IRS Issues Proposed Regulations Adjusting Use of Some Taxpayer Information

[kcjenkins]

IRS Issues Proposed Regulations

Adjusting Use of Some Taxpayer Information

IR-2009-121, Dec. 30, 2009

WASHINGTON - The Internal Revenue Service today announced the issuance of

proposed and temporary regulations and related revenue rulings addressing

the use or disclosure of tax return information by tax return preparers.

The regulations and related revenue rulings under section 7216 enable tax

return preparers to more effectively provide a range of services that

taxpayers would ordinarily expect from tax return preparers. Generally,

these services benefit taxpayers, increase voluntary compliance and improve

tax administration.

The proposed and temporary regulations enable tax return preparers to use or

disclose tax return information without explicit taxpayer consent in certain

limited circumstances. Tax preparers can contact their clients regarding tax

law developments that may affect the clients. They can also disclose

information in connection with the potential sale or purchase of a tax

return preparer's business and during the process of conducting client

conflict-of-interest checks.

Before these proposed regulations are adopted as final regulations,

consideration will be given to any written (a signed original and eight (8)

copies) or electronic comments that are submitted timely to the IRS. The IRS

and the Treasury Department request comments on the clarity of the proposed

rules, how they can be made easier to understand and the administrability of

the rules in the proposed regulations. All comments will be made available

for public inspection and copying. A public hearing will be scheduled if

requested in writing by any person that timely submits written comments.

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Rev. Rul. 2010-4

PURPOSE

This revenue ruling provides guidance on whether a tax return preparer is

liable for criminal and civil penalties under Internal Revenue Code sections

7216 and 6713 when the tax return preparer discloses or uses tax return

information under the circumstances described below.

ISSUEs

(1) Is a tax return preparer liable for penalties under

sections 7216 and 6713 when the tax return preparer uses tax return

information to contact taxpayers to inform them of changes in tax law that

could affect the taxpayers' income tax liability reported in tax returns

previously prepared or processed by the tax return preparer?

(2) Is a tax return preparer, who is lawfully engaged in the

practice of law or accountancy, liable for penalties under sections 7216 and

6713 when the tax return preparer uses tax return information of taxpayers

whose tax returns the tax return preparer has prepared or processed to

determine which taxpayers' future income tax return filing obligations may

be affected by a prospective change in tax rule or regulation and to contact

the potentially affected taxpayers for whom B reasonably expects to provide

accounting services in the next year to notify them of the changed rule or

regulation, explain how the change may affect them, and advise them with

regard to actions they may take in response to the change?

(3) Is a tax return preparer liable for penalties under sections 7216 and

6713 when the tax return preparer discloses tax return information contained

in the list permitted to be maintained by the tax return preparer under

section 301.7216-2(n) to a third-party service provider that creates,

publishes, or distributes, by mail or e-mail, newsletters, bulletins, or

similar communications to taxpayers whose tax returns the tax return

preparers have prepared or processed containing tax information and general

business and economic information or analysis for educational purposes or

for purposes of soliciting additional tax return preparation services for

the tax return preparer?

Rev. Rul. 2010-5

PURPOSE

This revenue ruling provides guidance on whether a tax return preparer is

liable for criminal and civil penalties under Internal Revenue Code sections

7216 and 6713 when the preparer discloses tax return information under the

circumstances described below.

ISSUES

(1) Is a tax return preparer liable for penalties under sections 7216

and 6713 when the preparer discloses to a professional liability insurance

carrier tax return information required by the insurance carrier to obtain

or maintain professional liability insurance coverage?

(2) Is a tax return preparer liable for penalties under sections 7216

and 6713 when the preparer discloses to the preparer's professional

liability insurance carrier tax return information required by the insurance

carrier to promptly and accurately report a claim or a potential claim

against the tax return preparer, or to aid in the investigation of a claim

or potential claim against the tax return preparer?

(3) Is a tax return preparer liable for penalties under sections 7216

and 6713 when the preparer discloses tax return information to the

preparer's professional liability insurance carrier in order to secure legal

representation under the terms of the insurance policy or to an unrelated

attorney for the purpose of evaluating a claim or potential claim against

the tax return preparer?