Rev. Proc. 62-18

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to set forth the procedures relating to (1) the inspection by State governments of certain Federal tax returns and related documents filed under the Internal Revenue Code of 1954, (2) the furnishing to State governments of copies of such returns and documents, and (3) the furnishing to State governments of abstract data from such returns and documents.

SEC. 2. AUTHORITY TO INSPECT.

.01 By virtue of sections 301.6103(a)-1(d), 301.6103(b)-1, and 301.6106-1 of the Regulations on Procedure and Administration published in Treasury Decision 6543, C.B. 1961-1, 671, and Treasury Decision 6546, C.B. 1961-1, 682, the Commissioner of Internal Revenue may, upon application by the Governor of a State, open certain Federal tax returns to certain State tax officials, bodies, or commissions for certain State and local purposes depending upon the type of Federal tax return of which inspection is requested.

.02 Returns which may be open to inspection and the respective State tax officials, bodies, or commissions by whom or which inspection may be made are set forth in this Revenue Procedure.

SEC. 3. INSPECTION OF RETURNS MADE IN RESPECT OF THE TAXES IMPOSED BY CHAPTER 5, CHAPTER 11, CHAPTER 12, CHAPTER 23, CHAPTER 32, SUBCHAPTERS B, C, AND D OF CHAPTER 33, AND SUBCHAPTER B OF CHAPTER 37 OF THE CODE.

Under authority of section 301.6103(a)-1(d) of the Regulations, the Commissioner, upon application by the Governor of the State as specified in section 3.04, may grant permission for inspection of certain returns by the respective State tax officials and for the respective purposes set forth in this section.

.01 Estate and gift tax returns.--Returns and notices in respect of estate tax imposed by Chapter 11 of the Code and returns in respect of gift tax imposed by Chapter 12 of the Code may, in the discretion of the Commissioner or his delegate, be made available for inspection by any properly authorized official, body, or commission, lawfully charged with the administration of any tax law of a State, for the purpose of such administration, provided like cooperation is given by the State with respect to inspection of returns of estate, inheritance, legacy, succession, gift, or other tax of the State for use of the Commissioner and his representatives in the administration of the Federal tax laws.

.02 Unemployment tax returns.--Returns in respect of the unemployment tax imposed by Chapter 23 of the Code may, in the discretion of the Commissioner or his delegate, be made available for inspection by any properly authorized official of a State-provided (a) such State has a law certified to the Secretary of the Treasury as having been approved in accordance with section 3304 of the Code and (b) the inspection is solely for the purpose of administering such law.

.03 Excise tax returns.--Returns in respect of excise taxes imposed by Chapter 5 of the Code (tax on transfers to avoid income tax); Chapter 32 of the Code (manufacturers excise taxes); subchapters B, C, and D of Chapter 33 of the Code (communications tax, transportation taxes, and tax on safe deposit boxes); and subchapter B of Chapter 37 of the Code (tax on account and palm oil) may, in the discretion of the Commissioner or his delegate, be made available for inspection by any properly authorized official, body, or commission, lawfully charged with the administration of any tax law of the State, for the purpose of such administration.

.04 Applications for inspection.

1 In general.--Application for the inspection provided for in sections 3.01, 3.02, and 3.03 shall be made in writing, signed by the Governor of the State, and addressed to the Commissioner of Internal Revenue, Washington 25, D.C. The applications for the respective types of returns shall state the following:

a The title of the official, body, or commission by whom or which inspection is to be made;

b A specific reference to the law of the State which such official, body, or commission is charged with administering and the law under which he or it is so charged;

c The purpose for which the inspection is to be made; and

d If the inspection of an estate or gift tax return is requested, the fact that the State gives like cooperation with respect to the inspection of returns of an estate, inheritance, legacy, succession, gift, or other tax of the State, for use of the Commissioner or his representatives in the administration of the Federal tax laws.

