Tax Preparer Disclosure Penalties
By Steven B. Gorin, Esq.
Thompson Coburn LLP, St. Louis, MO
Internal Revenue Code §7216 generally penalizes tax preparers
who disclose or use tax return information without express, specific
permission from the taxpayer. Regulations were finalized in 2008 and
effective as of January 1, 2009. If a planner receives information for
reasons other than tax preparation and the information is later used
on a tax return, then the information becomes privileged tax return
information.
The IRS is primarily concerned with tax return preparers using the
information to cross-sell other services. However, generally lawyers
may use tax return information in the course of a traditional legal
practice and accountants may use such information in the course of a
traditional accounting practice. Regs. §301.7216-2(h)(1)(i).
Special rules apply for disclosure to persons who are not in the
United States. Regs. §301.7216-2(c), (d). If you are directly or
indirectly involved in tax return preparation, you should consider
getting to know these rules.
For more information, in the Tax Management Portfolios, see Tarr
and Drucker, 634 T.M., Civil Tax Penalties, and in Tax Practice
Series, see ¶3830, Penalties.
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