CCA 200913029: A prison-data contract needed a federal tax-administration purpose

Plain-English summary

Chief Counsel considered whether the IRS could work with the Florida Department of Corrections to identify fraudulent refund schemes involving prisoners. A contract under section 6103(n) had to serve a tax-administration purpose, and any disclosure of tax information had to be limited to what the contract required. The writer saw difficulty if Florida planned to use the information for its own non-tax prosecutions, but thought a contract might work if the department only assisted the IRS in stopping refund schemes. A detail of state personnel to a federal agency under the Intergovernmental Personnel Act was identified as another possible arrangement.

Ruling snapshot

• Question: Could the IRS disclose tax information or use state corrections personnel to combat prisoner refund schemes?
• Outcome: Advice given: a section 6103(n) contract might work if tied to federal tax administration, and a personnel detail might offer another option.
• Key authorities: IRC § 6103(n); Intergovernmental Personnel Act.

Full text (IRS public release)

ID: CCA-716714-08 Number: 200913029
Release Date: 3/27/2009
Office: --------------
UILC: 6103.01-02, 6103.04-01, 6103.14- 00

From: -------------------
Sent: 7/16/2008
To: --------------------
Cc:
Subject: Fla. Dept. of Corrections ---------

This is what I've learned so far regarding 6103(n) contracts. I don't know that IRS has to be the sole beneficiary of the arrangement, but the contact needs to accomplish a tax administration purpose. Generally, disclosures of tax information in a contract situation are limited to whatever is necessary to accomplish the terms of the contract. While the proposal would undoubtedly help the IRS, we'd need to tie in the Fla. Dept. of Corrections' use of the information to a legitimate tax administration purpose if they plan to somehow use the information. The only thing I can see Florida doing with the information is using it for potential non-tax prosecutions, possibly for fraud, since they don't have an income tax. Plus, I think we'd be limited to individuals incarcerated in Florida, which would limit the amount of potential leads. I guess we need to see what the Department of Corrections is proposing, then go from there? If they simply want to help put an end to refund schemes within their prison system by assisting the IRS, we might be able to do something in terms of a contract. I also did a little checking on the Intergovernmental Personnel Act. Among other things, it allows a non- federal employee to be detailed to a federal agency, while continuing to be paid by his or her employer of record. I've cut and pasted some information from OPM that might be useful in this regard. http://www.opm.gov/PROGRAMS/IPA/assignF.asp Depending on what the IGPA allows, this might be a viable option, assuming that the Department of Corrections just wants to help us identify and address fraudulent refund schemes.