Why are you being asked to provide a written consent to disclosure tax return information?

The answer is that on January 1, 2009, new IRS regulations under Internal Revenue Code section 7216 became effective.  Treasury Regulation 301.7216 modified regulations that had remained largely unchanged for 30 years. The newly revised regulations attempt to address modern return preparation practices, including electronic filing and the cross marketing of financial and commercial products and services by tax return preparers.

Absent a specific, exception, Treas. Reg. section 301.7216 generally prohibits the disclosure or use of tax return information without the client’s explicit, written consent. In general, a “disclosure” of tax return information involves a disclosure by the preparer of a client’s return information to a third party, such as a mortgage lender. 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.

Under section 7216, a tax return preparer is subject to a criminal penalty for “knowingly or recklessly” disclosing or using tax return information. Each violation of section 7216 could result in a fine of up to $1,000 or one year imprisonment, or both. Internal Revenue Code section 6713, the companion civil penalty, imposes a $250 penalty on a preparer for each prohibited disclosure or use of the return information.

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Our company policy has always been to only provide confidential client information to a third party after receiving written consent.  Also, we don’t use your tax return information to cross sell you additional products and we never intentionally send unencrypted confidential information through the internet.

With that said, we know that sometimes, for convenience, you would like us to forward copies of your tax returns to someone such as your mortgage lender when applying for a home loan.  We are happy to accommodate your request so we have provided a sample disclosure consent form you may use to authorize us to disclose your tax return information to a third party.

Click here to view our §7216 Consent Form.

Here are some tips for completing the form before you send it to us:

• If you file jointly with your spouse, both you and your spouse should sign the consent form.
• A brief statement of purpose will suffice.  For example, “I’m applying for a home loan.”
• The name you type on the first line of the “Name and address” section will automatically appear in the “disclose to” line below.
• The default duration is one year unless you specify a longer or shorter duration.
• After signing and dating your consent, please mail it to us at 6165 Ridgeview Ct, Suite D, Reno, NV 89519-6332 or fax it to us at (775) 828-5028.

Please call if you have any questions.