2 Procedure as to returns filed in the internal revenue district within or including the State requesting inspection.

a General inspection.--Upon application, permission may be granted for general inspection of the returns of the taxes specified in sections 3.01, 3.02 and 3.03 which are filed in the district within or including such State. If such general inspection is desired, the application made to the Commissioner in accordance with section 3.041 shall include a statement that general inspection is desired of a specified class or classes of returns (for example, estate tax returns, gift tax returns, etc.). Permission granted to a State for the general inspection provided for in this subdivision shall, except as hereinafter provided in the case of unemployment tax returns, continue in effect until such time as the Commissioner by written notice to the Governor of the State provides that such inspection will be permitted only on the basis of periodic application therefor. Permission for general inspection of unemployment tax returns will terminate without notice at such time as the State ceases to have a law certified to the Secretary as having been approved in accordance with section 3304 of the Code. The Governor of the State shall supply in writing to the District Director of Internal Revenue, with whom the returns to be inspected were filed, a list of the names of the individuals designated to make the inspection on behalf of the official, body, or commission named in the application to the Commissioner, and shall keep such list current by appropriate deletions or additions as may be necessary.

b Inspection of specific returns. Permission granted pursuant to section 3.042a for general inspection of returns of a particular tax includes permission to inspect specifically identified returns of such tax when desired. However, if a State is interested only in examining certain returns of particular taxpayers, the application for inspection of such returns shall be made in writing to the Commissioner as provided in section 3.041 and in addition to the information outlined in such subparagraph shall state the name and address of each taxpayer whose return or returns it is desired to inspect, the kind of tax reported on each such return, the taxable period covered by such return, and the names of the individuals designated to make the inspection on behalf of the official, body, or commission named in the application.

3 Returns filed in other internal revenue districts.--In the case of returns filed in an internal revenue district other than one within or including the State requesting inspection, permission for inspection provided in sections 3.01, 3.02 and 3.03 will be granted only with respect to specifically identified returns. The application for such inspection shall be made to the Commissioner as provided in section 3.042a and, in addition to the information outlined therein and section 3.042b shall specify the internal revenue district or office in which the returns to be inspected are believed to have been filed.

.05 Time and place of inspection.--A convenient time and place for the inspection of returns will be arranged by the internal revenue officer (District Director or Director of International Operations) with whom the returns were filed. The inspection will be permitted only in the presence of an internal revenue officer or employee and only in an office of the Internal Revenue Service during the regular hours of business of such office.

SEC. 4. INSPECTION OF CORPORATION RETURNS OF INCOME TAX OR UNEMPLOYMENT TAX.

.01 Under the provisions of sections 301.6103(b)-1(a) and 301.6106-1 of the regulations, the proper tax officers of a State shall have access, upon application made in accordance with the provisions of this paragraph, to the returns filed by any corporation with respect to the taxes imposed by chapters 1, 3, and 6 of the Code and with respect to the unemployment tax imposed by chapter 23 of the Code, or to abstracts of such returns. Application for access to the returns of any corporation, or abstracts thereof, shall be in writing, signed by the Governor of the State and addressed to the Commissioner of Internal Revenue, Washington 25, D.C. The application shall set forth the reason why access is desired; the names and official positions of the officers designated to have such access; and, with respect to each return to which access is desired, the name and address of the corporation filing the return, the kind of tax (income tax or unemployment tax) reported on the return, and the taxable year covered by the return.

.02 Time and place of inspection.--The internal revenue officer, District Director, or Director of International Operations, with whom the returns were filed is authorized to make such returns available in accordance with permission granted by the Commissioner. Such officer shall set a convenient time and place for the inspection. The inspection will be permitted only in the presence of an internal revenue officer or employee and only in an office of the Internal Revenue Service during the regular hours of business of such office.

.03 In addition to the inspection provided for in this section, corporation returns of income tax or unemployment tax may be made available upon proper application, respectively, under the provisions of section 3 (with respect to unemployment tax returns) and section 5 (with respect to corporation income tax returns) of this Revenue Procedure, to properly authorized State officials, and upon the conditions and for the purposes respectively set forth in these sections.

SEC. 5. INSPECTION OF INCOME TAX RETURNS.

