7.28.2  Disclosure of Information About Exempt Organizations to Appropriate State Officials as Described in IRC 6104(c)

7.28.2.1  (04-02-2010)
Pension Protection Act

  1. Section 1224 of the Pension Protection Act of 2006 (PPA) amended IRC § 6104(c), which governs disclosures concerning section 501(c)(3) and certain other organizations to State tax or charity agencies. The PPA significantly expands the scope of information available to these agencies, as well as gives the IRS the ability to provide this information much earlier in the administrative process.

  2. As part of this legislation, a provision was included that requires recipients of taxpayer information under IRC section 6104(c) to meet comprehensive technical, procedural and administrative Federal safeguard requirements pursuant to IRC section 6103(p)(4).

  3. Prior to the PPA, the IRS provided notifications of final revocations for organizations exempt under section 501(c)(3) to both State tax and charity agencies in all fifty states. All automatic notifications to those agencies have ceased. In order for agencies now to be eligible to receive return and return information pursuant to section 6104(c), agencies must meet certain requirements. Agencies must submit a Safeguard Procedures Report (SPR) to the Office of Safeguards in Small Business/Self Employed (SB/SE), Communications, Liaison and Disclosure (CLD) and be approved to receive the information. In addition, State agencies are required to enter into a disclosure agreement with the IRS outlining permitted disclosures and uses of information as well as committing to the statutory safeguard requirements.

7.28.2.2  (04-02-2010)
Disclosure Agreement

  1. As indicated in 7.28.2.1, disclosures under IRC section 6104(c) will only be made to those state agencies that have submitted their Safeguard Procedures Report (SPR) to the Office of Safeguards and have entered into a disclosure agreement with the IRS regarding IRC section 6104(c).

  2. The model Disclosure Agreement for States Attorney General is at Exhibit 7.28.2-1. The model Disclosure Agreement for state tax officers is at Exhibit 7.28.2-2. The terms of the Disclosure Agreements cannot be varied by individual state agencies. Periodically, it is expected that state agencies may execute addenda to the Disclosure Agreement or execute entirely new Disclosure Agreements as changes occur to the disclosure program.

  3. The Disclosure Agreement describes the responsibilities of the parties, the procedures for disclosure, and information to be disclosed. The Disclosure Agreement constitutes the written request for disclosure required by IRC § 6104(c)(2) and (3).

7.28.2.3  (04-02-2010)
Responsibilities of Exempt Organizations (EO) and Governmental Liaison and Disclosure (GLD) under IRC 6104(c)

  1. Exempt Organizations (EO), Tax Exempt and Government Entities (TE/GE) Division is responsible for disclosures pursuant to IRC § 6104(c). Governmental Liaison and Disclosure (GLD) is responsible for interpreting the requirements of IRC § 6104(c). Accordingly, EO must coordinate with GLD to resolve situations not clearly covered by these procedures that require interpretation of IRC § 6104(c).

  2. The Office of Disclosure under the Director, GLD, is primarily responsible for providing advice and assistance relating to the disclosure of tax returns and return information. IRM 11.3.33.4.

  3. The EO Fed/State Liaison should consult the Disclosure Technical Advisor for TE/GE with regard to disclosure issues that are not clear under IRC § 6104(c) or the related regulations, or to coordinate program requirements or events.

  4. To carry out its responsibilities, EO will:

    1. Advise State officers of the disclosure provisions of IRC § 6104(c);

    2. Maintain a current list of state agencies with approved Disclosure Agreements;

    3. Make disclosures authorized by IRC § 6104(c);

    4. Process requests for the administrative material relating to disclosable determinations; and

    5. Maintain records of disclosures provided under IRC § 6104(c)

7.28.2.3.1  (04-02-2010)
Exempt Organizations (EO) Responsibilities

  1. Within EO, the Offices of the Directors of Examinations and R&A are responsible for making disclosures under IRC § 6104(c) with respect to determinations issued by their respective component offices.

    1. EO Determinations (under the Director, R&A) is responsible for notifying appropriate State officers when the Service makes a proposed or final determination that an organization is denied recognition as an organization described in IRC § 501(c)(3), or that an organization’s exempt status has been terminated because it no longer operates and thus no longer meets the requirements of its exemption under IRC § 501(c)(3). When capabilities permit, EO Determinations will also be responsible for providing names, addresses and taxpayer identification numbers of organizations that have applied for recognition as section 501(c)(3) organizations.

    2. EO Examinations is responsible for notifying appropriate State officers when the Service issues a proposed or final determination revoking recognition of exemption under IRC § 501(c)(3), or issues a proposed or final statutory notice of deficiency for tax imposed by any of the following Internal Revenue Code sections. • IRC 507(c) Termination of private foundation status • IRC 4911 Tax on excess expenditures to influence legislation • IRC 4912 Tax on disqualifying lobbying expenditures • IRC 4940 Excise tax based on private foundation investment income • IRC 4941 Taxes on self-dealing • IRC 4942 Taxes on failure to distribute income • IRC 4943 Taxes on excess business holdings • IRC 4944 Taxes on investments that jeopardize charitable purpose • IRC 4945 Taxes on taxable expenditures • IRC 4951 Taxes on self-dealing with respect to black lung benefit trusts • IRC 4952 Taxes on taxable expenditures of black lung benefit trusts • IRC 4953 Tax on excess contributions to black lung benefit trusts • IRC 4955 Taxes on political expenditures of IRC 501(c)(3) organizations • IRC 4958 Taxes on excess benefit transactions • IRC 4965 Taxes on certain tax-exempt entities entering into prohibited tax shelter transactions • IRC 4966 Taxes on taxable transactions • IRC 4967 Taxes on prohibited benefits

  2. EO Technical and EO Determinations will designate an IRC § 6104(c) coordinator to:

    1. Identify the cases in which notice may be provided;

    2. Identify the appropriate State officers for each particular case;

    3. Prepare and issue the required notice;

    4. Maintain records on the notices issued;

    5. Coordinate with the EO Fed/State Liaison responsible for overall direction and monitoring;

    6. Provide information needed for preparing the periodic reports on IRC § 6104(c) activities in EO; and

    7. Respond to requests for documents from State officers.

  3. EO Examinations is responsible for overall strategic direction and monitoring compliance with the requirements of IRC § 6104(c). The EO Fed/State Liaison in EO Examinations will carry out these responsibilities, which include:

