The Internal Revenue Code § 6103(h)(1) provides that returns and return information shall, without written request, be open to inspection by or disclosure to officers and employees of the Department of the Treasury whose official duties require such inspection or disclosure for tax administration purposes. The Internal Revenue Code § 6103(b)(4) provides that the term “tax administration” means the administration, management, conduct, direction, and supervision of the execution and application of the internal revenue laws or related statutes (or equivalent laws and statutes of a state) and tax conventions to which the United States is a party.
Internal Revenue Code § 6713 imposes a civil penalty of $250 on any person who is engaged in the business of preparing, or providing services in connection with the preparation of returns of tax, or any person who for compensation prepares a return for another person, and who “Discloses any information furnished to him for, or in connection with, the preparation of any such return, or Uses any such information for any purpose other than to prepare, or assist in preparing, any such return. Imposition of the penalty under [this section] does not require that the disclosure be knowing or reckless as it does under Internal Revenue Code § 7216.” 26 U.S.C. §7216 is a criminal provision enacted by the U.S. Congress in 1971 that prohibits preparers of tax returns from knowingly or recklessly disclosing or using tax return information. A convicted preparer may be fined not more than $1,000 or imprisoned not more than one year or both, for each violation.
Returns and return information may be used or disclosed to initiate or conduct a money laundering investigation if the investigation is considered for tax administration purposes according to 26 U.S.C. § 6103(b)(4). When investigating potential money laundering or Bank Secrecy Act (BSA) violations, the key test (related statute test) is whether, under the facts and circumstances of the particular case, the money laundering and Bank Secrecy Act provisions are considered related to the administration of the Internal Revenue laws. Data collected by IRS personnel pursuant to their enforcement responsibilities under the BSA in a “pure” Title 31 investigation are not return information under section 6103. In a “pure” Title 31 investigation, i.e., where no Title 26 related statute determination has been made, the information is subject to the disclosure rules found at 31 U.S.C. § 5319 et seq. When Title 31 has been determined to be a statute related to tax administration for Section 6103 purposes, the entirety of the information is covered by Section 6103 because it was received by the Secretary for the purpose of determining some individual’s liability or potential liability under the Code.
IRS: Bank Secrecy Act
IRS: Bank Secrecy Act – Disclosure
In 1997, the Taxpayer Browsing Protection Act
“amend[ed] the Internal Revenue Code of 1986 to prevent the unauthorized inspection of tax returns or tax return information