$// Internal Revenue Service Request to Inspect and Copy, DA 95-26 //$ $/ 300.220 Accounts, Records, and Memoranda /$ $/ 000.442 Disclosure to other Federal government agencies /$ FOR RECORD ONLY Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-26 In the Matter of ) ) Internal Revenue Service ) AAD 94-152 Request to Inspect and Copy ) Commission Records ) MEMORANDUM OPINION AND ORD Adopted: January 9, 1995; Released: January 10, 1995 By the Chief, Common Carrier Bureau: I. Introduction 1. The Internal Revenue Service (IRS) has requested that we allow IRS agents to inspect and copy files maintained by the Accounting and Audits Division. The files contain facts or information obtained during Commission audits, and the associated audit reports and workpapers, concerning certain common carriers for the period 1988 to present. The carriers have objected to disclosure pursuant to Section 0.442(d)(1) of the Commission's Rules. Finding these objections without merit, we grant the IRS' request for disclosure, conditioned on the IRS' maintaining the same level of confidentiality as is required of the Commission. II. Background 2. The IRS, through its auditing field agents, has requested that we allow IRS agents to inspect and copy certain files maintained by the Accounting and Audits Division for the period 1988 to present. These files contain facts or information obtained during Commission audits, and the associated audit reports and workpapers, submitted in confidence to the Commission by the local exchange carriers owned by five holding companies: Ameritech Corporation, BellSouth Corporation, GTE Service Corporation, Southwestern Bell Corporation, and US West, Inc. (hereafter collectively referred to as "the LECs"). We notified the LECs of the disclosure request pursuant to Section 0.442(d)(1) of the Commission's Rules and afforded each ten days to respond. All the LECs oppose disclosure. III. Discussion 3. Section 3510 of the Paperwork Reduction Act of 1980 specifically allows federal government agencies, including the Commission and the IRS, to share information so long as such disclosure is not otherwise barred. The requesting agency must afford the information the same protection that it received from the disclosing agency. The Commission, however, generally will not release confidential information obtained from common carriers during audits performed by Commission staff. This policy emanates from Section 220(f) of the Communication Act of 1934, as amended, which prohibits any Commission member, officer or employee from divulging facts and information derived in the course of an audit, except as directed by the Commission or a court. In considering Section 3510, the Senate Committee on Government Affairs recognized the Commission's general concern that disclosure of confidential information to other agencies could harm the privacy rights of regulatees. The Committee stated that information need not be shared "if the disclosure would be inconsistent with applicable agency policy." The Commission has expressed its policy regarding requests for confidential records from other federal government agencies in Section 0.442 of its rules. 4. Section 0.442(b) requires the Commission to disclose to federal agencies, such as the IRS, information submitted to the Commission in confidence provided that four conditions are met: (1) Specific Commission assurances against such disclosure have not been given, (2) the other agency has established a legitimate need for the information, (3) disclosure is made subject to the provisions of 44 U.S.C. 3508(a), and (4) disclosure is not prohibited by the Privacy Act or other provisions of law. We discuss these conditions in turn below. 5. The first condition under Section 0.442(b) prohibits the disclosure of information that carriers submit in confidence to the Commission when specific assurances against disclosure have been given. The Commission has given no such assurances to the LECs regarding any of the information requested by the IRS. In response to the notification of the IRS' request for disclosure, GTE has asked the Commission, pursuant to Section 0.442(c) of its rules, for assurances that it will not disclose the information to the IRS. Because GTE's arguments against disclosure, discussed infra, fail to override our determination that granting the IRS' request will serve the public interest, we deny GTE's request for assurances against disclosure to the IRS. 6. The LECs claim that disclosure of the files would violate the second condition of Section 0.442(b) of the Commission's Rules, which requires that the requesting agency have a "legitimate need" for the information. The IRS will use the requested information in discharging its Congressional mandate to enforce the Internal Revenue Code. We defer to the IRS' judgment in determining what information it needs to discharge that mandate. Certain LECs have challenged the disclosure request by arguing that the existence of alternative methods for the IRS to obtain the information demonstrates that the agency lacks a legitimate need for the contents of our files. Their argument, though, targets the source of the information, not the need that the IRS has for the audit reports and associated documents contained in those files. 