11.3.2  Disclosure to Persons with a Material Interest

11.3.2.1  (08-29-2008)
Introduction

  1. IRC §6103(e), Disclosure to Persons Having Material Interest, provides a listing of persons who may generally request and receive returns and return information. IRC §6103(e)(1)-(6) and IRC §6103(e)(10) concern disclosure of "returns." IRC §6103(e)(7) through (e)(9) as well as (e)(10) refer to disclosure of "return information. "

  2. Delegation Order 11-2 indicates the IRS employees who may disclose, or authorize the disclosure of, returns and return information under IRC 6103(e). It also outlines the extent to which this authority may be redelegated.

11.3.2.2  (08-29-2008)
General Rules

  1. Persons described in IRC §6103(e) always have access to the appropriate return as specified in IRC §6103(e)(1) through IRC §6103(e)(6), subject to the limitations in IRC §6103(e)(10) for partnership, trust or Subchapter S returns which are discussed in this IRM. Generally, these persons also have access to return information. A request for a copy of a return must be made in writing.

  2. IRC §6103(e)(7) provides that return information will not be disclosed if the IRS determines that disclosure would seriously impair Federal tax administration. Return information will be denied under this provision only if disclosure will impair an imminent or ongoing tax administration function in some significant way, or have an adverse impact on the IRS's ability to administer the tax laws.

    Example:

    Disclosure of information which would reveal the nature, scope, limit or direction of the IRS's examination investigation, or disclosure of the identity of confidential informants or prospective witnesses.

  3. Some of the provisions of IRC §6103(e) require that the requester demonstrate that he or she has a material interest in the information to be disclosed. A material interest is an important interest and is generally, but not always, financial in nature. However, in the legal sense, the interest needs to be substantial or of consequence.

  4. IRC §6103(e) does not restrict IRS personnel from disclosing tax information to the extent permitted by other provisions of the Internal Revenue Code, such as for investigative purposes (IRC §6103(k)(6)), or the matter of administrative and judicial tax proceedings, (IRC §6103(h)(4)).

  5. It is not necessary in all situations for an individual to be authorized to have access to returns or return information in order to engage in face-to-face or telephone discussions with IRS employees.

    Example:

    There are many situations where employees of corporations may contact the IRS to inquire as to the meaning of a bill, notice or other written communication from the IRS. In the majority of these cases, the communication can be discussed without the need for independent reference to or disclosure of confidential tax information by an IRS employee. IRS employees who handle contacts of this nature should not hesitate to provide the general information the caller requests. Note that IRS employees may accept information from third parties without disclosure being an issue.

  6. Tax treaty information obtained by the IRS from a foreign tax authority may usually be disclosed to the taxpayer to whom it relates on written request in accordance with IRC §6103(e). Disclosure will not be made to the taxpayer if the foreign tax authority providing the information objects to the disclosure or if the IRS deems that disclosure would seriously impair Federal tax administration under IRC §6103(e)(7). See IRM 11.3.25.2(8), Information Received from Foreign Tax Authorities.

  7. Requests under IRC §6103(e) that involve documents related to the Simultaneous Examination Program, or an Industry-wide Exchange of Information or a Spontaneous Exchange of Information, will be handled by the Large and Mid-Size Business Division in accordance with the procedures contained in IRM 11.3.25, Disclosure to Foreign Countries Pursuant to Tax Treaty.

  8. If a Freedom of Information Act request for tax treaty information is received, follow the procedure established in IRM 11.3.13, Freedom of Information Act .

  9. IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes, discusses the use and disclosure of third party comparable information. Such comparable third party tax information does not lose its individual confidentiality protection simply because it is used to help determine another taxpayer's tax liability.

11.3.2.3  (08-29-2008)
Processing Requests for Returns and Return Information

  1. Requests for copies of tax returns are often made on Form 4506, Request for Copy of Tax Return, and are processed by the campus RAIVS unit designated on the form. Transcripts of accounts may be ordered using Form 4506-T, Request for Transcript of Tax Return. IRS also offers telephonic/electronic access to tax information through programs such as tele-transcripts and "Where's My Refund?"

  2. Other IRS employees may also handle requests for returns and return information.

    Example:

    Requests by taxpayers for information in open collection, examination, and criminal investigation files may be received and processed by those functions. IRM 21.3.6, Forms and Information Requests,contains specific instructions for Customer Service personnel.

  3. Disclosure personnel are responsible for ensuring that requests for returns and return information are processed in accordance with all disclosure rules and regulations. Requests involving complex or unusual circumstances should be coordinated with the appropriate Disclosure personnel. For further information regarding the responsibilities of Disclosure personnel, see IRM 11.3.38, Role and Responsibilities of Disclosure Managers.

  4. IRC §6103(e) requires written requests for copies of tax returns. Although it is preferable that requests for return information also be in writing, the statute permits disclosure of return information without a written request.

    Example:

    After verifying identity, Customer Service personnel may divulge return information to taxpayers concerning their refund checks.

  5. Information furnished to the IRS by third parties (e.g., informants) may be returned to the third party upon request in most instances, provided the material has remained in its original state. This is not considered a disclosure under IRC §6103(b)(8), since nothing is being made " known" to the providing party. However, if it has become integrated with other return information or if the information has been used and this use of the information by the IRS is in any way reflected on the document, it may be returned only as provided by IRC §6103. Additionally, the document or information must be withheld from the third party if the return of such document or information would impair or interfere with tax administration.

11.3.2.3.1  (08-29-2008)
Requirements for Written Requests

  1. Written requests for returns and return information should include:

    1. The name, address and identifying number of the taxpayer

    2. A description of the information requested, including type of tax and taxable period and

    3. Sufficient evidence to establish that the requester is entitled to receive the requested information.

  2. IRS personnel processing requests for returns and return information must be reasonably satisfied that the requester is who he or she claims to be.

  3. Identification is not normally required for written requests. If there are doubts about a person's identity, IRS employees must request additional identity information or offer to mail the requested information to the taxpayer's name and address of record.

11.3.2.3.2  (08-29-2008)
Requirements for Verbal or Electronic Requests

  1. When responding to verbal or electronic inquiries from taxpayers, no return information may be disclosed until IRS personnel have asked sufficient questions and received adequate information to make certain that the person making the inquiry is the taxpayer, the taxpayer's authorized representative, or some other person authorized under IRC §6103(e). In the case of electronic access, the system will ask the necessary questions. See IRM 11.3.2.4 below, for more specific guidance as to who can have access to various types of returns and return information.

    Note:

    Authentication requirements vary based on the IRS program, the identity of the requester, and the information sought. The appropriate IRM or office procedures will be followed. After the taxpayer is authenticated, it is still necessary to determine whether the requested information may be disclosed to that person in accordance with IRC §6103.

  2. The following information may help to verify the requester’s identity:

    1. Taxpayer's name as it appears on the tax return

    2. Taxpayer's address as it appears on the tax return or as modified on IRS records

    3. Taxpayer's social security number (SSN) or employer identification number (EIN)

    4. In the case of refund inquiry, the type of tax (e.g., individual, corporate, estate, excise), the approximate amount of expected refund (unless computed by IRS) and the place of filing

    5. For a matter involving an individual income tax return, the date of birth and/or filing status, and/or

    6. Other unique identifier issued by the IRS

  3. An in-person requester must be asked to present a driver's license or other acceptable proof of identity (e.g., other photo ID or 2 non-photo documents/cards). A telephone requester should be given the option of calling back, making a written request, or having the information mailed to the address of record if there are doubts about the caller's identity. Information should not be mailed to a taxpayer, even at his or her address of record, if the requester is clearly not the taxpayer or other authorized IRC §6103 recipient.

    Note:

    Notwithstanding the guidance above, functions may establish internal policies and implement procedures allowing tax information to be sent to the address of record based upon a request from a third party who does not represent the taxpayer or who does not hold a tax information authorization. These decisions are based upon the function’s assessment of the risks and vulnerabilities concerning the possibility that an unauthorized individual could gain access to such information and their willingness to accept the level of risk involved.

  4. Responses to verbal inquiries must be limited to the disclosure of return information.

  5. Copies of tax returns cannot be disclosed upon verbal request. Requests for copies of returns must be made in writing.

11.3.2.4  (08-29-2008)
Persons Who May Have Access to Returns and Return Information Pursuant to IRC §6103(e)

  1. This subsection covers the persons to whom returns and return information may be disclosed upon proper request and the circumstances under which the disclosures can take place.

11.3.2.4.1  (08-29-2008)
Individuals

  1. Returns and Return Information of an individual filing Form 1040 may be disclosed to:

    1. That individual

    2. If property transferred by that individual to a trust is sold or exchanged in a transaction described in IRC §644, (repealed for sales and exchanges made after 8/5/97), the trustee or trustees, jointly or separately, of such trust to the extent necessary to ascertain any amount of tax imposed upon the trust by IRC §644

    3. The spouse of that individual if the individual and spouse have signified their consent to consider a gift reported on the return as made one-half by the individual and one-half by the spouse pursuant to the provisions of IRC §2513, or

    4. The child of that individual (or the child's legal representative) to the extent necessary to comply with the provisions of IRC §1(g) involving tax on unearned income of minor children. See IRM 11.3.2.4.10.

