Disclosure - The rules governing access to and disclosure of returns and return information under Title 26, Internal Revenue Code (IRC), are different from the rules governing access and disclosure of information collected under Title 31, referred to as the Bank Secrecy Act (BSA).

Access - Accessed information must be protected to prevent unauthorized disclosures.

IRS examiners must limit their access to information in accordance with the Taxpayer Browsing Protection Act of 1997 and the disclosure rules under Title 26 and Title 31.

Access to Title 26 returns and return information is governed by IRC 6103, Confidentiality and Disclosure of Returns and Return Information, and is controlled by the IRS. Returns includes information reports, such as the Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, and return information includes a taxpayer’s identity, address, and financial information. Title 31 reports and report information used in a Title 26 case becomes return information subject to Title 26 disclosure.

Access to Title 31 reports information is controlled by the Financial Crimes Enforcement Network (FinCEN). BSA reports are available electronically through the FinCEN Query application via the secure FinCEN Portal. BSA reports are confidential and may not be accessed or disclosed except as authorized by FinCEN. A list of BSA forms is available on https://www.fincen.gov/.

Every IRS employee, contractor and stakeholder who has access to tax returns, return information, personally identifiable information (PII) and sensitive but unclassified information (SBU) is responsible to protect it from unauthorized access, use or disclosure. Likewise, every person has a responsibility to know when a disclosure is authorized. IRM 11.3, Disclosure of Official Information, provides an overview and basic introduction to disclosure.

Director, Examination – Specialty Policy is the executive responsible for BSA Examination policy and procedures.

Director, Examination – Specialty Examination is the executive responsible for BSA examination operational compliance.

Chief, BSA Policy is responsible for ensuring general information about basic BSA examiner responsibilities and IRM sections is communicated to and carried out by BSA examiners.

The following table contains acronyms, and their definitions, used throughout this IRM:

The following table contains terms, and their definitions, used in this IRM:

Sources of guidance on disclosures of official information may also be found at these related resources:

Title 26 returns and return information are owned by IRS and access to Title 26 returns and return information is governed by the Internal Revenue Code.

Returns and return information are confidential and may not be disclosed except as authorized by IRC 6103, Confidentiality and Disclosure of Returns and Return Information.

IRC 6103 allows for certain exceptions to the prohibition on disclosure of returns and return information.

IRC 6103(h), Disclosure to certain Federal officers and employees for purposes of tax administration, etc., specifically IRC 6103(h)(1), Department of the Treasury, 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" .

Access to Title 26 returns and related return information is available to IRS employees who need this information for their tax administration work through the various databases maintained by IRS, such as the Integrated Data Retrieval System (IDRS).

Examiners may access IDRS and other sources of return information if a Form 8300 examination is conducted under the authority provided in Title 26 at IRC 6050I, Returns Relating to Cash Received in Trade or Business, etc.

Instructions and guidelines relating to disclosure of information from tax returns and other IRS documents, including disclosure under the Freedom of Information Act (FOIA), 5 USC 552, and the Privacy Act, 5 USC 552a, are published in IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes. Refer also to IRM 9.5.5.4, Money Laundering and Currency Crimes, The Money Laundering Investigation and Disclosure, for more information relating to the use of returns and return information in criminal money laundering investigations.

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Anyone making an unauthorized disclosure may be subject to civil and criminal sanctions under the IRC.

A Title 26 examination may contain or obtain information that may also be relevant to a Title 31 violation. If the information indicating potential BSA noncompliance is from a Title 26 examination that information is considered "return information" and is protected by IRC 6103, Confidentiality and Disclosure of Returns and Return Information, used or disclosed in a Title 31 examination unless a determination is made that the two statutes, Title 26 and Title 31, are related.

For a related statute determination, IRM 11.3.22.20.1, Use of Tax Information in Tax or Tax-Related Bank Secrecy Act and Money Laundering Investigations, the key test is whether, under the facts and circumstances of the particular case, the money laundering provisions meet the "related statute" test.

The BSA is not "per se" (automatically) related to the Internal Revenue Code.

If the designated official determines, via the Related Statute Memorandum (RSM), that a potential BSA violation was in furtherance of a potential Title 26 violation (hereafter known as an "approved RSM" ). Title 26 information can be used in the Title 31 examination. The "approved RSM" authorizes the examiner to initiate a Title 31 examination.

