11.3.2. Disclosure to Persons with a Material Interest

(1) IRC 6103(e), Disclosure to Persons Having Material Interest, provides a listing of persons who may generally request and receive returns and return information. IRC 6103(e)(1)-(6) and IRC 6103(e)(10) concern disclosure of "returns." IRC 6103(e)(7) through (e)(9) as well as (e)(11) refer to disclosure of "return information."

(2) Delegation Order 11-2 (Rev. 4) (found in IRM 1.2.2.12.2, Authority to Permit Disclosure of Tax Information and to Permit Testimony or the Production of Documents and IRM Exhibit 1.2.2-2, Delegation Order 11-2 (Rev. 4), Reference Chart) indicates IRS employees who may disclose, or authorize the disclosure of, returns and return information under IRC 6103(e). This Delegation also outlines the extent to which this authority may be redelegated.

(1) The following items govern the authority pertaining to disclosures to persons with a material interest:

• 26 USC 6103(e)

• 26 CFR 301.6103(e)

• Delegation Order 11-2 (Rev. 4), found in IRM 1.2.2.12.2, Authority to Permit Disclosure of Tax Information and to Permit Testimony or the Production of Documents

(1) This IRM is used by all IRS employees authorized under Delegation Order (Rev. 4)11-2, found in IRM 1.2.2.12.2, Authority to Permit Disclosure of Tax Information and to Permit Testimony or the Production of Documents, who make disclosures of tax information to a person with material interest as part of their official duties.

(1) Business Units are responsible for establishing and documenting the program controls developed to oversee their program as well as ensuring employee compliance with all applicable elements of this IRM.

(1) The following is a list of the terms and acronyms that are used in this IRM Section:Terms and Definitions

(1) The following table lists other sources of guidance on disclosure to persons with a material interest:

(1) IRC 6103(e) has no established requirements for a written request. Generally written requests for returns and return information must include:

1. The name, mailing address and identifying number of the taxpayer, or any combination thereof,

2. A description of the information requested, including type of tax and taxable period, and

3. Sufficient evidence to establish that the requester is entitled to receive the requested information. (See IRM 11.3.2.4, Persons Who May Have Access to Returns and Return Information Pursuant to IRC 6103(e).)

(2) IRS personnel processing requests for returns and return information must be reasonably satisfied that the requester is who he or she claims to be.

(3) Identification is not normally required for written requests. If there are doubts about a person's identity, IRS employees must request additional identity information.

(1) When responding to verbal or electronic inquiries from taxpayers, no return information may be disclosed until IRS personnel have asked sufficient questions and received adequate information to make certain that the person making the inquiry is the taxpayer, the taxpayer's authorized representative, or some other person authorized under IRC 6103(e). See IRM 11.3.2.4, Persons Who May Have Access to Returns and Return Information Pursuant to IRC 6103(e), for more specific guidance as to who can have access to various types of returns and return information.

(2) The following information may help to verify the requester’s identity:

1. Taxpayer's name as it appears on the tax return

2. Taxpayer's address as it appears on the tax return or as shown on IRS records

3. Taxpayer's TIN (social security number, individual taxpayer identification number, or employer identification number)

4. In the case of refund inquiry, the type of tax (e.g., individual, corporate, estate, excise), the approximate amount of expected refund (unless computed by the IRS) and the place of filing

5. For a matter involving an individual income tax return, the date of birth and/or filing status

6. Other unique identifier issued by the IRS

7. An in-person requester may present a driver’s license or other acceptable proof of identity (e.g., government issued photo ID or 2 non-photo documents/cards), and/or

8. A telephone requester may also be given the option of calling back with additional information, or making a written request if there are doubts about the caller’s identity

(3) Information must not be provided to a requester if the requester is clearly not the taxpayer or other authorized IRC 6103 recipient.

(4) Responses to verbal inquiries must be limited to the disclosure of return information.

(5) Copies of tax returns cannot be disclosed upon verbal request. Requests for copies of returns must be made in writing.

(1) Returns and return information of an individual filing any of the returns in the Form 1040 series may be disclosed to:

1. That individual

2. The spouse of that individual if the individual and spouse have signified their consent to consider a gift reported on the return as made one-half by the individual and one-half by the spouse pursuant to the provisions of IRC 2513, or

3. The child of that individual (or the child's legal representative) to the extent necessary to comply with the provisions of IRC 1(g) involving tax on unearned income of minor children. (See IRM 11.3.2.4.10, Minors.)

Note: Community property rules alone do not allow a spouse to access the single return or return information of the other spouse pursuant to IRC 6103(e). However, this does not preclude disclosure, where appropriate, under other provisions of IRC 6103 such as in administrative and judicial tax proceedings, (IRC 6103(h)(4)), or for investigative purposes (IRC 6103(k)(6)). See IRM 11.3.22, Disclosure to certain Federal Officers and Employees for Tax Administration Purposes under IRC 6103(h) and IRM 11.3.21, Investigative Disclosure.

(2) Returns and return information of individuals filing income tax returns jointly may be disclosed to either of the individuals with respect to whom the return is filed.

1. Information documents posted to an individual's Information Return Master File account are individual, not joint, information returns. The fact that information on a joint return is derived from such individual returns does not convert the individual character of the data. If such information returns are filed with the joint return and as long as the disclosure is made from the filed joint return, then joint return disclosure rules apply. This is not meant to preclude disclosures, where appropriate, under other provisions of IRC 6103. See IRC 6103(h)(4), IRC 6103(k)(6), and IRM 11.3.22, Disclosure to certain Federal Officers and Employees for Tax Administration Purposes under IRC 6103(h) and IRM 11.3.21, Investigative Disclosures.

Reminder: Even if a jointly-filed return liability is converted to a separate spousal assessment (e.g., under Innocent Spouse or Offer-In-Compromise provisions), IRC 6103(e)(1)(B) still applies to return information developed relative to the new separate assessment. However, in these situations the non-assessed spouse would ordinarily be entitled to only IRC 6103(e)(8) type information due to the application of IRC 6103(e)(7).

Reminder: The Form 4506, Request for Copy of Tax Return, procedures for requesting Form W-2, Wage and Tax Statement, are for copies of the individual Form W-2 and do not involve information taken from the income tax return.

(1) Returns and return information of a partnership may be disclosed to any person who was a member of the partnership during any part of the period covered by the return. Both general and limited partners are entitled to request and receive partnership returns and return information. IRC 6103(e)(10) limits the disclosure of certain information attached to partnership returns. IRC 6103(e)(10) provides that information to be disclosed cannot include any supporting schedule, attachment, or list that contains third party taxpayer identifying information other than that of the individual making the request for access. A requesting partner cannot receive any Form 1065 Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc. , or other attachments that include identifying information of other partners or other individuals. The partner can receive only the Form K-1 that pertain to his or her interest in the partnership. See Exhibit 11.3.2-2, Release of Documents/Schedules related to Forms 1065 pursuant to IRC 6103(e)(10), which contains detailed guidance about information that can be released to partners seeking access to partnership returns, including schedules that must be restricted or sanitized prior to release.

(2) Before disclosing tax information concerning a partnership, verify that the person who has asked for the information was a partner during the requested tax year or has been authorized to receive federal tax information. For example, if the person requests partnership tax information for the year 2015, that person must establish that he or she was a partner at some time during 2015. To determine whether a requester was a member of the partnership for the year requested, verify that a schedule K-1 was filed for the requester. Partners may also file a power of attorney authorizing other individuals to receive partnership information or represent the partnership. The individual holding the power of attorney cannot have any greater access to the return or return information of the partnership than the individual granting the power of attorney. All rules in IRC 6103(e)(10) relating to the restrictions of the disclosure of third-party tax information apply to the power of attorney as well. The disclosure of information concerning employment tax matters relating to partnerships follows the same rules. If a question concerns an employment tax matter and no partnership return has yet been filed, the IRS must still verify that the individual was a partner for the year in question by analyzing whatever information the individual may be able to provide. It is up to the requester to provide sufficient identifying information for the IRS to verify that he or she is a partner or is otherwise authorized to receive tax information about the partnership. As always, the decision concerning whether to disclose the requested information will depend on a reasonable analysis of the best information provided by the requester and from IDRS or other available information.

(3) The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) created procedures which require that an examination be handled in one partnership-level proceeding and not at the partner level. The TEFRA process applies to tax years prior to 2018. TEFRA created the Tax Matters Partner (TMP) who represents the partnership and its partners during a TEFRA examination. The TMP is designated based on IRC 6231(a)(7). A TMP entitled to request and receive partnership returns and return information under IRC 6103 for reasons other than IRC 6103(e) may receive such information without the limits defined in IRC 6103(e)(10) with respect to the partnership return.

(4) Section 1101 of the Bipartisan Budget Act of 2015 (BBA) repealed the TEFRA partnership procedures. For tax years after December 31, 2017, the partnership is required to designate a "partnership representative", unless the eligible partnership has elected out of the centralized partnership audit regime. The partnership representative (as defined in IRC 6223(a)) has the sole authority to act on behalf of the partnership. If the partnership representative is not designated, the Secretary may select any person as the partnership representative. The partnership representative does not have to be a partner; however, his actions will bind the partnership and all partners of such partnership in dealings with the IRS. A partnership representative entitled to request and receive partnership returns and return information under IRC 6103 for reasons other than IRC 6103(e) may receive such information without the limits defined in IRC 6103(e)(10) with respect to the partnership return.

(1) A corporation’s tax return may be disclosed to any corporate officer authorized by the corporation to legally bind the corporation. The authority to bind means the ability to execute agreements that are binding and legally enforceable against the corporation under state law:

1. "A corporate officer authorized to legally bind the corporation" includes, but is not limited to, the president or other chief executive officer of the corporation

2. Generally, a written statement by the officer, on corporate letterhead stationery, to the effect that he/she has authority to legally bind the corporation is sufficient to permit disclosure. If there is a question about the requester's authority to receive the returns or return information, mail the information to the corporate address of record

3. For telephone requests, ask sufficient questions to establish the identity and position of the caller

(2) Any person designated by resolution of the corporate board of directors or other similar governing body.

(3) Any officer or employee of the corporation, upon submitting a written request which is signed by a principal officer and attested to by the secretary or any other officer.

(4) To the extent that (1)-(3) above do not apply, any officer or employee who signed the return on behalf of the corporation under forms or regulations prescribed by the Secretary, or signed a corporate income tax return under IRC 6062, and who is still employed by the corporation in the same capacity with the same authority. See IRC 6061 and 26 CFR 301.6061-1. Processing information relating solely to the filing of the return signed by that person may be disclosed as long as that person continues to act on behalf of the corporation in the same capacity (with the same authority) as when he/she signed the corporate return. IRC 6103(k)(6) disclosures of return information may also be made when appropriate, if the IRS personnel need to obtain information from the corporation. See IRM 11.3.21, Investigative Disclosure, for additional information.

(5) Any bona fide shareholder of record owning one percent or more of the outstanding stock of the corporation, upon submitting documentation which reasonably demonstrates such ownership. Such shareholders may have access to returns and return information for all years. However, they have no access rights when they are no longer shareholders. See IRM 11.3.2.5.1, One Percent Shareholders, for additional information and guidelines about requests from one percent shareholders.

(6) If a corporation was an electing small business corporation under Subchapter S of Chapter 1, any person who was a shareholder during any part of the period covered by such return during which an S corporation election was in effect. All types of shareholders, regardless of the percentage of shares held, may receive Subchapter S returns and return information. A return or return information cannot be disclosed to a person who was not a shareholder during some part of the year for which the return in question was filed. Nor may a shareholder receive returns or return information for any period during which the election was not in effect.

(7) If the corporation has been dissolved, any person authorized by applicable state law to act for the corporation, or any person whom the IRS finds to have a material interest that will be affected by information contained in the return or return information. Material interest is an important interest and is generally, but not always, financial in nature.

(1) To the extent that a subsidiary filed a separate return, the disclosure of the subsidiary's return and return information is governed by the same rules as those set out in IRM 11.3.2.4.3, Corporations.

(2) If a corporation has filed a consolidated return which includes the return of the subsidiary, the entire return and return information is the return or return information of the subsidiary. Disclosures are governed by the rules set out in IRM 11.3.2.4.3, Corporations.

(3) Whether or not consolidated returns have been filed, persons authorized to act for the parent corporation may request and receive returns and return information of the subsidiary. A parent corporation is one having over 50% ownership of the subsidiary.

(1) Returns and return information of a federal, state or local government agency may be disclosed to any person legally authorized to act for such agency. Generally, verification that the requester is a government official, such as a director of taxation or personnel, will be sufficient.

(2) Tribal council members and other officials of federally recognized Indian tribes and Alaskan Native villages are also entitled to receive returns and return information. Revenue Procedure 2008-55 references lists of currently recognized tribal and native village governments. Non-federally recognized tribes or native organizations are treated like any other non-governmental organization.

(1) Returns and return information of a tax-exempt organization that are not publicly available under IRC 6104 may be disclosed to any person legally authorized to act for the organization. A requester’s right of access is based upon the structure of the organization. If the organization is a corporation, the rules for access to a corporate return or return information must be followed. If the entity is a trust or other type of entity, those rules must be followed. See IRM 11.3.9, Exempt Organizations, for additional information.

(1) The administrator, executor, or trustee of an estate may receive returns and return information of the estate.

(2) Any heir at law, next of kin, or beneficiary who establishes a material interest which will be affected by the return or return information may also receive returns and return information. A material interest is an important interest and is generally, but not always, financial in nature.

(3) The requester must furnish satisfactory evidence that he/she is an administrator, executor, trustee, heir at law, or next of kin under applicable state law, or is named as a beneficiary in the decedent's will. Generally, written evidence such as a copy of the will, proof of relationship, or letters testamentary will be furnished to show satisfactory proof of entitlement.

(4) See IRM 11.3.3.4, Distinction between Disclosure to Designees and the Conference and Practice Requirements, regarding representatives for estates.

(1) The trustee or trustees, jointly or separately, may receive returns and return information of a trust.

(2) Any beneficiary of a trust may receive returns and return information of the trust, but only if the beneficiary shows a material interest which will be affected by the tax information. A material interest is an important interest and is generally, but not always, financial in nature.

(3) The grantor of a grantor-type trust has a material interest in the trust as long as the grantor is a trustee or beneficiary. The return information of the trust can be disclosed to the grantor in this situation as long as the IRS does not determine that disclosure would seriously impair federal tax administration. If the trust is not a grantor-type trust, then the grantor cannot have access to the trust returns or return information unless the grantor establishes he/she is also a trustee and/or beneficiary to the trust.

(4) The requester must furnish satisfactory evidence that he/she is a trustee or beneficiary of the trust. A person with a reversionary interest in a trust will be considered a "beneficiary" or "trustee" only if he or she is accorded such status by the law of the state where the trust was established.

(5) Tax information may be disclosed to a person identified on Form 56, Notice Concerning Fiduciary Relationship, if that person is acting in a fiduciary capacity for the trust, and only if he/she can establish a material interest in the tax information being requested. The filing of Form 56 is not by itself sufficient to substantiate a material interest. Be sure the information presented establishes a valid material interest. Discuss any questions with your Disclosure office.

(6) Trustees often use a bank's trust department to manage or control the assets of a trust. Employees assigned to these departments are acting in a fiduciary capacity. Form 56 should be filed identifying the person who is acting in a fiduciary relationship. A "person" in this case can be an individually-named employee or all employees in a bank’s trust department, depending on the wording of Form 56.

(7) If there is doubt that the person seeking tax information is who he or she claims to be, ask for a copy of Form 56 to be sure the person is individually listed or that the Form 56 references the "bank trust department," and the person is actually a trust department employee.

(8) If there are indications that the person seeking tax information is not individually named or a trust department employee, then do not disclose any tax information to that person. Alternatively, you could send the information in a sealed envelope to the trust’s address of record or the address of the person/department listed on Form 56, if the requester first establishes a material interest.

(9) A person seeking tax information can have access to the information of a trust limited to just processing issues if he or she signed the Form 1041, U.S. Income Tax Return for Estates and Trusts, is an employee of the bank’s trust department and is employed in the same capacity he or she held when the return was signed. In order to obtain access to tax information not related to processing issues, the person seeking tax information must show a "material interest" as discussed above.

(1) If an individual is legally incompetent, a return or return information that would be available to him or her (See IRM 11.3.2.4.1, Individuals, through IRM 11.3.2.4.8, Trusts, or IRM 11.3.2.4.10, Minors), can be disclosed to the committee, trustee or guardian of his or her estate.

(2) Situations where an individual may be legally incompetent include those where the individual is a minor, or is senile, disabled, insane, or otherwise incapable of fully administering his or her own affairs.

