Privacy Impact Assessment – Electronic MFTRA
E-MFTRA System Overview:
ELEC MFTRA provides the California Franchise Tax Board with a variety of account transcripts ordered via Command Code MFTRA. FTB completes electronic transcript requests, which arrive at the Fresno campus via File Transfer Protocol. The requests are merged with internal requests, processed overnight in Memphis, and the merged file is returned to Fresno the following day. FTB requests are sorted out of the merged file, reviewed by IRS Disclosure, and transferred to FTB in Sacramento via FTP. Disclosure removes any transcripts that contain data not appropriate to share with the state (e.g., criminal activity indicators). FTB receives transcripts in a 48-hour turnaround, instead of the normal 6-8 week processing timeframe for manual requests; IRS saves resources by automating a process which otherwise would require individual requests processed manually.
System of Records Number(s):
Treasury/IRS 24.030 Individual Master File
Treasury/IRS 24.046 Business Master File, Taxpayer Services
Data in the System
1. Describe the information (data elements and fields) available in the system in the following categories:
A. Taxpayer
B. Employee
C. Audit Trail Information (including employee log-in info)
D. Other (Describe)
A. Taxpayer –
Name, tax return information, account transcript, tax period
B. Employee - None.
C. Audit Trail Information
6103D Accounting for Disclosure -
Requires supervisor’s signature from person requesting the information and the signature of FTB Coordinator. Paper copies of the employee request for transcript data are retained at the Franchise Tax Board.
D. Other – None.
2. Describe/identify which data elements are obtained from files, databases, individuals, or any other sources.
A. IRS
B. Taxpayer
C. Employee
D. Other Federal Agencies (List agency)
E. State and Local Agencies (List agency)
F. Other third party sources (Describe)
A. IRS –
Individual Master File (IMF)
IMF is the Individual Master File, which consists of a series of runs, data records and files that are in production with links to many of the other IRS systems located at MCC, TCC, DCC, and Campuses. The IMF receives individual tax submissions in electronic format and processes them through a pre-posting phase, posts the transactions, analyzes the transactions and produces output in the form of Refund data, Notice data, Reports, and information feeds to other entities.
Business Master File (BMF).
BMF is an IRS Critical Infrastructure asset. All tax data and related information pertaining to individual business income taxpayers are posted to the BMF so that the file reflects a continuously updated and current record of each taxpayer's account. All settlements with taxpayers are effected through computer processing of the BMF account and the data therein is used for accounting records, for issuance of refund checks, bills or notices, answering inquiries, classifying returns for audit, preparing reports and other matters concerned with the processing and enforcement activities of the Internal Revenue Service.
B. Taxpayer - none
C. Employee - None.
D. Other Federal Agencies –
Social Security Numbers are verified through Social Security Administration files.
E. State and Local Agencies – CA Franchise Tax Board provides names of taxpayers whose information they are seeking
F. Other third party sources - None
3. Is each data item required for the business purpose of the system? Explain.
Yes. The data elements are required by the California Franchise Tax Board to conduct state audits of taxpayers based on audit referrals from the IRS.
4. How will each data item be verified for accuracy, timeliness, and completeness?
The transcripts provided are the same product used internally by IRS tax examiners to analyze taxpayer accounts. ELEC MFTRA does not collect data from sources other than IRS records that were submitted by the taxpayer for input to the MFTRA. Records with invalid or inconsistent data are printed on an error list. ELEC MFTRA validates the data file received from the FTB as it prepares the input file for processing. Upon receipt of the output file, a validation is done to ensure the input file was processed successfully.
5. Is there another source for the data? Explain how that source is or is not used.
While the Transcript Delivery System is available to the CA FTB, it provides redacted transcripts that do not meet State needs for conducting audits; also, BMF accounts are not available through TDS at this time.
6. Generally, how will data be retrieved by the user?
Data requests for the CA FTB are sorted from the requests made by IRS employees, loaded to a CD, and then uploaded to an FTB mini-computer which is housed in the Fresno IRS computer room. After IRS Disclosure review, the data (minus accounts removed by Disclosure) is transmitted via File Transfer Protocol from Fresno to Sacramento to a mini-computer in a secured location in the CA FTB. Transcripts are printed and sorted to the requesting employee in the CA FTB.
7. Is the data retrievable by a personal identifier such as name, SSN, or other unique identifier?
Data is retrievable by TIN and the Remarks field.
Access to the Data
8. Who will have access to the data in the system (Users, Managers, System Administrators, Developers, Others)?
No one has access to the data while it is in process. IRS Disclosure does review each account before the data is released back to FTB, however. This Disclosure 100% review is an integral part of the delivery process. This access is to validate that the file has been processed successfully and, if necessary, to remove any information that is not on a “need to know” basis.
9. How is access to the data by a user determined and by whom?
The Franchise Tax Board auditor fills out a Form 6227 to request IRS information needed to complete the state audit. The request is reviewed and signed by the auditor’s immediate supervisor, and reviewed and signed again by the IRS Coordinator (an FTB employee) prior to entry into FTB’s mini-computer in Sacramento, which initiates an order for an IRS MFTRA transcript. The supervisor and IRS Coordinator determine whether the requestor has a legitimate need for the data in order to perform their official duties, and that the requestor is appropriately qualified to receive the data.
Transcript requests/receipts are subject to both Safeguard and Need & Use review by IRS Mission Assurance.
10. Do other IRS systems provide, receive, or share data in the system? If YES, list the system(s) and describe which data is shared. If NO, continue to Question 12.
Yes. The Master File Transcript (IMF and BMF) data is extracted from the IRS mainframe. No other IRS systems are involved.
11. Have the IRS systems described in Item 10 received an approved Security Certification and Privacy Impact Assessment? Yes.
12. Will other agencies provide, receive, or share data in any form with this system?
The CA Franchise Tax Board receives the transcripts they request. No other agencies receive or share the data provided to FTB.
Administrative Controls of Data
13. What are the procedures for eliminating the data at the end of the retention period?
MFTRA transcripts are filed along with the audit papers for the audit case at FTB in Sacramento. Transcripts are destroyed at the end of the case retention period in FTB, usually 3.5 years. The IRS data is treated as confidential material and destroyed in accordance with applicable guidelines in IRM 1.15.57.1.12.
14. Will this system use technology in a new way? If "YES" describe. If "NO" go to Question 15. No.
15. Will this system be used to identify or locate individuals or groups? If so, describe the business purpose for this capability.
The system is used to request IRS tax data on taxpayers already known to the FTB to meet their audit criteria, and is used during the state audit as a tool to make the appropriate additional assessment or no change.
16. Will this system provide the capability to monitor individuals or groups? If yes, describe the business purpose for this capability and the controls established to prevent unauthorized monitoring.
No. The transcript received by FTB is a “snapshot in time” of the taxpayer’s account. On-line access to account data is not provided.
17. Can use of the system allow IRS to treat taxpayers, employees, or others, differently? Explain. No.
18. Does the system ensure "due process" by allowing affected parties to respond to any negative determination, prior to final action?
IRS policy requires that states do not take action on audit information provided by IRS until the IRS audit/assessment is final. Individuals have the ability to appeal an audit. If an IRS audit assessment is reversed on appeal, FTB is notified to allow comparable amendment to the state assessment.
19. If the system is web-based, does it use persistent cookies or other tracking devices to identify web visitors?
Not applicable.
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