IRC Section 7216: Tax Return Disclosure

Effective Jan. 1, 2009, Section 7216 limited tax return preparers’ use and disclosure of information obtained during the return preparation process to activities directly related to the preparation of the return. The regulations describe how preparers, with the informed written consent of taxpayers, may use or disclose return information for other purposes and describes specific and limited exceptions that allow a preparer to use or disclose return information without the consent of taxpayers.

The most troublesome aspect of the changes relates to the penalty provisions. The regulations carry a criminal penalty for “knowingly or recklessly” disclosing or using tax return information with each section 7216 violation resulting in a fine of up to $1,000, a one-year prison term or both. 

Recent Action

IRS proposes updated tax season guidance on Section 7216
The IRS released temporary clarifying guidance to help tax practitioners during the upcoming tax season meet the regulations under Section 7216.

Section 7216 Resources

• AICPA Section 7216 Resources
• A video of AICPA President and CEO Barry Melancon describes what’s new with the Sec. 7216 rules, why complying with them may be difficult (especially for smaller firms), and steps the AICPA is working on to obtain clarity and possible relief
• A video, explaining the ins and outs of the new rules by the AICPA’s Vice President-Taxation Tom Ochsenschlager
• An article offers more details on the rules now in effect
• CCH 7216 Compliance Resource Center
• Background on Section 7216

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