.01 In general.--Under the provisions of sections 301.6103(b)-1(b) of the regulations, income tax returns filed with respect to the taxes imposed by chapters 1, 2, 3, and 6 of the Code shall, upon application made in accordance with the provisions of this paragraph, be open to inspection by any official, body, or commission, lawfully charged with the administration of any State tax law or any properly designated representative of such official, body, or commission, if the inspection is for the purpose of such administration or for the purpose of obtaining information to be furnished to local taxing authorities as provided in section 6103(b)(2) of the Code. The application shall be made in writing and signed by the Governor of the State and shall be addressed to the Commissioner of Internal Revenue, Washington 25, D.C. The application shall state the following:

1 The title of the official, body, or commission by whom or which the inspection is to be made;

2 A specific reference to the State tax law which such official, body, or commission is charged with administering and the law under which he or it is so charged;

3 The purpose for which the inspection is to be made; and

4 If the inspection is for the purpose of obtaining information to be furnished to local taxing authorities, (1) the title of the official, body, or commission of each political subdivision of the State, lawfully charged with the administration of the tax laws of such political subdivision, to whom or to which the information secured by the inspection is to be furnished, and (2) the purpose for which the information is to be used by such official, body, or commission.

.02 Procedure as to returns filed in the internal revenue district within or including the State requesting inspection.

1 General inspection.--Permission may be granted by the Commissioner to any State for general inspection of returns of the taxes imposed by chapters 1, 2, 3, and 6 of the Code which are filed in an internal revenue district within or including such State. If such general inspection is desired, the application made to the Commissioner in accordance with section 5.01 shall include a statement that general inspection is desired of returns filed in the internal revenue district or districts within or including the State with respect to the taxes imposed by chapters 1, 2, 3, and 6 of the Code. Permission granted for the general inspection provided for in this subparagraph shall continue in effect until such time as the Commissioner by written notice to the Governor of the State provides that such inspection will be permitted only on the basis of periodic applications therefor. The Governor shall supply to the district director with whom the returns to be inspected were filed a written list of the names of the individuals designated to make the inspection on behalf of the official, body, or commission named in the application to the Commissioner, and shall keep such list current by appropriate deletions or additions as may be necessary.

2 Inspection of specific returns.--Permission for the general inspection provided in section 5.021 of this section includes permission to inspect a specifically identified return when desired. However, a State interested only in examining the returns of particular taxpayers may inspect such returns on written application therefor to the Commissioner. The application in such case shall state, in addition to the information outlined in section 5.01 the name and address of each taxpayer whose return or returns it is desired to inspect, the taxable year covered by each such return, and the names of the individuals designated to make the inspection on behalf of the official, body, or commission named in the application.

.03 Procedure as to returns filed in other internal revenue districts.--In the case of returns filed with the Director of International Operations or in an internal revenue district other than one within or including the State requesting the inspection, permission for the inspection provided for in section 5.01 will be granted only with respect to specifically identified returns. The application for such inspection shall be made to the Commissioner as provided in section 5.01 and, in addition to the information outlined therein and in section 5.022 shall specify the internal revenue district or office in which the returns to be inspected are believed to have been filed.

.04 Time and place of inspection.--The internal revenue officer, District Director, or Director of International Operations, with whom the returns were filed is authorized to make such returns available in accordance with permission granted by the Commissioner. Such officer shall set a convenient time and place for the inspection. The inspection will be permitted only in the presence of an internal revenue officer or employee and only in an office of the Internal Revenue Service during the regular hours of business of such office.

SEC. 6. INSPECTION OF RETURNS STORED IN FEDERAL RECORDS CENTERS.

District Directors may not authorize inspection by State tax officers at Federal records centers of tax returns stored in such centers. However, if the State has previously been granted authorization for inspection of returns by the National Office and certain of these returns are stored in a Federal records center, the State should be permitted to inspect these returns in the district office, only on a name by name basis after the returns have been requisitioned and obtained from the Federal records center.

SEC. 7. DOCUMENTS AND INFORMATION WHICH MAY BE INSPECTED.

.01 State tax officers authorized previously to inspect returns may also inspect information returns, schedules, etc., designed to be supplemental to or to become a part of the returns as well as certain records and reports relating to returns, as follows:

1 Schedules, information returns, protests, briefs, waivers, and other statements or documents designed to be supplemental to or to become a part of the return, may be inspected.