    1. Advising state officers of the materials they may receive under IRC § 6104(c), how they can request specific materials, and how other state officers may apply to be designated as an appropriate State officer within the meaning of IRC § 6104(c)(2);

    2. Coordinating with CLD regarding states that want to be approved to receive information under section 6104(c) and assisting GLD in getting the Disclosure Agreement executed;

    3. Coordinating with CLD to ensure that the states that want to participate in the program under section 6104(c) have submitted their SPR;

    4. Providing copies of all the executed Disclosure Agreements to CLD, Office of Safeguards;

    5. Maintaining copies of all executed Disclosure Agreements;

    6. Identifying training needs and developing needed training materials in coordination with GLD;

    7. Monitoring the IRC § 6104(c) activities of the component offices that make IRC § 6104(c) disclosures, providing assistance and support, evaluating the effectiveness of procedures, and recommending improvements; and

    8. Providing periodic reports on IRC § 6104(c) activities to the Director, EO, and the Disclosure Technical Advisor for TE/GE;

    9. Advising the Director, Office of Safeguards when a Disclosure Agreement has been terminated.

  4. The Director, Examinations, in consultation with the Director, EO will determine the specific content and frequency of the periodic reports. The reporting should allow EO to maintain consistent records for each fiscal year.

7.28.2.4  (04-02-2010)
Appropriate State Officer

  1. The IRS may disclose return and return information under IRC section 6104(c) to an Appropriate State Officer, as defined below, or to a person other than the Appropriate State Officer, but only if that person is a state officer or employee designated by the Appropriate State Officer to receive information under IRC section 6104(c) on behalf of the Appropriate State Officer.

  2. An Appropriate State Officer may designate state officers or employees to receive information under IRC section 6104(c) on the behalf of the Appropriate State Officer by specifying in writing each person’s name and job title, and the name and address of the person’s office.

  3. IRC § 6104(c)(6)(B) provides that the term appropriate State officer means (1) the State attorney general, (2) the State tax officer, (3) with respect to a section 501(c)(3) organization or an applicant for recognition under section 501(c)(3), any other State official charged with overseeing charitable organizations, and (4) with respect to a section 501(c) organization other than one described in section 501(c)(1) or (3), the head of an agency designated by the State attorney general as having primary responsibility for overseeing the solicitation of funds for charitable purposes.

  4. Only the State attorney general can apply on behalf of his or her own State officers for a determination that they will be regarded as appropriate State officers for purposes of IRC 6104(c)(1) notifications. He or she may apply by furnishing a letter with supporting facts and information, to the EO Fed/State Liaison. The EO Fed/State Liaison will coordinate with EO R&A. The letter or sample application should describe the functions and authority of the State officer under State law and contain sufficient facts for the IRS to determine that the officer is an appropriate State officer within the meaning of IRC § 6104(c).

  5. Information that is disclosable under IRC § 6104(c) will be disclosed or made available to an Appropriate State Officer or designee with respect to the following organizations:

    1. An organization formed under the laws of the Appropriate State Officer’s state;

    2. An organization, the principal office of which is located in the Appropriate State Officer’s state;

    3. An organization that, as determined by the IRS, is or might be subject to the laws of the Appropriate State Officer’s state regulating charitable organizations or the solicitation or administration of charitable funds or charitable assets; or

    4. A private foundation required by IRC § 6033-2(a)(iv) to list the Appropriate State Officer’s state on any of the foundation’s returns filed for the last five years.

7.28.2.5  (04-02-2010)
EO Examinations- Notification of Determinations, Revocations, and Tax Deficiencies Relating to IRC § 501(c)(3) Organizations

  1. Reserved

7.28.2.5.1  (04-02-2010)
Proposed and Final Revocations

  1. Reserved

7.28.2.5.1.1  (04-02-2010)
Procedures for Examiners

  1. In accordance with group closing letter procedures found in Memorandum T:EO:E 07-2006, dated April 4, 2006 and located in the internet EO library, the examiner will send the 30-day proposed revocation letter and revenue agent report (RAR) to the taxpayer unless the case is part of a project that requires 30-day letter approval by Mandatory Review. The case will be held by the examiner for the appropriate period of time (ideally this is a 30-day period).

  2. At the same time that the 30-day letter and the RAR are sent to the taxpayer by the examining agent, the agent will prepare a package to be sent to the EO Fed/State Liaison consisting of copies of the following: - 30-day letter - Form 6018, Consent to Proposed Adverse Action - RAR - Forms 990 for all applicable tax periods This package may be sent by mail or by secured email to: EO Fed/State Liaison Internal Revenue Service 1616 Capitol Avenue, Stop 4730OMA Omaha, NE 68102 If the case is part of a project that requires approval of the 30-day letter by Mandatory Review prior to sending it to the taxpayer, the agent should only send the package to the EO Fed/State Liaison after receiving approval from Mandatory Review.

  3. The examiner will notate in the case chronology that § 6104(c) package for [state(s)] was sent to the EO Fed/State Liaison on dd/mm/yyyy.

  4. A Form 3198-A, TE/GE Special Handling Notice, should be attached to the front of the case file indicating that this is a case involving a State agency that is authorized to receive disclosures under IRC section 6104(c). The Form 3198-A will serve as a flag to Mandatory Review that this is a case subject to these special disclosure provisions.

  5. If the case is returned to the group by Mandatory Review for any reason, the examining agent should notify the EO Fed/State Liaison immediately.

7.28.2.5.1.2  (04-02-2010)
Procedures for Mandatory Review and the EO Fed/State Liaison

  1. The EO Fed/State Liaison will send the proposed revocation package to the appropriate state agency. The EO Fed/State Liaison will be responsible for keeping the appropriate records and notifying the Disclosure Office to account for the disclosures under IRC section 6103(p)(3).

  2. The EO Fed/State Liaison will coordinate with Mandatory Review and will track the progress of the proposed revocation case (i.e., agreed or unagreed).

  3. If the case is agreed and a 90-day letter (final revocation) is prepared by Mandatory Review and sent to the taxpayer, the EO Fed/State Liaison will be responsible for securing a copy of the 90-day letter from Mandatory Review and sending it to the appropriate state agency.

  4. If the case is unagreed and forwarded to the Appeals Office by Mandatory Review, the EO Fed/State liaison will track the progress of the case and coordinate with the Appeals Office.

  5. The Form 3198-A should stay attached to the case file in order to alert the Appeals Office that the case involves an unagreed proposed revocation in a state which is eligible to receive disclosures pursuant to section 6104(c).

  6. The EO Fed/State Liaison will be responsible for ensuring that the appropriate state agency is notified as to whether or not the proposed revocation is upheld.

7.28.2.5.2  (04-02-2010)
Chapter 41 and 42 Assessments

  1. In addition to the disclosure of proposed and final revocations of 501(c)(3) organizations, approved State tax and charity agencies are also eligible to receive notices of proposed and final deficiencies of tax imposed under section 507 or Chapter 41 or 42 against an organization or disqualified person and may request to see the underlying return information that the deficiencies are based on. These assessments include:

    • Initial and second tier taxes on private foundations and self-dealers under sections 4940 through 4945 for net investment income, self-dealing, failure to distribute income, excess business holdings, investments that jeopardize charitable purpose, and taxable expenditures;

    • Initial tax on certain supporting organizations and donor advised funds for excess business holdings under section 4943;

    • Section 4911 tax on excess lobbying expenditures by public charities that have elected to be subject to section 501(h) regarding expenditures to influence legislation;

    • Section 4912 tax on excess lobbying expenditures that result in loss of section 501(c)(3) tax-exempt status;

    • Section 4955 tax imposed on any amount paid or incurred by a section 501(c)(3) organization that participates or intervenes in any political campaign on behalf of, or in opposition to, any candidate for public office;

    • Section 4958 initial taxes on disqualified persons and organization managers of section 501(c)(3) organizations that engage in excess benefit transactions;

    • Section 4965 taxes related to prohibited shelter transactions;

    • Section 4966 taxes on taxable distributions by sponsoring organizations maintaining donor advised funds; and

    • Section 4967 taxes on distribution of prohibited benefits from donor advised funds.

7.28.2.5.2.1  (04-02-2010)
Procedures for Examiners

  1. At the time that the 30-day letter and RAR on a case involving an assessment under Chapter 41/42 are sent to the taxpayer by the examining agent, the examiner will prepare a package to be sent to the EO Fed/State Liaison consisting of copies of the following:

    • 30-day letter;

    • Form 870E, Waiver of Restriction on Assessment and Collection of Deficiency & Acceptance of Overassessment;

    • Form 4883, Exempt Organization Excise Tax Audit Changes;

    • RAR;

    • For assessments on organizations only, copies of applicable Forms 990, 990PF, and 4720;

    • For assessments on disqualified persons, copies of the publicly available version of Form 990 or Form 990-PF may be included in the package, but not Form 4720.

  2. The examiner will notate in the case chronology that § 6104(c) package for [state(s)] was sent to the EO Fed/State Liaison on dd/mm/yyyy.

  3. The examining agent should notify the EO Fed/State Liaison if the case is agreed or if the case is unagreed and being forwarded to Mandatory Review. If the case is unagreed and sent to Mandatory Review, a Form 3198-A should be attached to the case file to alert Mandatory Review that this is a case subject to the disclosure provisions of section 6104(c).

7.28.2.5.2.2  (04-02-2010)
Procedures for Mandatory Review and the EO Fed/State Liaison

  1. The EO Fed/State Liaison will send the Chapter 41/42 deficiency package to the appropriate state agency. The EO Fed/State Liaison will be responsible for keeping the appropriate records and notifying the Disclosure Office to account for the disclosure under section 6103(p)(3).

  2. If the case goes unagreed, the EO Fed/State Liaison will coordinate with Mandatory Review and Appeals, if applicable, and will track the progress of the case.

  3. For those cases forwarded to the Appeals Office, the Form 3198-A should stay attached to the case file in order to alert them that the case involves an unagreed issue in a state which is eligible to receive disclosures pursuant to section 6104(c).

  4. The EO Fed/State Liaison will be responsible for ensuring that the appropriate state agency is notified as to whether or not the proposed assessment is upheld.

7.28.2.6  (04-02-2010)
EO Determinations- Notification of Proposed and Final Determinations that an Organization is Denied Recognition as an Organization Described in IRC § 501(c)(3).

  1. Reserved

7.28.2.7  (04-02-2010)
Procedures for the Disclosure of Return Information of Organizations Described in IRC § 501(c) Other than IRC § 501(c)(3).

  1. Upon written request by an Appropriate State Officer, the IRS may disclose return and return information of section 501(c) organizations that are not 501(c)(3) organizations for the purpose of, and only to the extent necessary for, the administration of state laws regulating the solicitation or administration of charitable funds or charitable assets.

  2. The Disclosure Agreement constitutes the written request required by this provision. The EO Fed/State liaison may make disclosures in individual instances based on oral requests by Appropriate State Officers or their designees under this provision.

  3. The EO Fed/State Liaison is responsible for keeping the appropriate records of these disclosures.

7.28.2.8  (04-02-2010)
Disclosures to State Agencies Other than by Request Pursuant to Section 6104(c)(2)(D) of the Code

  1. IRC section 6104(c)(2)(D) of the Code allows the IRS to disclose to an Appropriate State Officer on its own initiative and without written request the returns and return information of charitable organizations or applicants for charitable status if the IRS determines that such information might constitute evidence of noncompliance with the laws under the jurisdiction of the Appropriate State Officer.

  2. The possible noncompliance acts must relate to state laws regulating charitable organizations or applicants, with the IRS determining whether the noncompliance comes under the jurisdiction of an Appropriate State Officer. All disclosures must be in compliance with the accounting and safeguard procedures of section 6103(p), and all disclosures will be made only to an Appropriate State Officer that has entered into a Disclosure Agreement.

  3. The disclosure of returns and return information may occur before the IRS makes a proposed determination (denial of recognition, revocation, or notice of deficiency) or takes any other administrative or enforcement action. IRC section 6104(c)(2)(D) includes the authority to disclose the proposed revocations of organizations that have elected not to apply for recognition of their tax exemption, such as churches. This authority is in addition to the other disclosure authority provided under IRC sections 6104(c)(1) and 6104(c)(2). The authority to authorize disclosures under IRC section 6104(c)(2)(D) is delegated to the Director, EO, Examinations and the Director, EO Rulings and Agreements.

  4. Disclosures of returns and return information by the IRS under section 6104(c)(2)(D) are made in writing to the Appropriate State Officer. The referral package should include returns and return information to the extent necessary to apprise the Appropriate State Officer of the possible noncompliance with state law. The referral package should include a narrative description of the facts and, if possible, reference the particular state law provision that may have been violated. The referral package should be routed to the individuals below, with concurrence noted by the first line manager and Area Manager or Manager, EO Technical, as appropriate.

    1. EO Examinations- EO Fed/State Liaison

    2. EO R&A Determinations- Manager, Technical Guidance and Quality Assurance

    3. EO R&A HQ- Manager, Technical Guidance and Quality Assurance

7.28.2.9  (04-02-2010)
Reporting

  1. At the end of each fiscal year, IRC § 6104(c) Notice Coordinators in component offices will provide an IRC § 6104(c) disclosure report to the EO Fed/State Liaison.

  2. At the end of each fiscal year, the EO Fed/State Liaison will provide a summary report on the disclosure program to the Disclosure Technical Advisor for TE/GE, and to the Director, EO.

  3. The EO Fed/State Liaison shall provide an accounting report to: Internal Revenue Service, Attn: Batching MS 6054, 1973 N. Rulon White Blvd., Ogden, UT 84201, no later than January 31, following the close of the preceding calendar year.

  4. The accounting report shall be completed in accordance with accounting for disclosure procedures outlined in IRM 11.3.37.

  5. Form 5466-B, Multiple Records of Disclosure, shall be used to record disclosures under IRC § 6104(c). See Exhibit 11.3.37-6. Use the following codes when completing the form;

    1. Nature of Disclosure Code:- (3) Inspection of document or file- no copies furnished. - (4) Photocopy furnished with or without prior inspection (for computer printouts see 1).

    2. Agency Code:- (260) All other entities (Agency/Attorney General) not otherwise indicated in IRM Exhibit 11.3.37-4 and IRM Exhibit 11.3.37-5.

    3. Purpose Code:- (34) Pursuant to disclosure authorities other than IRC § 6103.

    4. ADP Code:- (621) or (622) TEGE Correspondence Control Record 50.001 or Report of Matters in Technical 50.003.

7.28.2.10  (04-02-2010)
Training

  1. The Office of Disclosure will assist in providing disclosure training to designated persons in EO R&A, Determinations, and Examinations.

  2. EO R&A will provide general instructions to EO Determinations and Examinations regarding IRC § 6104(c) and the procedures related to disclosure.

Exhibit 7.28.2-1  (04-02-2010)
Sample Disclosure Agreement Under IRC Section 6104(c) for Attorney General’s Office

Disclosure Agreement Under IRC Section 6104(c)

SECTION 1. Introduction

1.1 This Agreement outlines the terms and conditions under which returns and return information will be disclosed to the Attorney General’s office of the State of [insert State name] pursuant to IRC section 6104(c). This Agreement constitutes the written request for inspection or disclosure required by paragraphs (c)(2)(C) and (c)(3) of section 6104.

SECTION 2. Definitions

For purposes of this Agreement, the following definitions apply:

2.1 Attorney General. The term Attorney General" means the Attorney General of the State of [insert State name].

2.2 IRS. The term "IRS" means the Internal Revenue Service, U.S. Department of Treasury.

2.3 State. The term "State" means [insert State name].

2.4 Return. The term "return" is defined in the same manner as provided in IRC section 6103(b)(1).

2.5 Return Information. The term "return information" is defined in the same manner as provided in IRC section 6103(b)(2). However, return information" does not include information in the hands of the Attorney General that is obtained wholly from sources independent of the IRS, even though identical to return information (including information that independently verifies return information).

2.6 Inspection. The term "inspection" means any examination of a return or return information.

2.7 Disclosure. The term "disclosure" means the making known to any person in any manner whatever a return or return information.

2.8 Code. The terms "Code" and IRC mean the Internal Revenue Code of 1986, as amended.

2.9 Taxable Person. The term taxable person means any person who is liable or potentially liable for excise taxes under IRC chapter 41 or 42. Such a person includes—

  1. a disqualified person described in section 4946(a)(1), 4951(e)(4), or 4958(f);

  2. a foundation manager described in IRC section 4946(b);

  3. an organization manager described in IRC section 4955(f)(2) or 4958(f)(2);

  4. a person described in IRC section 4958(c)(3)(B);

  5. an entity manager described in IRC section 4965(d); and

  6. a fund manager described in IRC section 4966(d)(3).

SECTION 3. Disclosure of Returns and Return Information Relating to IRC Section 501(c)(3) Organizations

3.1 Pursuant to the laws of [insert State name, the Attorney General is charged with the administration of State laws regulating organizations of the type described in IRC section 501(c)(3). Returns and return information (whether originals, paper copy, photocopy, microfilm, electronic transmission, magnetic media, or any other form) received from the IRS will be used for the purpose of, and only to the extent necessary in, the administration of such laws.

3.2 Pursuant to IRC section 6104(c), the Attorney General requests, and the IRS will disclose, with respect to any organization that is described in IRC section 501(c)(3) and exempt from taxation under IRC section 501(a), or has applied under IRC 508(a) for recognition as an organization described in IRC section 501(c)(3) the following items of return information

  1. A refusal or proposed refusal to recognize an organization’s exemption as a charitable organization (a final or proposed denial letter);

  2. Information regarding a grant of exemption following a proposed denial;

  3. A revocation of exemption as a charitable organization (a final revocation letter), including a notice of termination or dissolution;

  4. A proposed revocation of recognition of exemption as a charitable organization (a proposed revocation letter);

  5. Information regarding the final disposition of a proposed revocation of recognition other than by final revocation;

  6. A notice of deficiency or proposed notice of deficiency of tax imposed under IRC section 507 or chapter 41 or 42 on the organization or a taxable person;

  7. Information regarding the final disposition of a proposed notice of deficiency of tax imposed under IRC section 507 or IRC chapter 41 or 42 on the organization other than by issuance of a final notice of deficiency.

  8. On a quarterly or other periodic basis, the names, addresses, and taxpayer identification numbers of organizations that have applied for recognition as organizations described in IRC section 501(c)(3). Lists of applicants may not be available until the new determination letter tracking system becomes operational. In addition, the IRS may make available to the Attorney General the ability to verify, for any particular organization, whether such organization has applied for recognition as an IRC section 501(c)(3) organization; and

  9. Information regarding the final disposition of an application for recognition of exemption where no proposed denial letter is issued, including whether the application was withdrawn or whether the applicant failed to establish its exemption.

3.3 Additional Disclosures Related to IRC section 501(c)(3) Organizations. The IRS may make available for inspection or disclosure returns and return information of an organization described in IRC section 501(c)(3), or that has applied for recognition under IRC section 508(a) as an organization described in IRC section 501(c)(3), if the IRS determines that such returns or return information may constitute evidence of noncompliance under the laws within the jurisdiction of the Attorney General regulating charitable organizations and applicants.

3.4 Except for returns and return information relating to proposed notices of deficiency with respect to taxable persons, additional returns and return information of organizations or taxable persons with respect to which information is or may be disclosed under section 3.2 may be made available for inspection by or disclosed to the Attorney General or his/her designee (see Section 5.1)

3.5 The IRS will disclose or make available for inspection to the Attorney General under this Agreement such information only with respect to--

  1. an organization formed under the laws of [insert State name];

  2. an organization, the principal office of which is located in [insert State name];

  3. an organization that, as determined by the IRS, is or might be subject to the laws of [insert State name] regulating charitable organizations or the solicitation or administration of charitable funds or charitable assets; or

  4. a private foundation required by Treas. Reg. §1.6033-2(a)(iv) to list [insert State name] on any of the foundation’s returns filed for its last five years.

SECTION 4. Disclosure of Returns and Return Information Relating to Organizations other than IRC Section 501(c)(1) and IRC Section 501(c)(3) Organizations

4.1 The IRS may make available for inspection or disclosure returns and return information of any organization described in IRC section 501(c) (other than organizations described in paragraph (1) or (3) thereof) for the purpose of, and only to the extent necessary in, the administration of [insert State name] laws regulating the solicitation or administration of the charitable funds or charitable assets of such organizations. The Attorney General will use returns and return information so disclosed only for such purposes. [insert only if the AG’s office does this] Organizations whose information will be disclosed under this section will be limited to those organizations described in section 3.5(1)-(3).

SECTION 5. Designees of Attorney General Permitted to Receive Returns and Returns Information

5.1 The Attorney General designates the individuals listed in Appendix A to receive returns and return information on the Attorney General’s behalf, and to request additional returns and return information that have not already been disclosed pursuant to sections 3.2, 3.4 or 4.1. The Attorney General will notify the IRS in writing of any additions, deletions, or other changes to the list of designated persons.

SECTION 6. Use and Redisclosure of Returns and Return Information Disclosed to the Attorney General under this Agreement

6.1 The Attorney General or any designee to whom a return or return information has been disclosed may thereafter disclose such return or return information:

  1. to another employee of [insert State name] for the purpose of and only to the extent necessary in the administration of the laws described, above; and

  2. to another employee of [insert State name], personally and directly engaged in, and for use in, preparation for a civil proceeding before a State administrative body or court in a matter involving administration of the [insert State name] laws described above, if the returns and return information satisfy one or more of the criteria established in IRC sections 6103(h)(4)(A), 6103(h)(4)(B) or 6103(h)(4)(C) or any regulations promulgated pursuant to IRC section 6104(c)(4). Such information may also be disclosed in such civil administrative or judicial proceeding, but only if such information satisfies the criteria in such provisions or regulations, as applicable.
    Returns and return information received under IRC section 6104(c) and this Agreement may not be redisclosed to agents or contractors.

6.2 Notwithstanding any other provision of this Agreement, the IRS will not disclose a return or return information under this Agreement if such disclosure would seriously impair Federal tax administration. The Attorney General further agrees that prior to the disclosure of any return or return information in a State administrative or judicial proceeding or to any party as provided by section 6.1(b) of this Agreement, the Attorney General will notify in writing the TEGE Liaison from whom the return or return information was received, of the intention to make such disclosure. No officer or employee will disclose a return or return information in such State judicial or administrative proceeding if the TEGE Liaison or other official designated by the Director, Exempt Organizations, within 30 calendar days following receipt of such written notice, informs the Attorney General that such disclosure would seriously impair Federal tax administration.

SECTION 7. Safeguards and Other Requirements

7.1 As an express condition for the inspection and disclosure of returns and return information, the Attorney General agrees to comply with the safeguards and requirements prescribed by IRC section 6103(p)(4), regulations, and other published procedures, including:

  1. furnishing an initial report (Safeguard Procedures Report or SPR) and thereafter an annual report (Safeguard Activity Report or SAR) to the IRS, as specified in Publication 1075, Tax Information Security Guidelines for Federal, State and Local Agencies and Entities, Rev. 10-2007, or as later revised, describing the procedures established and utilized by the Attorney General’s office for ensuring the confidentiality of such returns and return information;

  2. permitting the IRS to review the extent to which the Attorney General is complying with the requirements of this section;

  3. informing in writing all employees to or by whom disclosure or inspection of returns or return information is authorized of the criminal penalties and civil liability provided by IRC sections 7213, 7213A, and 7431 for any willful disclosure or inspection of such returns and return information that is unauthorized by the Code; and

  4. reporting a possible unauthorized inspection or disclosure of Federal tax information upon discovery to the appropriate Agent-in-Charge, Treasury Inspector General for Tax Administration (TIGTA), as specified in Publication 1075, and to the IRS Office of Safeguards.

7.2 Processing of returns and return information received by the Attorney General from the IRS in the form of microfilm, photo-impressions, magnetic media or other format (including reformatting or reproduction, or conversion to magnetic media, punch cards, or hard copy printout) and transmission and storage of such returns or return information by or on behalf of the Attorney General may be performed by Attorney General owned and/or operated computer facilities. In those cases where such facilities used by the Attorney General are shared with other State agencies, the Attorney General will ensure the confidentiality of the returns and return information provided to such shared facility or person. As part of this responsibility, the terms of any contract or agreement between the Attorney General’s office and a shared computer facility to whom returns or return information are or may be provided for a purpose described in this subsection, will provide, or will be amended to provide, that such person, and officers and employees of the person, will comply with the applicable safeguard conditions contained in regulations, published rules or procedures, or written communications. In no event will returns and return information disclosed pursuant to this Agreement be inspected by or disclosed to persons other than officers and employees of the State (except as provided in section 6.1 regarding disclosures in administrative and judicial proceedings).

7.3 The safeguard requirements of IRC section 6103(p)(4) (except the destruction requirements of section 6103(p)(4)(F)) will no longer apply to any returns or return information if, and to the extent that, such return or return information is disclosed in the course of any administrative or judicial proceeding and made a part of the public record thereof. The Attorney General will maintain records that substantiate said disclosures and public record entry for a period of five years or the applicable State records control schedule, whichever is longer.

7.4 Upon the occurrence of any change in employment, duties, or relevant matters affecting an Attorney General’s or his/her designee's right of access to returns and return information or status as Attorney General or his/her designee, the Attorney General shall promptly advise in writing the TEGE Liaison, that such individual is no longer the Attorney General or the Attorney General's designee.

SECTION 8. Limitations

8.1 Pursuant to the provisions of IRC section 6103(p)(2), the IRS may charge a reasonable fee for furnishing returns and return information under the terms of this Agreement. The IRS agrees not to charge for the costs of routine reproduction of returns and return information.

8.2 Notwithstanding any other provision of this Agreement, the IRS will not disclose to, or make available for inspection by, any person, information which was obtained pursuant to a tax convention or bilateral agreement relating to the exchange of information between the United States and a foreign government.

SECTION 9. Officials to Contact for Obtaining Information

9.1 Additional requests for information related to matters disclosed pursuant to section 3 will be made to the TEGE Official who made the initial disclosure. Additional requests for information related to matters disclosed pursuant to section 4 are to be made to the TEGE Liaison.

SECTION 10. Termination or Modification of Agreement

10.1 The provisions of the Agreement are subject to provisions of the Code, regulations, and published procedures. This Agreement may be terminated or modified at the discretion of the IRS or the Attorney General due to changes in Federal or State statutes and regulations or whenever in the administration of Federal or State laws that action seems appropriate, and at such time there is a change in any of the Attorneys General listed in this Agreement.

10.2 The unauthorized use or disclosure of returns or return information furnished pursuant to this Agreement, or the failure to maintain adequate procedures for safeguarding the confidentiality of such returns and return information, constitutes grounds for termination of this Agreement and the exchange of information thereunder. The procedures in Treas. Reg. § 301.6103(p)(7)-1 (or any successor regulation) will apply to any suspension or termination of disclosures under this Agreement.

APPROVED:

[INSERT NAME OF STATE]

__________________________ (signature)

Attorney General

Signed at: _______________________ this ______ day of _____________, 20___.

INTERNAL REVENUE SERVICE

_____________________(signature)

Director, Exempt Organizations

Signed at: Washington, DC.______ this ____ day of ______________, 20___.

_____________________ (signature)

Director, Communications, Liaison, & Disclosure

Signed at: Washington, DC.______ this ____ day of ______________, 20___.

APPENDIX A DESIGNEES (INCLUDE NAME, ADDRESS, JOB TITLE, and NAME AND ADDRESS OF OFFICE)

Exhibit 7.28.2-2  (04-02-2010)
Sample Disclosure Agreement Under IRC Section 6104(c) for State Tax Officer

Disclosure Agreement Under IRC Section 6104(c)

SECTION 1. Introduction

1.1 This Agreement outlines the terms and conditions under which returns and return information will be disclosed to the Tax Office of the State of [insert State name] pursuant to IRC section 6104(c). This Agreement constitutes the written request for inspection or disclosure required by paragraphs (c)(2)(C) and (c)(3) of 6104(c).

SECTION 2. Definitions

For purposes of this Agreement, the following definitions apply:

2.1 Tax Office. The term Tax Office means the [insert State name] Department of Revenue.

2.2 Tax Officer. The term Tax Officer means the head of the Tax Office of [insert State name].

2.3 IRS. The term "IRS" means the Internal Revenue Service, U.S. Department of Treasury.

2.4 State. The term "State" means the State of [insert State name].

2.5 Return. The term "return" is defined in the same manner as provided in IRC section 6103(b)(1).

2.6 Return Information. The term "return information" is defined in the same manner as provided in IRC section 6103(b)(2). However, return information" does not include information in the hands of the Tax Officer that is obtained wholly from sources independent of the IRS, even though identical to return information (including information that independently verifies return information).

2.7 Inspection. The term "Inspection" means any examination of a return or return information.

2.8 Disclosure. The term "disclosure" means the making known to any person in any manner whatever a return or return information.

