Section 7216, which went into effect on January 1, 2009, will have a broad impact on the use of consumer’s tax information particularly with respect to sharing it with third parties. Tax preparers are keenly interested in understanding exactly what they need to do to comply with this important regulation. In our February Section LIVE 7216 webcast, we received several hundred detailed and pointed questions from the audience. Many of the questions surrounded the creation of newsletters and the specifics details of the regs and their application to a myriad of individual scenarios. “Section 7216 II: Shades of Gray LIVE webcast Question and Answer Session” aims to address those questions. The experts will reconvene in a one-hour live webcast which will be completely dedicated to providing specific answers to many detailed questions.
This new regulation can have a potentially broad impact on your business. This webcast is one of the most important events that we will run this year and is a must attend for CPAs and their marketing staff.
Course Level: Intermediate
Prerequisite: None
Method Of Presentation: Group-Based-Internet
Developer: The Knowledge Group, LLC
Recommended CLE/CPE Hours: 2.0
(Please note, your State Bar or Accounting Board will make the final determination with respect
to continuing education credit.)
Advance Preparation: Print and review course materials
Course Code: 093854]
Please click here to view the information about our preceding Rule 7216 event..
Jim F. Kurdziel
Senior Program Analyst and Technical Advisor, Electronic Tax Administration (ETA)
Phillip A. Pillar
Shareholder
Julian Y. Kim
Partner
Jim F. Kurdziel, Senior Program Analyst and Technical Advisor, Electronic Tax Administration (ETA) Internal Revenue Service,
Julian Y. Kim, Partner, Latham & Watkins LLP
and
Phillip A. Pillar, Shareholder, Greenberg Traurig, LLP
I. Uses/disclosures for non-preparation purposes, in general
1. Reg 301.7216-1(b) (4) (ii) example provides cannot ask whether taxpayer wants to make an IRA contribution without consent. Please provide other example i.e. claim a parent as a dependent, make a gift to child, set up profit sharing plan, make profit sharing contribution if you know they have a plan, set up Cafeteria Plan, HSA, set up a 529 Plan, etc. Please provide other examples that you believe could be a problem re: use
2. In Slide #15 - "To analyze tax return info (use)” - you indicated I would need consent to solicit - do I need consent to analyze?
3. Is soliciting valuation services for gift tax returns tax return preparation or does that require written authorization?
4. Based on our firm's reading of the 7216 regulations, a tax preparer can provide tax information to a bank without written consent, as long as the client has requested such disclosure. Is this true?
5. In a situation where a client calls or emails you and asks you to send a copy of their 1040 to their banker, must a client also consent in writing that specifically complies with all the details of 7216? Surely, this is not an abuse that needs addressing.
6. If a taxpayer asks us to call his broker to get basis information for a sold stock, can we do it without written permission?
7. Is consent for use and disclosure required for taxpayer's request for direct deposit of tax overpayment or automatic withdrawal of tax underpayment?
II. 301.7216-1 Definitions
1. If related co (financial advisor) currently has a client as a result of relationship/referral from tax preparer in 2008 do we have to do anything?
2. If the tax preparer also provides consulting services i.e. estate planning does that remove that taxpayer from 7216? How about if you provided consulting in prior years?
3. If we prepare f/s in 2009 for taxpayer does that exempt that taxpayer? How about if we prepared f/s in prior years?
4. If related co (mortgage co or investment advisory) had met with taxpayer in prior years and put them on mailing list then is that taxpayer exempt?
5. CPAs who perform due diligence engagements for clients whose returns are not prepared are not required to get disclosure?
6. Are estate planning services and payroll tax preparation services covered by 7216? As they are outside of Chapter 1 it would not appear so.
7. Notwithstanding the definition of tax returns that Julian reviewed, please comment that most of the emphasis when discussing tax returns and 7216 seems to deal with the 1040 series.
III. 301.7216-2(a) Disclosure pursuant to other provisions of the Internal Revenue Code
1. If I already have a Power of Attorney in effect for a particular tax return, do I still need to go through the consent process?
2. 301.7216-2(c) Disclosures or uses for preparation of a taxpayer’s return
3. Regs currently require consents to disclose info to any employee located outside US. Does this include a US employee working temporarily (to supervise the India office during tax season) in other country?
4. My Firm's tax prep software is accessible by all professionals in the Firm. Every professional can access any return. Must I password protect and restrict access to only those professional working on a specific client?
IV. 301.7216-2(d) Disclosures to other tax return preparers
1. It would help to know the definition of a "taxpayer." E.g., I assume that a corporation tax manager can pick up the corporate return, but what about a bookkeeper/employee of the corporation, etc...so is any of the entity' s employees...the taxpayer who is the taxpayer for purposes of a corporation or partnership? In other words, can we provide the tax return to someone in the client's accounting department that is not an officer of the corporation or a partner in the partnership without consent?