2 Examiners' reports may be inspected to the extent that such reports have previously been furnished to the taxpayer; 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.

6 Typed copies of office copies of certificates of overassessment may be furnished; no photostatic copies of certificates of overassessment may be made.

SEC. 8. COPIES, ABSTRACTS, OR TRANSCRIPTS OF RETURNS.

.01 Any official, body, or commission lawfully charged with the administration of any State tax law, or any properly designated representative of such official, body, or commission, by whom or which inspection of a return may be permitted under sections 301.6103(a) and 301.6103(a)-2, 301.6103(b)-1 and 301.6106-1 of the regulations, may be furnished with a copy of such return upon request.

.02 If the request for a copy of a return is made other than at the time of inspection of such return by the applicant, the request shall be in writing, shall adequately identify the return, a copy of which is desired, and shall be accompanied by satisfactory evidence that the applicant is a State tax official authorized to inspect the return.

.03 If the State tax official has been authorized by the Commissioner to inspect the return, either through permission for general inspection or permission to inspect a specific return, the application for the copy should be submitted to the District Director, or the Director of International Operations, with whom the return was filed, identifying the return or returns of which a copy is desired.

.04 In all other cases, the application shall be made in writing; signed by the Governor of the State addressed to the Commissioner of Internal Revenue; shall comply with the respective requirements set forth in this procedure governing applications for permission to inspect specific returns; and shall include a request that a copy be furnished.

.05 Request may be made for either or both inspection or a copy of a return.

SEC. 9. PROCEDURE FOR FURNISHING SERVICES.

.01 District Directors, upon authorization by the Commissioner, will provide the necessary inspection, copying, abstract, or transcript service with respect to those returns which are filed in their districts.

.02 When a State is authorized to inspect returns in a District office, the State generally will be advised that it will be necessary for the State to contact the District Director to determine when the returns and related documents will be available for inspection, copying, abstract, or transcript service. 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 filing periods, or interrupt investigative or administrative processes involving active use of returns and related documents.

.03 District Directors may also receive from the National Office, from time to time, lists of names, addresses, taxable periods involved, and classes of returns, with instructions to furnish copies of the returns and related documents, or abstracts or transcripts of information therefrom, when they are available, to designated State officials.

SEC. 10. STATE ABSTRACT OR TRANSCRIPT SERVICE, CHARGES, AND STATEMENTS OF ACCOUNT.

.01 States will be required to provide forms upon which such abstracts or transcripts are to be furnished. They will be forwarded periodically to the State tax commission or similar body which requested the service.

.02 Charges for State abstract or transcript service will be at the rate of $2.50 per hour.

.03 Charges for copies of returns and certifications furnished to States will be made as follows:

1 For each copy of a return or other document, 50 cents a page.

2 For each copy of Form 1040A, or a return or other document of similar size, a charge of 50 cents each will be made, even though both sides of the document are furnished.

3 For each copy of a page which is substantially larger than the size used in the largest income tax returns, the basic rate of 50 cents per page may be increased in proportion to the size (in multiples of 25 cents) to such amount that appears reasonable under the circumstances.

4 For each certification, 50 cents.

5 No charges will be made pursuant to this Revenue Procedure for abstracts of information which are furnished to States pursuant to special cooperative agreements between the States and the Federal Government for the mutual exchange of tax information.

SEC. 11. TERMS USED.

References to the district or office in which a return is filed shall, for the purposes of applications for inspection and the inspection, mean the district or office having official custody of the return. If it is believed that the district or office where the return was filed is different from the district or office having official custody, applications made in accordance with this procedure should include statements to that effect, specifying the several locations.

SEC. 12. CROSS REFERENCES.

For procedures relating to inspection by States of returns filed under the Internal Revenue Code of 1939, see Rev. Rul. 54-349, C.B. 1954-2, 122. See also Rev. Proc. 58-15, C.B. 1958-2, 1126, modifying Rev. Rul. 54-349, for charges for abstracts or copies of such returns and documents.