Privacy Act; Implementation

DEPARTMENT OF THE TREASURY

Office of the Secretary

31 CFR Part 1

Privacy Act; Implementation

AGENCY: Internal Revenue Service, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: In accordance with the requirements of the Privacy Act of

1974, 5 U.S.C. 552a, as amended, the Department of the Treasury,

Internal Revenue Service (IRS) gives notice of a proposed amendment to

exempt a new system of records, the IRS Audit Trail Lead Analysis

System--Treasury/IRS 34.020, from certain provisions of the Privacy

Act. The exemptions are intended to comply with the legal prohibitions

against the disclosure of certain kinds of information and to protect

certain information, about individuals, maintained in this system of

records.

DATES: Comments must be received no later than January 22, 1999.

ADDRESSES: Please submit comments to Office of Governmental Liaison and

Disclosure, Internal Revenue Service, 1111 Constitution Ave., NW,

Washington, DC 20220. Persons wishing to review the comments should

call 202-622-6240 to make an appointment with the Office of

Governmental Liaison and Disclosure.

FOR FURTHER INFORMATION CONTACT: Michael Sincavage, Director, 6103/

Privacy Operations, Governmental Liaison and Disclosure, Internal

Revenue Service, at 202-622-6240.

SUPPLEMENTARY INFORMATION: Under 5 U.S.C. 552a(k)(2), the head of an

agency may promulgate rules to exempt a system of records from certain

provisions of 5 U.S.C. 552a, if the system is investigatory material

compiled for law enforcement purposes. The IRS compiles records in this

system for law enforcement purposes. Treasury/IRS 34.020--IRS Audit

Trail Lead Analysis System (ATLAS) contains records that enable the IRS

to investigate and monitor the activities of individuals who access its

information systems which process taxpayer information

f 5 U.S.C. 552a, if the system is investigatory material

compiled for law enforcement purposes. The IRS compiles records in this

system for law enforcement purposes. Treasury/IRS 34.020--IRS Audit

Trail Lead Analysis System (ATLAS) contains records that enable the IRS

to investigate and monitor the activities of individuals who access its

information systems which process taxpayer information. The IRS will

use the information to ensure the protection and confidentiality of tax

returns and return information for the detection and deterrence of

unauthorized access and abuse of electronic records. The ATLAS

electronically identifies possible unauthorized accesses to taxpayer

information through matching of records using search criteria

indicative of probable unauthorized accesses and/or fraudulent use of

IRS information systems. ATLAS then generates leads for the Office of

Chief Inspector/Treasury Office of Inspector General for Tax

Administration for evaluation and analysis. After the Office of Chief

Inspector/Treasury Office of Inspector General for Tax Administration

completes evaluation and analysis of the leads, the information

received from ATLAS will be disposed of as appropriate in one of the

following ways: (1) Information obtained from this application will

become part of Conduct Investigation Files, Inspection (Treasury/IRS

60.003); Miscellaneous Information Files, Inspection (Treasury/IRS

60.007); and Special Inquiry Investigation Files (Treasury/IRS 60.009);

and will be retained in accordance with procedures established in

Records Disposition Handbooks, IRM 1(15)59.1 through IRM 1(15)59.32,

and IRM Exhibit (10)100-2; (2) information relevant to an investigation

that results in judicial or administrative action is retained for 10

years after the date of the action; or (3) information obtained from

this computer match that does not become part of the files in (1) above

will not be retained in any form searchable by individual identifier

books, IRM 1(15)59.1 through IRM 1(15)59.32,

and IRM Exhibit (10)100-2; (2) information relevant to an investigation

that results in judicial or administrative action is retained for 10

years after the date of the action; or (3) information obtained from

this computer match that does not become part of the files in (1) above

will not be retained in any form searchable by individual identifier.

Summary or statistical data may be retained as part of audit or

integrity project workpapers.

The IRS is hereby giving notice of a proposed rule to exempt

Treasury/IRS 34.020 (ATLAS) from certain provisions of the Privacy Act

of 1974 pursuant to 5 U.S.C. 552a(k)(2). The proposed exemption is from

provisions 552a (c)(3), (d)(1), (d)(2), (d)(3), (d)(4), (e)(1), (e)(4)

(G), (H), (I) and (f) because the system contains investigatory

material compiled for law enforcement purposes. The data will be

utilized to enforce 26 U.S.C. 7213, 7213A, 7214, and 18 U.S.C.

1030(a)(2)(B). The following are the reasons why this system of records

maintained by the IRS is exempt pursuant to 5 U.S.C. 552a(k)(2) of the

Privacy Act of 1974.

(1) 5 U.S.C. 552a(c)(3). This provision of the Privacy Act provides

for the release of the disclosure accounting required by 5 U.S.C.

552a(c) (1) and (2) to the individual named in the record at his/her

request. The reasons for exempting this system of records from the

foregoing provisions are:

cords

maintained by the IRS is exempt pursuant to 5 U.S.C. 552a(k)(2) of the

Privacy Act of 1974.