IRC 6103(k)(6), Disclosure by certain officers and employees for investigative purposes, authorizes the IRS to disclose return information to the extent necessary to obtain information relating to its official tax administration duties or to properly accomplish any activity connected with its official tax administration duties. Accordingly, if the disclosure of information was for one of those purposes, IRC 6103(k)(6) would authorize the disclosure. IRC 6103(k)(6) would not authorize the disclosure of return information solely the administration of Title 31.

Returns and return information may not be accessed or disclosed for examination of non-tax matters if the related statute test is not met.

Information uncovered in a Title 26 examination that indicates there may have been a Title 31 violation, before the Title 26 return or return information can be used in the Title 31 examination or in written referrals to Criminal Investigation or FinCEN, there must be a related statute determination.

If, in an ongoing Title 31 examination, Title 26 return information is needed, a related statute determination must be made before using return information in the Title 31 examination.

A determination must be made in writing about the related statute test prior to the access or disclosure of returns or return information. The examiner documents the reasons supporting the related statute determination in a written memorandum, known as the related statute memorandum. The determination is made by a group manager, not the examiner.

The Form 13535, Report of Foreign Bank and Financial Accounts Related Statute Memorandum, was developed specifically for the Report of Foreign Bank and Financial Accounts (FBAR) cases. See IRM 4.26.17, Bank Secrecy Act, Report of Foreign Bank and Financial Accounts (FBAR) Procedures, for more information about the FBAR related statute memorandum. FBARs are the only type of Title 31 examination that requires a specific format for the required related statute memorandum.

A good faith judgment that the Title 31 violation was in furtherance of a Title 26 violation should be demonstrated by tangible objective factors and supported by adequate documentation. The reasons supporting the determination are noted on the related statute memorandum.

Title 26 information may be accessed and used in the Title 31 examination once the related statute memorandum has been signed by the group manager. The original memorandum and determination must be included in the Title 31 case file and a copy must be included in the Title 26 file.

IRC 6103(b)(4), Tax Administration, and IRC 6103(h)(1), Department of the Treasury, together permit disclosure of Title 26 information to IRS employees for examination purposes when there is a good faith determination that a BSA violation was committed in furtherance of a Title 26 violation or was part of a pattern to violate the provisions of Title 26. IRC 6103(b)(4) and IRC 6103(h)(1) allow IRS employees, whose official duties require access to tax returns and tax return information, to use tax return information in an examination under Title 31 once a related statute determination has been made.

A money laundering or BSA violation will be deemed a "related statute" if the money laundering or BSA violation:

It is not necessary to establish with certainty that there was a Title 26 violation to meet the related statute test, but the determination must be a good faith determination.

The group manager must make a good faith determination that the BSA violation was in furtherance of a Title 26 violation prior to approving the related statute determination.

The related statute determination allows IRS personnel to use returns or return information for examination of Title 31 activities for which the IRS has responsibility.

The determination that the statutes are related makes the Title 31 case a matter of tax administration for purposes of IRC 6103, Confidentiality and Disclosure of Returns and Return Information. The information gathered in the Title 31 investigation from this point forward is subject to the disclosure rules under IRC 6103.

Information may disclosed within Treasury for purposes of tax administration. The Title 31 case can be disclosed to FinCEN and the Bureau of the Fiscal Services, both Treasury bureaus, as applicable for penalty assessment and/or collection purposes. See IRC 6103(h)(1), Department of the Treasury. It can also be disclosed to the Department of Justice for enforcement purposes under the rules of IRC 6103(h)(2), Department of Justice.

When IRS employees are engaged in Title 31 examination activities they are not acting under Title 26. Because their actions are taken under the authority of Title 31 and the BSA, FinCEN controls access to BSA information.

FinCEN and IRS executed a Letter Agreement on May 20, 2004 titled Electronic Access by the IRS SB/SE to BSA Information for Title 31 Purposes, Exhibit 4.26.14-1, and a Memorandum of Understanding (MOU) dated September 24, 2010, regarding broader electronic access to Title 31 Reports, Exhibit 4.26.14-2.

The Letter Agreement and MOU allow examiners electronic access to BSA information for Title 31 compliance purposes.

In a Title 31 examination, BSA examiners can also access Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, for transactions occurring on or after January 1, 2002, except for forms filed by court clerks for transactions occurring before July 9, 2012. See IRM 4.26.14.7 for more information about Forms 8300 filed by court clerks.

BSA personnel may directly access SAR information on FCQ for BSA examination purposes.

