Final Regs on Disclosures to the Census Bureau

 [4830-01]

 ACTION: Final regulations and removal of temporary regulations.

 SUMMARY: This document removes temporary regulations and provides final regulations relating to the disclosure of additional items of return information to the Bureau of the Census for use in certain statistical programs. These regulations provide guidance to Internal Revenue Service personnel responsible for disclosing the information.

 EFFECTIVE DATE: These regulations are effective December 16, 1991.

 FOR FURTHER INFORMATION CONTACT: Paul W. Winkler, (202) 566-4430 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

BACKGROUND

This document adopts with changes the proposed amendments to the Regulations on Procedure and Administration (26 CFR part 301) under section 6103(j)(1) of the Internal Revenue Code of 1986 that were published in the Federal Register on March 5, 1991 (56 FR 9182).

 Before adopting the final regulations, the Internal Revenue Service solicited comments and requests for a public hearing on the proposed regulations. No requests for a public hearing were received. The only comments received were from the Bureau of the Census. The Bureau of the Census requested that (a) the code indicator for Form 8814 be added to section 301.6103(j)(1)-1T(b)(1)(xiii); (b) the physical location of businesses be added in section 301.6103(j)(1)- 1T(b)(2)(i); (c) the business address on the Schedule C be added in section 301.6103(j)(1)-1T(b)(3)(xxi); (d) the reference in section 301.6103(j)(1)-1T(b)(2)(iii)(C) to the master file tax account number be changed to the master file tax account code (MFT); and (e) the total of IRA distributions be deleted from section 301.6103 (j)(1)-1T(b)(1)(ix). All of these changes are included in the final regulations.

 These regulations supersede the temporary regulations (T.D. 8336) issued under section 301.6103(j)(1)-1T that were published in the Federal Register on March 5, 1991 (56 FR 9169).

 Periodically, the disclosure regulations are amended to reflect the changing statistical needs of the Bureau of the Census for tax information, and these final regulations are an update of those regulations.

EXPLANATION OF PROVISIONS

 In preparation for the 1992 Economic and Agricultural Censuses, the original request by the Bureau of the Census for additional items of return information indicated several areas in which changes to existing Bureau access to tax return information either would improve present statistical programs or were necessary to implement new programs.

For these programs, the Bureau requested the following additional information from the forms and returns filed by individuals and businesses:

 (a) The total asset figures from corporate and partnership returns;

 (b) The answers to the material participation questions and the agricultural activity code on the Form 1040, Schedule F;

 (c) The business description;

 (d) Identities of all shareholders of Subchapter S corporations;

 (e) Identities of all members of a partnership;

 (f) Information from the Form 1120 identifying officers of corporations;

 (g) Stock and equity interests of shareholders and partners; and

 (h) Certain special income figures shown on the returns.

In addition, the Bureau requested that the final regulations require officers or employees of the Service to disclose the following information from the forms and returns filed by individuals and businesses:

 (a) The Form 8814 code indicator,

 (b) The physical location of a trade or business,

 (c) The business address on Schedule C.

Also, the Bureau requested that the reference in the temporary and proposed regulations to the master file tax account number be changed to the master file tax account code (MFT), and the total of IRA distributions be dropped from the list of return information disclosed to the Bureau of the Census for the purpose of conducting and preparing intercensal estimates of population and income.

All of these requests by the Bureau of the Census are reflected in the final regulations.

SPECIAL ANALYSES

It has been determined that these regulations are not major rules as defined in Executive Order 12291. Therefore, a Regulatory Impact Analysis is not required. It has also been determined that section 553 (b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and, therefore, a final Regulatory Flexibility Analysis is not required. Pursuant to section 7805 (f) of the Internal Revenue Code, the proposed regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

DRAFTING INFORMATION

The principal author of these regulations is Paul W. Winkler of the Office of Chief Counsel, Internal Revenue Service. However, personnel from other offices of the Internal Revenue Service and Treasury Department participated in developing these regulations on matters of both substance and style.

LIST OF SUBJECTS

26 CFR Part 301

 Administrative practice and procedure, Alimony, Bankruptcy, Child support, Continental shelf, Courts, Crime, Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Investigations, Law enforcement, Oil pollution, Penalties, Pensions, Reporting and recordkeeping requirements, Statistics, Taxes.

Treasury Decision 8377

ADOPTION OF AMENDMENTS TO THE REGULATIONS

PART 301 -- PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority for part 301 is amended by removing the citation for section 301.6103(j)(1)-1T and by adding the following citation:

Authority: Sec. 7805, I.R.C. 1954; 68A Stat. 917; 26 U.S.C. 7805 * * * Section 301.6103(j)(1)-1 also issued under 26 U.S.C. 6103 (j).

Par. 2. Section 301.6103(j)-1T is removed.

