Regulation 1.6012-1(a)(4) requires the guardian or other person charged with the care of the minor's person or property to make and file the return on behalf of the child if the child did not make and file the return. Inherent in this subsection is the authority to discuss the return and resulting tax liability, including any necessary collection activities, with a parent who signed the return. A parent who signed the return can also designate the non-signing parent to receive the return or return information of the child if a consent to disclose is properly submitted pursuant to IRC §6103(c).
Returns and return information of a minor may be disclosed to the minor's parents, if the minor's return reflects earned income. Pursuant to IRC §6201(c), parents are liable for their minor child's unpaid taxes to the extent they are based on compensation for the child's services. If the return reflects earned income of the minor, the return may be disclosed to the parent pursuant to IRC §6103(e)(1)(A)(i), and the return information pertaining thereto may be disclosed to the parent pursuant to IRC §6103(e)(7). In situations where IRC §6201(c) applies, information about the minor's return may be disclosed to the parent even if the parent has not signed the return.
If the parent has signed the minor child's return, and if the parents name is displayed in the entity section, the disclosure may be made if an appropriate request is received from the parent, without considering whether IRC §6201(c) applies.
IRC §6103(e)(2) provides for disclosure to the committee, trustee, or guardian of an incompetent's estate. If, under state law, the parent is the legal custodian of the minor's estate, all issues concerning the minor's tax liability (whether it relates to earned or unearned income) may be discussed with the parent. The IRS must look to state law for guidance concerning the effects of guardianship, custody, and non-custody of the minor on the disclosure of the minor's return and return information. To the extent necessary, Disclosure personnel will coordinate with Area Counsel to identify pertinent portions of state statutes, common law and Federal law applicable to determining entitlement to returns and return information.
See IRM 11.3.3, Disclosure to Designees and Practitioners, for information on how a minor could authorize a parent to access the minor's tax information, or a parent signing a minor's return on the minor's behalf could authorize a representative such as the non-signing parent to access the minor's tax information.
The administrator, executor, or trustee of an estate may receive the returns and return information of the deceased individual. Often, an estate is already settled at the time a request for returns and return information is made, and thus an administrator, executor or trustee of the estate will no longer exist. In these circumstances, a person seeking disclosure will often need to consult state law to determine how appointment of an administrator, executor or trustee of the estate may be accomplished.
Any heir at law, next of kin, beneficiary under the will, or a donee (recipient) of property may receive the returns and return information of a deceased individual. Such person must have a material interest that will be affected by the requested information. A material interest is an important interest and is generally, but not always, financial in nature.
The requester must furnish satisfactory evidence that he/she is an administrator, executor, trustee, heir at law, next of kin, beneficiary under the decedent's will, or a donee (recipient) of property. Acceptable documentation includes, but is not limited to: birth and/or death certificates, letters testamentary, a will, or other court document.
For deceased taxpayers, the person whose name is shown on the second name line on the IDRS Entity screen can be given information.
If the requester is an heir at law, next of kin, beneficiary, or donee, he/she must show a material interest which will be affected by the requested information. In some states, however, simply establishing a material interest may not be adequate.
A person alleging to be the common law wife of a deceased individual requests exemption information from the separate return filed by her alleged spouse in order to show that her illegitimate child is entitled to receive Social Security benefits. In jurisdictions where a common law spouse and illegitimate child may not inherit from his or her alleged spouse or parent (in the absence of their inclusion in the will or subsequent legitimizing), the spouse and child are precluded from obtaining returns and return information. Even though they each have a material interest affected by the information, they do not qualify as an heir at law, next of kin, beneficiary, or donee under state law, and thus are not entitled to receive returns and return information of the deceased individual. However, a surviving relative of the deceased who also has a material interest in the decedent's returns may be able to secure copies and provide them to the child claiming illegitimate status. Access to deceased alleged parents' returns by illegitimate children will generally depend on state law. In such circumstances, research is needed to ensure all disclosures are proper.