7. BellSouth also contends that "[i]f the Paperwork Reduction Act is read in conjunction with [Section 0.442(b)(2) of the Commission's Rules], it is apparent that there is no need for the IRS collection of the requested information from the FCC." While BellSouth does not sufficiently explain the basis for its argument, it is clear that the Paperwork Reduction Act cannot be read in conjunction with Section 0.442(b)(2) of the Commission's Rules to provide a basis for challenging the legitimacy of the IRS' need for the files. Congress enacted that Act to eliminate wasteful and unnecessary federal paperwork that places a burden on the American public. That Act applies to the "collection of information," that, in the context of requests made to other federal government agencies, includes only methods of obtaining "answers to questions posed to agencies, instrumentalities, or employees of the United States which are to be used for general statistical purposes." The IRS has requested to inspect and copy files that contain facts and information about specific LECs. The request logically relates to the IRS' auditing activities surrounding these LECs, rather than to some general statistical purpose. 8. The third condition requires that any Commission release to another agency of information submitted in confidence be subject to the federal statutory requirement that the requesting agency give the information the same protection that it received from the Commission. Thus, under Section 0.442(b)(3) of the Commission's rules, all provisions of law, including penalties, related to the unlawful disclosure of information apply to the officers and employees of the requesting agency to the same extent and in the same manner as the provisions apply to Commission personnel. Section 220(f) of the Communication Act of 1934, as amended, prohibits any Commission member, officer or employee from divulging facts and information derived in the course of an audit, except as directed by the Commission or a court. Thus, the Commission's release of any facts or information about certain LECs obtained during Commission audits, and the associated audit reports and workpapers, to the IRS subjects the IRS to the provisions of Section 220(f). The IRS has already promised that it will "not make the information reviewed available to the public, and [will] observe all confidentiality criteria." To comply with Section 0.442(b)(3), we expressly condition our grant of the IRS' request on the IRS maintaining the same level of confidentiality for the requested information as is required of the Commission. 9. Lastly, Section 0.442(b)(4) prevents the Commission from disclosing information to another agency if such disclosure would violate the Privacy Act or other provisions of law. Certain LECs contend that this condition prohibits us from granting the IRS' request. BellSouth argues that the Privacy Act prevents the IRS' use of information provided to the Commission by BellSouth for a purpose other than that for which the information was originally obtained. The Privacy Act, however, regulates the collection and use of information by federal government agencies in order to safeguard individuals, not businesses, from governmental invasions of privacy. BellSouth further argues that this Act bars the Commission's release of any files that contain information that identifies an individual. While the files include time reports and other documents that identify individual employees acting in their employment capacities, the Privacy Act does not bar disclosure in this case. That Act only proscribes disclosure of information about an individual "which is contained in a system of records." A "system of records" means records "from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual." Thus, coverage under the Privacy Act depends not only upon the content of the record, but also the method of retrieval. The requested files contain paper records of facts and information obtained during Commission audits, and the associated audit reports and workpapers. Commission personnel can only retrieve facts and information from the requested files by carrier or holding company name. The inclusion of identifying personal information is merely incidental to our auditing activities. Disclosure therefore does not implicate Privacy Act concerns. 10. The Computer Matching and Privacy Protection Act (Matching Act), 5 U.S.C. 552a, amended the Privacy Act of 1974 to include a prohibition against certain types of computer comparisons of "systems of records" to protect identifying personal information contained therein. BellSouth argues that the Matching Act prohibits us from granting the IRS' request. As with other provisions of the Privacy Act, the Matching Act does not apply to the particular files at issue because the IRS cannot retrieve any identifying personal information "by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual." In addition, the IRS request fails to constitute a "matching program" under the Act. A "matching program" is a computerized comparison of two or more "automated" systems of records. The IRS has requested specific non-automated files that contain paper copies of the facts or information obtained during Commission audits, and the associated audit reports and workpapers. 