Par. 3. Section 301.6103(j)(1)-1, paragraphs (b)(1) through (b)(3) are amended by revising to read as follows:

SECTION 301.6103(j)(1)-1 DISCLOSURES OF RETURN INFORMATION TO OFFICERS AND EMPLOYEES OF THE DEPARTMENT OF COMMERCE FOR CERTAIN STATISTICAL PURPOSES AND RELATED ACTIVITIES.

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(b) DISCLOSURE OF RETURN INFORMATION TO OFFICERS AND EMPLOYEES OF THE BUREAU OF THE CENSUS. -- (1) Officers or employees of the Service will disclose the following return information reflected on returns of an individual taxpayer to officers and employees of the Bureau of the Census for purposes of, but only to the extent necessary in, conducting and preparing, as authorized by chapter 5 of Title 13, United States Code, intercensal estimates of population and income for all geographic areas included in the population estimates program and demographic statistics programs, censuses, and related program evaluation --

(i) Taxpayer identity information (as defined in section 6103 (b)(6) of the Code), validity code with respect to the taxpayer identifying number (as described in section 6109), and taxpayer identity information of spouse and dependents, if reported;

(ii) District office and service center codes;

(iii) Marital status;

(iv) Number and classification of reported exemptions;

(v) Wage and salary income;

(vi) Dividend income;

(vii) Interest income;

(viii) Gross rent and royalty income;

(ix) Total of --

(A) Wages, salaries, tips, etc.,

(B) Interest income,

(C) Dividend income,

(D) Alimony received,

(E) Business income,

(F) Pensions and annuities,

(G) Income from rents, royalties, partnerships, estates, trusts, etc.,

(H) Farm income,

(I) Unemployment compensation, and

(J) Total Social Security benefits.

(x) Adjusted gross income;

(xi) Type of tax return filed;

(xii) Entity code;

(xiii) Code indicators for Form 1040, Form 8814, Schedules A, C, D, E, F, and SE;

(xiv) Posting cycle date relative to filing; and

(xv) Social Security benefits.

(2) Officers or employees of the Service will disclose to officers and employees of the Bureau of the Census for purposes of, but only to the extent necessary in, conducting, as authorized by chapter 5 of title 13, United States Code, demographic, economic, and agricultural statistics programs and censuses and related program evaluation --

(i) From the business master files of the Service, the taxpayer name directory and entity records consisting of taxpayer identity information (as defined in section 6103(b)(6)) with respect to taxpayers engaged in a trade or business, the principal industrial activity code, the filing requirement code, the employment code, the physical location, the service center and district and area office codes, and monthly corrections of, and additions to, such entity records;

(ii) From Form SS-4, all return information reflected on such return;

(iii) From an employment tax return --

(A) Taxpayer identifying number (as described in section 6109) of the employer,

(B) Total compensation reported,

(C) Master file tax account code (MFT),

(D) Taxable period covered by such return,

(E) Employer code,

(F) Document locator number,

(G) Record code,

(H) Total number of individuals employed in the taxable period covered by the return,

(I) Total taxable wages paid for purposes of Chapter 21, and

(J) Total taxable tip income reported for purposes of chapter 21; and

(iv) From Form 1040, Schedule SE --

(A) Taxpayer identifying number of self-employed individual,

(B) Business activities subject to the tax imposed by chapter 21,

(C) Net earnings from farming,

(D) Net earnings from nonfarming activities,

(E) Total net earnings from self-employment, and

(F) Taxable self-employment income for purposes of chapter 2.

(3) Officers or employees of the Service will disclose the following business related return information reflected on the return of a taxpayer to officers and employees of the Bureau of the Census for purposes of, but only to the extent necessary in, conducting and preparing, as authorized by chapter 5 of title 13, United States Code, demographic, economic, and agricultural statistics programs, censuses, and surveys. The "return of a taxpayer" includes, but is not limited to, Form 941; Form 990 series; Form 1040 series and Schedules C, F, and SE; Form 1065 and all attending schedules and Form 8825; Form 1120 series and all attending schedules and Form 8825; Form 851; Form 1096; and other business returns, schedules and forms that the Service may issue --

(i) Taxpayer identity information (as defined in section 6103 (b) (6) of the Code) including shareholder, partner, and employer identity information;

(ii) Gross income, profits, or receipts;

(iii) Net farm profits;

(iv) Sales of livestock and produce raised;

(v) Returns and allowances;,

(vi) Cost of labor, salaries, and wages;

(vii) Total assets;

(viii) Royalty income;

(ix) Interest income, including portfolio interest;

(x) Rental income, including gross rents;

(xi) Tax-exempt interest income;

(xii) Percentage of stock owned by each shareholder;

(xiii) Percentage of capital ownership of each partner;

(xiv) Agricultural activity code;

(xv) Answers to material participation questions;

(xvi) End-of-year code;

(xvii) Months actively operated;

(xviii) Principal industrial activity code, including the business description;

(xix) All information on Schedule E filed with Form 1120 series;

(xx) Total number of documents and the total amount reported on the Form 1096 transmitting Forms 1099-MISC;

(xxi) Form 941 indicator and business address on Schedule C; and

(xxii) Consolidated return indicator.

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