Most of the activities of the Internal Revenue Service, as well as certain activities of other Federal agencies, constitute "tax administration." As defined in IRC 6103(b)(4), the term encompasses not only administration of the internal revenue laws, but to an extent, administration of certain other related Federal or State civil and criminal statutes.

The term means the administration, management, conduct, direction, and supervision of the execution and application of the internal revenue laws or related statutes, equivalent laws and statutes of a State, and tax conventions between the United States and foreign jurisdictions. It includes assessment, collection, enforcement, litigation, publication, and statistical gathering functions under such laws, statutes, or conventions.

The term "State" is defined in IRC 6103(b)(5) and IRM 11.3.32.2(2).

Certain bankruptcy cases may also be considered proceedings pertaining to tax administration if the bankruptcy court properly invokes jurisdiction in any manner to determine a tax matter.

Cases involving employee conduct violations by Federal or State revenue employees related to the employees' tax administration activities and their own tax violations are generally considered tax administration matters. However, IRC 6103(l)(4) generally will apply in IRS disciplinary matters.

The term "related statutes" in IRC 6103(b)(4) is not defined in the Code. However, it generally includes those sections of the U.S. Code, other than Title 26 (Internal Revenue Code), which, if violated, impede the administration of the internal revenue laws, and which directly relate to a tax matter.

Certain investigations by the IRS are inherently tax related. Examples include 18 USC 1001 (Statements or Entries Generally), when the underlying violation is a false statement on an income tax return, or 18 USC 371 (Conspiracy), when there is a conspiracy to commit a Title 26 violation or to defraud the United States of tax revenues in a refund claim.

In Bank Secrecy Act and Money Laundering investigations, CI can make a related statute determination or "call," information received or prepared by the IRS after a related statute determination is made is return information protected by IRC 6103.

See IRM 9.3.1, Disclosure and Publicity - Disclosure, for further discussion of related statutes.

"Judicial tax proceeding" means a proceeding before a Federal or State Court or magistrate (including the U.S. Tax Court) regarding tax administration.

It includes any proceeding about tax matters under the authority of a court.

The duties performed by IRS employees generally involve tax administration. However, IRS personnel should not have unlimited access to returns and return information.

IRS employees may access returns and return information only when there is a "need to know" the information for their tax administration duties. This is important in maintaining the confidentiality of information in the custody of the IRS.

The IRS decides on a case by case basis whether an employee has a need to know. IRS employees must follow established procedures and not access tax accounts pertaining to relatives or other prohibited entities. See IRS's Unauthorized Access (UNAX) materials.

Before disclosing returns or return information to other IRS personnel, employees should satisfy themselves that the proposed recipient has an official tax administration need for the information. A manager or Disclosure employee should be consulted if there is any question whether disclosures are proper.

IRS employees are not prohibited from disclosing return information to seek advice about legal, technical, or procedural issues in a specific case: for example, when employees consider similar issues about unrelated taxpayers. The disclosures may be between individual employees, or between offices such as in industry-wide examinations under the Coordinated Examination Program. However, a "need to know" must be established on a case by case basis. Universal access by an IRS function's employees to tax files would generally fail the need to know requirement.

Generally, return information may not be published in internal management documents or posted to unsecure intranet sites.

When return information is appropriately disclosed to obtain legal, technical or procedural assistance, or to demonstrate investigative or enforcement techniques, IRS employees should not disclose taxpayers’ identities unless it is necessary. In some cases, withholding the taxpayer’s name would be sufficient, while in others, it may be necessary to withhold certain case facts which identify the taxpayer. Deleting identities doesn't change the nature of the information (i.e., it remains tax information protected by IRC 6103) but it does further compliance with the need to know requirement.

The Internal Revenue Restructuring and Reform Act of 1998 (P.L. 105–206 Section 1001(a)(4)) prohibits ex-parte communications between appeals officers and other IRS employees to the extent that such communications appear to compromise the independence of the appeals officers.

The IRC 6103(h)(1) need to know access even extends to Federal tax information disclosed to other agencies under Title 26.

