Chief Counsel confirms a state agency may receive return information under § 6103(l)(7) via a computer matching agreement

Plain-English summary

This is a short Chief Counsel email about sharing federal tax return information with a government agency during a security and compliance transition. Section 6103 generally keeps return information confidential, but § 6103(l)(7) lets the IRS disclose limited information to agencies that administer certain benefit programs (often through the DIFSLA program, which matches IRS data for federal, state, and local agencies). Counsel concurred that the agency in question is one to which § 6103(l)(7) may authorize disclosure, and agreed that a computer matching agreement (CMA) should be drafted as the written authorization required before any information is disclosed. Counsel noted the agency must keep the information segregated by program, which it does, and offered housekeeping suggestions: update an existing CMA to reflect a program the agency no longer administers, confirm that only two named agencies have access, and review the DIFSLA CMA template for other shared state-database scenarios.

Ruling snapshot

• Question: May return information be disclosed to the agency under § 6103(l)(7), and what writing is needed to authorize it?
• Outcome: Advice given (disclosure authority confirmed; a computer matching agreement recommended)
• Key authorities: IRC § 6103(l)(7)

Full text (IRS public release)

ID: CCA_2018100214305812
UILC: 6103.12-00

Number: 201846004
Release Date: 11/16/2018
From:
Sent: Tuesday, October 02, 2018 2:30:58 PM
To:
Cc:
Bcc:
Subject: FW: Assistance Request: Security/Compliance Transition for -------------------------------- from ---
----- to ------- - Response Requested by 10/5/2018

------,

Per our conversation and the information you provided, we concur that --------------- is an agency to which section 6103(l)(7) may authorize disclosure. We agree that a CMA should be drafted to serve as the necessary writing to permit disclosure to ---------------- before disclosing any information. The ----------must able to keep information segregated according to program, which you indicated it does. We also suggest updating the CMA with -------------to accurately reflect that it no longer administers the ---
------------------ program, and confirming that ------------ and --------------- are the only two agencies with access to ---------. Finally, we suggest that the CMA template for DIFSLA programs be reviewed to contemplate other shared state database scenarios.

We hope this is helpful, but please let us know if you have any questions.

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