Rev. Proc. 76-36

Section 1. Purpose.

The purpose of this Revenue Procedure is to modify the provisions of Rev. Proc. 75-36, 1975-2 C.B. 565, relating to the furnishing of financial data to the Bureau of Census (Census) and the Bureau of Economic Analysis (BEA), which are agencies within and under the jurisdiction of the United States Department of Commerce.

Sec. 2. Scope.

The scope of this Revenue Procedure is limited to those taxpayers who provide Census with information concerning inventory, for which the taxpayers employ the last-in, first-out (LIFO) inventory method, as described in section 472 of the Internal Revenue Code of 1954.

Sec. 3. Background.

.01 Rev. Proc. 75-36 sets forth the procedure to be used by the Internal Revenue Service in the examination of Federal income tax returns involving the LIFO inventory requirements of section 472(c) of the Code for the taxable year in which the taxpayer elects or reelects to use the LIFO inventory method, or extends an existing LIFO election to cover all or a greater portion of its inventories, and Census or BEA requests that the taxpayer furnish certain financial information to the appropriate agency.

.02 Section 472(e)(2) of the Code and the regulations issued thereunder provide, in part, that once the LIFO method is elected, it must be used in all subsequent taxable years, unless the Secretary of the Treasury or the Secretary's delegate determines that the taxpayer has used some procedure other than the LIFO method for any such subsequent taxable year in order to ascertain the income, profit, or loss of such subsequent taxable year, for the purpose of a report or statement covering such taxable year to shareholders, partners, or other proprietors, or beneficiaries, or for credit purposes.

.03 Census collects data on inventories of manufacturing and wholesale firms in the economic census conducted every five years. Similar data are also collected in monthly and/or annual surveys for manufacturing, wholesale, and retail firms. These data are collected under the authority of title 13, United States Code, 13 U.S.C.A. section 9 (Supp. 1975) (title 13). Section 9 of title 13 states that the information collected may not be used "for any purpose other than the statistical purposes for which it is supplied" and further prohibits "any publication whereby the data furnished by any particular establishment or individual under this title can be identified." This section also does not permit "anyone other than the sworn officers and employees of the Department or bureau or agency thereof to examine the individual reports."

.04 Under the provisions of title 13, data collected in Census surveys are exempt from disclosures under the Freedom of Information Act. Data on individual firms may not be released because (1) they are "specifically exempted by statute," and (2) they are "commercial or financial information obtained from a person and privileged or confidential." (Section 552(b)(3) and (b)(4) of title 5, United States Code, 5 U.S.C.A. section 552 (Supp. 1975).)

.05 Census requires taxpayers to submit financial information in the year of the LIFO election, reelection, or extension, as well as in subsequent taxable years. Certain of the required information is not available on a LIFO basis (for example, inventory on a location basis) and some taxpayers have been reluctant to submit the required information because Rev. Proc. 75-36 is limited to the year of the LIFO election, reelection, or extension.

.06 The information to be furnished to Census will not be furnished by the taxpayer to any other persons nor will it be furnished to other government agencies unless otherwise authorized by the Service.

Sec. 4. Application.

In the examination of returns, a taxpayer's LIFO election will not be terminated for Federal income tax purposes solely because the taxpayer has furnished financial information required by Census to Census on a non-LIFO basis, for the year of the LIFO election, reelection, or extension, as well as for subsequent taxable years. This Revenue Procedure applies to all financial information collected by Census under the authority of title 13, and exempted from disclosure under the Freedom of Information Act, under the authority of title 5, United States Code, 5 U.S.C.A. section 552 (Supp. 1975).

Sec. 6. Effect on Other Documents.

To the extent provided herein, Rev. Proc. 75-36 is modified.

Sec. 7. Inquiries.

Inquiries in regard to this Revenue Procedure should refer to its number and be addressed to the Commissioner of Internal Revenue, Attention T:C:C, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.