Revenue officer may use and share a credit report for hardship review

Plain-English summary

The Taxpayer Advocate Service asked Field Collection to determine whether a taxpayer faced enough financial hardship for currently-not-collectible status. Chief Counsel advised that the revenue officer may obtain a consumer credit report without a summons because deciding whether to suspend collection is a permissible collection purpose under federal credit-reporting law. The officer may use the report in the financial analysis and share it with the Taxpayer Advocate Service as part of that process. Sharing the resulting determination also complies with section 6103(h)(1) when the TAS employee needs the information for official tax-administration duties, meaning the information is helpful and appropriate.

Ruling snapshot

• Question: May a revenue officer obtain a taxpayer's credit report for a hardship review and share the analysis with the Taxpayer Advocate Service?
• Outcome: Advice given: yes, for the stated collection and tax-administration purposes.
• Key authorities: IRC § 6103(h)(1); 15 U.S.C. §§ 1681 and 1681e(a); 31 U.S.C. § 3711(h)

Full text (IRS public release)

ID:      CCA-02191058-16
UILC:    9999.92-00

Number: 201614032
Release Date: 4/1/2016
From: ---------------
Sent: Friday, February 19, 2016 10:58 AM
To: ------------------------
Cc: -----------------
Bcc:
Subject: Consumer Credit Reports


This email responds to your request for a counsel opinion regarding consumer credit
reports. We understand the relevant facts presented by your request for assistance to
be as follows. A Case Advocate from TAS requested that Field Collection conduct a
financial review to determine whether a taxpayer is experiencing a financial hardship
such that the taxpayer’s account should be placed in “Currently Not Collectible” (CNC)
status. In order to conduct the financial review, the Revenue Officer (RO) would
ordinarily request and analyze a credit bureau report to support the financial
analysis. You have asked us whether, under these circumstances, it is permissible for
the RO to request the credit report of the taxpayer without a summons, and to include
findings from the credit report in the financial determination that the RO will share with
TAS.

Under these circumstances, the RO’s request for and use of a credit report is
permissible under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681. Section
1681e(a) requires prospective users of consumer report information “identify
themselves, certify the purposes for which the information is sought, and certify that the
information will be used for no other purpose.” Under 31 U.S.C. § 3711(h), the Service
may request a consumer report to “collect a claim, compromise a claim, or terminate
collection action on a claim.” In this situation, because the RO would be using a credit
report to determine whether a taxpayer’s account should be placed in CNC status, the
RO has a permissible purpose to obtain the credit report. Moreover, sharing the credit
report with TAS, as part of this process, would not violate the FCRA.

Furthermore, the RO’s transmission to TAS of the financial determination that
references or contains a credit report does not violate I.R.C. § 6103. Since TAS is part
of the Department of the Treasury, the applicable disclosure provision is I.R.C. §
6103(h)(1), which authorizes disclosure of return information to officers and employees
of the Department of Treasury whose official duties require such disclosure for tax
administration. As long as the TAS employee needs the information for his official
duties, the disclosure to TAS is permissible under section 6103. “Need” in this context
means “helpful and appropriate.”
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