Transcript Disclosure and Use of Tax Return Information

Disclosure and Use of
Tax Return Information
Take effect 1/1/2009
§ 7216
Final Regulation § 301.7216-1
Final Regulation § 301.7216-2
Final Regulation § 301.7216-3
Revenue Procedure 2008-35
TAM-1313
NTA 680
Presentation Developed by Honkamp Krueger & Co., P.C.
Why Pay Attention
to this part of the seminar:
If you fail to adhere to the new rules • Civil Penalties:
– $250 for each disclosure or use
• Not to Exceed $10,000 each calendar year
• Criminal Penalties:
– Maximum Penalty of 1 year In Prison
– Maximum Fine of $1,000
– Or Both (including costs of prosecution)
Developed by: Honkamp Krueger
& Co. P.C.
Disclosure vs. Use
• Disclosure:
– The act of making tax return information
known to any person in any matter
whatsoever
• Use:
– Any circumstance which a practitioner refers
to or relies on tax return information
• ie: providing a subsidiary with tax return
information to sell investment services
Developed by: Honkamp Krueger
& Co. P.C.
Makeup of Consent
• Must be a separate written document
– Each disclosure or use consent needs to be
contained on a separate written document
• One sheet can not be used to consent to both uses and
disclosures.
– Special rule if multiple uses or disclosures are
needed
• Specifically and separately identify each disclosure or use to
give taxpayer option to opt out
– Must be on 8½ x 11 paper or larger using at least 12
point font
– All text on that consent form must pertain only to the
use or disclosure consent
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Makeup of Consent
• Mandatory Statements in Consent
– Please see Revenue Procedure 2008-35 for
required language
• Section Four covers required paragraphs
• These paragraphs are different depending on use
or disclosure
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& Co. P.C.
Makeup of Consent
• Must Include Affirmative Consent
• Must Include a Signature
– Paper – Signature must be made
– Electronic – Special rules apply for electronic
consents which apply to consents over the
internet or through e-mail
• Tax Preparer can not provide a consent
form with blank spaces for taxpayer to
complete related to the purpose of the
consent
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& Co. P.C.
Makeup of Consent
• Consent to disclose the entire return
– These are allowed
– The consent must provide that the taxpayer
has the ability to request a more limited
disclosure of tax return information as the
taxpayer may direct
• Multiple additional rules for using or
disclosing data overseas.
Developed by: Honkamp Krueger
& Co. P.C.
In Summary of What
Needs to be Included
• Taxpayer name and Tax Preparer name
• Intended Purpose of the Disclosure or Use
• For Disclosure:
– Identify recipient or recipients of tax return information
• For Use:
– Identify the particular use authorized
• Include the specific information that will be
used/disclosed up to and including the entire
return
• Signed and Dated by the Taxpayer as well as a
copy of the consent given to the Taxpayer
Developed by: Honkamp Krueger
& Co. P.C.
Timing Rules for Consent
• No retroactive consents
• Tax Preparer may not request a taxpayer’s consent to
disclose or use tax return information for purposes of
solicitation of business unrelated to tax return
preparation after the tax return preparer provides a
completed tax return to the taxpayer for signature
• If a taxpayer denies a consent request, the tax preparer
may not request another consent with a “substantially
similar” request
• Consent can be specified for length of time in effect
• If none specified, one year is assumed
Developed by: Honkamp Krueger
& Co. P.C.
Exceptions to Rules
Permissible disclosures/uses without consent of taxpayer
• Any disclosure to the IRS
• Disclosures or uses for preparation of a
taxpayer’s return
– Tax return preparer located within the same firm in the
United States
• Disclosures to other tax return preparers
– Preparer-to-Preparer
• Can disclose information to preparer outside of firm to aid in
auxiliary services in preparation, as long as those services
are not “substantive determinations” affecting the tax liability
• ie: when we send returns to third party to e-file the return
Developed by: Honkamp Krueger
& Co. P.C.
Exceptions to Rules
Permissible disclosures/uses without consent of taxpayer
• Disclosure or Use if Related Taxpayers
– In preparing a return for B, you may use A’s
information if:
• B is related to A in the following ways:
– Husband/Wife, Child/Parent, Grandchild/Grandparent,
Partner/Partnership, Trust or Estate/Beneficiary or
Fiduciary, Corporation/Shareholder or members of a
controlled group
• A’s interest in the information is not adverse to B’s
interest in the information
• A has not expressly prohibited the disclosure or use
Developed by: Honkamp Krueger
& Co. P.C.
Exceptions to Rules
Permissible disclosures/uses without consent of taxpayer
• By court order, administrative order,
requests by a federal/state agency, US
Congress, Professional Association Ethics
Board or Public Company Accounting
Oversight Board
• For use in securing legal advice, treasury
investigations or court proceedings
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& Co. P.C.
Exceptions to Rules
Permissible disclosures/uses without consent of taxpayer
• Certain disclosures by accountants and
attorneys
– A lawfully engaged tax preparer may use the
taxpayer’s tax return information for the
purpose of providing other legal or accounting
services to the taxpayer
• Accounting Services include preparation of books
and records, working papers, or accounting
statements or reports for the taxpayer
• See §301.7216-2(h) for full rule for accountants
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& Co. P.C.
Exceptions to Rules
Permissible disclosures/uses without consent of taxpayer
• Information in preparation or audit of state,
local or foreign tax returns/obligations
• Payment for Tax Preparation Services
– ie: use a credit card number given to pay, the
preparer may use the return to get the name
of the taxpayer
• Retention of Records
– For use in preparation of future returns
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& Co. P.C.
Exceptions to Rules
Permissible disclosures/uses without consent of taxpayer
• Lists for solicitation of tax return business
– Should be solely the name, address, e-mail
address and phone number
– Only used to offer additional tax information or
tax preparation services
• For Quality or Peer Reviews
• To report the commission of a crime
• If due to tax preparer’s incapacity or death
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& Co. P.C.
Application of Rules for Returns
• 1040 Series
– Effective 1/1/2009
– All rules above apply
• Non-1040 Series
– Rules for non-1040 series are different
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& Co. P.C.
Application of Rules for Returns
Rules for Non-1040 Returns
• Consent can be included in the
engagement letter for non-1040 returns
– Must include the client and tax preparer
names
– Must be signed and dated by client
• Specific tax return information to be
disclosed or used must be identified (same
as 1040 requests)
Developed by: Honkamp Krueger
& Co. P.C.
Application of Rules for Returns
Rules for Non-1040 Returns
• For Disclosure
– Specify purpose and specific recipients
– You can identify a descriptive class of
recipients for non-1040 returns
• For Use
– Specify the specific products or services for
which use is requested (same as 1040)
Developed by: Honkamp Krueger
& Co. P.C.
Summary
• To gain a through understanding of these rules,
you should read through the code, regulations
and the revenue procedure.
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§ 7216
Final Regulation § 301.7216-1
Final Regulation § 301.7216-2
Final Regulation § 301.7216-3
Revenue Procedure 2008-35
• More information should be coming from the IRS
on specifics on applying these rules.
Developed by: Honkamp Krueger
& Co. P.C.