Privacy Act of 1974, as Amended; System of Records

DEPARTMENT OF THE TREASURY

Internal Revenue Service

Privacy Act of 1974, as Amended; System of Records

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice of proposed amendment to Privacy Act system of records.

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SUMMARY: The Treasury Department, Internal Revenue Service, gives

notice of a proposed amendment to the system of records entitled

Compliance Programs and Projects Files--Treasury/IRS 42.021, which is

subject to the Privacy Act of 1974, 5 U.S.C. 552a.

DATES: Comments must be received no later than January 19, 1995. This

revised system of records will be effective January 30, 1995, unless

comments are received which result in a contrary determination.

ADDRESSES: Comments should be sent to the Office of Disclosure,

Internal Revenue Service, 1111 Constitution Avenue, NW., Washington,

DC. 20224. Comments will be made available for inspection and copying

in the Freedom of Information Reading Room, (202) 622-5164 upon

request.

FOR FURTHER INFORMATION CONTACT:

Larry Faulkner, Compliance 2000 Executive, (202) 622-6900.

SUPPLEMENTARY INFORMATION: The Internal Revenue Service is redesigning

business and work processes to improve the way we use technology to

maximize the availability of information resources. This will require

long-term, continuous improvement to product quality, productivity, and

customer satisfaction.

One of the strategies to implement this change is Compliance 2000.

This is a mission-based philosophy of tax administration that

emphasizes taxpayer education and assistance coupled with a more

focused use of enforcement resources. Compliance 2000 will address

making the tax system easier for taxpayers to comply voluntarily, yet

recognizes that despite the Service's best efforts some people will not

voluntarily respond. One goal of Compliance 2000 is to identify and

address causes of noncompliance.

This system presently includes records relating to information

gathering to identify noncompliance with the Internal Revenue Code.

Enhancements are being added to the system to enable the Internal

Revenue Service to identify causes of noncompliance. These enhancements

will be accomplished by use of an automated information system to form

an integrated, on-line resource network. Instead of each function or

level within a geographical area addressing isolated or systemic

compliance or business issues on its own (National, Regional, District,

or Service Center), we will approach business from a more unified

perspective to provide one-stop information to compliance personnel

within a local area and greatly reduce the need for separate contracts

with outside sources. Data will be drawn from the Audit Information

Management System (AIMS)--Treasury/IRS 42.008; the Individual Master

File (IMF)--Treasury/IRS 24.030; the Business Master File (BMF)--

Treasury/IRS 24.046; the Returns Compliance Programs File--Treasury/IRS

26.016; the Taxpayer Delinquent Accounts Files (TDA)--Treasury/IRS

26.019; Taxpayer Delinquency Investigation (TDI) Files--Treasury/IRS

26.020; Wage and Information Returns Processing (IRP) System--Treasury/

IRS 22.061; the International Enforcement Program Files--Treasury/IRS

42.017; the Case Management and Time Reporting System--Treasury/IRS

46.002; and from the Centralized Evaluation and Processing of

Information Items--Treasury/IRS 46.009. In addition, data will be drawn

from other third party sources. As an example, these third party

sources may include commercial sources, state and local agencies,

construction contract information, license information from state and

local agencies, Currency and Banking Reports (CBRS), data regarding

assets and financial transactions from state and local agencies, and

information on significant financial transactions from reviews of

periodicals and local newspapers, and other media sources.

The system of records notice is being amended to give a more

definitive description of the records that are to be included in the

system. This notice will also reflect the change to consolidate this

new information within each geographical location and for on-line

access to this information on a need-to-know basis. There will be

additional authorized users within each local area network.

Internal Revenue Service will develop and maintain database and

retrieval systems accessed through automated local area networks. The

purpose of these systems will be to combine information from sources

inside and outside the IRS, such as motor vehicle data, business

license data, currency and banking data (CBRS), commercial database

information, into a centralized processing unit which will serve as a

comprehensive compliance network for each district, service center,

region, etc. These databases would be available for use by all IRS

functions on a need-to-know basis. As an example, a database may be

configured to identify a particular grouping or market segment of

taxpayers and their assets in a more efficient and effective manner

than is presently available. Previously this was not possible because

of the format and configuration of the original databases. For example,

in addition to taxpayer data from the system of records listed herein,

this system may include on-line access to such information as the

Currency and Banking Retrieval System (CBRS), any state's Department of

Motor Vehicle (DMV), Credit Bureau information, real estate ownership

information, and commercial databases.

This system of records is currently exempt from certain provisions

of the Privacy Act. No amendment to the rule exempting this system from

certain provisions of the Privacy Act is being made to the system. The

system notice, as revised, is published in its entirety below.

Alex Rodriguez,

Deputy Assistant Secretary (Administration).

Treasury/IRS 42.021

Compliance Programs and Project Files.

National Office, Districts, Service Centers, and Austin Compliance

Center. (See IRS Appendix A for addresses.)