Internal Revenue Code 6103(h)(1) permits the disclosure of returns and return information to IRS employees for the purposes of tax administration. Tax administration includes the education of employees.

Guidance for material that is subject to publication and/or public release may be obtained from the embedded Learning and Education staff. Learning and Education has written guidelines for creating acceptable fictitious taxpayer identification numbers, names, and addresses for training material. This information is available on the IRS intranet.

On rare occasions, it may be necessary to use returns or return information to illustrate key points, and to assist students in understanding tax law or procedure. Once a determination is made that the use of "live" returns or return information is appropriate, care must be taken to withhold taxpayer identifying information. This includes items such as the name, address, TIN, DLN, signature, and any other information which would identify a specific taxpayer on any part of the tax return, including schedules, being used in the training material.

Numeric information should be changed where possible, but, if necessary, may remain unchanged. However, the mere removal of personal identifiers from returns or return information does not cause the remaining information to lose its confidential return information status. Therefore, if copies of sanitized returns or return information are distributed during local training and the numeric fields contain unaltered original return information, students must safeguard them in the same way as any return information. This includes precautions such as storing the information in locked cabinets and shredding the information, when it is no longer needed. Alternatively, the instructor may collect the returns or return information at the end of the class and dispose of them properly. If possible, return information in training materials needs to be marked clearly as IRC 6103 material and segregated from the rest of the material, because of the affirmative obligations to disclose training materials under the FOIA. Questions about developing training material using tax return or return information may be directed to your local training coordinator.

Occasionally, the desire to provide general educational material or to publicize an IRS matter on the intranet may be identified. The release of SBU data in such circumstances is prohibited under applicable disclosure laws and computer security standards. However, GLD can usually assist functions in identifying or developing alternatives that will comply with all legal and procedural requirements.

There are several IRS programs providing opportunities for educational and work experiences to qualifying students. The students offered employment through these programs are considered to be "direct-hire" trainees, unpaid student volunteers, or "hosting" trainees.

"Direct-hire" trainees are employees of the Department of the Treasury. Therefore, IRC 6103(h)(1) authorizes them to have access to returns or return information when required to carry out tax administration duties.

Returns and return information cannot be disclosed to student volunteers or host trainees because they are not Department of the Treasury employees qualifying for IRC 6103(h)(1) access, unless they qualify for the exception for student volunteers meeting all the conditions specified in 5 USC 3111 which concerns acceptance of volunteer service by students. IRC 6103(n) is not applicable in the absence of a qualifying contract. Privacy Act protected information also cannot be disclosed to a student volunteer or host trainee because that person does not qualify as an IRS employee under section (b)(1) of the Privacy Act, unless the person qualifies for the exception for student volunteers as defined in 5 USC 3111.

For purposes of 5 USC 3111, a student must be "an individual who is enrolled, not less than half-time, in a high school, trade school, technical or vocational institute, junior college, college, university, or comparable recognized educational institution." One of the 5 USC 3111 requirements is that individuals from high schools or vocational schools must participate in a formal program with the IRS as part of their curriculum.

Students who qualify under the 5 USC 3111 exception are treated as IRS and/or Treasury employees by statute for the purposes of both the Privacy Act and IRC 6103. Qualifying students may have access to return information to the extent necessary to perform their tax administration duties. Qualifying students must obtain the approval of the institution where they are enrolled as part of a program to provide educational experiences for students. They must be uncompensated and may not be used to displace any Federal employee. Student volunteers compensated by other than Federal funds may be considered "uncompensated" for 5 USC 3111 purposes and qualify as Treasury employees for IRC 6103 and Privacy Act purposes. This does not cover volunteers from other organizations such as AARP or welfare to work programs.

"Hosting" trainees are hired and paid by non-Treasury Department organizations and assigned by these organizations to the IRS for training. Since the "hosting" trainees are not Treasury Department or IRS employees, they may not have access to returns or return information or information governed by the Privacy Act, such as certain personnel information, unless they are students who meet the criteria of 5 U.S.C. 3111.

