Comments on the Confidentiality Provisions of the Internal Revenue Code.

March 15, 2000

On March 15, 2000, Tax Executives Institute filed the following comments with the House Ways and Means Committee Chairman Bill Archer on a study by the staff of the Joint Committee on Taxation on the confidentiality provisions of the Internal Revenue Code. The Institute's comments were prepared under the aegis of its IRS Administrative Affairs Committee, whose chair is Robert J. McDonough of Getronics NV.

On January 28, 2000, the staff of the Joint Committee on Taxation released a study on the confidentiality provisions of the Internal Revenue Code. See Staff of the Joint Committee on Taxation, Study of Present-Law Taxpayer Confidentiality and Disclosure Provisions as Required by Section 3802 of the Internal Revenue Service Restructuring and Reform Act of 1998 (JCS-1- 00). On behalf of Tax Executives institute, I am pleased to submit the following comments on those provisions of the study affecting corporate taxpayers.

Background

Tax Executives Institute was established in 1944 to serve the professional needs of in-house tax practitioners. Today, the Institute has 52 chapters in the United States, Canada, and Europe. The Institute's more than 5,000 members are accountants, attorneys, and other business professionals who work for the largest 2,800 companies in the United States and Canada; they are responsible for conducting the tax affairs of their companies and ensuring their compliance with the tax laws. TEI members deal with the tax code in all its complexity, as well as with the Internal Revenue Service, on almost a daily a basis. Most of the companies represented by our members are part of the IRS's Coordinated Examination Program, pursuant to which they are audited on an ongoing basis.

TEI is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. Our background and experience enable us to bring a unique and, we believe, balanced perspective to the issues raised by the taxpayer confidentiality provisions of the Internal Revenue Code.(1)

Current Law: Sections 6103 and 6110

In 1976, Congress provided that tax returns and tax return information are confidential and not subject to disclosure, except in 13 limited circumstances. In these areas of allowable disclosure, Congress attempted "to balance the particular office or agency's need for the information involved with the citizen's right to privacy, as well as the impact of the disclosure upon the continuation of compliance with our country's voluntary tax assessment system." Staff of the Joint Committee on Taxation, General Explanation of the Tax Reform Act of 1976, 94th Cong., 2d Sess. 315 (1976). Embodied in section 6103 of the Code, these rules define the protected area ("returns" and "return information") in detail, establish a basic rule of confidentiality, and prescribe different rules for...