There are extra constraints on the access of Suspicious Activity Report (SAR) information because of their confidential nature. For Title 31 examinations, the Letter Agreement limits SAR access by BSA employees to:

Care must be taken to avoid using Title 31 examinations as a pretext for conducting Title 26 information gathering activities. The decision in United States v. Deak-Perera, 566 F. Supp. 1398 (D.D.C. 1983), served as a warning that the courts will not tolerate the gathering of information based on false or misleading representations on the part of the examiner.

The following procedures should be followed to avoid any appearance of mixing Title 31 and Title 26 activities:

All BSA data users must adhere to the BSA Data Information Access Security Plan policies. BSA Data Information Access Security Plan is available on the FinCEN Portal under the Knowledge Library within the FinCEN Data Use and Guidelines link. All BSA data users must adhere to the BSA Data Information Access Security Plan policies.

One of the purposes of the Bank Secrecy Act, as set out in 31 USC 5311, Declaration of Purpose, is to provide reports and records considered to be of high utility in tax matters. As "tax" is one of the uses envisioned for BSA information, IRS employees have access to most Title 31 reports on FinCEN Query (FCQ) for tax matters and may use the information accessed from FCQ in Title 26 proceedings.

FinCEN made a separate determination on SAR access because of SARs' confidential nature. See IRM 4.26.14.3.3.

SAR information may be helpful in examination and collection activities when:

IRS employees, including auditors, revenue agents, and revenue officers, may want to use SAR information to:

Access to BSA information through FCQ for tax purposes is governed by the Memorandum of Understanding (MOU) between FinCEN and IRS dated September 24, 2010. Exhibit 4.26.14-2.

The MOU covers electronic access to all BSA report information including SAR information, but excluding Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Access to Form 8300 is permitted outside the MOU because of its dual nature as both a Title 26 and a Title 31 form.

Authorized agency personnel may access Title 31 report information including SAR information. Queries to obtain the reports should be as focused as possible on the subject. An audit trail of all accesses will be maintained.

Each operating division or business unit authorized to receive SAR information has detailed policies and procedures for SAR access in their IRM.

Each operating division or business unit authorized to receive SAR information will issue a policy directive detailing policies and procedures for SAR access for its employees.

Training on SAR information access and security is mandatory prior to any authorized access.

Once SAR information is secured for Title 26 compliance purposes, dissemination of that SAR information is subject to both Title 31 and Title 26 disclosure restrictions. The SARs and SAR information must be protected in the same manner as information received from a confidential informant. For more information about SAR protection, see IRM 4.26.14.6.2 and IRM 4.26.14.6.3.

Access and use of FCQ data are subject to minimum managerial review of audit trails to ensure appropriate use of FCQ data in relation to assigned cases.

31 USC 5319, Availability of Reports, provides that BSA reports and information are to be made available to governmental entities and certain self-regulatory organizations upon request of the head of the agency or organization.

31 CFR 1010.950, Availability of Information, provides additional guidance on disclosures of BSA information to governmental entities. These rules expand upon the types of requests that will be honored from agency heads and adds Congress and its subcommittees to the list of governmental entities to whom BSA information may be disclosed. State and local agencies may be required to pay fees. 31 CFR 1010.950(f).

FinCEN has delegated to the Commissioner of Internal Revenue Service the authority to disseminate reports required under the BSA regulations, subject to guidelines and procedures. FinCEN has the authority to set out those guidelines and has done so in the Revised Re-Dissemination Guidelines for Bank Secrecy Act Information. See Exhibit 4.26.14-3.

IRM 11.3.22, Disclosure of Official Information, Disclosure to Federal Officers and Employees for Tax Administration Purposes, contains additional information.

Disclosure of BSA information to non-governmental entities is very limited. Disclosure of BSA reports and records is governed by statute, regulation, administrative delegations of authority, and administrative guidelines as well as case law. See 31 USC 5319, Availability of Reports, and 31 CFR 1010.950, Availability of Information.

31 USC 5319 provides that BSA reports and information are to be made available to governmental entities for purposes consistent with the BSA. This section specifically provides that BSA reports and records of reports are exempt from disclosure to non-governmental entities even under the Freedom of Information Act (FOIA), 5 USC 552.

31 USC 5319 was amended in December 2011 to expand the prohibition of disclosure so that BSA reports and information also may not be disclosed under any state, local, tribal, or territorial "freedom of information" , "open government" , or similar law.

31 CFR 1010.960, Disclosure, reiterates the FOIA exemption established by 31 USC 5319 providing that all BSA reports and records are specifically exempt from disclosure under the FOIA. As a result, FCQ report information may not be disclosed by an examiner to non-governmental entities, even to the subject of the report.