Any individual who has business and/or financial activities. These

may be grouped by industry, occupation, or financial transactions,

included in commercial databases, or in information provided by state

and local licensing agencies. Taxpayers who may be involved in any area

of noncompliance: Such as self-employed persons who don't file income

tax returns, businesses who don't file employment tax returns,

taxpayers with income reported on information returns who don't file

tax returns, withholding noncompliance, migrant workers, and any

individuals who may be involved in tax evasion schemes.

From the Audit Information Management System (AIMS)--Treasury/IRS

42.008: Tax return status and location, closing information as well as

other internal management information (i.e., type of return,

adjustment, penalty, occupation code, issue code, etc.). From the

Individual Master File (IMF)--Treasury/IRS 24.030 and the Business

Master File (BMF)--Treasury/IRS 24.046: Taxpayer entity records (name,

address, identification number (TIN), tax modular records which contain

all records relative to specific tax returns for each applicable tax

period or year. Tax transactions such as tax amount, statements and/or

additions, etc. From the Wage and Information Returns Processing (IRP)

File--Treasury/IRS 22.061; Records representing certain wages and

information returns: For example, Forms W-2, W-2P, and 1087 and 1099

series, currency transaction reports, state tax refunds, statements of

sales and equity obligations, and records of agricultural subsidy

payments, etc. Information from the Returns Compliance Programs

System--Treasury/IRS 26.016. Information from the Taxpayer Delinquent

Accounts Files (TDA)--Treasury/IRS 26.019: For example, taxpayers who

have outstanding assessments and persons owing child support

obligations. From the Taxpayer Delinquency Investigation (TDI) Files--

Treasury/IRS 26.020; Taxpayers who may be delinquent in filing Federal

tax returns. Information on foreign corporations from International

Enforcement Program Files, Treasury/IRS 42.017. From the Centralized

Evaluation and Processing of Information Items (CEPII), Treasury/IRS

46.009, and from the Case Management and Time Reporting System,

Treasury/IRS 46.002: Information items received by Internal Revenue

Service about taxpayers alleging violation of laws. Other information

would relate to unreported income and asset situations involving

significant financial transactions within the U.S. as well as foreign

transactions. Examples of other information would include data from

commercial databases, any state's Department of Motor Vehicles (DMV),

credit bureaus, state and local real estate records, commercial

publications, newspapers, airplane and pilot information, US Coast

Guard vessel registration information, any state's Department of

Natural Resources information, as well as other state and local

records. In addition, Federal government databases may also be

accessed, such as, federal employment files, federal licensing data,

etc.

5 U.S.C. 301, 26 U.S.C. 7602, 7801, and 7802.

The Internal Revenue Service has adopted a mission-based philosophy

to increase voluntary compliance with the tax laws of the Internal

Revenue Code. In order to accomplish this, we will be focusing more on

research and analysis techniques as opposed to case-by-case enforcement

in order to determine key areas of non-compliance. The IRS will

approach these areas with a more unified perspective instead of

addressing isolated or systemic compliance of business issues on

national, regional or local levels. The IRS will also address major

broad-based issues that affect compliance and will lead to better tax

administration.

Disclosure of returns and return information may be made only as

provided by 26 U.S.C. 6103.

Paper records, microfilm, and magnetic media.

Name and/or taxpayer identification number (social security number

or employer identification number), and any personal identifier or

characteristic (i.e., document locator number) included in this system.

Access controls will not be less than those provided by the

Manager's Security Handbook, IRM 1(16)12, and the Automated Information

System Security Manual, IRM 2(10)00. Passwords and access codes must be

used to access this system.

Records are maintained in accordance with Records Control Schedule,

IRM 1(15)59.

Officials prescribing policies and practices--Chief Operations

Officer and Compliance 2000 Executive, 1111 Constitution Avenue, NW.,

Washington, DC 20224. Officials maintaining the system--District

Directors, Service and Compliance Center Directors, Regional

Commissioners. Refer to Appendix A and addresses.

This system is exempt from the notification provisions of the

Privacy Act.

This system is exempt from the access and contest provisions of the

Privacy Act.

26 U.S.C. 7852(e) prohibits Privacy Act amendment of tax records.

(1) Taxpayer's returns, (2) taxpayer's books and records, (3)

informants and third party information, (4) city, state government, (5)

other Federal agencies, (6) examinations of related taxpayers, (7)

taxpayer's employer, and (8) investigatory material compiled for law

enforcement purposes whose sources need not be reported.

This system is exempt from 5 U.S.C. 552a(c)(3), (d)(1), (d)(2),

(d)(3), (d)(4), (e)(1), (e)(4)(G), (H), and (I), (f) of the Privacy Act

pursuant to 5 U.S.C. 552a(k)(2), as published at 31 CFR 1.36.

[FR Doc. 94-31213 Filed 12-19-94; 8:45 am]

BILLING CODE 4830-01-M