Internal Revenue Code

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.

IRC Section 7216 This site contains the full-text to Title 26-IRC Section 7216. Learn More>>

IRC Section 7525 This site contains the full-text to Title 26-IRC Section 7525. Learn More>>   Safeguarding Taxpayer Information This brochure, prepared by the Internal Revenue Service, is a quick reference guide for businesses that receive, maintain, share, transmit and store personal data. The downloadable brochure provides the latest privacy and security rules. Learn More>>   New Regs Govern Overseas Disclosure and Use of Taxpayer Information On Jan. 1, 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. Learn More>>   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). Learn More>>