Page 4 - Be Aware of 26 U.S.C. § 7216: You May, to Your Surprise, Be a Tax Return Preparer

Although 26 U.S.C. § 7216 and its regulations are set up as a blanket prohibition on use and
disclosure of tax return information, 26 C.F.R. § 301.7216 2 sets forth a great many exceptions
to this general rule. Uses and disclosures under 26 C.F.R. § 301.7216 2 do not require a taxpayer
client’s consent, while all other uses and disclosures require the taxpayer’s written consent. 26
C.F.R. § 301.7216 3. A discussion of all of the myriad exceptions under 26 C.F.R. § 301.7216 2 is

beyond the scope of this article, which will discuss those exceptions most relevant to an
attorney who falls within the definition of a tax return preparer under 26 C.F.R. § 301.7216 1.

The following uses and disclosures are permitted without obtaining your taxpayer client’s
consent. Some are directly connected with the business of preparing tax returns, and some
are merely related to that business. Some are self-evident; others require some explanation.

“Disclosure pursuant to other provisions of the Internal Revenue Code.” 26 C.F.R. §

301.7216 2(a).

Disclosure to an officer or employee of the IRS. 26 C.F.R. § 301.7216 2(b).

Disclosure pursuant to an order of a court or other legal compulsion. 26 C.F.R. §
301.7216 2(g).

Disclosure to or use by others in your firm who will also assist in preparing the client’s
tax return(s). 26 C.F.R. § 301.7216 2(c)(2).

Disclosure to other tax return preparers outside your firm. 26 C.F.R. § 301.7216 2(d).

This disclosure is only for the purpose of having them prepare or assist in
preparing tax returns, butnotin order for them to make substantive
determinations—analysis, interpretation, or application of the law—that
affect the tax liability reported by the taxpayer.

Consequently, if you are the first recipient of your taxpayer client’s tax return
information and you are going to engage an accountant to prepare tax
returns for the client and that accountant will make substantive
determinations in connection with those returns, you will need the client’s

written consent to disclose the tax return information to the accountant.

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).

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