Bankruptcies are governed by Title 11 of the U.S. Code. Information about the types of bankruptcy cases as they relate to the material interest issues discussed below is found in Chapters 7 and 11 of Title 11 (U.S. Code).
IRC §6103(e)(4) & (5) set forth several interrelated rules that provide the basic legal framework for addressing material interest disclosure issues in a bankruptcy context. Disclosures for tax administration purposes are discussed in IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes.
The IRS may always disclose the debtor-taxpayer's returns and return information to the debtor-taxpayer, and to any other person with the debtor-taxpayer's written consent. For detailed instructions involving disclosures to a debtor's attorney, see IRM 11.3.3.1.6, Disclosure to an Attorney-in-Fact.
Disclosures cannot be made to the U.S. Trustee in a tax administration matter pursuant to IRC §6103(e). Disclosures may be made to the U.S. Trustee, the trustee, or other creditors in accordance with IRC §6103(h) if the bankruptcy case pertains to tax administration. See IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes. The U.S. Trustee, when acting as "policeman" for the Bankruptcy Court to ensure compliance with the tax laws (particularly, staying current with tax deposits), may receive tax information consistent with IRC §6103(h)(4)(A). The U.S. Trustee's efforts to ensure tax compliance qualify as a tax administration activity under IRC §6103(b)(4)(B). The bankruptcy process incorporating the statutory and judicially imposed requirements relating to tax collection is a Federal judicial proceeding pertaining to tax administration within the meaning of IRC §6103(h)(4).
Disclosure rules distinguish between trustees in Chapter 7 and 11 cases where the debtor is an individual, and other trustees in bankruptcy, e.g., corporate Chapter 11 cases. In individual Chapter 7 or 11 cases, IRC §1398 applies and a return for the estate of the debtor is filed by the trustee (thus creating a separate taxable entity) in addition to the return filed by the debtor. See (3) above regarding disclosure to the debtor-taxpayer.
In an individual's Chapter 7 or 11 case, any return of the debtor for the taxable year when the case commenced or any preceding taxable year shall be available to the trustee. A bankruptcy case commences with the filing of a petition in court. The trustee may also obtain return information relating to the returns available to the trustee, if disclosure of the return information would not seriously impair tax administration.
In an involuntary case, no disclosure of a debtor's return will be made to the trustee until an order for relief has been entered by the court having jurisdiction, unless the court finds that disclosure is appropriate for purposes of determining whether an order for relief should be entered.
Returns and return information of the bankrupt estate filed by the trustee as described in (4) above are available to the trustee. See IRM 11.3.2.4.7 for a description of trustee rules. The debtor may also obtain the returns and return information of the bankruptcy estate.
Different rules apply for disclosure to a trustee (if one has been appointed) in cases other than individual Chapter 7 and 11 cases. These are cases where IRC §1398 does not apply and no separate taxable entity has been created. In such cases, the debtor's return and return information for current and prior years may be disclosed to the trustee. The trustee must furnish satisfactory evidence that he/she is trustee. The trustee in his/her fiduciary capacity, must also establish a material interest which will be affected by the requested information.
A trustee for a corporate taxpayer in a bankruptcy case wants to know the amount of the taxpayer's pending refund in order to propose a distribution among the taxpayer's creditors. In this case, the trustee has a material interest and may obtain the requested information.
In Chapter 13 bankruptcies, trustees are not entitled to tax information under IRC §6103(e)(4) as they have no responsibility for the debtor's tax returns. For disclosures to be allowed, the bankruptcy would need to be a judicial proceeding pertaining to tax administration (see (4) above), or the debtor must provide a consent for disclosure under IRC §6103(c).
Bank examiners are not trustees. To receive tax information, they must have a valid IRC §6103(c) consent from the taxpayer or the disclosure must satisfy IRC §6103(h)(4) provisions when the bankruptcy proceeding becomes a tax administration proceeding.