      Note:

      Community property rules alone do not allow a spouse to access the single return or return information of the other spouse pursuant to IRC §6103(e). However, this does not preclude disclosure, where appropriate, under other provisions of IRC §6103. See IRC §6103(h)(4), IRC §6103(k)(6), IRM 11.3.21, Investigative Disclosure, and IRM 11.3.22 ,Disclosure to Federal Officers and Employees for Tax Administration.

  2. Returns and return information of individuals filing income tax returns jointly may be disclosed to either of the individuals with respect to whom the return is filed.

    Example:

    If a wife signs a joint income tax return for her husband, the husband may make a written request and receive the return since it was filed with respect to him.

    Reminder:

    This only applies to the joint return itself, including attachments.

    1. Information documents posted to an individual's Information Return Master File account are individual, not joint, information returns. The fact that information on a joint return is derived from such individual returns does not convert the individual character of the data. If such individual returns are filed with the joint return and as long as the disclosure is made from the joint return filing, then joint return disclosure rules apply. This is not meant to preclude disclosures, where appropriate, under other provisions of IRC §6103. See IRC §6103(h)(4), IRC §6103(k)(6), and IRM sections 11.3.21 and 11.3.22.

      Reminder:

      Even if a jointly filed return liability is converted to a separate spousal assessment (e.g., under Innocent Spouse or Offer-In-Compromise provisions), IRC §6103(e)(1)(B) still applies to return information developed relative to the new separate assessment. However, in these situations the non-assessed spouse would ordinarily be entitled to only IRC §6103(e)(8) type information due to the application of IRC §6103(e)(7).

      Reminder:

      The Form 4506, Request for Copy of Tax Return, procedures for requesting Form W-2 are for the individual W-2 copies and do not involve information taken from the income tax return.

  3. IRC §6103(e)(8) provides for disclosures pertaining to deficiencies assessed with respect to persons who have filed jointly but are no longer married or no longer reside in the same household. IRC §6103(e)(8) provides that certain limited collection information regarding one spouse must be disclosed to the other spouse relative to tax deficiencies with respect to a jointly filed return. It does not apply to deficiencies which may not be collected by reason of IRC §6502.

  4. Disclosures requested pursuant to IRC §6103(e)(8) will be made only upon written request. Requests will be signed by the taxpayer or his/her duly authorized attorney-in-fact. The IRC §6103(e)(8) process will be used only if the taxpayer has specifically requested the IRC §6103(e)(8) authority. Otherwise, the request will be processed under the authority of IRC §6103(e)(7). Disclosures of collection information, pursuant to either IRC §6103(e)(7) or (e)(8), relative to joint returns where the spouses are divorced or separated should be limited as described in (7) and (8) below.

  5. Any employee having delegated authority to make disclosures pursuant to IRC §6103(e) as detailed in Delegation Order 11-2 may make disclosures pursuant to IRC §6103(e)(8).

  6. Disclosures made pursuant to IRC §6103(e)(8) must be limited to the specific tax period associated with the requester's joint deficiency.

  7. Information that must be disclosed upon receipt of a proper written request from a spouse who has been assessed the joint tax will include:

    1. Whether the IRS has attempted to collect the deficiency from the other spouse

    2. The amount collected, if any, and the current collection status (e.g., notice, TDA, installment agreement, suspended), and

    3. If suspended, the reason for suspension (e.g., unable to locate, hardship, etc.)

  8. Information which will not be disclosed includes:

    1. The other spouse's location or telephone number

    2. Any information about the other spouse’s employment, income, or assets, and/or

    3. The income level at which a currently not collectible account will be reactivated

  9. If a requester insists on receiving information about the spouse which is prohibited as outlined above, advise him or her to file a Freedom of Information Act request in order to receive the associated appeal rights, or to contact the appropriate Disclosure Office for guidance.

  10. The IRS has the authority to develop procedures controlling the frequency with which any requester can make requests pursuant to IRC §6103(e)(8). GLD has determined that only 1 request per 6 month (calendar) period will be allowed.

  11. Requests for returns must be in writing.

11.3.2.4.1.1  (08-29-2008)
Identity Theft and Access to Information Returns

  1. Situations may arise when an individual’s Social Security Number (SSN) or other personal information may be compromised, resulting in a report of income being earned by that individual when in reality it was not.

  2. Information returns such as Form W-2 and Form 1099 reflecting earned or unearned income that are extracted and placed on the Information Return database can be disclosed to the individual who has been assigned the SSN listed on the information return though the income was presumably earned by another individual. This is allowed because the IRS would hold the person assigned the SSN responsible for the payment of any tax on the reported income.

    Note:

    Once it has been determined that the income contained in the information return(s) was not earned by the person to whom the SSN is assigned, such that there is no tax consequence to that person as a result of the income reported on this return(s), no further disclosures of information related to this return may be made to that person.

  3. If an individual states that income information reported as earned by another individual is actually his or her income and wants access to the information, do not release any information unless the requesting individual is able to show he or she was employed by or received income from the business entity filing the W-2 or Form 1099. This is best evidenced by a pay stub or other documentation from the employer, the filing of a FTC Identity Theft Affidavit, a copy of a police report relating to an identity theft issue, or other acceptable documentation.

  4. If the requester establishes that he or she earned the income, only the information regarding the particular information return or returns at issue may be released.

  5. Other information about handling allegations of identity theft and advising affected taxpayers can be found at:
    http://irweb.irs.gov/AboutIRS/bu/pipds/pip/itim/idtheft/default.aspx

11.3.2.4.2  (08-29-2008)
Partnerships

  1. Returns and return information of a partnership may be disclosed to any person who was a member of the partnership during any part of the period covered by the return. Both general and limited partners are entitled to request and receive partnership returns and return information. On December 20, 2007, IRC §6103(e)(10) was enacted, limiting the disclosure of certain information attached to partnership returns. The information to be disclosed cannot include any supporting schedule, attachment, or list of a person other than the individual making the request for access. A requesting partner can no longer receive any Forms K-1 or other attachments that include identifying information of other partners or other individuals. He or she can receive only Forms K-1 that pertain to his or her interest in the partnership. See Exhibit 11.3.2-2 which contains detailed guidance about information that can be released to individuals seeking access to partnership returns, including schedules that must be restricted or sanitized prior to release.

    Note:

    Any information in transcript form or in administrative files that may include other third party information extracted from or attached to Form 1065 must also be evaluated in accordance with IRC §6103(e)(10).

  2. Before disclosing tax information concerning a partnership, verify that the person who has asked for the information was a partner during the requested tax year or has been authorized by a partner to receive Federal tax information. If the person requests partnership tax information for the year 2007, for example, that person must establish that he or she was a partner at some time during 2007. To determine whether a requester was a member of the partnership for the year requested, verify that a schedule K-1 was filed for the requester. Partners may also file a power of attorney authorizing other individuals to receive partnership information or represent the partnership. The individual holding the power of attorney cannot have any greater access to the return or return information of the partnership than the individual granting the power of attorney. All rules in IRC §6103(e)(10) relating to the restrictions of the disclosure of 3rd party tax information apply to the power of attorney as well. The IRS employee should verify the person's status as a partner by following the identification procedures and techniques outlined in IRM 21.1.3.2.3, Required Taxpayer Authentication, and IRM 21.1.3.2.4, Additional Taxpayer Authentication . The disclosure of information concerning employment tax matters relating to partnerships follows the same rules. If a question concerns an employment tax matter and no partnership return has yet been filed, the IRS must still verify that the individual is a partner by analyzing whatever information the individual may be able to provide. It is up to the requestor to provide sufficient identifying information for the IRS to verify that he or she is a partner or is otherwise authorized to receive tax information about the partnership. As always, the decision concerning whether or not to disclose the requested information will depend on a reasonable analysis of the best information provided by the requester and from IDRS or other available information.

    Note:

    A Form 941, Employer's Quarterly Federal Tax Return submitted by a partnership must be signed by a responsible and duly authorized member or officer having knowledge of its affairs. A Form 941 may also be signed by a duly authorized agent of the taxpayer if a valid power of attorney has been filed (See Treasury Regulations §31.6061-1 and §31.6011(a)(7)). Because the Internal Revenue Code restricts disclosure of partnership returns and return information to partners and does not make any exception for Forms 941 filed by partnerships, the IRS may not disclose any tax information to an officer of the partnership (who is not a partner) even though that officer may have the authority to sign and may in fact have signed the Form 941. The partnership may submit a power of attorney permitting the officer, as a full time employee, to act on its behalf or may authorize disclosure of the partnership's Federal return and return information to the officer.