2.9 Code. The term "Code" means the Internal Revenue Code of 1986, as amended.

2.10 Taxable person. The term taxable person means any person who is liable or potentially liable for excise taxes under IRC chapter 41 or 42. Such a person includes—

  1. a disqualified person described in section 4946(a)(1), 4951(e)(4), or 4958(f);

  2. a foundation manager described in section 4946(b);

  3. an organization manager described in section 4955(f)(2) or 4958(f)(2);

  4. a person described in section 4958(c)(3)(B);

  5. an entity manager described in section 4965(d); and

  6. a fund manager described in section 4966(d)(3).

SECTION 3. Disclosure of Returns and Federal Return Information Relating to IRC Section 501(c)(3) Organizations

3.1 Pursuant to the laws of [insert State name], the Tax Officer is charged with the administration of state laws regulating organizations of the type described in IRC section 501(c)(3). The taxing of such organizations (under general or specific state tax statutes) constitutes such administration. Returns and return information (whether originals, paper copy, photocopy, microfilm, electronic transmission, magnetic media, or any other form) received from the IRS will be used for the purpose of, and only to the extent necessary in, the administration of such laws.

3.2 Pursuant to IRC section 6104(c), the Tax Officer requests, and the IRS will disclose, with respect to any organization that is described in section 501(c)(3) and exempt from taxation under section 501(a), or has applied under section 508(a) for recognition as an organization described in section 501(c)(3), the following items of return information:

  1. A refusal or proposed refusal to recognize an organization’s exemption as a charitable organization (a final or proposed denial letter);

  2. Information regarding a grant of exemption following a proposed denial;

  3. A revocation of exemption as a charitable organization (a final revocation letter), including a notice of termination or dissolution;

  4. A proposed revocation of recognition of exemption as a charitable organization (a proposed revocation letter);

  5. Information regarding the final disposition of a proposed revocation of recognition other than by final revocation;

  6. A notice of deficiency or proposed notice of deficiency of tax imposed under section 507 or chapter 41 or 42 on the organization or a taxable person;

  7. Information regarding the final disposition of a proposed notice of deficiency of tax imposed under section 507 or chapter 41 or 42 on the organization other than by issuance of a final notice of deficiency.

  8. On a quarterly or other periodic basis, the names, addresses, and taxpayer identification numbers of organizations that have applied for recognition as organizations described in IRC section 501(c)(3). Lists of applicants may not be available until the new determination letter tracking system becomes operational. In addition, the IRS may make available to the Tax Officer the ability to verify, for any particular organization, whether such organization has applied for recognition as a section 501(c)(3) organization.

  9. Information regarding the final disposition of an application for recognition of exemption where no proposed denial letter is issued, including whether the application was withdrawn or whether the applicant failed to establish its exemption.

3.3 Additional Disclosures Related to IRC section 501(c)(3) Organizations. The IRS may make available for inspection or disclosure returns and return information of an organization described in IRC section 501(c)(3), or that has applied for recognition under section 508(a) as an organization described in section 501(c)(3), if the IRS determines that such returns or return information may constitute evidence of noncompliance under the laws within the jurisdiction of the Tax Officer regulating charitable organizations and applicants.

3.4 Except for returns and return information relating to proposed notices of deficiency with respect to taxable persons, additional returns and return information of organizations or taxable persons with respect to which information is or may be disclosed under Section 3.2 may be disclosed to or made available for inspection by the Tax Officer.

3.5 The IRS will disclose or make available for inspection to the Tax Officer under this Agreement such information only with respect to--

  1. an organization formed under the laws of [insert State name];

  2. an organization, the principal office of which is located in [insert State name];

  3. an organization that, as determined by the IRS, is or might be subject to the laws of [insert State name] regulating charitable organizations or the solicitation or administration of charitable funds or charitable assets; or,

  4. a private foundation required by §1.6033-2(a)(iv) to list [insert State name] on any of the foundation’s returns filed for its last five years.

SECTION 4. Disclosure of Federal Returns and Federal Return Information Relating to Organizations other than IRC Section 501(c)(1) and Section 501(c)(3) Organizations

4.1 The IRS may make available for inspection or disclosure returns and return information of any organization described in IRC section 501(c) (other than organizations described in paragraph (1) or (3) thereof) for the purpose of, and only to the extent necessary in, the administration of [insert State name] laws regulating the solicitation or administration of the charitable funds or charitable assets of such organizations. The Tax Officer will use returns and return information so disclosed only for such purposes. [insert only if the Tax Office does this] Organizations whose information will be disclosed under this section will be limited to those organizations described in subsection 3.5(1)-(3).

SECTION 5. Designees of Tax Officer Permitted to Receive Returns and Return Information

5.1 The Tax Officer designates the individuals listed in Appendix A to receive returns and return information on the Tax Officer’s behalf, and to request additional returns and return information that have not already been disclosed pursuant to sections 3.2, 3.4 or 4.1. The Tax Officer will notify the IRS in writing of any additions, deletions or other changes to the list of designated persons.

SECTION 6. Use and Redisclosure of Returns and Return Information Disclosed to the Tax Officer under this Agreement

6.1 The Tax Officer or any designee to whom a return or return information has been disclosed may thereafter disclose such return or return information:

  1. to another employee of [insert State name] for the purpose of and only to the extent necessary in the administration of the laws described above; and

  2. to another employee of [insert State name], personally and directly engaged in, and for use in, preparation for a civil proceeding before a State administrative body or court in a matter involving administration of the [insert State name] laws described above, if the returns and return information satisfy one or more of the criteria established in IRC sections 6103(h)(4)(A), 6103(h)(4)(B) or 6103(h)(4)(C) or any regulations promulgated pursuant to IRC section 6104(c)(4). Such information may also be disclosed in such civil administrative or judicial proceeding, but only if such information satisfies the criteria in such provisions or regulations, as applicable.
    Returns and return information received under IRC section 6104(c) and this Agreement may not be redisclosed to agents or contractors.

6.2 Notwithstanding any other provision of this Agreement, the IRS will not disclose a return or return information under this Agreement if such disclosure would seriously impair Federal tax administration. The Tax Officer further agrees that prior to the disclosure of any return or return information in a State administrative or judicial proceeding or to any party as provided by subsection 6.1(b) of this Agreement, the Tax Officer or his/her designee will notify in writing the TEGE Liaison from whom the return or return information was received, of the intention to make such disclosure. No officer or employee will disclose a return or return information in such State judicial or administrative proceeding if the TEGE Liaison or other official designated by the Director, Exempt Organizations, within 30 calendar days following receipt of such written notice, informs the Tax Officer that such disclosure would seriously impair Federal tax administration.

SECTION 7. Safeguards and Other Requirements

7.1 As an express condition for the inspection and disclosure of returns and return information, the Tax Officer agrees to comply with the safeguards and requirements prescribed by IRC section 6103(p)(4) and any implementation of such safeguards and requirements as may be provided by regulations and published procedures including:

  1. furnishing an initial report (Safeguard Procedures Report or SPR) and thereafter an annual report (Safeguard Activity Report or SAR) to the IRS, as specified in Publication 1075, Tax Information Security Guidelines for Federal, State and Local Agencies and Entities, Rev. 10-2007, or as later revised, describing the procedures established and utilized by the Tax Officer for ensuring the confidentiality of such returns and return information;

  2. permitting IRS to review the extent to which the Tax Officer is complying with the requirements of this section;

  3. Informing in writing all employees to or by whom disclosure or inspection of returns or return information is authorized of the criminal penalties and civil liability provided by IRC sections 7213, 7213A, and 7431 for any willful disclosure or inspection of such returns and return information that is unauthorized by the Code; and

  4. Reporting a possible unauthorized inspection or disclosure of Federal tax information upon discovery to the appropriate Agent-in-Charge, Treasury Inspector General for Tax Administration, as specified in Publication 1075.

7.2 Processing of returns and return information received by the Tax Officer from IRS in the form of microfilm, photo-impressions, magnetic media or other format (including reformatting or reproduction, or conversion to magnetic media, punch cards, or hard copy printout) and transmission and storage of such returns or return information by or on behalf of the Tax Officer may be performed by Tax Office owned and/or operated computer facilities. In those cases where such facilities used by the Tax Office are shared with other State agencies, the Tax Officer will ensure the confidentiality of the returns and return information provided to such shared facility or person. As part of this responsibility the terms of any contract or Agreement between the Tax Office and a shared computer facility to whom returns or return information are or may be provided for a purpose described in this subsection, will provide, or will be amended to provide, that such person, and officers and employees of the person, will comply with the applicable safeguard conditions contained in regulations, published rules or procedures, or written communications. In no event will returns and return information disclosed pursuant to this Agreement be inspected by or disclosed to persons other than officers and employees of the Tax Officer (except as provided in Section 6.1 regarding disclosures in administrative and judicial proceedings).

7.3 The safeguard requirements of IRC section 6103(p)(4) (except the destruction requirements of section 6103(p)(4)(F)) shall cease to apply with respect to any returns or return information if, and to the extent that, such return or return information is disclosed in the course of any administrative or judicial proceeding and made a part of the public record thereof. The Tax Officer will maintain records that substantiate said disclosures and public record entry for a period of five years or the applicable State records control schedule, whichever is longer.

7.4 Upon the occurrence of any change in employment, duties, or relevant matters affecting a Tax Officer’s right of access to returns and return information or status as Tax Officer, the Tax Officer shall promptly advise in writing the TEGE Liaison that such individual is no longer the Tax Officer.

SECTION 8. Limitations

8.1 Pursuant to the provisions of IRC section 6103(p)(2), IRS may charge a reasonable fee for furnishing returns and return information under the terms of this Agreement. IRS agrees not to charge for the costs of routine reproduction of returns and return information.

8.2 Notwithstanding any other provision of this Agreement, IRS will not disclose or make known in any manner to any person described in section 3 of this Agreement information which was obtained pursuant to a tax convention or bilateral Agreement relating to the exchange of information between the United States and a foreign government.

SECTION 9. Officials to Contact for Obtaining Information

9.1 Additional requests for information related to matters disclosed pursuant to section 3 will be made to the TEGE Official who made the initial disclosure. Additional requests for information related to matters disclosed pursuant to section 4 are to be made to the TEGE Liaison.

SECTION 10. Termination or Modification of Agreement

10.1 The provisions of the Agreement are subject to provisions of the Code, implementing regulations, and published procedures. This Agreement may be terminated or modified at the discretion of IRS or the Tax Officer due to changes in Federal or State statutes and regulations or whenever in the administration of Federal or State laws that action seems appropriate, and at such time there is a change in any of the Tax Officers listed in this Agreement.

10.2 The unauthorized use or disclosure of returns or return information furnished pursuant to this Agreement or the failure to maintain adequate procedures for safeguarding the confidentiality of such returns and return information, also constitutes grounds for termination of this Agreement and the exchange of information there under. The procedures in Treas. Reg. § 301.6103(p)(7)-1 (or any successor regulation) will apply to any suspension or termination of disclosures under this Agreement.

SECTION 11. Effect on Basic Agreement

11.1 Except as provided herein, this Agreement supersedes any provision of the Agreement on Coordination of Tax Administration or the Implementing Agreement for the Agreement on Coordination of Tax Administration as it pertains to the disclosure of information described in IRC section 6104(c). Nothing in this Agreement shall otherwise affect the Agreement on Coordination of Tax Administration or the Implementing Agreement for the Agreement on Coordination of Tax Administration as those Agreements pertain to disclosures under IRC section 6103(d).

APPROVED:

[INSERT NAME OF STATE] DEPARTMENT OF REVENUE

Title (signature)

Signed at: _______________________ this ______ day of _____________, 20___.

INTERNAL REVENUE SERVICE

Director, Exempt Organizations (signature)

Signed at: Washington, DC.______ this ____ day of ______________, 20___.

Director, Communications, Liaison, & Disclosure (signature)

Signed at: Washington, DC.______ this ____ day of ______________, 20___.

APPENDIX A DESIGNEES (INCLUDE NAME, ADDRESS, JOB TITLE, and NAME AND ADDRESS OF OFFICE)


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