Additional information pertaining to bankruptcy disclosures, including detailed examples, can be found in Document 9225, Bankruptcy Disclosure Handbook.
IRC §6103(e)(9) provides for certain disclosures to persons who have been assessed the trust fund recovery penalty (TFRP) pursuant to IRC §6672. IRC §6103(e)(9) allows one responsible person to obtain certain limited information about other persons assessed the penalty for the same underlying tax.
Disclosures pursuant to IRC §6103(e)(9) may be made only upon receipt of a written request. The request must be signed by a person actually assessed the TFRP or his/her duly authorized attorney-in-fact.
Be careful when processing IRC §6103(e)(9) requests as they involve tax information pertaining to individuals other than the requester. While the attorney-in-fact provisions of IRC §6103(e)(6) apply, the provisions of IRC §6103(c) do not, as another party's tax information is involved.
Any employee delegated the authority to make disclosures pursuant to IRC §6103(e) by Delegation Order 11-2 (found in IRM 1.2.49.3), may make disclosures pursuant to IRC §6103(e)(9).
Disclosure personnel will advise employees making such disclosures to be certain that disclosures are limited to the specific tax periods associated with the requester's TFRP. Not all responsible officers subject to the penalty are assessed for the same periods. See the general rules as outlined in IRM 11.3.40, Disclosures Involving Trust Fund Recovery Penalty Assessments.
When releasing transcripts in response to IRC §6103(e)(7) or IRC §6103(e)(9) requests involving TFRPs, take care to restrict the information disclosed on other assessed persons to that in 1) through 5), above. TXMOD prints currently include the TIN for other persons assessed. Disclosure of the TINs of other assessed persons is unauthorized so transcripts must be redacted.
Instructions for Collection personnel are found in IRM 5.1.22.4, Disclosure of Trust Fund Recovery Penalty Payment Information. They provide that if the case is not assigned to a Revenue Officer, Collection Advisory will obtain the information and send it to the taxpayer. Appeals also has procedures in IRM 8.25.1.6.5, Trust Fund Recovery Penalty (TFRP) Overview and Authority. If a requester insists on receiving information about another responsible person which is prohibited as outlined above, he/she should be advised to either file a Freedom of Information Act request in order to receive the associated appeal rights, or contact the appropriate Disclosure office for guidance.
The Taxpayer Bill of Rights 2 provides the IRS with authority to establish procedures controlling the frequency with which any requester can make requests pursuant to IRC §6103(e)(9). Until such procedures are developed by SB/SE at a national level, IRS personnel must follow locally developed procedures.
See IRM 11.3.40, Disclosure Involving Trust Fund Recovery Penalty Assessments, for additional disclosure guidance when TFRPs are involved.
A receiver is a person appointed by a court to take into his/her custody, control and management of the property or funds of another, pending judicial action concerning such property or funds. While receiverships most commonly arise in bankruptcy or insolvency situations, this is not always the case, and various state and Federal laws authorize the appointment of receivers in different circumstances.
If substantially all of the property of a person with respect to whom a return is filed is in the hands of a receiver, current and prior years' returns and return information of that person may be disclosed to the receiver. The receiver, in his/her fiduciary capacity, must have a material interest which will be affected by the requested information. A material interest is an important interest and is generally, but not always, financial in nature.
A receiver must furnish satisfactory evidence that he/she is the appointed receiver who holds substantially all of the property of the person whose assets are in receivership.
The default classification for an LLC with two or more members is a partnership.
The default classification for an LLC with one member is a disregarded entity. A single member disregarded entity is categorized as a sole proprietorship.
A multi-member LLC can elect to be classified as a corporation or an S-Corp or accept the default classification of partnership.
A single-member LLC can elect to be classified as a corporation or accept the default classification of "disregarded entity" .
Tax information must be disclosed in conformance with the Federal tax treatment of the LLC. For example, if the LLC is taxed as a corporation, then the disclosure rules for corporations must be followed. If the LLC is considered a "disregarded entity" then the business operation is reported on the income tax return of the single member which may be Form 1040, Form 1065 or Form 1120.