(1) 5 U.S.C. 552a(c)(3). This provision of the Privacy Act provides

for the release of the disclosure accounting required by 5 U.S.C.

552a(c) (1) and (2) to the individual named in the record at his/her

request. The reasons for exempting this system of records from the

foregoing provisions are:

(i) The release of disclosure accounting would put the subject of

an investigation on notice that an investigation exists and that such

person is the subject of that investigation.

(ii) Such release would provide the subject of an investigation

with an accurate accounting of the date, nature, and purpose of each

disclosure and the name and address of the person or agency to whom the

disclosure was made. The release of such information to the subject of

an investigation would provide the subject with significant information

concerning the nature of the investigation and could result in the

altering or destruction of documentary evidence, the improper

influencing of witnesses, and other activities that could impede or

compromise the investigation.

(iii) Release to the individual of the disclosure accounting would

alert the individual as to which agencies were investigating the

subject and the scope of the investigation and could aid the individual

in impeding or compromising investigations by those agencies.

ntity of confidential sources and reveal confidential information

supplied by such sources; and, disclose investigative techniques and

procedures.

(3) 5 U.S.C. 552a(e)(4)(I). This provision of the Privacy Act

requires the publication of the categories of sources of records in

each system of records. In cases where an exemption from this provision

has been claimed, the reasons are as follows:

(i) Revealing categories of sources of information could disclose

investigative techniques and procedures;

(ii) Revealing categories of sources of information could cause

sources who supply information to investigators to refrain from giving

such information because of fear of reprisal, or fear of breach of

promises of anonymity and confidentiality.

(4) 5 U.S.C. 552a(e)(1). This provision of the Privacy Act requires

each agency to maintain in its records only such information about an

individual as is relevant and necessary to accomplish a purpose of the

agency required to be accomplished by statute or executive order. The

reasons for exempting this system of records from the foregoing

provision are as follows:

(i) The IRS will limit its inquiries to information that is

necessary for the enforcement and administration of computer security

laws and tax laws. However, an exemption from the foregoing provision

is needed because, particularly in the early stages of an

investigation, it is not possible to determine the relevance or

necessity of specific information.

(ii) Relevance and necessity are questions of judgment and timing.

What appears relevant and necessary when collected may subsequently be

determined to be irrelevant or

unnecessary. It is only after the information is evaluated that the

relevance and necessity of such information can be established with

certainty.

not possible to determine the relevance or

necessity of specific information.

(ii) Relevance and necessity are questions of judgment and timing.

What appears relevant and necessary when collected may subsequently be

determined to be irrelevant or

unnecessary. It is only after the information is evaluated that the

relevance and necessity of such information can be established with

certainty.

(iii) When information is received by the IRS relating to

violations of law within the jurisdiction of other agencies, the

Service processes this information through the Service systems in order

to forward the material to the appropriate agencies.

As required by Executive Order 12866, it has been determined that

this proposed rule is not a significant regulatory action, and

therefore, does not require a regulatory impact analysis.

Pursuant to the requirements of the Regulatory Flexibility Act, 5

U.S.C. 601-612, it is hereby certified that these regulations will not

significantly affect a substantial number of small entities. The

proposed rule imposes no duties or obligations on small entities.

In accordance with the provisions of the Paperwork Reduction Act of

1995, the Department of the Treasury has determined that this proposed

rule would not impose new recordkeeping, application, reporting, or

other types of information collection requirements.

List of Subjects in 31 CFR Part 1

Privacy.

Part 1 of Title 31 of the Code of Federal Regulations is amended as

follows:

PART 1--[AMENDED]

1. The authority citation for part 1 continues to read as follows:

Authority: 5 U.S.C. 301, 31 U.S.C. 321, subpart A also issued

under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C.

552a.

Sec. 1.36 [Amended]

collection requirements.

List of Subjects in 31 CFR Part 1

Privacy.

Part 1 of Title 31 of the Code of Federal Regulations is amended as

follows:

PART 1--[AMENDED]

1. The authority citation for part 1 continues to read as follows:

Authority: 5 U.S.C. 301, 31 U.S.C. 321, subpart A also issued

under 5 U.S.C. 552, as amended. Subpart C also issued under 5 U.S.C.

552a.

Sec. 1.36 [Amended]

2. Section 1.36, under the heading ``The Internal Revenue

Service,'' is amended by removing in paragraph (a)(1) the entry

``Integrated Data Retrieval System (IDRS) Security Files--34.018'' and

in paragraph (b)(1) by adding the following entry in numerical order to

read as follows:

* * * * *

(b) * * *

(1) * * *

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Name of system No.

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* * * * *

Audit Trail Lead Analysis System............................. 34.020

* * * * *

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Dated: November 10, 1998.

Shelia Y. McCann,

Deputy Assistant Secretary (Administration).

[FR Doc. 98-33905 Filed 12-22-98; 8:45 am]

BILLING CODE 4830-01-P