[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6103(p)(7)-1]

[Page 64]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                         Information and Returns
 
Sec. 301.6103(p)(7)-1  Procedures for administrative review of a 

determination that a State tax agency has failed to safeguard Federal 
tax returns or return information.

    (a) Notice of Service's intention to terminate disclosure to a State 
tax agency. Notwithstanding subsection (d) of section 6103, the Internal 
Revenue Service may terminate disclosure of Federal returns and return 
information to a State agency, body, or commission described in section 
6103(d) (hereinafter in this section referred to as a State tax agency) 
if the Service makes a determination that:
    (1) A State tax agency has made unauthorized disclosure of Federal 
returns or return information received from the Service and that the 
State tax agency has not taken adequate corrective action to prevent 
repetition of the unauthorized disclosure, or
    (2) A State tax agency does not satisfactorily maintain the 
safeguards described in subsection (p)(4) of section 6103, and has made 
no adequate plan to improve its system to maintain those safeguards 
satisfactorily. Prior to terminating disclosure, the Service will notify 
the State tax agency in writing of the Service's preliminary 
determination and of the Service's intention to discontinue disclosure 
of Federal returns and return information to the State tax agency. Upon 
so notifying the State tax agency, the Service, if it determines that 
Federal tax administration would otherwise be seriously impaired, may 
suspend further disclosure of Federal returns and return information to 
the State tax agency pending a final determination by the Commissioner 
or Deputy Commissioner described in subparagraph (2) of paragraph (c) of 
this section.
    (b) State tax agency's right to appeal. A State tax agency shall 
have 30 days from the date of receipt of a notice described in paragraph 
(a) of this section to appeal the preliminary determination described in 
paragraph (a) of this section. The appeal shall be made directly to the 
Commissioner.
    (c) Procedures for administrative review. (1) To appeal a 
preliminary determination described in paragraph (a) of this section, 
the State agency shall send a written request for a conference to: 
Commissioner of Internal Revenue (Attention: C), 1111 Constitution 
Avenue, NW., Washington, D.C. 20224. The request must include a complete 
description of the State tax agency's present system of safeguarding 
Federal returns or return information received from the Service. The 
request must then state the reason or reasons that the State agency 
believes that such system, including improvements, if any, to such 
system expected to be made in the near future, is or will be adequate to 
safeguard Federal returns or return information received from the 
Service.
    (2) Within 45 days of the receipt of a request made in accordance 
with the provisions of subparagraph (1) of this paragraph, the 
Commissioner or Deputy Commissioner will personally hold a conference 
with representatives of the State tax agency, after which the 
Commissioner or Deputy Commissioner will make a final determination with 
respect to the appeal.

(Secs. 6103(p)(7) and 7805 of the Internal Revenue Code of 1954 (90 
Stat. 1685, 26 U.S.C. 6103(p)(7); 68A Stat. 917; 26 U.S.C. 7805))

[T.D. 7693, 45 FR 26325, Apr. 18, 1980]