In August 2007, regulations were issued requiring any LLC classified as a disregarded entity to be treated as the taxpayer for certain excise and employment taxes. A single-member LLC that is classified as a disregarded entity for income tax purposes is treated as a separate entity for purposes of employment tax (for wages paid on or after 1/1/2009) and certain excises taxes (for liabilities imposed and actions first required or permitted in periods beginning on or after 1/1/2008). Thus, be aware that the parties who may be entitled to tax information about an LLC may differ, depending on the type of tax and tax period(s) involved. See IRM 5.1.21, Collecting from Limited Liability Companies, or Pub 3402, Taxation of Limited Liability Companies, for additional information.
Partnership for federal tax purposes, then IRS will accept that the entity is a partnership for federal tax purposes.
If an LLC is owned by a husband and wife in a non-community property state the LLC should file as a partnership.
Income, expenses and net taxable income of a sole proprietorship are reported on Schedule C of Form 1040.
Access to the individual income tax return of a sole proprietor is governed by the same rules found in IRC §6103(e)(1) relating to individuals. See IRM 11.3.2.4.1.
Sole proprietorships having employees are required to file employment tax returns such as Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and Form 941, Employer's Quarterly Federal Tax Return.
Access to employment tax returns and tax return information related to a sole proprietorship is restricted to the person obligated to file the return and pay the tax. The spouse or employee of a sole proprietor may not have access to tax returns or tax return information related to Business Master File (BMF) returns of the sole proprietorship because he/she is not obligated to pay the tax on the return.
This denial of access applies even if the spouse or employee signed the BMF tax return in error.
A sole proprietor may designate another person, such as his/her spouse or an employee of the business, to receive the information using either a written consent or verbal consent, pursuant to IRC §6103(c). Verbal consents can only be used if disclosure relates to a tax matter.
If a taxpayer provides information asserting that they are or may be the victim of an unauthorized disclosure or unauthorized access of their tax returns or return information, IRC §6103(e)(11) allows for the disclosure of specific limited information about the status of an investigation. This section applies to disclosures made on or after December 18, 2015.
Only unauthorized disclosure or access under IRC §7213, IRC §7213A, or IRC §7214 are covered by this material interest provision.
The Treasury Inspector General for Tax Administration (TIGTA) is responsible for responding to any IRC §6103(e)(11) inquiries. If any IRS employee receives a request for the status of an unauthorized disclosure investigation they should refer the requester to TIGTA.
whether any action has been taken with respect to any individual, including whether a referral has been made for prosecution of that individual.
In docketed Tax Court cases, suits for refund, and bankruptcy cases that are judicial tax proceedings, no power of attorney is required from a counsel of record. An attorney becomes the attorney of record by filing a petition or refund suit or entering an appearance in the case. Specific instructions for disclosure of returns and return information to an attorney in fact are contained in IRM 11.3.3.1.6.
Specific instructions for disclosure of returns and return information to designees and practitioners are contained in IRM 11.3.3, Disclosure to Designees and Practitioners.
Specific instructions for responding to Congressional inquiries are found in IRM 11.3.4, Congressional Inquiries.
A request submitted under IRC §6103(e)(1)(D)(iii) should be sent to the IRS Territory having jurisdiction over the corporation whose return(s) and return information are sought.
The written request must be accompanied by evidence establishing that the requester is a bona fide shareholder of record of the required amount of stock of the corporation. Corporate stock certificates displaying the corporate seal and a printout from a state regulatory body such as the Secretary of State's Office or the Corporation Commission, detailing the total outstanding shares of stock currently in existence may be used to verify the percentage of ownership.
If any doubt exists whether the requester meets the 1% threshold, it is permissible to contact the corporation whose information is at issue to determine if they agree that the requester owns at least 1% of its outstanding stock. The requester should be advised and given an opportunity to withdraw their request if the corporation will be contacted.
All facts and circumstances must be obtained and evaluated when determining if a shareholder is a bona fide owner of stock. While the Internal Revenue Code does not currently define "bona fide" , regulations preceding present day IRC §6103(e)(1)(D)(iii) indicated that a shareholder is not considered bona fide if the shares were acquired for the purpose of obtaining the right to inspect the return(s) of the corporation.
The requirement that a shareholder be bona fide has a direct correlation to the states' statutory requirements that a shareholder seeking to inspect the books and records of the corporation have a proper purpose to do so. Generally, the "proper purpose" requirement means the purpose for inspection must reasonably relate to the requester's interests as a shareholder, but must not be adverse to the interests of the corporation whose information will be accessed. Proper purpose does include the intention to purchase shares in the corporation or a situation where the shareholder is a competitor seeking to take over the corporation. The fact that the shareholder is a competitor, even in a hostile takeover situation, does not defeat the shareholder's statutory right of inspection. The requester must still meet all other requirements shown above when it is determined (or known) that the requester is a competitor of the corporation.
When determining if a shareholder is a beneficial owner of stock, consider whether the shareholder is entitled to receive dividends on the stock, whether he or she has a right to vote as a result of ownership, whether he or she possesses the authority to sell the stock, and/or is liable for tax consequences connected to the stock. These examples are not all inclusive. Specific facts and circumstances must be evaluated for each case.
When processing a request, also consider the provisions of IRC §6103(e)(7) concerning the withholding of return information if release would seriously impair Federal tax administration.
When providing returns and return information to a one percent shareholder, the shareholder must be advised in writing of the provision in IRC §6103(a)(3) concerning the nondisclosure of information and the implications and liabilities of IRC §7213(a)(5) and IRC §7431(a)(2). The provisions of IRC §6103(e)(6) regarding attorneys-in-fact do not apply to one percent shareholders. The provisions of IRC §6103 prevent a one percent shareholder from redisclosing the information to anyone. If photocopies of information are provided, Notice 129 may be affixed to the first page of each return to meet this requirement.
Generally, return preparers are not entitled to receive returns or return information without written authorization from the taxpayer conforming to the requirements of IRC §6103(c) and Treas. Reg. 301.6103(c)-1, or pursuant to a power of attorney in conformance with Conference and Practice requirements.
The fact that a taxpayer has employed a tax return preparer, who is obviously aware of the information provided on the face of the return prepared, is not evidence of the taxpayer's intent that the preparer later have access to the return. In some instances, the return submitted to the IRS may vary from the one signed by the preparer. See IRM 11.3.3 for information pertaining to disclosures to designees.
It is the IRS's responsibility to ensure that any penalties assessed against preparers, as required by IRC §6694 and IRC §6695, are assessed against the appropriate preparer. Where the preparer is under examination or investigation for his/her preparation of a return, an examiner may need to disclose the return to its preparer. When the preparer signed the declaration of verification on the return (pursuant to IRC §6065), the IRS can ascertain the validity and reliability of that declaration by permitting the preparer to inspect the tax returns which bear his/her name as preparer. If not signed, the preparer may inspect the returns that the taxpayer alleges were prepared by the preparer.
When the taxpayer is under examination or investigation and a preparer has not signed the declaration, the IRS can permit an alleged preparer of the return to inspect the document to verify a taxpayer's statement that another person completed his/her return as filed.
If a preparer is under examination or investigation with respect to his/her preparation of the return (notwithstanding lack of status as a "tax return preparer" within the meaning of IRC §7701(a)(36) and Treasury Regulation 301.7701-15), an examiner may properly disclose the return to its preparer and to question the preparer regarding its preparation when the examiner is administering internal revenue laws.
In both (3) and (4) above, disclose only those portions of the return that are necessary to establish preparation.
Information returns, such as Form W-2, Wage and Tax Statement, and Form 1099 are required to be filed by one taxpayer (payor) such as a business entity (Corporation, Sub-S Corporation, Partnership or Sole Proprietorship) who must also provide a copy to the person who earned the income. These information returns may also be required to be submitted by the person who earned the income on their income tax return. In those instances, the information return itself and any data extracted from the information return is considered the return information of both the payor and the person who received the information return.
Transmittal documents such as Form 1096, Annual Summary and Transmittal of U.S. Information Returns, and Form W-3, Transmittal of Wage and Tax Statements, are the information returns of the submitter only. So only those with a right to tax information of the business entity can obtain either the transmittal itself or any return information extracted from the transmittal document.
Individual’s seeking access to their own W-2 information found in the Information Return Master File are allowed to receive that information to the extent they can establish their right to the information. See IRM 11.3.2.4.1.
Those who are allowed access to returns and return information for a business entity per IRC §6103(e)(1)(C), (Corporations, Sub-S Corporations, or 1% shareholders of C-Corporations), or per IRC §6103(e)(1)(D), (Partnerships), can request and receive W-2 information on other employees of the business in limited circumstances.
Due to the dual nature of the information in the W-2, before release of any information about other employees of an entity to those seeking access under IRC §6103(e)(1)(C) or (e)(1)(D), we must consider the potential impact on a person’s willingness to voluntarily comply with our tax system if all employees’ wage information (such as the SSN, address and amount of income earned) is routinely shared with those with standing in a business entity.
Release only the entire W-2 or Form 1099 information of the business entity to the person making the request on behalf of the entity, presuming that wages or other income were earned by the person making the request. In effect, you give the individual access to the W-2 related to him or her.
Do not release W-2 or 1099 information of other employees (considered 3rd party information) unless the information released relates to the resolution of a tax issue and conforms with the requirements found in IRC §6103(h)(4), (see IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes, for additional information). To the extent the IRS is holding or has held the requesting individual with the business entity liable for any tax, penalty or fee and W-2 information about other employees of the business entity is related to the adjustment or determination of liability, that information can be provided to the requester because he or she would have a right to know how the IRS determined the liability.
In an open audit, collection or other tax related investigation, IRS employees can release 3rd party information to the extent necessary to resolve tax issues. If the release of 3rd party W-2 or 1099 information is necessary to support the resolution of a tax issue, that information can be released. That may or may not include all elements of information present and those items of information (address and SSN) not considered necessary to release, should be withheld.
The IRS proposed a penalty for failure to file Form W-2 and a person responsible for payment of the liability is seeking information on how it was determined, tax information used in making that determination, to the extent it implicates 3rd party data or is necessary to disclose to explain the adjustment, can be provided pursuant to IRC §6103(e) to the person seeking the information.
Employee information found in Form W-2, although legally available to taxpayers who can access business information because of their standing with a business entity, can, if released improperly lead to the potential of identity theft and may inadvertently negatively impact on voluntary compliance. The IRS can make a release of 3rd party information as necessary, but even if allowed, consideration for the removal of the SSN, address or other information that is not necessary to resolve the issue or explain an adjustment should be done.
Case note documentation must be appropriate and relevant to document any disclosures made pursuant to IRC §6103(e). Update case file with all actions as they take place so that all relevant information is documented.
any other significant actions pertaining to disclosure determinations under section 6103(e).
Disclosure and security rules must be followed when dealing with taxpayers via telephone or electronic media. (See IRM 11.3.1.14.2, Electronic Mail and Secure Messaging).
Although following disclosure rules may allow the disclosure of tax information to a taxpayer, his or her legal representative, or a designated third party to receive tax information, disclosure is prohibited if the information cannot be transmitted by an acceptable secure method. For example, if asked to submit tax information via email to a verified caller, you cannot transmit that information. Although the requester has a legal right to that information, email is not an approved secure method. As an alternative, the information can be provided via regular mail or another acceptable method.
