Rev. Rul. 54-349

SECTION 1. PURPOSE.

The purpose of this Revenue Ruling is to restate and revise the procedures relating to the inspection by State governments of income returns and related documents, the furnishing to State governments of copies of such returns and documents, and the furnishing to State governments of abstracts of data from such returns and documents.

SEC. 2. AUTHORITY TO INSPECT.

.01 Permission may be granted by the Commissioner to properly authorized officials, bodies, or commissions, lawfully charged with the administration of any State tax law, or the properly designated representatives of such officials, bodies, or commissions, to inspect income returns for the purpose of such administration, upon applications by Governors of the States in accordance with the provisions of section 55 of the Internal Revenue Code and the regulations thereunder. .02 Upon proper application to the Commissioner, the designated tax officers of a State will be granted permission to inspect all Federal income returns, or designated groups of such returns, which were filed in District Directors' offices located within the State. A State will be granted permission to inspect Federal income returns which were filed in District Directors' offices located outside of the State only upon specific requests addressed to the Commissioner identifying the taxpayers, their addresses, and the taxable years involved, and indicating that the inspection is desired for the purpose of administering the tax laws of the State.

.03 State tax officers authorized to inspect income returns may also inspect information returns, schedules, etc., designed to be supplemental to or to become part of the returns, as well as certain records and reports relating to the returns. The policy with respect to what documents may be inspected is generally as follows:

1 If the inspection of returns is authorized, schedules, information returns, protests, briefs, face of claims, waivers, and other statements or documents designed to be supplemental to or become part of the return, may also be inspected.

2 Examiners' reports may be inspected to the extent that such reports have previously been furnished to the taxpayers; therefore, the transmittal letter portion of a revenue agent's report, or a separate confidential report, which contains information for Service use only, may not be inspected.

3 Conference reports may not be inspected with the exception of the pages showing recomputation of tax liability.

4 Work papers of examiners, engineers' reports, cover letters of the reports in which opinions are expressed, reports of special agents, and interoffice communications, may not be inspected unless specific authorization is given by the Commissioner.

5 Inspection of claims for refund will be limited to the face of the claim only, since the back of the claim contains Service records. Typed copies of office copies of certificates of overassessment may be furnished; no photostat copies of certificates of over-assessment are to be made.

SEC. 3. COPIES OR ABSTRACTS.

State officers authorized to inspect returns and related documents will also be furnished, upon request, copies of such returns and related documents, or abstracts of information contained therein.

SEC. 4. PROCEDURE FOR FURNISHING SERVICES.

.01 District Directors, upon specific authorization by the Commissioner, will provide the necessary inspection, copying, or abstract services with respect to those returns which are retained in their offices for permanent filing. The National Office will perform these services with respect to the returns it retains for permanent filing. A copy of each letter authorizing the officers of a State to inspect returns in District Directors' offices will be furnished to the District Directors concerned.

.02 Where a State is authorized to inspect returns and related documents in a District Director's office the State generally will be advised that it will be necessary for the State to contact the District Director for the purpose of ascertaining when the returns and related documents will be available for inspection, or for copying or abstract service. District Directors will also receive from the National Office, from time to time, lists of names, addresses, and taxable years involved, with instructions to furnish copies of the returns and related documents, or abstracts of information therefrom, when they are available for this purpose, to designated States. District Directors should cooperate fully with properly designated State tax officers and arrange mutually convenient dates for the inspection of, or the obtaining of information from, returns and related documents. Care should be taken that any dates arranged will not interfere with the normal flow of returns during the income tax filing period, or interrupt investigative and administrative processes involving active use of returns and related documents.

.03 Charges will be made in accordance with the procedure contained in Mimeograph 6747, C.B. 1952-1, 54, for copies of returns and related documents which are furnished to States. The States will be required to provide forms upon which abstracts are to be furnished. Charges will be made for abstract service at the rate of $1.50 per hour for time spent preparing the abstracts. No charges will be made pursuant to this Revenue Ruling for abstracts of information which are furnished to States as a test project pursuant to special agreements between the States and the Federal Government for the mutual exchange of information.

.04 Payments received in connection with the furnishing of copies of returns or documents, or for abstract services, will be deposited as miscellaneous receipts.

.05 All requests by States for certified copies of returns or documents will be handled by the Audit Division in the National Office.

SEC. 5. EFFECT ON OTHER DOCUMENTS.

All other instructions which are inconsistent or in conflict with the provisions of this Ruling are amended or superseded accordingly

SEC. 6. EFFECTIVE DATE.

This Revenue Ruling is effective as of June 30, 1954.