A few court cases have considered 31 USC 5319. One case often cited is Berger v. IRS, 487 F Supp 2d 482, 496 (DNJ 2007), aff’d, 288 Fed. Appx. 829 (3rd Cir.2008). Documents, including some "CBRS" reports and related information, were sought from IRS under FOIA. Plaintiff argued that 31 USC 5319 was not an absolute prohibition against disclosure of BSA reports, basing this argument on an early version of this IRM that, according to Plaintiffs, provided that with regard to the contents of a "CBRS" report, "the examiner may disclose to the examined entity that a currency report was or was not filed and the contents of the report if any" . The court specifically stated that "Even if the IRM provision Plaintiffs quote was in effect at that time, this Court finds that "CBRS" reports qualify as reports exempt from disclosure under FOIA and [section] 5319." The reasoning of the court was that the statute clearly did not allow for discretion on the part of IRS. The lesson for IRS examiners is that the courts will consider that there is absolutely no discretion permissible on the part of the IRS examiner. BSA reports and information that would indicate that a BSA report had been filed are not to be disclosed by examiners in response to a FOIA request.

A copy of a report, however, can be provided to the filer of the report. Thus, while a CTR could not be disclosed to the subject of the CTR, it could be disclosed to the filer. Similarly, an FBAR could be disclosed to the filer of the FBAR, who is also, of course, the subject of the FBAR.

IRM 11.3.13, Disclosure of Official Information, Freedom of Information Act (FOIA), has additional information.

BSA reports are exempt from disclosure to the public under the Freedom of Information Act (FOIA) but may be shared between agencies under conditions prescribed in 31 USC 5319, 31 CFR 1010.950, Availability of Information, and FinCEN's Re-Dissemination Guidelines found in Exhibit 4.26.14-3.

Disclosure by IRS SB/SE is governed by two documents. One is a letter agreement specific to SB/SE and one is a FinCEN guidance memorandum issued subsequently to all governmental agencies allowed to access BSA information.

The letter agreement between FinCEN’s Director and the IRS SB/SE Commissioner, entitled Electronic Access by the IRS SB/SE to BSA Information for Title 31 Purposes (May 20, 2004), restricts the further dissemination of BSA information obtained under the agreement. See Exhibit 4.26.14-1. The letter agreement is binding and requires SB/SE to refrain from dissemination of BSA information to any person without the written permission of FinCEN in each case.

On November 28, 2007, FinCEN issued Re-Dissemination Guidelines for Bank Secrecy Act Information. See Exhibit 4.26.14-3. These guidelines apply to the re-dissemination of BSA information in the possession of a Federal, State, or local government agency. BSA information is defined to include a report (and any information in such a report that might reveal its existence) that is filed under the BSA. These guidelines apply to the IRS.

For purposes of the Re-Dissemination Guidelines, the words "disseminate" and its derivatives do not include the notification of a BSA report's existence or any other release of a BSA report between agencies that have been granted direct electronic access to BSA information. Consequently, such disclosures are not subject to FinCEN's approval.

FinCEN’s BSA Re-Dissemination Guidelines require certain procedures.

The guidelines prohibit any re-dissemination of BSA information not covered in the guidelines without first making a request in writing to FinCEN and obtaining FinCEN’s approval. There is a provision for emergency requests.

The guidelines further state that final authority governing interpretation of the guidelines or dissemination of a BSA report or BSA information rests with FinCEN.

Each type of "financial institution" is defined in 31 USC 5312(a)(2) and 31 USC 5312(c)(1) and the underlying regulations. For suspicious transaction reporting requirements, each type of financial institution should refer to its specific portion of the regulations at 31 CFR Chapter X, Financial Crimes Enforcement Network, Department of the Treasury. Within each portion of these regulations, the prohibition against disclosure of the SAR or information that one had been prepared or filed is similarly applied to employees as well as the financial institution. For Example:

In the context of litigation, FinCEN advises that a financial institution and its employees neither admit nor deny the existence of a SAR and not respond to any discovery request or subpoena for SAR information. See 31 CFR 1020.320(e), Confidentiality of SARs, for banks; 31 CFR 1021.320(e), Confidentiality of SARs, for casinos; 31 CFR 1022.320(d), Confidentiality of SARs, for money services businesses; and 31 CFR 1025.320(e), Confidentiality of SARs, for insurance companies.