There is nothing in the Privacy Act System of Records Notice for personnel records (Treas/IRS 36.003) that either requires or prohibits the inclusion of third party return information in an Employee Performance File (EPF). However, pursuant to the Privacy Act, third party return information in an EPF should be limited to information that is relevant and necessary to the purposes of the EPF.

Employee performance appraisals are a tool for executing basic management and supervisory responsibilities, and of improving individual and organizational effectiveness in accomplishing the IRS's mission and objectives. Many of the activities of IRS employees involve the handling of specific taxpayer matters. In the process of reviewing and evaluating the performance of an employee against prescribed performance standards, it may be necessary to discuss with some specificity how the employee handled a particular taxpayer's case to provide an accurate, fair, and objective evaluation. The inclusion of return information in the EPF, under these circumstances, would be appropriate. Obviously, non-inclusion of confidential tax information best protects the IRS and employee from UNAX or unauthorized disclosure concerns.

Deleting (or failing to include) taxpayer identifiers does not change the character of return information. Even without taxpayer identifying information, return information continues to be subject to all confidentiality, retention, and security provisions of IRC 6103. See IRM 11.3.20, Personnel Records.

The System of Records Notice 36.003 authorizes disclosure of information in the EPF to certain entities for certain purposes. However, disclosure of any third party return information in the EPF must be authorized under IRC 6103. If IRC 6103 does not authorize disclosure of the third party return information to that entity for the intended purpose, then the EPF must be sanitized of third party return information before any disclosure is made. For example, an employee reviewing his/her own EPF may see third party return information in the EPF, if the employee's review is for the purpose of improving his/her performance handling tax administration duties. An employee may not see third party return information in his/her own EPF for purposes of use in a personnel action (such as a grievance) unless the requirements of IRC 6103(l)(4) have been met.

IRC 6103(h)(6) allows the Internal Revenue Service Oversight Board to have limited access to returns and return information.

To qualify for disclosure to the Oversight Board, returns and return information must be provided within the context of a report prepared by the Commissioner or the Treasury Inspector General for Tax Administration (TIGTA) to assist the Board in carrying out its duties, and its inclusion in the report must have been deemed necessary by the Commissioner or TIGTA.

The information disclosed to the Board may not include personal identifying data such as taxpayer:

Other than as permitted above, no return or return information may be disclosed to any member of the Oversight Board or to any IRS employee or detailee of the Board by reason of their service to the Board.

Any request for information not permitted to be disclosed and any contact regarding a specific taxpayer, made by an individual as described in (4) above to an officer or employee of the IRS must be reported by the employee to the Secretary, TIGTA, and to the Joint Committee on Taxation.

The Board members and other individuals described in (4) above are subject to the anti-browsing rules (IRC 7213A) which apply to IRS employees.

Employees of the Office of Professional Responsibility (OPR) are IRS employees.

The OPR:

Activities which the OPR conducts relating to claimant representation before the IRS constitute tax administration.

Returns and return information will be disclosed to the OPR in accordance with the appropriate IRM procedures.

The penalty provisions of IRC 7213, IRC 7213A and IRC 7431 are applicable.

Officials of other Treasury bureaus or Treasury agencies who require returns and return information in claimant representative matters undertaken in accordance with 31 USC 330, may have access to such information under IRC 6103(l)(4)(B).

Requests must be in writing and must include the following:

Disclosure requests from other Treasury bureaus and agencies will be forwarded to the Director, GLD for processing. Contact will be made with the appropriate functions to obtain the information required to comply with the request.

Treasury officials to whom disclosures are made should be informed of the penalty provisions of IRC 7213, IRC 7213A and IRC 7431 relating to unauthorized disclosure and inspection of returns and return information.

The Treasury Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for administering and enforcing the tax administration functions of:

When returns and return information relating to taxes administered by the IRS (such as income tax returns) are needed by TTB employees for tax administration purposes, written requests should be submitted to the IRS office having custody of the records, to the attention of the Disclosure Officer.

