11.3.31. Federal Tax Check Service

(1) For over 40 years, the IRS Disclosure Office manually processed thousands of federal tax compliance check requests for individual security clearance or background investigations for employment with the federal government. The Disclosure Office responded to various consent forms from multiple government agencieswhich resulted in slightly varied responses depending upon the consents received from the agencieswhich were initially based on the statutory language in IRC 6103(g), Disclosure to the President and certain other persons.

In 2019, GLDS completed a multi-year collaborative effort with IT to develop and deploy the TCCS, an application that performs automated tax checks and provides uniform responses. The TCCS standardized and modernized the work of checking federal tax compliance for the purposes outlined in this IRM section.

On October 1, 2019, the Disclosure Tax Check Program was stopped and the TCS was implemented in its place. Data Exchange and Quality Initiatives (DEQI), Data Services, administers the TCS. Agencies looking to participate in the program must enroll by executing a written agreement (Memorandum of Understanding (MOU) or Service Level Agreement (SLA)) and a Reimbursable Agreement.

(2) Agencies enrolled in the TCS will use Form 14767 , Consent to Disclose Tax Compliance Check, which was designed to authorize disclosure of tax compliance information and follows the provisions of IRC 6103(c) , to request a TCR.

(3) Enrolled agencies request tax checks for any of the following purposes:

1. Security clearance background investigation

2. Suitability background investigation for federal employment or fitness to perform work as a federal contractor

3. Monitoring employee tax compliance (if it is a condition of employment)

4. Pre-employment screening (hiring)

5. Authorization to be issued a federal credential or receive sensitive government information

6. Eligibility for access to federally controlled facilities and information systems

7. Other purposes authorized by federal law

(4) After the enrolled agency submits Form 14767, the TCS will provide tax compliance information through the TCR which is released back to the enrolled agency. The same consent form is used for all applicants and employees, resulting in consistent criteria and reporting government wide. The implementation of the TCS combined multiple tax check consent forms into a single, uniform waiver.

(5) Tax check requests are processed only upon receipt of a valid Form 14767, Consent to Disclose Tax Compliance Check, and a response to each request is provided within three-business days.

(1) Tax check requests for non-tax administration purposes will be processed only with the taxpayer’s signed authorization. IRS employees will not access the taxpayer’s account under IRC 6103(h)(1) for these tax checks. Disclosure of tax compliance information outside the IRS will only be made per IRC 6103. Federal agencies enrolled in the TCS, under a MOU, receive the TCR per IRC 6103(c). The TCR is disclosed to a designee upon receipt of a valid IRS Form 14767, Consent to Disclose Tax Compliance Check. SeeIRM 11.3.2, Disclosure to Persons with a Material Interest, and IRM 11.3.3, Disclosure to Designees and Practitioners.

(2) The authority for tax check disclosures under this section isIRC 6103(c), 26 CFR 301.6103(c)-1, Disclosure of Returns and Return Information to Designee of Taxpayer, and Delegation Order 11-2 found in IRM 1.2.2.12.2 , Servicewide Delegations of Authority.

(3) The TCRs for tax administration purposes are conducted per IRC 6103(h)(1). The Treasury Inspector General for Tax Administration (TIGTA) and the IRS Employee Tax Compliance (ETC) Program request tax checks using this authority.

(1) Director, GLDS, administers and maintains the IRS enterprise TCCS and TCA.

(2) Data Services, GLDS, administers the TCS.

(3) IT, Applications Development, manages the TCCS and TCA.

(4) Disclosure Office owns the tax check policy and addresses policy questions.

(5) TCCS/TCA reviews IRS tax records for filing and payment history then creates the TCR for release.

(1) Data Services regularly reports program status through operational reviews to the Director, Governmental Liaison, Disclosure, and Safeguards.

(2) DEQI, under Data Services, manages the TCS and serves as the IRS point of contact for all internal and external TCS stakeholders and is responsible for:

• Enrolling agencies

• Negotiating, executing, and maintaining agreements (MOU, SLA, and reimbursable agreements)

• Calculating costs

• Generating monthly billing reports

• Communicating program changes and enhancements

• Updating guidance material

• Troubleshooting issues

  Note: IRS offices enroll in the TCS via an SLA and do not pay for service. SeeIRM 11.3.31.2(4).

(3) GLDS Support Services (GSS), under Data Services, receives and processes Form 14767, Consent to Disclose Tax Compliance Check, and releases the TCR following established procedures.

(4) Technical Support and Analysis, under Data Services, processes system requests to add/remove enrolled agencies and authorized requestors.

(5) Program and Planning Support, PGLD, posts earnings through monthly billing reports.

(6) Chief Financial Officer (CFO) reviews and approves the calculated costs, as well as the reimbursable agreements between the IRS and the external agencies.

