Page 1 - Be Aware of 26 U.S.C. § 7216: You May, to Your Surprise, Be a Tax Return Preparer
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November 15, 2018 ARTICLES
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
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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.
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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)