Requests should be signed by an official not lower than a Special Agent in Charge (SAC), and should include:

The Disclosure Officer will process the requests and transmit the material to the requester or the designee. The Disclosure Officer should:

In emergency situations, telephone requests may be made by TTB officials authorized to initiate written requests. A telephone request must be confirmed in writing by TTB within 24 hours. Telephone requests will be processed expeditiously; however, nothing should be disclosed until the written confirmation is received.

The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) is part of the Department of Justice. Since the revenue functions regarding excise taxes remained at Treasury, it is not anticipated that IRC 6103(h)(1) disclosures will need to be made to ATF. However, should ATF be involved with tax administration relative to alcohol, tobacco, firearms, and explosives, the law has been written in such a way, that for disclosure purposes, ATF falls under DOJ and is considered as if it was a Treasury component. Any request for tax information by ATF should be submitted to the Director, GLD using the format prescribed in IRM 11.3.22.8.1(3).

When TTB makes IRC 6103 disclosures (e.g., to States under IRC 6103(d) for taxes it administers), TTB is responsible for any necessary administrative IRC 6103 requirements (e.g., IRC 6103(p)(3) and IRC 6103(p)(4)).

IRM Part 21, Customer Account Services and IRM 13.1.7, Taxpayer Advocacy, contain procedures for disclosures to the Financial Management Service (FMS) concerning undelivered, lost or stolen tax refund checks.

In settling refund claimant matters referred by the IRS, FMS may need returns or more information than was initially released. Generally, FMS will submit written requests to the appropriate campus or field office.

When a copy of a return is needed, only the portions actually required should be disclosed. Generally, these are the portions showing the name, address, and social security number, and the portion showing the signature(s).

In expedited and hardship cases, FMS may make requests by telephone. Calls should be directed to the Headquarters Office of the National Taxpayer Advocate.

IRC 6103(h)(1) also authorizes disclosures to FMS to carry out other IRS programs. For example, FMS receives tax information to issue tax refund checks and to administer the IRC 6402 Tax Refund Offset Program.

See IRM 11.3.22.1(5) for penalty provisions.

Prior to the Homeland Security Act, the U.S. Customs Service collected excise taxes levied under subtitle E (chapters 51 and 52) of the Internal Revenue Code on imports of tobacco products and paraphernalia, distilled spirits, rectified products, wine, and beer. While the U.S. Customs Service has moved from Treasury to the Department of Homeland Security, the revenue (tax) function of these Chapters technically remains with Treasury. However, via delegation (T.O. 165-09), Treasury has given this taxing authority to Homeland Security Border and Transportation Security. For reference purposes, we will refer to this Homeland Security component as "Customs."

Generally, Customs’ tax administration functions will not require access to returns and return information obtained under other provisions of the Code.

Customs or import duties on goods entering the United States are not internal revenue taxes. Therefore, the collection of customs duties does not constitute a tax administration activity for purposes of IRC 6103(h)(1).

See IRM 11.3.22.1(5) for penalty provisions. Under IRC 6103(h)(1), Customs has access to the IRS Business Master file data base (BMF) for verification of Employer Identification Numbers (EINs), that are in their Automated Commercial System data base.

On a monthly basis, the Martinsburg Computing Center can provide Customs with a tape that contains the BMF EIN Primary Name Line, State and ZIP Code for every EIN in the BMF. This information can be matched against the Automated Commercial System data base, and if the EIN does not match, or is not issued by the IRS, Customs can void the number in the Automated Commercial System.

See IRM 11.3.29.8, Disclosure of Return Information - U.S. Customs Service, for disclosure authority to Customs under IRC 6103(l)(14).

The IRS may disclose returns and return information (including taxpayer return information) to officers and employees of the Department of Justice (including United States Attorneys) personally and directly engaged in, and solely for their use in, any Federal grand jury proceeding, or preparation for any proceeding (or investigation which may result in such proceeding) before a Federal grand jury or any Federal or State court.

Returns and return information may be disclosed under the following conditions: