The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-129260-16) under Code section 6103(n) to implement rules requiring the IRS to notify the U.S. State Department of “seriously delinquent tax debts” of taxpayers seeking passports (or passport renewals).
The rules also allow the State Department to disclose such taxpayer information to those contractors providing passport services for the State Department.
The Fixing America’s Surface Transportation (FAST) Act enacted Code section 7345 to require that the IRS notify the State Department of “certified seriously delinquent tax debts,” and added Code section 6103(k)(11) providing that, upon certification under Code section 7345, the IRS is authorized to disclose the return information of a taxpayer to officers and employees of the State Department.
The FAST Act also generally requires that the State Department deny a passport (or passport renewal) in the case of an individual if notified by the IRS that the individual has been certified as having seriously delinquent tax debts and permits the State Department to revoke a previously issued passport to such person. Code section 6103(k)(11), however, did not authorize the State Department to disclose to its contractors such returns and return information of delinquent taxpayers applying for a passport or applying to renew a passport.
As explained in the preamble to today’s proposed regulations [PDF 237 KB], the State Department engages contractors to assist in carrying out its responsibilities with respect to passports. These contractors are not “officers and employees” of the State Department.
The proposed regulations add the State Department to the list, under the section 6103(n) regulations, of agencies whose officers and employees may disclose returns and return information to any person for tax administrative purposes to the extent necessary in connection with a written service contract, specifically to contractors providing passport-related services.
Comments are due 30 days after the proposed regulations are published in the Federal Register (scheduled for March 13, 2018).
<p>© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.</p> <p>Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.<br> </p>
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.