Taxpayers must consent so tax preparers can release taxpayer’s information to others…
On January 1, 2009, new regulations under Internal Revenue Code section 7216 became effective. Treas. Reg. section 301.7216 represents a modification of previous regulations that had remained largely unchanged for 30 years. The newly revised regulations attempt to address tax return preparation practices, including electronic filing and the availability of financial and commercial products and services by tax return preparers.
Generally the disclosure or use of tax return information without the client’s written consent is prohibited. In general, a “disclosure” of tax return information involves a disclosure by the preparer of a client’s return information to a third party. A “use” of tax return information generally involves the use of the return information by the preparer potentially for the purposes of offering non-tax services to the taxpayer.
A tax return preparer is subject to a criminal penalty for “knowingly or recklessly” disclosing or using tax return information. Each violation could result in a fine of up to $1,000 or one year imprisonment, or both. The companion civil penalty imposes a $250 penalty on a preparer for each prohibited disclosure or use of the return information.
Federal law requires the consent form be provided to the taxpayers. Taxpayers are not required to complete this form. However If they complete the form and agree to the disclosure of their tax return information, their consent is valid for the amount of time that they specify. If they do not specify the duration of their consent, their consent is valid for one year.