By itself, transmitting tax information or information protected by the Privacy Act using an unapproved method is not considered an unauthorized disclosure of tax or Privacy Act information, but can lead to unauthorized disclosures and presents an unacceptable level of risk and vulnerability for the Service.
Use the following guidelines when leaving messages that contain confidential information on answering machines/voice mail. These guidelines are consistent with prudent business practices and disclosure rules while still providing for good customer service.
While tax information protected by IRC §6103 generally may not be left on an answering machine or voice mail, there are exceptions.
If the employee "reasonably believes" he or she has reached the taxpayer's correct answering machine or voice mail, it is acceptable to leave the employee’s name, telephone number, any appropriate reference number for the inquiry, the fact that he or she works for the IRS (identifying the function of the calling employee is permissible), and the name of the person who should return the call. Additional information can be left on the recording if the taxpayer has given prior approval to leave such information on voice mail or the answering machine.
The employee must document the taxpayer's telephone number, his or her approval to call that number, and the taxpayer's permission for IRS to leave information on the recording.
If the employee does not have a reasonable belief he or she has reached the correct taxpayer, disclose no tax or other confidential information on the message.
When the number reached cannot be positively identified as the taxpayer's and it is otherwise appropriate and practical, it may be preferable to simply ask for a return call from "whoever initiated the contact and left the number for the IRS return call." If the call is in response to an earlier taxpayer inquiry or request, a statement can be made that the call is in response to an earlier inquiry/request. The IRS employee may not indicate the nature of the original request/situation nor reveal any specifics about the return call if it involves confidential information.
When calling about collection of unpaid taxes, the restrictions of IRC §6304(b)(4) apply, and IRS employees are generally precluded from identifying themselves as IRS employees unless they reasonably believe the answering machine or voice mail belongs to the taxpayer.
Normally, it is not appropriate to leave information on the answering machine of the taxpayer's designee under IRC §6103(c) because these designees cannot further authorize IRS to disclose the taxpayer's information to anyone else, and we cannot be certain who will pick up the message. For example, leaving taxpayer information on the voicemail of a Congressional staffer when working a Congressional inquiry is not permitted, as a member of Congress (or the designated staffer) has no authority to give a third party access to that information, and IRS employees have no way to know whether anyone else has access to that voicemail.
An attorney-in-fact who under Conference and Practice Requirements has been authorized in Section 5 of Form 2848, Power of Attorney and Declaration of Representative, to designate others to receive information of the taxpayer.
Consult with the appropriate Disclosure Office if there are any questions about contacting taxpayers and leaving confidential information on answering machines or voice mail.
The Information Technology (IT) Office of Cybersecurity developed rules to deal with disclosures of sensitive but unclassified (SBU) information (e.g., information protected by IRC §6103 or the Privacy Act) when using cell phones or other cordless devices. The Governmental Liaison, Disclosure and Safeguards (GLDS) guidelines were developed based on confidentiality rules/standards and reflect IT Office of Cybersecurity policy. If more comprehensive security guidelines are subsequently issued, they must be followed to the extent they conflict with these guidelines, since the IT Office of Cybersecurity has institutional responsibility for cybersecurity issues. Cybersecurity has also approved the use of cordless devices for certain systems and these special systems operate within approved parameters.
Remember that the use of cell phones or other cordless devices does not automatically create disclosure concerns. However, use of these devices raises some vulnerability issues, and it is an agency responsibility to decide what risks are acceptable and prudent for business purposes. The IRS is fully committed to protecting sensitive information, particularly taxpayer information. Employees must use good judgment and common sense when balancing the risks of unauthorized disclosure against business needs.
The single greatest vulnerability when using these technologies occurs in locations where privacy is limited. Airports, restaurants, and other crowded spaces pose a greater risk of having a conversation overheard using a cellular phone. Whenever possible, IRS personnel should conduct cellular phone conversations in private settings or in locations that minimize the potential for eavesdropping. Cordless devices are rarely, if ever, used outside of a person’s home and do not lend themselves to conversations in crowded areas, but can still pose a risk of someone overhearing a conversation that the taxpayer does not want overheard.