  3. Requests for returns must be made in writing.

11.3.2.4.3  (08-29-2008)
Corporations

  1. Any corporate officer authorized by the corporation in accordance with applicable state law to legally bind the corporation. The authority to bind means the ability to execute agreements that are binding and legally enforceable against the corporation under state law:

    1. "A corporate officer authorized to legally bind the corporation " includes, but is not limited to, the president or other chief executive officer of the corporation

    2. Generally, a written statement by the officer, on corporate letterhead stationery, to the effect that he/she has authority to legally bind the corporation is sufficient to permit disclosure. If there is a question about the requester's authority to receive the returns or return information, mail the information to the corporate address of record

    3. For telephone requests, ask sufficient questions to establish the identity and position of the caller

      Example:

      Ask a corporate officer who is not the president of a corporation if he/she can legally bind the corporation. If there is a question whether the requester is authorized to receive the requested return information, mail it to the corporation at the corporate address of record.

  2. Any person designated by resolution of the corporate board of directors or other similar governing body.

  3. Any officer or employee of the corporation, upon submitting a written request which is signed by a principal officer and attested to by the secretary or any other officer.

  4. To the extent that (1)-(3) above do not apply, any officer or employee who signed the return on behalf of the corporation under forms or regulations prescribed by the Secretary or signed a corporate income tax return under IRC §6062, and who is still employed by the corporation in the same capacity with the same authority. See IRC §6061 and its regulations. Processing information relating solely to the filing of the return signed by that person may be disclosed as long as that person continues to act on behalf of the corporation in the same capacity (with the same authority) as when he/she signed the corporate return. IRC §6103(k)(6) disclosures may also be made when appropriate, if the IRS personnel need to obtain information from the corporation.

  5. Any bona fide shareholder of record owning one percent or more of the outstanding stock of the corporation, upon submitting documentation which reasonably demonstrates such ownership. Such shareholders may have access to returns and return information for all years. However, they have no access rights when they are no longer shareholders. See IRM 11.3.2.5.1 for additional information and guidelines about requests from one percent shareholders.

  6. If a corporation was an electing small business corporation under subchapter S of chapter 1, any person who was a shareholder during any part of the period covered by such return during which an S corporation election was in effect. All types of shareholders, regardless of the percentage of shares held, may receive subchapter S returns and return information. A return or return information cannot be disclosed to a person who was not a shareholder during some part of the year for which the return in question was filed. Nor may a shareholder receive returns or return information for any period during which the election was not in effect.

    Note:

    Not all Schedules K-1 attached to the Sub-Chapter S return ( Form 1120S) can be provided in response to a written request for access. Only the Schedule K-1 for the person making the request can be released. Any other schedules or attachments containing other 3rd party information must be sanitized or withheld per IRC §6103(e)(10). See Exhibit 11.3.2-3 for more details about what can be released and what needs to be edited or sanitized prior to release. This restriction also applies to any information extracted from Schedules K-1 found in various transcripts or administrative files.

  7. If the corporation has been dissolved, any person authorized by applicable State law to act for the corporation, or any person whom the IRS finds to have a material interest that will be affected by information contained in the return or return information. Material interest is an important interest and is generally, but not always, financial in nature.

11.3.2.4.4  (05-24-2005)
Subsidiary of a Corporation

  1. To the extent that a subsidiary filed a separate return, the disclosure of the subsidiary's return and return information is governed by the same rules as those set out in IRM 11.3.2 .4.3, above.

  2. If a corporation has filed a consolidated return which includes the return of the subsidiary, the entire return and return information is the return or return information of the subsidiary. Disclosures are governed by the rules set out in IRM 11.3.2.4.3, above.

  3. Whether or not consolidated returns have been filed, persons authorized to act for the parent corporation may request and receive returns and return information of the subsidiary. A parent corporation is one having over 50% ownership of the subsidiary.

  4. Requests for returns must be made in writing.

11.3.2.4.5  (08-29-2008)
Government Agencies

  1. Returns and return information of a Federal, State or local government agency may be disclosed to any person legally authorized to act for such agency. Generally, verification that the requester is a government official, such as a director of taxation or personnel, will be sufficient.

  2. Tribal council members and other officials of Federally recognized Indian tribes and Alaskan Native villages are also entitled to receive returns and return information. Rev. Proc. 2002-64 lists currently recognized tribal and native village governments. Non-federally recognized tribes or native organizations are treated like any other non-governmental organization.

  3. Requests for returns must be made in writing on appropriate government letterhead.

11.3.2.4.6  (08-29-2008)
Tax Exempt Organizations

  1. Returns and return information of a tax exempt organization that are not publicly available under IRC §6104 may be disclosed to any person legally authorized to act for the organization. A requester’s right of access is based upon the structure of the organization. If the organization is a corporation, the rules for access to a corporate return or return information must be followed. If the entity is a trust or other type of entity, those rules must be followed.

  2. Requests for returns must be made in writing on appropriate organizational letterhead.

11.3.2.4.7  (08-29-2008)
Estates

  1. The administrator, executor, or trustee of an estate may receive returns and return information of the estate.

  2. Any heir at law, next of kin, or beneficiary who establishes a material interest which will be affected by the return or return information may also receive returns and return information. A material interest is an important interest and is generally, but not always, financial in nature.

    Example:

    Submission of a copy of a will by a beneficiary who is described in the will as entitled to " x" percent of the decedent’s gross estate, together with a statement that the decedent's return is needed to assist the beneficiary in determining whether he/she has received a proper share of the estate, would generally be sufficient to permit disclosure. The merits of an action, such as a law suit brought by a beneficiary, will generally, but not always, have no bearing on the material interest determination.

  3. The requester must furnish satisfactory evidence that he/she is an administrator, executor, trustee, heir at law, or next of kin under applicable state law, or is named as a beneficiary in the decedent's will. Generally, written evidence such as a copy of the will, proof of relationship, or letters testamentary will be furnished to show satisfactory proof of entitlement.

  4. See IRM 11.3.3.3, Distinction between Disclosure to Designees and the Conference and Practice Requirements, regarding representatives for estates.

  5. Requests for returns must be made in writing.

11.3.2.4.8  (08-29-2008)
Trusts

  1. The trustee or trustees, jointly or separately, may receive returns and return information of a trust.

  2. Any beneficiary of a trust may receive returns and return information of the trust, but only if the beneficiary shows a material interest which will be affected by the tax information. A material interest is an important interest and is generally, but not always, financial in nature.

    Note:

    Releases of Forms 1041 trust returns must comply with the requirements of IRC §6103(e)(10) . Generally all Forms K-1 cannot be released in response to a request for access to a trust tax return. Provide only a copy of the Form K-1 pertaining to the person making the request to that individual or his/her legal representative. Do not release any other schedule or attachment to the return that contains other 3rd party identifying information. See Exhibit 11.3.2-1 for more details about the various forms and schedules and how they should be edited or withheld prior to release. This restriction also applies to any information extracted from those schedules that may be found in various transcripts or administrative files.

  3. The requester must furnish satisfactory evidence that he/she is a trustee or beneficiary of the trust. A person with a reversionary interest in a trust will be considered a "beneficiary" or "trustee" only if he or she is accorded such status by the law of the state where the trust was established.

    Example:

    If the beneficiary of the trust submits a copy of the trust document together with a statement that the requested information is needed to help him/her determine whether to bring action against the trustees for breach of their fiduciary duty, that information would generally be sufficient to permit disclosure. The merits of an action or a contemplated action will usually not have a bearing on the material interest determination.

  4. Tax information may be disclosed to a person identified on Form 56, Notice Concerning Fiduciary Relationship because that person is acting in a fiduciary capacity for the trust, but only if he/she can establish a material interest in the tax information being requested. The filing of Form 56 is not by itself sufficient to substantiate a material interest. Be sure the information presented establishes a valid material interest. Discuss any questions with your Disclosure office.

  5. Trustees often use a bank's Trust Department to manage or control the assets of a trust. Employees assigned to these departments are acting in a fiduciary capacity. Form 56 should be filed identifying the person who is acting in a fiduciary relationship. A "person" in this case can be an individually named employee or all employees in a bank’s trust department, depending on the wording of Form 56.

  6. If there is doubt that the person seeking tax information is who he or she claims to be, ask for a copy of Form 56 to be sure the person is individually listed or that the Form 56 references the "bank Trust Department, " and the person is actually a Trust Department employee.

    Note:

    IRM 3.13.2.19.1 indicates that a processed Form 56 is evidenced by the input of TC 098 on the account along with the trustee’s name and address. This may be researched on the IDRS entity module. To the extent that the validity of the Form 56 can be established by using IDRS research, do not ask the requester to provide other verification without good reason.

  7. If there are indications that the person seeking tax information is not individually named or a Trust Department employee, then do not disclose any tax information to that person. Alternatively, you could send the information in a sealed envelope to the Trust’s address of record or the address of the person/department listed on Form 56, if the requester first establishes a material interest.

  8. A person seeking tax information can have access to the information of a Trust limited to just processing issues if he or she signed the Form 1041, is an employee of the bank’s Trust Department and is employed in the same capacity he or she held when the return was signed. In order to obtain access to tax information not related to processing issues, the person seeking tax information must show a "material interest" as discussed above.

  9. Requests for returns must be made in writing.

11.3.2.4.9  (08-29-2008)
Incompetents

  1. If an individual is legally incompetent, a return or return information that would be available to him or her ( See IRM 11.3.2.4.1 through 11.3.2.4.8, above, or IRM 11.3.2.4.10, below), can be disclosed to the committee, trustee or guardian of his or her estate.

  2. Situations where an individual may be legally incompetent include those where the individual is a minor, or is senile, disabled, insane, or otherwise incapable of fully administering his or her own affairs.

  3. Generally, we look to appropriate state law for the definition of a guardian, trustee or committee of the estate of an incompetent.

  4. Court appointed guardians, trustees, and committees, as well as fiduciaries, administrators and executors, may also have access to returns and return information on behalf of incompetents, if they produce copies of the appropriate documents establishing their rights and authority.

  5. To the extent necessary, Disclosure personnel should coordinate with Area Counsel to identify pertinent portions of state statutes, common law and Federal law to help determine entitlement to returns and return information.

  6. When handling requests for returns and return information of incompetents, use discretion so as not to impose an undue burden on the requester. If there is a significant question about the requester's entitlement, IRS employees may offer to mail the return information to the taxpayer's name and address of record.

  7. Requests for returns must be made in writing.

11.3.2.4.10  (08-29-2008)
Minors

  1. Returns and return information of a minor may be disclosed to the minor.

  2. Returns and return information of a minor may be disclosed to the signer of the return. Generally, this is a parent of the child but the child may sign the return. Rev. Rul. 82–206, 1982-2 C.B. 356, advises that if the child cannot prepare and file his/her own tax return, the parent should do so on behalf of the child, using the following language to sign the return: " By (signature) Parent (or guardian) for minor child." The revenue ruling is derived from IRC §6012 and the regulations. Treasury Regulation 1.6012-1(a)(4) requires the guardian or other person charged with the care of the minor's person or property to make and file the return on behalf of the child if the child did not make and file the return. Inherent in this subsection is the authority to discuss the return and resulting tax liability, including any necessary collection activities, with a parent who signed the return. A parent who signed the return can also designate the non-signing parent to receive the return or return information of the child if a consent to disclose is properly submitted pursuant to IRC §6103(c) .

  3. Returns and return information of a minor may be disclosed to the minor's parents, if the minor's return reflects earned income. Pursuant to IRC §6201(c), parents are liable for their minor child's unpaid taxes to the extent they are based on compensation for the child's services. If the return reflects earned income of the minor, the return may be disclosed to the parent pursuant to IRC §6103(e)(1)(A)(i), and the return information pertaining thereto may be disclosed to the parent pursuant to IRC §6103(e)(7). In situations where IRC §6201(c) applies, information about the minor's return may be disclosed to the parent even if the parent has not signed the return.

    Note:

    If the parent has signed the minor child's return, the disclosure may be made if an appropriate request is received from the parent, without considering whether IRC §6201(c) applies.

  4. IRC §6103(e)(2) provides for disclosure to the committee, trustee, or guardian of an incompetent's estate. If, under state law, the parent is the legal custodian of the minor's estate, all issues concerning the minor's tax liability (whether it relates to earned or unearned income) may be discussed with the parent. The IRS must look to state law for guidance concerning the effects of guardianship, custody, and non-custody of the minor on the disclosure of the minor's return and return information. To the extent necessary, Disclosure personnel will coordinate with Area Counsel to identify pertinent portions of state statutes, common law and Federal law applicable to determining entitlement to returns and return information.

  5. See IRM 11.3.3, Disclosure to Designees and Practitioners, for information on how a minor could authorize a parent to access the minor's tax information, or a parent signing a minor's return on the minor's behalf could authorize a representative such as the non-signing parent to access the minor's tax information.

  6. Requests for returns must be made in writing.

11.3.2.4.11  (08-29-2008)
Deceased Individuals

  1. The administrator, executor, or trustee of an estate may receive the returns and return information of the deceased individual. Often, an estate is already settled at the time a request for returns and return information is made, and thus an administrator, executor or trustee of the estate will no longer exist. In these circumstances, a person seeking disclosure will often need to consult state law to determine how appointment of an administrator, executor or trustee of the estate may be accomplished.

  2. Any heir at law, next of kin, beneficiary under the will, or a donee (recipient) of property may receive the returns and return information of a deceased individual. Such person must have a material interest that will be affected by the requested information. A material interest is an important interest and is generally, but not always, financial in nature.

  3. The requester must furnish satisfactory evidence that he/she is an administrator, executor, trustee, heir at law, next of kin, beneficiary under the decedent's will, or a donee (recipient) of property. Acceptable documentation includes, but is not limited to: birth and/or death certificates, letters testamentary, a will, or other court document.

  4. If the requester is an heir at law, next of kin, beneficiary, or donee, he/she must show a material interest which will be affected by the requested information. In some states, however, simply establishing a material interest may not be adequate.

    Example:

    A person alleging to be the common law wife of a deceased individual requests exemption information from the separate return filed by her alleged spouse in order to show that her illegitimate child is entitled to receive Social Security benefits. In jurisdictions where a common law spouse and illegitimate child may not inherit from his or her alleged spouse or parent (in the absence of their inclusion in the will or subsequent legitimizing), the spouse and child are precluded from obtaining returns and return information. Even though they each have a material interest affected by the information, they do not qualify as an heir at law, next of kin, beneficiary, or donee under state law, and thus are not entitled to receive returns and return information of the deceased individual. However, a surviving relative of the deceased who also has a material interest in the decedent's returns may be able to secure copies and provide them to the child claiming illegitimate status. Access to deceased alleged parents' returns by illegitimate children will generally depend on state law. In such circumstances, research is needed to ensure all disclosures are proper.

  5. Requests for returns must be made in writing.

11.3.2.4.12  (08-29-2008)
Bankruptcies

  1. Bankruptcies are governed by Title 11 of the U.S. Code. Information about the types of bankruptcy cases as they relate to the material interest issues discussed below is found in Chapters 7 and 11 of Title 11 (U.S. Code).

  2. IRC §6103(e)(4) & (5) set forth several interrelated rules that provide the basic legal framework for addressing material interest disclosure issues in a bankruptcy context. Disclosures for tax administration purposes are discussed in IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration.

  3. The IRS may always disclose the debtor-taxpayer's returns and return information to the debtor-taxpayer, and to any other person with the debtor-taxpayer's written consent. For detailed instructions involving disclosures to a debtor's attorney. See IRM 11.3.3.1.6, Disclosure to an Attorney-in-Fact.

  4. Disclosures cannot be made to the U.S. Trustee in a tax administration matter pursuant to IRC 6103(e). Disclosures may be made to the U.S. Trustee, the trustee, or other creditors in accordance with IRC §6103(h) if the bankruptcy case pertains to tax administration. See IRM 11.3.22. The U.S. Trustee, when acting as "policeman" for the Bankruptcy Court to ensure compliance with the tax laws (particularly, staying current with tax deposits), may receive tax information consistent with IRC §6103(h)(4)(A). The U.S. Trustee's efforts to ensure tax compliance qualify as a tax administration activity under IRC §6103(b)(4)(B). The bankruptcy process incorporating the statutory and judicially imposed requirements relating to tax collection is a Federal judicial proceeding pertaining to tax administration within the meaning of IRC §6103(h)(4).

  5. Disclosure rules distinguish between trustees in Chapter 7 and 11 cases where the debtor is an individual, and other trustees in bankruptcy, e.g., corporate Chapter 11 cases. In individual Chapter 7 or 11 cases, IRC §1398 applies and a return for the estate of the debtor is filed by the trustee (thus creating a separate taxable entity) in addition to the return filed by the debtor. See (2) above regarding disclosure to the debtor-taxpayer.

  6. In an individual's Chapter 7 or 11 case, any return of the debtor for the taxable year when the case commenced or any preceding taxable year shall be available to the trustee. A bankruptcy case commences with the filing of a petition in court. The trustee may also obtain return information relating to the returns available to the trustee, if disclosure of the return information would not seriously impair tax administration.

  7. In an involuntary case, no disclosure of a debtor's return will be made to the trustee until an order for relief has been entered by the court having jurisdiction, unless the court finds that disclosure is appropriate for purposes of determining whether an order for relief should be entered.

  8. Returns and return information of the bankrupt estate filed by the trustee as described in (4) above are available to the trustee. See IRM 11.3.2.4.7 for a description of trustee rules. The debtor may also obtain the returns and return information of the bankruptcy estate.

  9. Different rules apply for disclosure to a trustee (if one has been appointed) in cases other than individual Chapter 7 and 11 cases. These are cases where IRC §1398 does not apply and no separate taxable entity has been created. In such cases, the debtor's return and return information for current and prior years may be disclosed to the trustee. The trustee must furnish satisfactory evidence that he/she is trustee. The trustee in his/her fiduciary capacity, must also establish a material interest which will be affected by the requested information.

    Example:

    A trustee for a corporate taxpayer in a bankruptcy case wants to know the amount of the taxpayer's pending refund in order to propose a distribution among the taxpayer's creditors. In this case, the trustee has a material interest and may obtain the requested information.

  10. In Chapter 13 bankruptcies, trustees are not entitled to tax information under IRC §6103(e)(4) as they have no responsibility for the debtor's tax returns. For disclosures to be allowed, the bankruptcy would need to be a judicial proceeding pertaining to tax administration (see (3) above), or the debtor must provide a consent for disclosure under IRC §6103(c).

  11. Bank examiners are not trustees. To receive tax information, they must have a valid IRC §6103(c) consent from the taxpayer or the disclosure must satisfy IRC §6103(h)(4) provisions when the bankruptcy proceeding becomes a tax administration proceeding.

  12. Additional information pertaining to bankruptcy disclosures, including detailed examples, can be found in Document 9225 , Bankruptcy Disclosure Handbook.

  13. Requests for returns must be made in writing.

11.3.2.4.13  (08-29-2008)
Trust Fund Recovery Penalties

  1. IRC §6103(e)(9) provides for certain disclosures to persons who have been assessed the trust fund recovery penalty (TFRP) pursuant to IRC §6672. IRC §6103(e)(9) allows one responsible person to obtain certain limited information about other persons assessed the penalty for the same underlying tax.

  2. Disclosures pursuant to IRC §6103(e)(9) may be made only upon receipt of a written request. The request must be signed by a person actually assessed the TFRP or his/her duly authorized attorney-in-fact.

    Note:

    Be careful when processing IRC §6103(e)(9) requests as they involve tax information pertaining to individuals other than the requester. While the attorney-in-fact provisions of IRC §6103(e)(6) apply, the provisions of IRC §6103(c) do not, as another party's tax information is involved.

  3. Any employee delegated the authority to make disclosures pursuant to IRC §6103(e) by Delegation Order 11-2, may make disclosures pursuant to IRC §6103(e)(9).

  4. Disclosure personnel will advise employees making such disclosures to be certain that disclosures are limited to the specific tax periods associated with the requester's TFRP. Not all responsible officers subject to the penalty are assessed for the same periods. See the general rules as outlined in IRM 11.3.40, Disclosures Involving Trust Fund Recovery Penalty Assessments.

  5. Disclosures made pursuant to IRC §6103(e)(9) shall also be made in written form upon receipt of a proper written request from a person who has been assessed the penalty or their duly authorized attorney-in-fact. The disclosure will be limited to the specific tax period associated with the requester's TFRP and must include:

    1. Names of the other individuals assessed the same penalty

    2. Amount collected from each individual assessed the penalty

    3. Current collection status (e.g., notice, TDA, installment agreement, suspended), and

    4. If suspended, the reason (e.g., unable to locate, hardship)

      Note:

      When releasing transcripts in response to IRC §6103(e)(7) or IRC §6103(e)(9) requests involving TFRPs, take care to restrict the information disclosed on other assessed persons to that in 1) through 5), above. TXMOD prints currently include the TIN for other persons assessed. Disclosure of the TINs of other assessed persons is unauthorized so transcripts must be redacted.

  6. Information which will not be disclosed includes:

    1. The location or telephone number of other responsible persons

    2. Any employment, income, or asset information about other responsible persons

    3. Information about any person not assessed the penalty, or

    4. The income level at which a currently not collectible account will be reactivated

  7. Instructions for Collection personnel are found in IRM 5.1.1.6.4, Disclosure of Trust Fund Recovery Penalty (TFRP) Payment Information. They provide that if the case is not assigned to a Revenue Officer, Technical Support will obtain the information and send it to the taxpayer. Appeals also has procedures in its IRM. If a requester insists on receiving information about another responsible person which is prohibited as outlined above, he/she should be advised to either file a Freedom of Information Act request in order to receive the associated appeal rights, or contact the appropriate Disclosure office for guidance.

  8. The Taxpayer Bill of Rights 2 provides the IRS with authority to establish procedures controlling the frequency with which any requester can make requests pursuant to IRC §6103(e)(9). Until such procedures are developed by SB/SE at a national level, IRS personnel should follow locally developed procedures.

  9. See IRM 11.3.40 for additional disclosure guidance when TFRPs are involved.

11.3.2.4.14  (08-29-2008)
Receivers

  1. A receiver is a person appointed by a court to take into his/her custody, control and management of the property or funds of another, pending judicial action concerning such property or funds. While receiverships most commonly arise in bankruptcy or insolvency situations, this is not always the case, and various state and Federal laws authorize the appointment of receivers in different circumstances.

  2. If substantially all of the property of a person with respect to whom a return is filed is in the hands of a receiver, current and prior years' returns and return information of that person may be disclosed to the receiver. The receiver, in his/her fiduciary capacity, must have a material interest which will be affected by the requested information. A material interest is an important interest and is generally, but not always, financial in nature.

  3. A receiver must furnish satisfactory evidence that he/she is the appointed receiver who holds substantially all of the property of the person whose assets are in receivership.

  4. Requests for returns must be made in writing.

11.3.2.4.15  (08-29-2008)
Limited Liability Companies (LLC)

  1. 'Limited Liability Companies or LLCs are not recognized as a type of entity for federal income tax purposes. Instead, the default classification for an LLC with two or more members is a partnership. The Default classification for an LLC with one member is a disregarded entity. A multi-member LLC can elect to be classified as a corporation or an S-Corp or accept the default classification of partnership. A single-member LLC can elect to be classified as a corporation or accept the default classification of "Disregarded Entity" .

  2. Tax information must be disclosed in conformance with the Federal tax treatment of the LLC. For example, if the LLC is taxed as a corporation, then the disclosure rules for corporations must be followed. If the LLC is considered a "Disregarded Entity" then the business operation is reported on the income tax return of the single member which may be Form 1040, Form 1065 or Form 1120.

  3. If the LLC is considered a Disregarded Entity and income is reported on Form 1040, follow the rules for accessing or disclosing tax information for a sole proprietorship. See IRM 11.3.2.4.16.

11.3.2.4.16  (08-29-2008)
Sole Proprietorships

  1. Income, expenses and net taxable income of a sole proprietorship are reported on Schedule C of Form 1040.

  2. Access to the individual income tax return of a sole proprietor is governed by the same rules found in IRC §6103(e)(1) relating to individuals. See IRM 11.3.2.4.1.

  3. Sole proprietorships having employees are required to file employment tax returns such as Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and Form 941, Employer's Quarterly Federal Tax Return.

  4. Access to employment tax returns and tax return information related to a sole proprietorship is restricted to the person obligated to file the return and pay the tax. The spouse or employee of a sole proprietor may not have access to tax returns or tax return information related to BMF returns of the sole proprietorship because he/she is not obligated to pay the tax on the return.

    Note:

    This denial of access applies even if the spouse or employee signed the BMF tax return in error.

  5. A sole proprietor may designate another person, such as his/her spouse or an employee of the business, to receive the information using either a written consent or verbal consent. Verbal consents can only be used if disclosure relates to a tax matter.

11.3.2.5  (08-29-2008)
Other Disclosure Authorities

  1. In docketed Tax Court cases, suits for refund, and bankruptcy cases that are judicial tax proceedings, no power of attorney is required from a counsel of record. An attorney becomes the attorney of record by filing a petition or refund suit or entering an appearance in the case. Specific instructions for disclosure of returns and return information to an attorney in fact are contained in IRM 11.3.3.1.6.

  2. Specific instructions for disclosure of returns and return information to designees and practitioners are contained in IRM 11.3.3, Disclosure to Designees and Practitioners.

  3. Specific instructions for responding to Congressional inquiries are found in IRM 11.3.4, Congressional Inquiries.

11.3.2.5.1  (08-29-2008)
One Percent Shareholders

  1. Pursuant to IRC §6103 (e)(1)(D)(iii), any bona fide shareholder of record owning 1 percent or more of the outstanding stock of a corporation may make a written request to access the returns and return information of that corporation. The requester should be:

    1. A shareholder of record on the shareholder books of the corporation whose information is being requested

    2. A bona fide shareholder, and

    3. A beneficial owner of one percent or more of the corporation's outstanding stock

  2. A request submitted under IRC §6103(e)(1)(D)(iii) should be sent to the IRS Territory having jurisdiction over the corporation whose return(s) and return information are sought.

  3. The request must be in writing. At a minimum, it should set forth the following:

    1. Name and address of the requester

    2. Name and address of the corporation whose return(s) and return information the requester wants to access

    3. Type of tax and the taxable period(s) covered

    4. Amount of the corporation’s outstanding capital stock

    5. Number of shares owned by the shareholder and the date or dates when the shareholder acquired them

    6. Statement indicating whether the shareholder has the beneficial as well as the record title to such shares, and

    7. Statement that the shareholder did not acquire the shares for the purpose of obtaining the right to inspect the returns of the corporation

  4. The written request must be accompanied by evidence establishing that the requester is a bona fide shareholder of record of the required amount of stock of the corporation. Corporate stock certificates displaying the corporate seal and a printout from a state regulatory body such as the Secretary of State's Office or the Corporation Commission, detailing the total outstanding shares of stock currently in existence may be used to verify the percentage of ownership.

    Note:

    If any doubt exists whether the requester meets the 1% threshold, it is permissible to contact the corporation whose information is at issue to determine if they agree that the requester owns at least 1% of its outstanding stock. The requester should be advised and given an opportunity to withdraw their request if the corporation will be contacted.

  5. All facts and circumstances must be obtained and evaluated when determining if a shareholder is a bona fide owner of stock. While the IRC does not currently define "bona fide" , regulations preceding present day IRC §6103(e)(1)(D)(iii) indicated that a shareholder is not considered bona fide if the shares were acquired for the purpose of obtaining the right to inspect the return(s) of the corporation.

  6. The requirement that a shareholder be bona fide has a direct correlation to the states' statutory requirements that a shareholder seeking to inspect the books and records of the corporation have a proper purpose to do so. Generally, the "proper purpose" requirement means the purpose for inspection must reasonably relate to the requester's interests as a shareholder, but must not be adverse to the interests of the corporation whose information will be accessed. Proper purpose does include the intention to purchase shares in the corporation or a situation where the shareholder is a competitor seeking to take over the corporation. The fact that the shareholder is a competitor, even in a hostile takeover situation, does not defeat the shareholder's statutory right of inspection. The requester must still meet all other requirements shown above when it is determined (or known) that the requester is a competitor of the corporation.

  7. When determining if a shareholder is a beneficial owner of stock, consider whether the shareholder is entitled to receive dividends on the stock, whether he or she has a right to vote as a result of ownership, whether he or she possesses the authority to sell the stock, and/or is liable for tax consequences connected to the stock. These examples are not all inclusive. Specific facts and circumstances should be evaluated for each case.

  8. When processing a request, also consider the provisions of IRC §6103(e)(7) concerning the withholding of return information if release would seriously impair Federal tax administration.

  9. When providing returns and return information to a one percent shareholder, the shareholder should be advised in writing of the provision in IRC §6103(a)(3) concerning the nondisclosure of information and the implications and liabilities of IRC §7213 (a)(5) and IRC §7431(a)(2). The provisions of IRC §6103(e)(6) regarding attorneys-in-fact do not apply to one percent shareholders. The provisions of IRC §6103 prevent a one percent shareholder from redisclosing the information to anyone. If photocopies of information are provided, Notice 129 may be affixed to the first page of each return to meet this requirement.

11.3.2.5.2  (08-29-2008)
Preparers

  1. Generally, return preparers are not entitled to receive returns or return information without written authorization from the taxpayer conforming to the requirements of IRC §6103 (c) and Treas. Reg. 301.6103(c)-1 or pursuant to a power of attorney in conformance with Conference and Practice requirements.

  2. The fact that a taxpayer has employed an income tax return preparer, who is obviously aware of the information provided on the face of the return prepared is not evidence of the taxpayer's intent that the preparer later have access to the return. In some instances, the return submitted to the IRS may vary from the one signed by the preparer. See IRM 11.3.3 for information pertaining to disclosures to designees.

  3. It is the IRS's responsibility to ensure that any penalties assessed against preparers, as required by IRC §6694 and IRC §6695, are assessed against the appropriate preparer. Where the preparer is under examination or investigation for his/her preparation of a return, an examiner may need to disclose the return to its preparer. When the preparer signed the declaration of verification on the return (pursuant to IRC§ 6065), the IRS can ascertain the validity and reliability of that declaration by permitting the preparer to inspect the tax returns which bear his/her name as preparer. If not signed, the preparer may inspect the returns that the taxpayer alleges were prepared by the preparer.

  4. When the taxpayer is under examination or investigation and a preparer has not signed the declaration, the IRS can permit an alleged preparer of the return to inspect the document to verify a taxpayer's statement that another person completed his/her return as filed.

  5. If a preparer is under examination or investigation with respect to his/her preparation of the return (notwithstanding lack of status as an "income tax return preparer" within the meaning of IRC §7701(a)(36) and Treasury Regulation 301.7701-15), an examiner may properly disclose the return to its preparer and to question the preparer regarding its preparation when the examiner is administering internal revenue laws.

  6. In both (3) and (4) above, disclose only those portions of the return that are necessary to establish preparation.

11.3.2.5.3  (08-29-2008)
Two or More Parties

  1. Several information returns are required to be filed by one taxpayer, but they are actually the returns of both the taxpayer reporting the information and the taxpayer receiving the information return.

    Example:

    Forms 1099 are considered returns of both the payor and the payee. Title 26 Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, is considered to be a return of each of the persons listed in Parts I, II and IV of the form.

  2. Transmittal documents such as Form 1096, Annual Summary and Transmittal of U.S. Information Returns, and Form W-3, Transmittal of Wage and Tax Statements are the returns of the submitter only. Both the employer and the employee may have access to Form W-2, but only the employer may access the Form W-3.

11.3.2.6  (08-29-2008)
Methods for Communication of Confidential Information

  1. Disclosure and security rules must be followed when dealing with taxpayers via telephone or electronic media.

  2. Although following disclosure rules may allow the disclosure of tax information to a taxpayer, his or her legal representative, or a designated third party to receive tax information, disclosure is prohibited if the information cannot be transmitted by an acceptable secure method. For example, if asked to submit tax information via e-mail to a verified caller, you cannot transmit that information. Although the requester has a legal right to that information, e-mail is not an approved secure method. As an alternative, the information can be provided via regular mail or another acceptable method.

  3. By itself, failure to transmit tax information or information protected by the Privacy Act using an approved method is not considered an unauthorized disclosure of tax or Privacy Act information, but can lead to unauthorized disclosures and presents an unacceptable level of risk and vulnerability for the Service. See the following web site for information about IRS e-mail policies:
    http://mass.web.irs.gov/itsec/EmailPolExchangEmailTaxpayers.asp

11.3.2.6.1  (08-29-2008)
Leaving Information on Answering Machines/Voice Mail

  1. Use the following guidelines when leaving messages that contain confidential information on answering machines/voice mail. These guidelines are consistent with prudent business practices and disclosure rules while still providing for good customer service.

  2. Answering machine/voice mail guidelines:

    1. While tax information protected by IRC §6103 generally may not be left on an answering machine or voice mail, there are exceptions.
      If the employee "reasonably believes" he or she has reached the taxpayer's correct answering machine or voice mail, it is acceptable to leave the employee’s name, telephone number, any appropriate reference number for the inquiry, the fact that he or she works for the IRS (identifying the function of the calling employee is permissible), and the name of the person who should return the call. Additional information can be left on the recording if the taxpayer has given prior approval to leave such information on voice mail or the answering machine.

    2. "Reasonable belief" is supported by the following:

      • The greeting on the answering machine or voice mail refers to the taxpayer being contacted or

      • The taxpayer has indicated that this is the telephone number where he or she may be reached directly

    3. The function should document the taxpayer's telephone number, his or her approval to call that number, and the taxpayer's permission for IRS to leave information on the recording.

    4. If the employee does not have a reasonable belief he or she has reached the correct taxpayer, no tax or other confidential information should be disclosed on the message.

  3. When the number reached cannot be positively identified as the taxpayer's and it is otherwise appropriate and practical, it may be preferable to simply ask for a return call from "whoever initiated the contact and left the number for the IRS return call." If the call is in response to an earlier taxpayer inquiry or request, a statement can be made that the call is in response to an earlier inquiry/request. The IRS employee may not indicate the nature of the original request/situation nor reveal any specifics about the return call if it involves confidential information.

    Caution:

    When calling about collection of unpaid taxes, the restrictions of IRC §6304(b)(4) apply, and IRS employees are generally precluded from identifying themselves as IRS employees unless they reasonably believe the answering machine or voice mail belongs to the taxpayer.

  4. Normally, it is not appropriate to leave information on the answering machine of the taxpayer's IRC §6103(c)designee because these designees cannot further authorize IRS to disclose the taxpayer's information to anyone else and we cannot be certain who will pick up the message.

    Exception:

    A designee who under Conference and Practice Requirements has been authorized in Section 5 of Form 2848, Power of Attorney and Declaration of Representative, to designate others to receive information of the taxpayer.

    Note:

    Consult with the appropriate Disclosure Office if there are any questions about contacting taxpayers and leaving confidential information on answering machines or voice mail.

11.3.2.6.2  (08-29-2008)
Use of Cell Phones and Cordless Devices

  1. The Modernization and Information Technology Services (MITS) Office of Cybersecurity developed rules to deal with disclosures of sensitive but unclassified information (e.g., information protected by IRC §6103 or the Privacy Act) when using cell phones or other cordless devices. The GLD guidelines were developed based on confidentiality rules/standards and reflect MITS policy. If more comprehensive security guidelines are subsequently issued, they must be followed to the extent they conflict with these guidelines, since the MITS Office of Cybersecurity has institutional responsibility for cybersecurity issues. The Security function has also approved the use of cordless devices for certain systems and these special systems operate within approved parameters.

    Reminder:

    Remember that the use of cell phones or other cordless devices does not automatically create disclosure concerns. However, use of these devices raises some vulnerability issues, and it is an agency responsibility to decide what risks are acceptable and prudent for business purposes. The IRS is fully committed to protecting sensitive information, particularly taxpayer information. Employees must use good judgement and common sense when balancing the risks of unauthorized disclosure against business needs.

  2. The single greatest vulnerability when using these technologies occurs in locations where privacy is limited. Airports, restaurants, and other crowded spaces pose a greater risk of having a conversation overheard. Whenever possible, IRS personnel should conduct cellular phone conversations in private settings or in locations that minimize the potential for eavesdropping.

    Example:

    An IRS employee can normally conduct a cell phone conversation from a private work space within his or her home or from an automobile where he or she is the sole occupant without fear that the conversation will be overheard. An employee can also conduct a conversation away from passers-by. Conversely, an IRS employee returning a call in a restaurant or an office lobby should be careful not to convey sensitive information that might be overheard by others.

    Caution:

    Be aware of the volume of your speaking voice. Cell phone users tend to speak louder, often without realizing it. Digital cell phones are more secure than analog cell phones. Cordless phones operate on even less secure frequencies. Think of them as potential party lines.

  3. For contacts initiated by IRS employees, the employee must inform a taxpayer that he or she is calling from a cell phone or other cordless device when the employee is in an area where sensitive information could be overheard. When calling from a private setting where the conversation cannot be overheard, an employee is not required to disclose that the call is originating from a cell phone.

  4. If the employee is calling via cell phone from a public place, he or she must advise the taxpayer accordingly. This will alert the taxpayer of the potential for the inadvertent disclosure of his or her tax information.

    Example:

    When returning a taxpayer's call the employee should state, "I’m calling you from my cell phone. Do you have the bank account information I requested?" Or, "I’m calling you from my cell phone. Do you have the information I requested about your tax return? " These or similar statements informing the person that you are calling from a cell phone are appropriate.

  5. If the IRS employee is in a public environment and the expectation is that no sensitive information will be disclosed, the employee is not required to inform the taxpayer that he or she is using a cell phone or other cordless device. However, the employee should still consider telling the taxpayer that he or she is using a cell phone in case a sensitive issue comes up in the discussion. For example, the employee might say, "I’m returning your call from my cell phone. You wanted to set up an appointment? "

  6. IRS personnel must honor a taxpayer’s request not to conduct a conversation concerning sensitive information by cell phone.

  7. For taxpayer initiated contacts, the IRS is under no obligation to determine if the caller is using an unsecure platform such as a cordless device. Any necessary dialogue, including the disclosure of sensitive data, is authorized based on the fact the caller has accepted any security vulnerability by using a cordless device to contact the IRS.

  8. If the IRS employee is aware that a caller is using a cordless device or cell phone, for an incoming call, the employee should ask if it is permissible to discuss SBU data considering the communications device in use. Permission should be documented whenever appropriate (i.e., other documentation such as history notes are already being kept.)

  9. If the taxpayer does not agree to the use of a cordless or cell phone, the IRS employee should offer the taxpayer the option of rescheduling the conversation when a more secure "land" line is available. Any agreement should be appropriately documented. See above.

  10. Classified information should never be discussed over a cell or cordless phone. Check with your manager or local Disclosure office to see if you normally have access to this type of information. MITS Cybersecurity can provide guidance about appropriate technologies for handling this type of information.

Exhibit 11.3.2-1  (08-29-2008)
Release of Documents/Schedules for Form 1041 pursuant to IRC §6103(e)(10)

Form Number Title of Form Release in Full Redact/Withhold
Form 1041 U.S. Income Tax Return for Estates and Trusts (pages one through four) Y N
Attachments to Form 1041:
Form K-1 Beneficiary's Share of Current Year Income, Deductions Credits, and Other Items N Withhold all K-1s except for the K-1 for the person requesting the return
Schedule C Business Income or (Loss) Y N
Schedule C-EZ Short Form Business Income or (Loss) Y N
Schedule D Capital Gain or (Loss) Y N
Schedule E Rents, Royalties, Partnerships, other Estates and Trusts etc. Y N
Schedule F Farm Income or (Loss) Y N
Schedule H Household Employment Taxes Y N
Other Information, Question 5 - If this is answered "yes" there is to be an attachment that will include identity information from the seller financing the sale of property to the entity. N Redact any name, address and tax identification number of the person listed on the required attachment
Form 1041-T Transmittal of Estimated Taxes Credited to Beneficiaries (The form contains name and address of all beneficiaries that needs to be redacted. The amount of the estimated tax payment and % allocated need not be redacted) N Redact section 2 columns a and b for all but the person requesting the return
Form 1116 Foreign Tax Credit Y N
Form 3468 Investment Credit Y N
Form 3800 General Business Credit Y N
Form 4136 Credit for Federal Tax Paid on Fuels Y N
Form 4255 Recapture of Investment Credit Y N
Form 4684 Casualties and Thefts Y N
Form 4797 Ordinary Gain or (Loss) Y N
Form 4952 Investment Interest Expense Deduction Y N
Form 5884 Work Opportunity Credit Y N
Form 6251 Alternative Minimum Tax - Individuals Y N
Form 6252 Installment Sale Income N Redact Part III line item 27 to remove the name, address and TIN listed
Form 6478 Credit for Alcohol Used as Fuel Y N
Form 6781 Gains and Losses from Section 1256 Contracts and Straddles Y N
Form 8283 Non-cash Charitable Contributions N Redact Part I
Redact Part II item c that identifies the charitable organization the donation was made to
Redact Part II item e if there is a name listed
Redact Parts III and IV of the form for the signature, name, address and EIN of the appraiser and donee accepting the gift
Form 8582 Passive Activity Loss Limitations Y N
Form 8582-CR Passive Activity Credit Limitations Y N
Form 8586 Low Income Housing Credit Y N
Form 8609-A Annual Statement for Low Income Housing Credit Y N
Form 8611 Recapture of Low Income Housing Credit N Redact the issuer's name in item 1F
Form 8693 Low Income Housing Credit Disposition Bond N Redact Part I, Section 7a for the name and address is that of the person requesting the return.
Redact Part II except the date for all but the person requesting the return
Part III, redact the signature and name for all but the person requesting the return
Form 8697 Interest Computation under the Look-Back Method for Completed Long-Term Contracts N Redact item C for the name and EIN of the named entity
Form 8801 Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts Y N
Form 8824 Like Kind Exchanges Y N
Form 8834 Qualified Electric Vehicle Credit Y N
Form 8845 Indian Employment Credit Y N
Form 8860 Qualified Zone Academy Bond Credit N Redact Part I, line 1a to remove the Bond issuer's name, city or town and state
Form 8866 Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method N Redact the name and entity EIN on line C
Form 8873 Extraterritorial Income Exclusion Y N
Form 8882 Credit for Employer-Provided Childcare Facilities and Services Y N
Form 8886 Reportable Transaction Disclosure Statement N Redact line 5 parts a and d
Redact lines 6a and 6b to remove identity information
Form 8909 Energy Efficient Appliance Credit Y N
Form 8910 Alternative Motor Vehicle Credit Y N
Form 8911 Alternative Fuel Vehicle Refueling Property Credit Y N
Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds N Redact Part 1 Section a1 and remove the name and address of the bond issuer
Redact Part 1 section a7 and remove the name and address of the bond issuer

Exhibit 11.3.2-2  (08-29-2008)
Release of Documents/Schedules related to Forms 1065 pursuant to IRC §6103(e)(10)

Form Number Title of Form Release in Full Redact/Withhold
Form 1065 U.S. Return of Partnership income (pages one through four) Y N
Attachments to Form 1065:
Form K-1 Partner's Shares of Income, Credits, Deductions, etc. N Withhold all K-1s except for the K-1 for the person making the request
Schedule M-3 Net Income (Loss) Reconciliation for S Corporations with Total Assets of $10 Million or More. N Redact the Name and EIN for any information in item D of the form
Schedule C Additional Information for Schedule M-3 Filers N Line 2b, redact the name and EIN of any entities listed
Schedule F Profit or Loss from Farming Y N
Form 4797 Sales of Business Property Y N
Form 4562 Depreciation and Amortization Y N
Line 4 - Statement of ordinary income or loss from other partnerships, estates and trusts N Redact any identifying information such as name, EIN and address if this statement is attached
Schedule A - line 4 Statement of additional section 263A costs Y N
Schedule B - Question 3 N If question 3 answered "yes" there is to be an attachment that includes other partnership names, EIN that are to be withheld in full
Form 3468 Investment Credit Y N
Form 4684 Casualties and Thefts Y N
Form 5884 Work Opportunity Credit Y N
Form 5884-A Credits for Employers Affected by Hurricane Katrina, Rita, or Wilma Y N
Form 6252 Installment Sale Income N Redact Part III, line item 27 to remove the name, address and TIN listed
Form 6478 Credit for Alcohol Used as Fuel Y N
Form 6765 Credit for Increasing Research Activities Y N
Form 6781 Gains and Losses from Section 1256 Contracts and Straddles Y N
Form 8283 Non-cash Charitable Contributions N Redact Part II item c that identifies the charitable organization the donation was made to.
Redact Part II item e if there is a name listed.
Redact Parts III and IV of the form for the identifying name, address and EIN of the appraiser and donee acknowledging the gift
Form 8308 Report of a Sale or Exchange of Certain Partnership Interests N Part I, redact the name, address and TIN of all but the person making the request for the return.
Part II, redact the name, address and TIN of all but the person making the request for the return
Form 8586 Low Income Housing Credit Y N
Form 8609A Annual Statement for Low Income Housing Credit Y N
Form 8611 Recapture of Low Income Housing Credit N Redact the issuer's name in item 1F
Form 8693 Low Income Housing Credit Disposition Bond N Redact Part I, section 7a for the name and address listed for all but the person requesting the return
Redact Part II except the date for all but the person requesting the return
Part III, redact the signature and name of all but the individual requesting the return
Form 8697 Interest Computation under the Look-Back Method for Completed Long-Term Contracts N Redact item C for the name and EIN of the named entity
Form 8824 Like Kind Exchanges Y N
Form 8825 Rental Real Estate Income and Expenses of a Partnership or an S Corporation (line 20b contains name and EIN for a "person other than the entity making the return" and should be redacted) N Redact line 20b to not disclose the name or EIN of other related entities
Form 8826 Disabled Access Credit Y N
Form 8832 Entity Classification Election N Redact any information on lines 4a and b except if that is the name and TIN of a person requesting the return.
Redact the name and EIN listed on lines 5a and b
Form 8835 Renewal Electricity, Refined Coal and Indian Coal Production Credit Y N
Form 8844 Empowerment Zone and Renewal Community Employment Credit Y N
Form 8845 Indian Employment Credit Y N
Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips Y N
Form 8847 Credit for Contributions to Selected Community Development Corporations Y N
Form 8858 Information Return of U.S. Persons With Respect to Foreign Disregarded Entities N Withhold all attached Forms 8858 except for the one related to the person requesting the return
Form 8861 Welfare-to-Work Credit Y N
Form 8864 Biodiesel and Renewable Diesel Fuels Credit Y N
Form 8865 Return of U.S. Persons With Respect to Certain Foreign Partnerships N Withhold all attached Forms 8858 except for the one related to the person requesting the return
Form 8866 Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method N Redact the name and entity EIN on line C
Form 8873 Extraterritorial Income Exclusion Y N
Form 8874 New Markets Credit N Redact columns a and b from part 1 of the form
Form 8881 Credit for Small Employer Pension Plan Startup Costs Y N
Form 8882 Credit for Employer-Provided Childcare Facilities and Services Y N
Form 8886 Reportable Transaction Disclosure Statement N Redact line 5 parts a and d
Redact lines 6a and 6b to remove identity information
Form 8893 Election of Partnership Level Tax Treatment Y N
Form 8896 Low Sulfur Diesel Fuel Production Credit Y N
Form 8900 Qualified Railroad Track Maintenance Credit Y N
Form 8906 Distilled Spirits Credit Y N
Form 8907 Nonconventional Fuels Source Credit Y N
Form 8908 Energy Efficient Home Credit Y N
Form 8909 Energy Efficient Appliance Credit Y N
Form 8910 Alternative Motor Vehicle Credit Y N
Form 8911 Alternative Fuel Vehicle Refueling Property Credit Y N
Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds N Redact Part 1 Section a1 and remove the name and address of the bond issuer
Form 8916-A Reconciliation of Cost of Goods Sold Reported on Schedule M-3 N Redact the name and EIN of any entity other than the entity filing the return
Form 8923 Mine Rescue Team Training Credit Y N
Statement of section 743b Basis Adjustments N Redact any name, address or TIN of any person listed except for the person requesting the return

Exhibit 11.3.2-3  (08-29-2008)
Release of Documents/Schedules related to Forms 1120S pursuant to IRC §6103(e)(10)

Form Number Title of Form Release in Full Redact/Withhold
Form 1120S U.S. Income Tax Return For an S Corporation (pages one through four) Y N
Attachments to Form 1120S :
Form K-1 Shareholder's Share of Income, Credits, Deductions, etc. N Withhold all K-1s except for the K-1 for the person requesting the return or his/her legal representative
Schedule M-3 Net Income (Loss) Reconciliation for S Corporations with Total Assets of $10 Million or More N To the extent there are other entity names, addresses or EINs included in any attached statement to Schedule M-3, redact those
Form 970 Application to use LIFO Inventory Method N Redact any name of applicant and TIN Do not redact the name and EIN of the filer
Form 2220 Underpayment of Estimated Tax by Corporations Y N
Form 2553 Election by a Small Business Corporation N Redact Part I item F for the name of the individual listed unless the request is from that person
Redact Part I column J for all but the person making the request
Redact Part I column K for the signature of all but the person making the request
Redact Part I, column M for all but the person making the request
The above applies to all attachments for Part I
Part III, redact the name, address, TIN and signature of the individual unless the request is from the named person in Part III
Form 3468 Investment Credit Y N
Form 4136 Credit for Federal Tax Paid on Fuels (although there are Registration numbers on the schedule, these are the return information of the entity itself making them disclosable to those who have a right to the return pursuant to IRC §6103(e)(1)) Y N
Form 4562 Depreciation and Amortization Y N
Form 4684 Casualties and Thefts Y N
Form 4797 Sale of Business Property Y N
Form 5884 Work Opportunity Credit Y N
Form 5884-A Credit for Employers Affected by Hurricane Katrina, Rita or Wilma Y N
Form 6252 Installment Sale Income N Redact Part III line item 27 to remove the name, address and TIN listed
Form 6478 Credit for Alcohol Used as Fuel Y N
Form 6765 Credit for Increasing Research Activities Y N
Form 6781 Gains and Losses of Section 1256 Contracts and Straddles Y N
Form 8050 Direct Deposit of Corporate Tax Refund Y N
Form 8283 Non-cash Charitable Contributions N Redact Part II item c that identifies the charitable organization the donation was made to
Redact Part II item e if there is a name listed
Redact Parts III and IV of the form for the identifying name, address and EIN of the appraiser and donee acknowledging the gift
Form 8586 Low Income Housing Credit Y N
Form 8609-A Annual Statement for Low Income Housing Credit Y N
Form 8611 Recapture of Low Income Housing Credit Y N
Form 8693 Low Income Housing Credit Disposition Bond N Redact Part I, section 7a for the name and address listed for all but the person requesting the return
Redact Part II except the date for all but the person requesting the return
Part III, redact the signature and name of all but the individual requesting the return
Form 8697 Interest Computation under the Look-Back Method for Completed Long-Term Contracts N Redact item C for the name and EIN of the named entity
Form 8820 Orphan Drug Credit Y N
Form 8824 Like Kind Exchanges Y N
Form 8825 Rental Real Estate Income and Expenses of a Partnership or an S Corporation (line 20b contains name and EIN for a "person other than the entity making the return" and should be redacted) N Redact line 20b to not disclose the name or EIN of other related entities
Form 8826 Disabled Access Credit Y N
Form 8835 Renewal Electricity, Refined Coal and Indian Coal Production Credit Y N
Form 8844 Empowerment Zone and Renewal Community Employment Credit Y N
Form 8845 Indian Employment Credit Y N
Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips Y N
Form 8847 Credit for Contributions to Selected Community Development Corporations Y N
Form 8861 Welfare-to-Work Credit Y N
Form 8864 Biodiesel and Renewable Diesel Fuels Credit Y N
Form 8866 Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method N Redact the name and entity EIN on line C
Form 8873 Extraterritorial Income Exclusion Y N
Form 8874 New Markets Credit N Redact columns a and b from Part 1
Form 8881 Credit for Small Employer Pension Plan Startup Costs Y N
Form 8882 Credit for Employer-Provided Childcare Facilities and Services Y N
Form 8886 Reportable Transaction Disclosure Statement N Redact line 5 parts a and d
Redact lines 6a and 6b to remove identity information
Form 8896 Low Sulfur Diesel Fuel Production Credit Y N
Form 8900 Qualified Railroad Track Maintenance Credit Y N
Form 8906 Distilled Spirits Credit Y N
Form 8907 Nonconventional Fuels Source Credit Y N
Form 8908 Energy Efficient Home Credit Y N
Form 8909 Energy Efficient Appliance Credit Y N
Form 8910 Alternative Motor Vehicle Credit Y N
Form 8911 Alternative Fuel Vehicle Refueling Property Credit Y N
Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds N Redact Part 1 Section a1 and remove the name and address of the bond issuer
Form 8916-A Reconciliation of Cost of Goods Sold Reported on Schedule M-3 N Redact the name and EIN of any entity other than the entity filing the return
Form 8923 Mine Rescue Team Training Credit Y N
Statement required pursuant to Treas. Reg. 1.351-3 related to transferee/ transferrer of stock and securities in a controlled corporation N If the statement contains any identity information such as the name, address or TIN of any individual, redact all information except that related to the person making the request

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