Page 6 - 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

or potential legal and ethical conflicts of interest when a tax return preparer is considering
engaging a new client. 26 C.F.R. § 301.7216-2(p).
o Tax return information gathered in conducting a conflict review may only be used
for purposes of that conflict review.
• Disclosure or use to the extent necessary for a tax return preparer to collect payment for tax
preparation services. 26 C.F.R. § 301.7216-2(l).
o This simply means that you can use a taxpayer client’s credit card and disclose the
information that appears on the card.

If use and/or disclosure is not authorized under 26 C.F.R. § 301.7216-2, as discussed above,
it is prohibited unless you obtain consent from the taxpayer on forms prepared according
to very specific, exacting requirements set forth in 26 U.S.C. § 301.7216-3. This regulation
should be reviewed carefully if you are requesting taxpayer consent. Consent may not be
retroactive.

Conclusion
Being a criminal defense lawyer in the tax area may be much more complex than you
realized. If you represent a taxpayer client who is or may soon be under criminal
investigation by the IRS or the Department of Justice, you will almost inevitably become a
tax return preparer under 26 C.F.R. § 301.7216-1 by assisting in the preparation of tax
returns. You must then ascertain whether your use or disclosure of your taxpayer client’s
tax return information is permitted under 26 C.F.R. § 301.7216-2. If not, you must obtain
your taxpayer client’s consent to use or disclose on forms that comply with all of the
requirements of 26 C.F.R. § 301.7216-3.
Caroline Rule is a partner at Kostelanetz & Fink, LLP, with offices in New York and Washington, D.C.

© 2018 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be
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