Proposed Reg Would Lengthen Time For Submitting Return Disclosure Authorizations

Preamble to Prop Reg 03/17/2011, Prop Reg §301.6103(c)-1

IRS has issued a proposed reg that would double the period for submission to IRS (or an agent or contractor of IRS) of a taxpayer's request for disclosure of his returns and return information under Code Sec. 6103(c). Under the proposed reg, the period within which a signed and dated authorization must be received by IRS to be effective is extended from 60 days to 120 days. While the proposed reg is effective when final regs are published, the extended submission period currently applies under a previously issued interim rule.

Background. Under Code Sec. 6103(c), returns and return information may be disclosed to persons designated by the taxpayer in a request for or consent to disclosure. A taxpayer's authorization (signed and dated by the taxpayer) must include the following in a written document that solely relates to the authorization: (1) the taxpayer's identity (name, address, taxpayer identifying number) sufficient to enable IRS to clearly identify the taxpayer; (2) the identity of the person to whom disclosure is to be made; (3) the type of return or return information to be disclosed; and (4) the tax year or years covered by the return or return information. (Reg. §301.6103(c)-1(b)(1))

Under Reg. §301.6103(c)-1(b)(2), disclosure of a return or return information isn't allowed unless the written request for, or consent to, disclosure is received by IRS (or an agent or contractor of IRS) within 60 days following the date on which the written request was signed and dated by the taxpayer.

IRS has determined that the current 60-day period has created a problem in some cases. Some institutions that assist taxpayers in their financial dealings have had difficulty in obtaining and submitting the written authorizations to IRS within the 60 days allowed by the existing regs.

In December of 2009, IRS announced an interim rule in Notice 2010-8, 2010-3 IRB 29, that extended from 60 days to 120 days the period within which Code Sec. 6103(c) authorizations must be received in order to be effective. The interim rule applies to authorizations signed and dated on or after Oct. 19, 2009, and remains in effect until there is a final reg. (IR 2009-122)

Proposed reg. IRS has issued a proposed reg that would amend the regs under Code Sec. 6103(c) to extend from 60 days to 120 days the effective period of taxpayer-provided authorizations. Thus, disclosures otherwise allowed under Code Sec. 6103(c) would be made if IRS receives the written authorization within 120 days following the date on which the request or consent was signed and dated by the taxpayer.

References: For confidentiality of return information, see FTC 2d/FIN ¶S-6200; United States Tax Reporter ¶61,034; TG ¶1978.