Tax preparers get new guidance on Section 7216
The IRS strikes ... and just in time for tax season, too.
The agency has released temporary guidance that's meant to clarify what tax preparers can do to comply with Section 7216 of the Internal Revenue Code.
According to the AICPA, Section 7216 "generally prohibits the disclosure or use of tax return information without the client’s explicit, written consent" -- and that has been a source of confusion for CPAs and other tax preparers for some time now.
The IRS's new guidance, though, would allow tax return preparers to "more effectively provide a range of services that taxpayers would ordinarily expect from tax return preparers." According to MACPA Executive Director Tom Hood, the IRS is "responding to requests from the AICPA and state CPA societies (the MACPA and others) to loosen the regulations to allow for typical CPA services related to performing tax services."
In certain instances, those services could, according to the IRS, permit tax preparers to "use or disclose tax return information without explicit taxpayer consent in limited circumstances." Those circumstances might include the disclosure of information "in connection with the potential sale or purchase of a tax return preparer’s business and during the process of conducting client conflict-of-interest checks."
The guidance is contained in two revenue procedures -- Revenue Procedure 2010-4 and 2010-5. The IRS will entertain comments on the proposals before making them final.
If you're looking for further details about Section 7216, these earlier resources would be good places to start
- Summary of Section 7216, from the Tax Advisor
- The latest in implementing Section 7216, an AICPA Tax Section e-alert
- AICPA video summary
- Article on new disclosure regulations
- IRS aids for preparing Section 7216 forms
- FAQs from the IRS
- AICPA Tax Section practice guide
- Video: AICPA President Barry Melancon examines Section 7216
- New IRS Reg. 7216 worries, confuses CPAs. but help is on the way (from Rick Telberg)