Rev. Rul. 2022-7

ISSUE

Whether Federal, State, and local government officers or employees (government employees) are subject to the disclosure restrictions of section 6103(a) of the Internal Revenue Code (Code) with regard to returns or return information received as a result of disclosure under:

• section 6103(c) with the consent of the taxpayer (taxpayer consent exception),

• section 6103(e) as a person having a material interest, but not under section 6103(e)(1)(D)(iii) relating to disclosures to certain shareholders (material interest exception), or

• section 6103(k)(6) for investigative purposes (investigative disclosure exception).

FACTS

Situation 1. A requests the assistance of a friend, B, with respect to a Federal tax matter. A also requests that the Internal Revenue Service (IRS) provide A’s returns and return information to B. B subsequently discloses to a third party return information obtained as a result of A’s request.

Situation 2. Same as Situation 1, above, except that B happens to be an employee in the office of a State agency .

Situation 3 . C is an attorney employed by a law firm. The firm has a policy of taking disciplinary action against any of its attorneys who do not properly fulfill their tax obligations. The IRS serves a notice of levy with respect to C’s tax liability on the payroll department of the firm. D is a payroll department employee of the firm. D processes the notice of levy and informs

the firm’s managing partners of C’s tax delinquency to enable the firm to take appropriate action consistent with firm policy.

Situation 4 . E is an employee of a State agency. The agency has a policy of taking disciplinary action against employees who do not properly fulfill their tax obligations. The IRS serves a notice of levy with respect to E’s tax liability on the payroll department of the State agency. F is a payroll department employee of the State agency. F processes the notice of levy and informs the appropriate office of the State agency of E’s tax delinquency to enable the agency to take appropriate action consistent with agency policy.

Situation 5 . Same as Situation 4, above, except that E and F are employees of a Federal agency.

Situation 6 . G is the father of 5-year-old film star H. H’s mother signs H’s return as parent for a minor child and dies shortly thereafter. G is the guardian of H’s estate under applicable State law. G receives notice that H’s return is under examination by the IRS. G does not have a copy of H’s return, so G obtains the return and return information from the IRS. When subsequently asked by a news reporter how much income H reported on the return, G replies “three million dollars.”

Situation 7 . Same as Situation 6, above, except that G happens to be an employee of a Federal agency.

LAW

Generally, section 6103 provides that returns (as defined in section 6103(b)(1)) and return information (as defined in section 6103(b)(2)) are confidential and may not be disclosed except as expressly authorized by the Code. Specifically, “except as authorized by this title” (that is, the Code), section 6103(a) prohibits the disclosure by officers or employees of the United States, of any State, or of specified local government agencies, or by certain other specified persons, of returns and return information obtained in connection with their service as such an officer or employee or otherwise or under the provisions of section 6103 (disclosure restrictions). See Girard v. Bentsen, 94-2 U.S.T.C. ¶ 50,625

(N.D. Cal. 1994) (“or otherwise” modifies “in connection with his service,” allowing the statute to cover those who are neither “officers” nor “employees,” namely certain other persons specified in section 6103(a)). For purposes of section 6103(a), the term “officer or employee” includes a former officer or employee.

There are, however, exceptions to the general rule of confidentiality. First, the taxpayer consent exception permits the disclosure of returns and return information to a designee of the taxpayer, pursuant to the taxpayer’s request or consent. To be valid, a consent must satisfy the requirements of section 6103(c) and § 301.6103(c)-1 of the Procedure and Administration Regulations. Second, the material interest exception permits the disclosure of returns and return information to specific persons with a material interest in the information. Third, the investigative disclosure exception, in conjunction with § 301.6103(k)(6)-1, authorizes the disclosure of return information (but not returns) to the extent that disclosure is necessary in obtaining information that is not otherwise reasonably available with respect to the correct determination of tax, liability for tax, or the amount to be collected, or with respect to the enforcement of any other provision of the Code.