Civil and/or criminal penalties can apply to employees for violations of the prohibition against disclosure. See 31 USC 5321(d), Criminal Penalty Not Exclusive of Civil Penalty.

For disclosure of SAR information sought by FinCEN, an appropriate regulator, or a law enforcement agency see the regulations for banks at 31 CFR 1020.320(d), for casinos at 31 CFR 1021.320(d), and for money services businesses at section 31 CFR 1022.320(d).

FinCEN guidance also allows a financial institution to disclose SAR information to its controlling company or head office.

FinCEN and the federal banking agencies take the position that banks’ internal controls for the filing of SARs should minimize the risks of disclosure.

There are other considerations regarding disclosure by government employees in addition to the disclosure rule of 31 USC 5318(g)(2)(A)(ii). No current or former officer or employee of the Federal Government or of any state, local, tribal, or territorial government within the United States, who has any knowledge that such report was made, may disclose to any person involved in the transaction that the transaction has been reported, other than as necessary to fulfill the official duties of such officer or employee.

The Revised Re-Dissemination Guidelines reiterate the importance of safeguarding SARs. BSA information includes the information in a SAR, as well as discussions between officials of a financial institution and law enforcement concerning a SAR, if the disclosure of such information or discussions would reveal the existence of a SAR.

An IRS employee who is requested to provide SAR information in response to a Freedom of Information Act (FOIA) request or a summons, should be aware of the following:

The information contained in a SAR and even the existence of a SAR generally cannot be disclosed to parties involved in the transaction. See 31 USC 5318(g)(2)(ii).

As with the precautions required for informant information, the identity of persons who furnish information regarding suspicious activity must be protected. All employees must, therefore, handle such information in strict confidence. (See IRM 25.2, Information and Whistleblower Rewards).

BSA information, when included in a Title 26 compliance case file, is subject to the IRC 6103, Confidentiality and disclosure of returns and return information, restrictions on disclosure of return information. Title 31 data obtained during a tax examination or collection activity is "return information" for purposes of IRC 6103(b)(2), Return Information.

Furthermore, when the SAR information is used in a Title 26 case it retains its character as information from a BSA report. If a FOIA request is made in the Title 26 case:

The examiner should follow security procedures for safeguarding SAR information, including:

SAR information may only be disseminated to the extent permitted under IRC 6103 of Title 26 and Appendix III, SAR Disclosure Guidance, of FinCEN’s Re-Dissemination Guidelines. The examiner must consult with management officials, the SAR Coordinator, and the BSA FinCEN Liaison when considering information-sharing and prior to taking any action.

If SAR information is sought in a tax case, the protections of 31 USC 5318(g), Reporting of Suspicious Transactions, 31 USC 5319, Availability of Reports, and those of IRC 6103, Confidentiality and disclosure of returns and return information, apply.

The information contained in the SAR and the existence of the SAR itself cannot be disclosed.

Under both Title 26 and Title 31, there are criminal and civil penalties for unauthorized disclosure of SAR information.

In using SAR information, the examiner must be careful not to create an impression that a SAR may have been filed.

SARs and SAR information must be treated the same way as information from a confidential informant.

Employees should neither lie to the taxpayer nor admit the existence of a SAR when dealing with a taxpayer. If asked by the taxpayer for the source of their information, the employee may reply: "I cannot disclose that information. The authority to withhold that information is in IRC 6103(e)(7)."

Potential unauthorized disclosures or loss of SAR data must be reported.

Suspected browsing of SAR data is subject to unauthorized access (UNAX) rules and is reported to TIGTA. IRM 4.26.14.1.1.

Penalties for unauthorized access and disclosure in violation of IRC 6103, Confidentiality and Disclosure of Return and Return Information, are set forth in IRC 7431, Civil Damage for Unauthorized Inspection or Disclosure of Returns and Return Information, and IRC 7213, Unauthorized Disclosure of Information, and IRC 7213A , Unauthorized Inspection of Returns or Return Information, (criminal). See a discussion of these penalties in IRM 11.3.1, Introduction to Disclosure.

IRC 7431, Civil Damages, provides that disclosure rules are enforced by the injured taxpayer who can bring an action for civil damages.

The criminal penalties for disclosure of a return or return information under IRC 6103 are set out in IRC 7213. They include:

Penalties for disclosure of BSA information are found in 31 USC 5321, Civil Penalties.

Criminal penalties for willful unauthorized access and disclosure in violation of the BSA are found in 31 USC 5322, Criminal Penalties.