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IRS will redact social security numbers from applications for exempt organization status

IRS Tax Exempt and Government Entities Division Memo, “Interim Guidance on Redacting Social Security Numbers When Processing EO Determination Letter Requests” (July 19, 2016)

IRS has issued an internal memo that instructs its employees to redact social security numbers that organizations erroneously include in their applications for tax-exempt status.

Background. Approved applications for tax-exempt status, which consist of the application filed by an organization, papers submitted in support of the application or notice, and any letters or documents issued by IRS regarding the application, are available to the public under Code Sec. 6104(a)(1)(A).

The only statutory exceptions to this rule are if the applicant requests that IRS withhold a trade secret, process, patent, style of work, or apparatus and IRS determines disclosure would adversely affect the organization or if IRS determines disclosure of information would adversely affect the national defense. (Code Sec. 6104(a)(1)(D)) IRS is not statutorily required to withhold any other information from public inspection on approved applications for tax-exempt status (and certain other determination letter requests) that are subject to public disclosure under Code Sec. 6104.

Facts. Although IRS cautions applicants not to include social security numbers with their exempt organization status applications, some applicants submit social security numbers as part of those applications.

IRS will redact social security numbers. IRS believes that social security numbers on these applications could result in abuse if made public. Because IRS is required to disclose approved application information, in order to protect the personal privacy of individuals affiliated with these organizations, IRS has announced, in a memo to its employees, that it will make reasonable efforts to redact social security numbers from determination letter requests that are closed on or after July 19, 2016. The announcement also provides specific procedures for IRS employees to follow to achieve the redactions and provides that the Internal Revenue Manual will be amended to reflect this new redaction policy and the procedures to achieve the goals of the policy.

References: For public inspection of applications for tax-exempt status, see FTC 2d/FIN ¶  S-6621; United States Tax Reporter ¶  61,044.