(7) Beckley Finance Center collects on billing from customers, via Intra-Governmental Payment and Collection (IPAC), and provides support to customers with billing questions.

(1) TCS metrics are captured through the Business Objects Enterprise (BOE) application and used for accounting and billing, and includes the following reports:

• Daily Tax Check Report: Provides a list of the tax check requests processed daily. It provides the transaction ID, unique processing number, adjudication results, and whether the request was successful or if it failed.

• Tax Check Request Processing, Results: Provides a breakdown of successful and failed requests by requester.

• Tax Check Results, Overall Adjudication Summary: Provides a breakdown of the overall adjudication results by requester.

• Tax Check Service Billing Report: Provides the amount to be billed to the requester according to agency code, along with a choice to filter by requester ID, and can be generated for a single agency.

• Agency Summary Report: Provides a transaction count by each requester, including compliance results or failed transactions, and can be generated for one or more agencies.

(1) The following is a list of the acronyms that are used in this IRM section and their definitions:

(1) The Disclosure and Privacy Knowledge Base can be found at: Disclosure and Privacy Knowledge Base - Home (sharepoint.com)

(2) IRM 1.2.1.16.2, Policy Statement 25-3, Standard Tax Compliance Checks for Suitability and Monitoring for Federal Applicants, Employees, and Contractors

(3) IRM 1.33.3, Strategic Planning, Budgeting and Performance Management Process; Reimbursable Operating Guidelines

(4) IRM 25.29.1, Standard Tax Compliance Check for Suitability and Monitoring

(5) IRM 11.3.30, Disclosure to the President

(6) 26 USC 6103 Confidentiality and Disclosure of Returns and Return Information

(7) 26 CFR 301.6103(c)-1, Disclosure of Returns and Return Information to Designee of Taxpayer

(1) IRC 6103 prohibits the IRS from disclosing any tax information to third parties without a valid consent.

(2) Form 14767, Consent to Disclose Tax Compliance Check, is required to authorize the IRS to prepare and release a TCR, which discloses confidential federal tax informationto an agency as a third-party appointee.

(3) The appointee is the federal agency or the IRS office identified on the form, as specified in the MOU or SLA, which must be a current or prospective employing or contracting agency or a federal investigative service provider agency. This form will also be used to request a tax compliance report for other authorized uses. Pursuant to this consent, only the TCR and limited details from the tax account will be disclosed.

(4) Agencies enrolled in the TCS must submit a valid Form 14767, executed by the record subject, to GSS via fax transmission; invalid or incomplete forms, or requests from agencies not enrolled in the TCS, will not be processed.

(5) A valid Form 14767 must be completed and contain the following required elements:

• Taxpayer’s first and last name(s).

• Taxpayer’s Social Security Number;

• Name and agency code of the requesting agency.

• Taxpayer’s handwritten signature;electronic signatures are not acceptable.

• Date of the request, which must be handwritten.

• Each form submitted to GSS must be complete, contain the required elements, be legible, and not older than 120 days (4 months) from the date it was signed.

(1) The TCR is the IRS Letter 6201, Tax Compliance Report. The TCCS / TCA reviews the individual’s filing, payment and penalty history and produces a TCR which identifies whether the individual is compliant, non-compliant or has a compliance issue meeting their federal tax obligations. The report will include return filing history for the last four tax years. The IRS will report up to two additional tax years (for a total of six years) of return filing history when it has required the individual to file returns, but returns are not on file. The report will show unpaid tax debt if there is a balance due for any tax period as of the date of the report. TCS also identifies and reports tax years with late payments for the last four tax years and any civil fraud penalties assessed in the last five years.

(2) The TCR will reflect an individual’s overall tax compliance as follows:

1. Compliant: There is no record of an overdue tax return or unpaid tax debt.

2. Non-Compliant: A required tax return is not on file or a tax debt is past due. The individual needs to take corrective action.

3. Compliance Issue: Indicates one or more of the following conditions:

• History of late paid tax debt.

• Filing issues.

• Individual is resolving an issue through an administrative or judicial proceeding, which allows due process for the individual to settle the tax matter.

(3) The TCR will address the tax compliance check in three sections: Filing Information, Amount You Owe, and Additional Information. Each section contains a narrative statement and specific account details.

• Filing Information: Lists the individual’s income tax filing history and, if applicable, delinquent business tax returns (for a sole proprietor required to file excise or employment tax returns). TCS doesn’t review or report corporate or partnership tax obligations.

• Amount You Owe: Lists any federal taxes owed as of the date of the report or states no taxes are due.

• Additional Information: Lists any late payments of federal income, employment, or excise taxes for the most recent four tax years, as well as any fraudulent failure to file or civil tax fraud penalties assessed within five years of the date of the report.