Page 1 - Be Aware of 26 U.S.C. § 7216: You May, to Your Surprise, Be a Tax Return Preparer

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Fall 2018, Vol. 19 No. 1

November 15, 2018

Be Aware of 26 U.S.C. § 7216: You May, to

Your Surprise, Be a Tax Return Preparer

If you are an attorney who practices in the criminal tax area, be
aware of 26 U.S.C. § 7216, which makes it a crime for a tax return

preparer to make unauthorized use or disclosures of a taxpayer’s
tax return information.

By Caroline Rule

Under 26 U.S.C. § 7216, it is a federal crime—a misdemeanor punishable by up to a year in
jail and/or a $1,000 fine—for a tax return preparer to knowingly or recklessly disclose any
taxpayer client’s tax return information furnished in connection with tax return
preparation, or to use any such information for any purpose other than preparing or
assisting in preparing a tax return. There are also civil penalties, which do not depend on
knowing or reckless behavior, set forth in 26 U.S.C. § 6713: a fine of $250 for each
prohibited disclosure or use, up to $10,000 total per calendar year.

Why You May Be a Return Preparer
You may think that, as an attorney rather than an accountant, you need not be concerned
about these provisions because you are not a tax return preparer. However, the definition
of tax return preparer is broad, and the regulations under section 7216 are complex; so if
you represent clients in tax-related criminal investigations or prosecutions, you will almost
surely find yourself falling within the definition of tax return preparer with its numerous
concomitant regulations.

The definition of tax return preparer under 26 C.F.R. § 301.7216-1 includes “(A) [a]ny
person who is engaged in the business of preparing or assisting in preparing tax returns”
and “(C) [a]ny person who is otherwise compensated for preparing, or assisting in preparing,
a tax return for any other person.” 26 C.F.R. § 301.7216-1(b)(2)(i) (emphases added).

Furthermore,

© 2018 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be
copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent
of the American Bar Association.
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