(3) Generally, we look to appropriate state law for the definition of a guardian, trustee or committee of the estate of an incompetent.

(4) Court appointed-guardians, trustees, and committees, as well as fiduciaries, administrators and executors, may also have access to returns and return information on behalf of incompetents, if they produce copies of the appropriate documents establishing their rights and authority.

(5) To the extent necessary, Disclosure personnel should coordinate with Area Counsel to identify pertinent portions of state statutes, common law and federal law to help determine entitlement to returns and return information.

(6) When handling requests for returns and return information of incompetents, use discretion so as not to impose an undue burden on the requester. If there is a significant question about the requester's entitlement, IRS employees may offer to mail the return information to the taxpayer's name and address of record.

(1) Returns and return information of a minor may be disclosed to the minor or the minor’s legal guardian. See (4) below.

(2) Returns and return information of a minor may be disclosed to the signer of the return. Generally, this is a parent of the child, but the child may sign the return. Revenue Ruling 82-206, 1982-2 C.B. 356, advises that if the child cannot prepare and file his/her own tax return, the parent must do so on behalf of the child, using the following language to sign the return: "By (signature) Parent (or guardian) for minor child." The revenue ruling is derived from IRC 6012 and the regulations. 26 CFR 1.6012-1(a)(4) requires the guardian or other person charged with the care of the minor's person or property to make and file the return on behalf of the child if the child did not make and file the return. Inherent in this subsection is the authority to discuss the return and resulting tax liability, including any necessary collection activities, with a parent who signed the return (for information on how a minor or minor’s guardian can authorize a representative see (5) below). A parent who signed the return can also designate the non-signing parent to receive the return or return information of the child if a consent to disclose is properly submitted pursuant to IRC 6103(c).

(3) Returns and return information of a minor may be disclosed to the minor's parents, if the minor's return reflects earned income. Pursuant to IRC 6201(c), parents are liable for their minor child's unpaid taxes to the extent they are based on compensation for the child's services. If the return reflects earned income of the minor, the return may be disclosed to the parent pursuant to IRC 6103(e)(1)(A)(i), and the return information pertaining thereto may be disclosed to the parent pursuant to IRC 6103(e)(7). In situations where IRC 6201(c) applies, information about the minor's return may be disclosed to the parent even if the parent has not signed the return.

(4) IRC 6103(e)(2) provides for disclosure to the committee, trustee, or guardian of an incompetent's estate. If, under state law, the parent is the legal custodian of the minor's estate, all issues concerning the minor's tax liability (whether it relates to earned or unearned income) may be discussed with the parent. The IRS must look to state law for guidance concerning the effects of guardianship, custody, and non-custody of the minor on the disclosure of the minor's return and return information. To the extent necessary, Disclosure personnel will coordinate with Area Counsel to identify pertinent portions of state statutes, common law and federal law applicable to determining entitlement to returns and return information.

(5) See IRM 11.3.3, Disclosure to Designees and Practitioners, for information on how a minor could authorize a parent to access the minor's tax information, or a parent signing a minor's return on the minor's behalf could authorize a representative such as the non-signing parent to access the minor's tax information.

(1) The administrator, executor, or trustee of an estate may receive the returns and return information of the deceased individual. Often, an estate is already settled at the time a request for returns and return information is made, and thus an administrator, executor or trustee of the estate will no longer exist. In these circumstances, a person seeking disclosure will often need to consult state law to determine how appointment of an administrator, executor or trustee of the estate may be accomplished.

(2) Any heir at law, next of kin, beneficiary under the will, or a donee (recipient) of property may receive the returns and return information of a deceased individual. Such person must have a material interest that will be affected by the requested information. A material interest is an important interest and is generally, but not always, financial in nature.

(3) The requester must furnish satisfactory evidence that he/she is an administrator, executor, trustee, heir at law, next of kin, beneficiary under the decedent's will, or a donee (recipient) of property. Acceptable documentation includes but is not limited to: birth and/or death certificates, letters testamentary, a will, or other court document.

(4) If the requester is an heir at law, next of kin, beneficiary, or donee, he/she must show a material interest which will be affected by the requested information. In some states, however, simply establishing a material interest may not be adequate.

(1) Bankruptcies are governed by Title 11 of the U.S. Code. Information about the types of bankruptcy cases as they relate to the material interest issues discussed below is found in Chapters 7 and 11 of Title 11 (U.S. Code).

(2) IRC 6103(e)(4) & (5) set forth several interrelated rules that provide the basic legal framework for addressing material interest disclosure issues in a bankruptcy context. Disclosures for tax administration purposes are discussed in IRM 11.3.22, Disclosure to certain Federal Officers and Employees for Tax Administration Purposes under IRC 6103(h).

(3) The IRS may always disclose the debtor-taxpayer's returns and return information to the debtor-taxpayer, and to any other person with the debtor-taxpayer's written consent. For detailed instructions involving disclosures to a debtor's attorney, see IRM 11.3.2.4.13, Attorney-in-Fact.

(4) Disclosures cannot be made to the U.S. Trustee in a tax administration matter pursuant to IRC 6103(e). Disclosures may be made to the U.S. Trustee, the trustee, or other creditors in accordance with IRC 6103(h) if the bankruptcy case pertains to tax administration. See IRM 11.3.22, Disclosure to certain Federal Officers and Employees for Tax Administration Purposes under IRC 6103(h). The U.S. Trustee, when acting as "policeman" for the Bankruptcy Court to ensure compliance with the tax laws (particularly, staying current with tax deposits), may receive tax information consistent with IRC 6103(h)(4)(A). The U.S. Trustee's efforts to ensure tax compliance qualify as a tax administration activity under IRC 6103(b)(4)(B). The bankruptcy process incorporating the statutory and judicially imposed requirements relating to tax collection is a federal judicial proceeding pertaining to tax administration within the meaning of IRC 6103(h)(4).

(5) Disclosure rules distinguish between trustees in Chapter 7 and 11 cases where the debtor is an individual, and other trustees in bankruptcy, e.g., corporate Chapter 11 cases. In individual Chapter 7 or 11 cases, IRC 1398 applies and a return for the estate of the debtor is filed by the trustee (thus creating a separate taxable entity) in addition to the return filed by the debtor. See (3) above regarding disclosure to the debtor-taxpayer.

(6) In an individual's Chapter 7 or 11 case, any return of the debtor for the taxable year when the case commenced, or any preceding taxable year shall be available to the trustee. A bankruptcy case commences with the filing of a petition in court. The trustee may also obtain return information relating to the returns available to the trustee, if disclosure of the return information would not seriously impair tax administration.

(7) In an involuntary case, no disclosure of a debtor's return will be made to the trustee until an order for relief has been entered by the court having jurisdiction, unless the court finds that disclosure is appropriate for purposes of determining whether an order for relief should be entered.

(8) Returns and return information of the bankrupt estate filed by the trustee as described in (4) above are available to the trustee. See IRM 11.3.2.4.7, Estates, for a description of trustee rules. The debtor may also obtain the returns and return information of the bankruptcy estate.

(9) Different rules apply for disclosure to a trustee (if one has been appointed) in cases other than individual Chapter 7 and 11 cases. These are cases where IRC 1398 does not apply and no separate taxable entity has been created. In such cases, the debtor's return and return information for current and prior years may be disclosed to the trustee. The trustee must furnish satisfactory evidence that he/she is trustee. The trustee in his/her fiduciary capacity, must also establish a material interest which will be affected by the requested information.

(10) In Chapter 13 bankruptcies, trustees are not entitled to tax information under IRC 6103(e)(4) as they have no responsibility for the debtor's tax returns. For disclosures to be allowed, the bankruptcy would need to be a judicial proceeding pertaining to tax administration (see (4) above), or the debtor must provide a consent for disclosure under IRC 6103(c).

(11) Bank examiners are not trustees. To receive tax information, they must have a valid IRC 6103(c) consent from the taxpayer or the disclosure must satisfy IRC 6103(h)(4) provisions when the bankruptcy proceeding becomes a tax administration proceeding.

(12) Additional information pertaining to bankruptcy disclosures, including detailed examples, can be found in Pub 4639, Disclosure & Privacy Law Reference Guide.

(1) IRC 6103(e)(6) permits any person described in IRC 6103(e)(1) through (5) and (e)(8) and (9) to authorize, in writing, an attorney-in-fact to request and receive such information on the person’s behalf.

(2) An attorney-in-fact is an individual designated by another person pursuant to a written instrument to act on behalf of that person in the performance of any act or acts described in the written instrument. Form 2848, Power of Attorney and Declaration of Representative, is often used as the written instrument authorizing a designated individual to act on behalf of another person. However, other written instruments can be used to provide authority to the designated individual (e.g. durable power of attorney, court order).

(3) A taxpayer may revoke a power of attorney by granting a new power of attorney to another recognized representative with respect to the same matter or by filing a statement of revocation with those offices of the Internal Revenue Service where the taxpayer has filed the power of attorney. A statement of revocation must:

• Indicate that the authority of the first power of attorney is revoked

• Be signed by the taxpayer

• List the name and address of each recognized representative whose authority is revoked (or a copy of the power of attorney to be revoked must be attached)

(4) The written authorization from the person having a material interest under IRC 6103(e)(1) through (5), (8) or (9) should comply with the requirements for disclosure to designees set forth elsewhere in this section.

(5) In a bankruptcy proceeding involving the tax liabilities of a debtor-taxpayer, the IRS may disclose to the debtor-taxpayer’s attorney of record the debtor-taxpayer’s return information relevant to the resolution of those tax matters affected by the proceeding. The requirement under IRC 6103(e)(6) that the Attorney-in-fact be "duly authorized in writing ... to inspect the return or receive the information" is considered to be met by the attorney’s entry of an appearance in the bankruptcy proceeding by signing the bankruptcy petition. This action qualifies the debtor-taxpayer’s attorney of record to act on the debtor’s behalf with respect to taxes subsumed by the bankruptcy proceeding, thus entitling the attorney, under IRC 6103(e)(6) to receive the debtor-taxpayer’s return information that is relevant to the resolution of tax issues in the bankruptcy proceeding prior to the filing of a proof of claim or other formal action by the IRS in the proceeding.

(6) An attorney-in-fact will be able to inspect or receive all returns and return information of the taxpayer contained in the POA on file, as well as certain other returns and return information of the taxpayer directly related to the matters listed in the POA, e.g., the returns in which losses were carried forward to a year listed in the POA. However, the attorney-in-fact must have express authorization to inspect or receive returns and return information of another taxpayer or entity, even if the taxpayer him or herself would be entitled to inspect or receive the returns or return information under IRC 6103(e).

(7) An attorney ad litem normally does not have the power to act for a taxpayer (e.g., the person he/she is representing) in such a way that he/she can access or authorize access to tax information of the person he/she represents. However, state law is controlling in such circumstances.

(8) An individual who is not a Circular 230 practitioner may represent a member of his or her immediate family. The family member representing the taxpayer should be a spouse, parent, child, brother, sister, grandparent, grandchild, stepparent, stepchild, stepbrother, or stepsister. Certain other individuals may also engage in limited practice based on a relationship to a taxpayer other than as an immediate family member. For more information, see Circular 230, 10.7(c) (“Limited practice”) and (d) (“Special Appearances”) and Publication 947, Practice Before the IRS and Power of Attorney.

(9) Officials authorized in accordance with Delegation Order 11-2 (Rev. 4) (see IRM 1.2.2.12.2, Authority to Permit Disclosure of Tax Information and to Permit Testimony or the Production of Records), must withhold return information requested by an attorney in fact to the extent disclosure would seriously impair federal tax administration.

(1) IRC 6103(e)(9) provides for certain disclosures to persons who have been assessed the trust fund recovery penalty (TFRP) pursuant to IRC 6672. IRC 6103(e)(9) allows a responsible person to obtain certain limited information about other persons assessed the penalty for the same underlying tax.

(2) Disclosures pursuant to IRC 6103(e)(9) may be made only upon receipt of a written request. The request must be signed by a person actually assessed the TFRP or his/her duly authorized attorney-in-fact.

(3) Any employee delegated the authority to make disclosures pursuant to IRC 6103(e) by Delegation Order 11-2 (Rev. 4) (found in IRM 1.2.2.12.2, Authority to Permit Disclosure of Tax Information and to Permit Testimony or the Production of Records), may make disclosures pursuant to IRC 6103(e)(9).

(4) Disclosures made pursuant to IRC 6103(e)(9) shall also be made in written form upon receipt of a proper written request from a person who has been assessed the penalty or their duly authorized attorney-in-fact. The disclosure will be limited to the specific tax period associated with the requester's TFRP and must include:

1. Names of the other individuals assessed the same penalty

2. Amount collected from each individual assessed the penalty

3. Current collection status (e.g., notice, TDA, installment agreement, suspended), and

4. If suspended, the reason (e.g., unable to locate, hardship)

Note: When releasing transcripts in response to IRC 6103(e)(7) or IRC 6103(e)(9) requests involving TFRPs, take care to restrict the information disclosed on other assessed persons to that in (1) through (5), above. TXMOD prints currently include the Taxpayer Identification Number (TIN) for other persons assessed. Disclosure of the TINs of other assessed persons is unauthorized so transcripts must be redacted.

(5) Information which will not be disclosed includes:

1. The location or telephone number of other responsible persons

2. Any employment, income, or asset information about other responsible persons

3. Information about any person not assessed the penalty, or

4. The income level at which a currently not collectible account will be reactivated

(6) Instructions for Collection personnel are found in IRM 5.1.22.5, Disclosure of Trust Fund Recovery Penalty Payment Information. They provide that if the case is not assigned to a Revenue Officer, Collection Advisory will obtain the information and send it to the taxpayer. Appeals also has procedures in IRM 8.25.1, Trust Fund Recovery Penalty (TFRP) Overview and Authority. If a requester insists on receiving information about another responsible person which is prohibited as outlined above, he/she should be advised to either file a FOIA request in order to receive the associated appeal rights or contact the appropriate Disclosure office for guidance.

(7) The Taxpayer Bill of Rights 2 provides the IRS with authority to establish procedures controlling the frequency with which any requester can make requests pursuant to IRC 6103(e)(9). Until such procedures are developed by SB/SE at a national level, the IRS personnel must follow locally developed procedures.

(8) See IRM 11.3.40, Disclosures Involving Trust Fund Recovery Penalty Assessments, for additional disclosure guidance when TFRPs are involved.

(1) A receiver is a person appointed by a court to take into his/her custody, control and management of the property or funds of another, pending judicial action concerning such property or funds. While receiverships most commonly arise in bankruptcy or insolvency situations, this is not always the case, and various state and federal laws authorize the appointment of receivers in different circumstances.

(2) If substantially all of the property of a person with respect to whom a return is filed is in the hands of a receiver, current and prior years' returns and return information of that person may be disclosed to the receiver. The receiver, in his/her fiduciary capacity, must have a material interest which will be affected by the requested information. A material interest is an important interest and is generally, but not always, financial in nature.

(3) A receiver must furnish satisfactory evidence that he/she is the appointed receiver who holds substantially all of the property of the person whose assets are in receivership.

(1) Limited Liability Companies or LLCs are not recognized as a type of entity for federal income tax purposes but are created by state statute. Depending on elections made by the LLC or the number of members, IRS will treat an LLC either as an association taxed as a corporation, partnership, or as part of the owner’s individual tax return (a "disregarded entity"). In general, an LLC is given the following classifications:

1. The default classification for an LLC with two or more members is a partnership.

2. A single-member disregarded entity owned by an individual is categorized as a sole proprietorship. A single-member disregarded entity owned by an entity is categorized as a branch or division of that entity.

3. A multi-member LLC can elect to be classified as an association taxed as a corporation or accept the default classification of partnership.

4. A single-member LLC can elect to be classified as a corporation or accept the default classification of "disregarded entity."

(2) Tax information must be disclosed in conformance with the federal tax treatment of the LLC. For example, if the LLC is taxed as a corporation, then the disclosure rules for corporations must be followed. If the LLC is considered a "disregarded entity" then the business operation is reported on the income tax return of the single member which may be Form 1040, U. S. Individual Income Tax Return, Form 1065, U.S. Return of Partnership Income or Form 1120, U.S. Corporation Income Tax Return.

(3) In August 2007, regulations were issued requiring any LLC classified as a disregarded entity to be treated as the taxpayer for certain excise and employment taxes. A single-member LLC that is classified as a disregarded entity for income tax purposes is treated as a separate entity for purposes of employment tax (for wages paid on or after 1/1/2009) and certain excises taxes (for liabilities imposed and actions first required or permitted in periods beginning on or after 1/1/2008). Thus, be aware that the parties who may be entitled to tax information about an LLC may differ, depending on the type of tax and tax period(s) involved. See IRM 5.1.21, Collecting from Limited Liability Companies, or Pub 3402, Taxation of Limited Liability Companies, for additional information.

(4) Revenue Procedure 2002-69 addresses classification of an entity that is solely owned by a husband and wife as community property under state law. If there is a qualified entity owned by a husband and wife and they treat the entity as a:

1. Disregarded entity for federal tax purposes, then the IRS will accept that the entity is disregarded for federal tax purposes;

2. Partnership for federal tax purposes, then the IRS will accept that the entity is a partnership for federal tax purposes.

(1) Income, expenses and net taxable income of a sole proprietorship are reported on Schedule C of Form 1040.

(2) Access to the individual income tax return of a sole proprietor is governed by the same rules found in IRC 6103(e)(1) relating to individuals. See IRM 11.3.2.4.1, Individuals.

(3) Sole proprietorships having employees are required to file employment tax returns such as Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and Form 941, Employer's Quarterly Federal Tax Return.

(4) Access to employment tax returns and tax return information related to a sole proprietorship is restricted to the person obligated to file the return and pay the tax. The spouse or employee of a sole proprietor may not have access to tax returns or tax return information related to Business Master File (BMF) returns of the sole proprietorship because he/she is not obligated to pay the tax on the return.

(5) A sole proprietor may designate another person, such as his/her spouse or an employee of the business, to receive the information using either a written consent or verbal consent, pursuant to IRC 6103(c), Profit or Loss From Business (Sole Proprietorship). Verbal consents can only be used if disclosure relates to a tax matter.

(1) If a taxpayer provides information asserting that they are or may be the victim of an unauthorized disclosure or unauthorized access of their tax returns or return information, IRC 6103(e)(11) allows for the disclosure of specific limited information about the status of an investigation. This section applies to disclosures made on or after December 18, 2015.

(2) Only unauthorized disclosure or access under IRC 7213, IRC 7213A, or IRC 7214 are covered by this material interest provision.

(3) The Treasury Inspector General for Tax Administration (TIGTA) is responsible for responding to any IRC 6103(e)(11) inquiries. If any IRS employee receives a request for the status of an unauthorized disclosure investigation, they should refer the requester to TIGTA.

(4) The information that TIGTA may disclose is:

1. whether an investigation was initiated based on the information that person submitted and whether the investigation remains open or is closed,

2. whether the investigation substantiated the information provided alleging a violation, and

3. whether any action has been taken with respect to any individual, including whether a referral has been made for prosecution of that individual.

(1) Pursuant to IRC 6103(e)(1)(D)(iii), any bona fide shareholder of record owning one percent or more of the outstanding stock of a corporation may make a written request to access the returns and return information of that corporation. The requester must be:

1. A shareholder of record on the books of the corporation whose information is being requested

2. A bona fide shareholder, and

3. A beneficial owner of one percent or more of the corporation's outstanding stock

(2) A request submitted under IRC 6103(e)(1)(D)(iii) should be sent to the IRS Territory having jurisdiction over the corporation whose return(s) and return information are sought.

(3) The request must be in writing. At a minimum, it must set forth the following:

1. Name and address of the requester

2. Name and address of the corporation whose return(s) and return information the requester wants to access

3. Type of tax and the taxable period(s) covered

4. Amount of the corporation’s outstanding capital stock

5. Number of shares owned by the shareholder and the date or dates when the shareholder acquired them

6. Statement indicating whether the shareholder has the beneficial as well as the record title to such shares, and

7. Statement that the shareholder did not acquire the shares for the purpose of obtaining the right to inspect the returns of the corporation

(4) The written request must be accompanied by evidence establishing that the requester is a bona fide shareholder of record of the required amount of stock of the corporation. Corporate stock certificates displaying the corporate seal and a printout from a state regulatory body such as the Secretary of State's Office or the Corporation Commission, detailing the total outstanding shares of stock currently in existence may be used to verify the percentage of ownership.

(5) All facts and circumstances must be obtained and evaluated when determining if a shareholder is a bona fide owner of stock. While the IRC does not currently define "bona fide," regulations preceding present day IRC 6103(e)(1)(D)(iii) indicated that a shareholder is not considered bona fide if the shares were acquired for the purpose of obtaining the right to inspect the return(s) of the corporation.

(6) The requirement that a shareholder be bona fide has a direct correlation to the states' statutory requirements that a shareholder seeking to inspect the books and records of the corporation have a proper purpose to do so. Generally, the "proper purpose" requirement means the purpose for inspection must reasonably relate to the requester's interests as a shareholder but must not be adverse to the interests of the corporation whose information will be accessed. Proper purpose does include the intention to purchase shares in the corporation or a situation where the shareholder is a competitor seeking to take over the corporation. The fact that the shareholder is a competitor, even in a hostile takeover situation, does not defeat the shareholder's statutory right of inspection. The requester must still meet all other requirements shown above when it is determined (or known) that the requester is a competitor of the corporation.

(7) When determining if a shareholder is a beneficial owner of stock, consider whether the shareholder is entitled to receive dividends on the stock, whether he or she has a right to vote as a result of ownership, whether he or she possesses the authority to sell the stock, and/or is liable for tax consequences connected to the stock. These examples are not all inclusive. Specific facts and circumstances must be evaluated for each case.

(8) When processing a request, also consider the provisions of IRC 6103(e)(7) concerning the withholding of return information if release would seriously impair federal tax administration.

(9) When providing returns and return information to a one percent shareholder, the shareholder must be advised in writing of the provision in IRC 6103(a)(3) concerning the nondisclosure of information and the implications and liabilities of IRC 7213(a)(5) and IRC 7431(a)(2). The provisions of IRC 6103(e)(6) regarding attorneys-in-fact do not apply to one percent shareholders. The provisions of IRC 6103 prevent a one percent shareholder from redisclosing the information to anyone. If photocopies of information are provided, Notice 129, Inspection or Disclosure Limitations, may be affixed to the first page of each return to meet this requirement.

(1) Generally, return preparers are not entitled to receive returns or return information without written authorization from the taxpayer conforming to the requirements of IRC 6103(c) and 26 CFR 301.6103(c)-1, or pursuant to a power of attorney in conformance with Conference and Practice requirements.

(2) The fact that a taxpayer has employed a tax return preparer, who is obviously aware of the information provided on the face of the return prepared, is not evidence of the taxpayer's intent that the preparer later has access to the return. In some instances, the return submitted to the IRS may vary from the one approved by the taxpayer. See IRM 11.3.3, Disclosure to Designees and Practitioners, for information pertaining to disclosures to designees.

(3) It is the IRS's responsibility to ensure that any penalties assessed against preparers, as required by IRC 6694 and IRC 6695, are assessed against the appropriate preparer. Where the preparer is under examination or investigation for his/her preparation of a return, an examiner may need to disclose the return to its preparer. When the preparer signed the declaration of verification on the return (pursuant to IRC 6065), the IRS can ascertain the validity and reliability of that declaration by permitting the preparer to inspect the tax returns which bear his/her name as preparer. If not signed, the preparer may inspect the returns that the taxpayer alleges were prepared by the preparer.

(4) When the taxpayer is under examination or investigation and a preparer has not signed the declaration, the IRS can permit an alleged preparer of the return to inspect the document to verify a taxpayer's statement that another person completed his/her return as filed.

(5) If a preparer is under examination or investigation with respect to his/her preparation of the return (notwithstanding lack of status as a "tax return preparer" within the meaning of IRC 7701(a)(36) and 26 CFR 301.7701-15), an examiner may properly disclose the return to its preparer and to question the preparer regarding its preparation when the examiner is administering internal revenue laws.

(6) In both (3) and (4) above, disclose only those portions of the return that are necessary to establish preparation.

(1) Information returns, such as Form W-2, Wage and Tax Statement, and Form 1099 series, are required to be filed by one taxpayer (payor) such as a business entity (Corporation, Sub-S Corporation, Partnership or Sole Proprietorship) who must also provide a copy to the person who earned the income (payee). These information returns may also be required to be submitted by the person who earned the income on their income tax return. In those instances, the information return itself and any data extracted from the information return is considered the return information of both the payor and the payee.

(2) Transmittal documents such as Form 1096, Annual Summary and Transmittal of U.S. Information Returns and Form W-3, Transmittal of Wage and Tax Statements, are the information returns of the submitter only. So only those with a right to tax information of the business entity can obtain either the transmittal itself or any return information extracted from the transmittal document.

(3) Individuals seeking access to their own Form W-2 information found in the Information Return Master File are allowed to receive that information to the extent they can establish their right to the information. See IRM 11.3.2.4.1, Individuals.

(4) Those who are allowed access to returns and return information for a business entity per IRC 6103(e)(1)(C), (Corporations, Sub-S Corporations, or 1% shareholders of C-Corporations), or per IRC 6103(e)(1)(D), (Partnerships), can request and receive Form W-2 information on other employees of the business in limited circumstances.

(5) Due to the dual nature of the information in the Form W-2, before release of any information about other employees of an entity to those seeking access under IRC 6103(e)(1)(C) or (e)(1)(D), we must consider the potential impact on a person’s willingness to voluntarily comply with our tax system if all employees’ wage information (such as the SSN, address and amount of income earned) is routinely shared with those with standing in a business entity.

(6) In order to adequately protect the personal information of employees of a business entity found in Information Returns, the following actions must be taken:

1. Release only the entire Form W-2 or Form 1099 information of the business entity to the person making the request on behalf of the entity, presuming that wages or other income were earned by the person making the request. In effect, you give the individual access to the Form W-2 related to him or her.

2. Do not release Form W-2 or 1099 information of other employees (considered third-party information) unless the information released relates to the resolution of a tax issue and conforms with the requirements found in IRC 6103(h)(4), (see IRM 11.3.22, Disclosure to certain Federal Officers and Employees for Tax Administration Purposes under IRC 6103(h), for additional information). To the extent the IRS is holding or has held the requesting individual with the business entity liable for any tax, penalty or fee and Form W-2 information about other employees of the business entity is related to the adjustment or determination of liability, that information can be provided to the requester because he or she would have a right to know how the IRS determined the liability.

   Example: In an open audit, collection or other tax-related investigation, IRS employees can release third-party information to the extent necessary to resolve tax issues. If the release of third-party Form W-2 or Form 1099 information is necessary to support the resolution of a tax issue, that information can be released. That may or may not include all elements of information present and those items of information (address and SSN) not considered necessary to release, should be withheld.

   Example: The IRS proposed a penalty for failure to file Form W-2 and a person responsible for payment of the liability is seeking information on how it was determined, tax information used in making that determination, to the extent it implicates third-party data or is necessary to disclose to explain the adjustment, can be provided pursuant to IRC 6103(e) to the person seeking the information.

3. Employee information found in Form W-2, although legally available to taxpayers who can access business information because of their standing with a business entity, can, if released improperly lead to the potential of identity theft and may inadvertently negatively impact on voluntary compliance. The IRS can make a release of third-party information as necessary, but even if allowed, consideration for the removal of the SSN, address or other information that is not necessary to resolve the issue or explain an adjustment should be done.