An IRS employee can normally conduct a cell phone conversation from a private work space within his or her home or from an automobile where he or she is the sole occupant without fear that the conversation will be overheard. An employee can also conduct a conversation away from passers-by. Conversely, an IRS employee returning a call in a restaurant or an office lobby must be careful not to convey sensitive information that might be overheard by others.
Be aware of the volume of your speaking voice. Cell phone users tend to speak louder, often without realizing it. Digital cell phones are more secure than analog cell phones.
For contacts initiated by IRS employees, the employee must inform a taxpayer that he or she is calling from a cell phone or other cordless device when the employee is in an area where sensitive information could be overheard. When calling from a private setting where the conversation cannot be overheard, an employee is not required to disclose that the call is originating from a cell or cordless phone.
If the employee is calling via cell phone from a public place, he or she must advise the taxpayer accordingly. This will alert the taxpayer of the potential for the inadvertent disclosure of his or her tax information.
When returning a taxpayer's call the employee should state, "I’m calling you from my cell phone. Do you have the bank account information I requested?" Or, "I’m calling you from my cell phone. Do you have the information I requested about your tax return?" These or similar statements informing the person that you are calling from a cell phone are appropriate.
If the IRS employee is in a public environment and the expectation is that no sensitive information will be disclosed, the employee is not required to inform the taxpayer that he or she is using a cell phone or other cordless device. However, the employee should still consider telling the taxpayer that he or she is using a cell phone or other cordless device in case a sensitive issue comes up in the discussion. For example, the employee might say, "I’m returning your call from my cell phone. You wanted to set up an appointment?"
IRS personnel must honor a taxpayer’s request not to conduct a conversation concerning sensitive information by cell or cordless phone.
For taxpayer initiated contacts, the IRS is under no obligation to determine if the caller is using a less secure platform such as a cordless device. Any necessary dialogue, including the disclosure of sensitive data, is authorized based on the fact the caller has accepted any security vulnerability by using a cordless device to contact the IRS.
If the taxpayer does not agree to the use of a cordless or cell phone, the IRS employee must offer the taxpayer the option of rescheduling the conversation when a more secure "land" line is available. Any agreement must be appropriately documented. See (8) above.
Classified information must never be discussed over a cell or cordless phone. Check with your manager or local Disclosure office to see if you normally have access to this type of information. IT Office of Cybersecurity can provide guidance about appropriate technologies for handling this type of information.
Form 8283 Non-cash Charitable Contributions N Page one: Redact Part I.
Redact Part II item c that identifies the charitable organization the donation was made to.
Redact Part II item e if there is a name listed.
Page two: Redact Parts III and IV of the form for the signature, name, address and EIN of the appraiser and donee accepting the gift.
Form 8693 Low Income Housing Credit Disposition Bond N Redact Part I, Section 7a the name and address is that of the person requesting the return.
Form 8912 Credit to Holders of Tax Credit Bonds N Redact the name and address of the bond issuer on each section.
Form 8308 Report of a Sale or Exchange of Certain Partnership Interests N Part I, redact the name, address and TIN of all but the person making the request for the return.
Form 8832 Entity Classification Election N Redact any information on lines 4a and b except if that is the name and TIN of a person requesting the return.
Form 2553 Election by a Small Business Corporation N Redact the name of the individual listed unless the request is from that person.
Page two: Redact Part I column J for all but the person making the request.
Redact Part I column K for the signature of all but the person making the request.
Redact Part I, column M for all but the person making the request.
The above applies to all attachments for Part I.
Page three: Part III, redact the name, address, TIN and signature of the individual unless the request is from the named person in Part III.
Page two: Redact Parts III and IV of the form for the identifying name, address and EIN of the appraiser and donee acknowledging the gift.

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