2. 301.7216-2(d) allows disclosure to other preparers without consent. If you prepare a partnership return and a partner verbally requests that their K-1 be disclosed to an unrelated outside preparer can you do so without written consent?
3. I am the in-house accountant and involved in having an outside-accounting firm review the returns. Do we need to have signed consent forms from the taxpayers between both myself and the outside accounting firm so that we can share information?
V. 301.7216-2(e) Disclosure or use of information in the case of related taxpayers
1. If we have a client that is not just a tax return prep client but an audit client and we then prepare corporate return and their individual return how does 7216 apply to this client?
2. 301.7216-2(h) Certain disclosures by attorneys and accountants
3. Reg 301.7216-2(h) appears to allow us to disclose return to banker, but only if we also provide the taxpayer accounting services? So, if we do not prepare financial statements, we need consent before disclosure to banker?
4. 301.7216-2 paragraph (h) seems to provide some broad exceptions for attorneys and accountants "in the normal course of business". Can someone please expand on this?
5. 301.7216-2(h)(1)(i) states in the normal course of rendering accounting services, the accountant may make tax return information available to lenders, as such can you disclose a tax return to a bank without written consent at a taxpayer's request?
6. 301.7216-2 paragraph (h) seems to provide some broad exceptions for attorneys and accountants "in the normal course of business". Can someone expand on this, please?
VI. 301.7216-3 Consent Requirements
1. Do we need an original consent or can we have a faxed copy for our records
2. How long do we have to keep support? Can we save electronically?
3. If taxpayer declines consent this year (2009) can you request consent (2010)?
4. Can all consents, if on separate letter, being mailed in the same envelope
5. Please confirm: For the Form 1040 series, a preparer CANNOT provide a taxpayer with the same written consent form to authorize both "uses" and "disclosures" of tax return information. (A violation of Section 4.05, Rev. Proc. 2008-35). Separate docs req'd.
6. May the consent name a law firm as opposed to a specific attorney? If we must name a specific attorney, does that mean we must obtain written consent to talk to any other person at that firm, including a legal assistant?
7. Can we obtain consent to disclose taxpayer information for multiple years (ex. 2008, 2009 & 2010) in a single consent letter?
8. Is consent solely by e-mail acceptable?
9. Could you please interpret Reg. -3(b)(2)? Sounds like any consent has to be given before tax return is completed?
10. For joint returns, how many signatures are required on consent forms?
11. What are the 7 specific consents referred to by Mr. Williams re: required paragraphs - these are not required in the non-1040 series?
VII. 301.7216-2(n) Lists for solicitation of tax return business
1. Once tax return is completed can we request consent for mailings, etc.? Example: Complete return and mail 3/15. Do we have to wait until next tax season to request consent?
2. If the taxpayer is no longer a tax client can we leave on mailing list?
3. We are a CPA firm and we want to send quarterly news letters to our individual client base. Do we need to obtain consent from each client? If so what form?
4. Does the answer above change if we use a third-party in which we provide the email addresses of our clients to that third party to send the quarterly letter?
5. We send out an electronic newsletter every other week (Biz Actions); they informed us that we must identify TAX ONLY clients because these clients can only get articles related to taxes. Is this accurate? We are a CPA/ Business Advisory Firm.
6. If newsletter provides PFP advice... are you saying consent is needed?
7. Follow up on the Biz Actions question: please comment on general newsletter mailings by a third party (Biz Actions) for a 1040 only client vs. a 1040 for a client who is a CEO of a company that our firm provides audit and corporate income tax services to.
8. Can we go back to the electronic newsletter question...if we use a third party to send an only tax information newsletter do we need client consent because we give email addresses to the third party?
VIII. Partnerships
1. If preparer prepares Partnership return -what is necessary to fax/email draft and/or final K-1s to partners? Do we need written approval from TMP or GP....what format? Fax or email to partner's accountant?
2. Disclosure of SSN - does this apply to SSN's that would be on a K-1 in an 1120S return. Can we send information to our clients overseas without masked or redacted SSNs?
3. For a partnership-If complete tax return with k-1's is sent to a third party oversees, do all of the partner have to consent to providing that information?
4. Need more clarification about sending out K-1 schedules to partners' accountant. Please advice.
VIIII. IRS operations questions
1. Is additional IRS guidance anticipated? If so, when?
2. Is there someone at the IRS that would "approve" consent letters?
3. Who is the contact at the IRS for questions re: 7216? Any phone number?
4. Is there any news about whether or not IRS will expand the regulations to include other returns such as F. 706, 5500, 990's that are not income tax returns?
- Tax Preparers
- CPA's
- Tax Attorneys
This is a must attend event for anyone interested in understanding Section 7216.
- New guidance explained by the most qualified key leaders & experts
- Hear directly from key regulators & thought leaders
- Interact directly with panel