IRC Section 7216 prohibits anyone who is involved in the preparation of tax returns from knowingly or recklessly disclosing or using the tax-related information provided other than in connection with the preparation of such returns. Anyone who violates this provision may be subject to a fine or even imprisonment. The regulations under Section 7216 provide an exemption from this law for tax return preparers who disclose taxpayer information to a third party for the purpose of having that third party process the return. Nevertheless, members should make third-party providers to which they have supplied protected client information aware of this requirement. Note there is no requirement in Section 7216 or its regulations for a member to inform the client that a third-party provider is being used. In addition, IRC Section 7525 provides a client with a privilege similar to an attorney-client privilege when they make certain tax-related disclosures to, among others, CPAs. Care needs to be taken to assure that a third-party provider does not do anything that adversely affects a client’s rights under this provision.
|Disclosure or Use of Information by Preparers of Returns
IRC Section 7216
This site contains the full-text to Title 26-IRC Section 7216.
IRC Section 7525
This site contains the full-text to Title 26-IRC Section 7525.
IRC Section 6713
This site contains the full-text to Title 26-IRC Section 6713.
New Regs Govern Overseas Disclosure and Use of Taxpayer Information
On Jan. 1, 2009, new rules took effect governing how U.S. tax-return preparers can disclose taxpayer information to overseas return preparers. The rules protect taxpayers from having their return information used in a manner they did not authorize. Return preparers who break the rules can be subject to fines and imprisonment.
New Disclosure Rules and Procedures Effective January 2009: Are you ready?
IRC §7216, Disclosure or Use of Information by Preparers of Returns, provides a criminal penalty for certain information disclosure. While this rule has been part of the tax law since 1971, the IRS recently modified the regulations to improve the ability of taxpayers to protect their tax return information (TRI).
Revenue Procedure 2008-35
This revenue procedure applies to all tax return preparers, as defined in §301.7216-1(b)(2), who seek consent to disclose or use tax return information pursuant to §§301.7216-3 and 301.7216-3T with respect to taxpayers who file a return in the Form 1040 series, e.g., Form 1040, Form 1040NR, Form 1040A, or Form 1040EZ.
Internal Revenue Procedure 2005-60
This revenue procedure informs Authorized IRS e-file Providers of their obligations to the Internal Revenue Service (the Service), taxpayers, and other participants in the IRS e-file Program.