Page 5 - 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

• Disclosure to an attorney in order to obtain legal advice, or in connection with Treasury
investigations or court proceedings. 26 C.F.R. § 301.7216-2(g).
o Consequently, you may consult another attorney outside your firm without your
taxpayer client’s consent.
• If you are an attorney, use of a taxpayer client’s information and disclosure to another
employee or member of your firm to provide legal or accounting services to the taxpayer
other than tax return preparation, such as estate planning or writing trial briefs. 26 C.F.R. §
301.7216-2(h)(1).
• Disclosure or use of information in the case of certain related taxpayers. 26 C.F.R. §
301.7216-2(e).
o You may sometimes disclose tax return information to a second taxpayer who is
related to the first taxpayer.
o Covered relationships:
 husband and wife
 child and parent
 grandchild and grandparent
 partner and partnership
 trust or estate and beneficiary
 trust or estate and fiduciary
 corporation and shareholder
 members of a controlled group of corporations
o The first taxpayer’s tax interest in the information must not be adverse to the
second taxpayer’s tax interest in the information.
o The first taxpayer must not have expressly prohibited the disclosure or use.
• If you are an attorney, disclosure or use of tax return information in performing legal
services for another client. 26 C.F.R. §301.7216-2(h)(2).
o The tax return information is or may be relevant to the subject matter of the legal
services for the other client.
o Consideration of the tax return information is necessary for the proper performance
of your or your colleagues’ legal services to the other client.
o You may disclose the information to another employee or member of your firm, but
you may not disclose the information to anyone who is not an employee or member
of your firm.
• Disclosure to an individual taxpayer’s fiduciary, such as a duly appointed fiduciary of a
deceased taxpayer or the executor of the taxpayer’s estate. 26 C.F.R. § 301.7216-2(j).
• Disclosure or use in an audit of any tax return of a taxpayer under the law of any state, or
assisting a taxpayer client with foreign-country tax obligations. 26 C.F.R. § 301.7216-2(k).
• Disclosure or use for conducting a conflict review, undertaken to comply with requirements
established by any federal, state, or local law, agency, board, or commission or by a
professional association ethics committee or board to identify, evaluate, or monitor actual

© 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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