NSA Says: Yes, You Can Talk To Your Own Clients.
via the National Society of Accountants
As tax return preparers should be aware, Code Section 7216 establishes a criminal penalty if a preparer knowingly or recklessly discloses or uses any information furnished to them for, or in connection with, the preparation of income tax returns for any purpose other than to prepare, or assist in preparing, any such returns. Exceptions can be provided in the regulations and NSA has long requested IRS to clarify the scope of this Code section. For example, a taxpayer provides his name and contact information for return preparation purposes. Can this information be used to contact the taxpayer for planning purposes? An overly zealous IRS agent (we hear there are some) may conclude that the preparer has disclosed this information to himself for tax planning and not tax return preparation purposes and assess a penalty.
The IRS has agreed with us that clarification is necessary and today, December 30, issued proposed and temporary regulations and related revenue rulings addressing the use or disclosure of tax return information by tax return preparers. According to IRS News Release 2009-121, “IRS Issues Proposed Regulations Adjusting Use of Some Taxpayer Information,” the regulations and related revenue rulings under section 7216 enable tax return preparers to contact their clients regarding tax law developments that may affect the clients. Not surprisingly, the New Release finds that this would allow tax return preparers “to more effectively provide a range of services that taxpayers would ordinarily expect from preparers.” Go figure. The IRS also recognized that “these services benefit taxpayers, increase voluntary compliance and improve tax administration.”
The IRS guidance also clarifies that preparers can disclose information in connection with other routine business activities, such as obtaining professional liability insurance, the potential sale or purchase of a tax return preparer’s business, during the process of conducting client conflict-of-interest checks, and for other purposes.
The guidance is contained in Revenue Rulings 2010-4 and 2010-5, both of which will be published in IRB 2010-4. To view a copy of the IRS News Release and the Revenue Rules click here: http://www.facebook.com/l/db2a9;www.irs.gov/newsroom/article/0,,id=217704,00.html
