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Disclosure and Use of Tax Return Information Take effect 1/1/2009 § 7216 Final Regulation § 301.7216-1 Final Regulation § 301.7216-2 Final Regulation §

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Presentation on theme: "Disclosure and Use of Tax Return Information Take effect 1/1/2009 § 7216 Final Regulation § 301.7216-1 Final Regulation § 301.7216-2 Final Regulation §"— Presentation transcript:

1 Disclosure and Use of Tax Return Information Take effect 1/1/2009 § 7216 Final Regulation § Final Regulation § Final Regulation § Revenue Procedure TAM-1313 NTA 680 Presentation Developed by Honkamp Krueger & Co., P.C.

2 Developed by: Honkamp Krueger & Co. P.C. Why Pay Attention to this part of the seminar: If you fail to adhere to the new rules - Civil Penalties: –$250 for each disclosure or use Not to Exceed $10,000 each calendar year Criminal Penalties: –Maximum Penalty of 1 year In Prison –Maximum Fine of $1,000 –Or Both (including costs of prosecution)

3 Developed by: Honkamp Krueger & Co. P.C. Disclosure vs. Use Disclosure: –The act of making tax return information known to any person in any matter whatsoever Use: –Any circumstance which a practitioner refers to or relies on tax return information ie: providing a subsidiary with tax return information to sell investment services

4 Developed by: Honkamp Krueger & Co. P.C. Makeup of Consent Must be a separate written document –Each disclosure or use consent needs to be contained on a separate written document One sheet can not be used to consent to both uses and disclosures. –Special rule if multiple uses or disclosures are needed Specifically and separately identify each disclosure or use to give taxpayer option to opt out –Must be on 8½ x 11 paper or larger using at least 12 point font –All text on that consent form must pertain only to the use or disclosure consent

5 Developed by: Honkamp Krueger & Co. P.C. Makeup of Consent Mandatory Statements in Consent –Please see Revenue Procedure for required language Section Four covers required paragraphs These paragraphs are different depending on use or disclosure

6 Developed by: Honkamp Krueger & Co. P.C. Makeup of Consent Must Include Affirmative Consent Must Include a Signature –Paper – Signature must be made –Electronic – Special rules apply for electronic consents which apply to consents over the internet or through Tax Preparer can not provide a consent form with blank spaces for taxpayer to complete related to the purpose of the consent

7 Developed by: Honkamp Krueger & Co. P.C. Makeup of Consent Consent to disclose the entire return –These are allowed –The consent must provide that the taxpayer has the ability to request a more limited disclosure of tax return information as the taxpayer may direct Multiple additional rules for using or disclosing data overseas.

8 Developed by: Honkamp Krueger & Co. P.C. In Summary of What Needs to be Included Taxpayer name and Tax Preparer name Intended Purpose of the Disclosure or Use For Disclosure: –Identify recipient or recipients of tax return information For Use: –Identify the particular use authorized Include the specific information that will be used/disclosed up to and including the entire return Signed and Dated by the Taxpayer as well as a copy of the consent given to the Taxpayer

9 Developed by: Honkamp Krueger & Co. P.C. Timing Rules for Consent No retroactive consents Tax Preparer may not request a taxpayer’s consent to disclose or use tax return information for purposes of solicitation of business unrelated to tax return preparation after the tax return preparer provides a completed tax return to the taxpayer for signature If a taxpayer denies a consent request, the tax preparer may not request another consent with a “substantially similar” request Consent can be specified for length of time in effect If none specified, one year is assumed

10 Developed by: Honkamp Krueger & Co. P.C. Exceptions to Rules Permissible disclosures/uses without consent of taxpayer Any disclosure to the IRS Disclosures or uses for preparation of a taxpayer’s return –Tax return preparer located within the same firm in the United States Disclosures to other tax return preparers –Preparer-to-Preparer Can disclose information to preparer outside of firm to aid in auxiliary services in preparation, as long as those services are not “substantive determinations” affecting the tax liability ie: when we send returns to third party to e-file the return

11 Developed by: Honkamp Krueger & Co. P.C. Exceptions to Rules Permissible disclosures/uses without consent of taxpayer Disclosure or Use if Related Taxpayers –In preparing a return for B, you may use A’s information if: B is related to A in the following ways: –Husband/Wife, Child/Parent, Grandchild/Grandparent, Partner/Partnership, Trust or Estate/Beneficiary or Fiduciary, Corporation/Shareholder or members of a controlled group A’s interest in the information is not adverse to B’s interest in the information A has not expressly prohibited the disclosure or use

12 Developed by: Honkamp Krueger & Co. P.C. Exceptions to Rules Permissible disclosures/uses without consent of taxpayer By court order, administrative order, requests by a federal/state agency, US Congress, Professional Association Ethics Board or Public Company Accounting Oversight Board For use in securing legal advice, treasury investigations or court proceedings

13 Developed by: Honkamp Krueger & Co. P.C. Exceptions to Rules Permissible disclosures/uses without consent of taxpayer Certain disclosures by accountants and attorneys –A lawfully engaged tax preparer may use the taxpayer’s tax return information for the purpose of providing other legal or accounting services to the taxpayer Accounting Services include preparation of books and records, working papers, or accounting statements or reports for the taxpayer See § (h) for full rule for accountants

14 Developed by: Honkamp Krueger & Co. P.C. Exceptions to Rules Permissible disclosures/uses without consent of taxpayer Information in preparation or audit of state, local or foreign tax returns/obligations Payment for Tax Preparation Services –ie: use a credit card number given to pay, the preparer may use the return to get the name of the taxpayer Retention of Records –For use in preparation of future returns

15 Developed by: Honkamp Krueger & Co. P.C. Exceptions to Rules Permissible disclosures/uses without consent of taxpayer Lists for solicitation of tax return business –Should be solely the name, address, address and phone number –Only used to offer additional tax information or tax preparation services For Quality or Peer Reviews To report the commission of a crime If due to tax preparer’s incapacity or death

16 Developed by: Honkamp Krueger & Co. P.C. Application of Rules for Returns 1040 Series –Effective 1/1/2009 –All rules above apply Non-1040 Series –Rules for non-1040 series are different

17 Developed by: Honkamp Krueger & Co. P.C. Application of Rules for Returns Rules for Non-1040 Returns Consent can be included in the engagement letter for non-1040 returns –Must include the client and tax preparer names –Must be signed and dated by client Specific tax return information to be disclosed or used must be identified (same as 1040 requests)

18 Developed by: Honkamp Krueger & Co. P.C. Application of Rules for Returns Rules for Non-1040 Returns For Disclosure –Specify purpose and specific recipients –You can identify a descriptive class of recipients for non-1040 returns For Use –Specify the specific products or services for which use is requested (same as 1040)

19 Developed by: Honkamp Krueger & Co. P.C. Summary To gain a through understanding of these rules, you should read through the code, regulations and the revenue procedure. § 7216 Final Regulation § Final Regulation § Final Regulation § Revenue Procedure More information should be coming from the IRS on specifics on applying these rules.


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