11. The LECs similarly contend that the Commission should deny disclosure because the request violates certain internal procedures set forth in Section 4083 of the IRS' own Manual. To facilitate the securing of information in an orderly manner from federal government agencies without undue inconvenience to those agencies, Section 4083 directs the IRS National Office to serve as an agent for its auditing field personnel. In this case, the request came directly from the IRS' field employees. The Manual further provides that "[t]he information desired should first be requested from the taxpayer or his/her representative and documentation to this effect should be included in the audit workpapers." The LECs claim that the IRS has failed to request any of the information contained in our files directly from them. Enforcement of the IRS' own internal procedures, though, falls outside the scope of this Commission's jurisdiction. Thus, the alleged violations of the Manual fail to constitute violations of "[a]nother provision of law" under Section 0.442(b)(4) of the Commission's Rules. 12. Southwestern Bell also argues that disclosure would deny it "protection of its legal rights and a measure of due process" provided by the judicial enforcement of a summons issued pursuant to Section 7602(a)(2) of the Internal Revenue Code. That subsection gives the IRS broad power to summon a taxpayer or any person having possession of books of account related to the business of the taxpayer "or any other person the Secretary may deem proper." Under Section 7602(a)(1) of the Internal Revenue Code, however, the IRS has the authority, separate and apart from its summons power under Section 7602(a)(2), "to examine any books, papers, records, or other data which may be relevant or material" to its inquiry. The mere fact that the IRS can obtain information by issuing a summons does not require it to follow that procedure, rather than requesting disclosure pursuant to Section 0.442 of the Commission's Rules. Indeed, that section, which gives the LECs notice of the IRS' request, an opportunity to object to disclosure, and ten working days from the date of this Order to move for a judicial stay, amply protects the LECs' due process rights. 13. Ameritech and GTE express concern that the Commission's release of information learned in the course of audits to other federal government agencies will undermine the spirit of cooperation between the carriers and the Commission. The information that the Commission will disclose to the IRS, however, remains protected from public release. As previously discussed, federal statutory law requires the IRS to safeguard the confidentiality of the audit reports to the same degree as the Commission. Therefore, our release of the information to the IRS should not undermine the carriers' cooperative spirit. 14. Finding the four conditions of Section 0.442(b) of the Commission's rules satisfied, we grant the IRS' request to inspect and copy our files concerning the LECs for the period 1988 to present, conditioned on the IRS' maintaining the same level of confidentiality as is required of the Commission. We believe that such disclosure will serve the public interest by helping the IRS enforce the Internal Revenue Code in accord with the procedures it believes will best meet this objective. Pursuant to Section 0.442(d)(4) of the Commission's Rules, the LECs will receive ten working days in which to seek a judicial stay of this Order. Upon release of this Order, the Accounting and Audits Division of the Common Carrier Bureau will furnish notice by telephone to the LECs of the Commission's determination and of the time for seeking a judicial stay, as well as subsequent notice in writing. IV. Ordering Clauses 15. Accordingly, IT IS ORDERED, pursuant to Sections 4(i) and 220(f) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 220(f), Section 3510 of the Paperwork Reduction Act of 1980, 44 U.S.C. 3510, and Sections 0.91 and 0.291 of the Commission's Rules, 47 C.F.R. 0.91, 0.291, that the IRS' request for disclosure under Section 0.442 of the Commission's Rules, 47 C.F.R. 0.442, IS GRANTED, conditioned on the IRS' maintaining the same level of confidentiality as is required of the Commission. 16. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 220(f) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 220(f), Section 3510 of the Paperwork Reduction Act of 1980, 44 U.S.C. 3510, and Sections 0.91 and 0.291 of the Commission's Rules, 47 C.F.R. 0.91, 0.291, that GTE's request for assurance against disclosure to the IRS IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Kathleen M.H. Wallman Chief, Common Carrier Bureau