TaxDome and IRS Section 7216 taxpayer consent

Using TaxDome does not require obtaining Section 7216 authorization from a taxpayer. Here’s why, and what the regulation actually covers.

What IRS Section 7216 covers

IRS Regulation 7216 is a set of rules issued by the Internal Revenue Service (IRS) that govern the disclosure and use of tax return information by tax return preparers, such as accountants, enrolled agents, and other professionals.

The regulation establishes standards for safeguarding and using confidential taxpayer information, including rules for obtaining taxpayer consent to disclose their information to third parties. It applies to both paper and electronic tax return information, and violating the regulation can result in penalties and even criminal charges.

In short, Regulation 7216 protects the privacy and confidentiality of taxpayer information and ensures that tax return preparers handle it in a responsible and ethical manner.

Who a tax preparer can disclose taxpayer information to

Under IRS Regulation 7216, a tax preparer may only disclose a taxpayer’s confidential information to specific individuals or entities with the taxpayer’s express consent:

• The taxpayer’s spouse, if they filed a joint tax return.
• The taxpayer’s dependent, if the tax return includes their information.
• Any individual or entity designated by the taxpayer in writing.
• Any individual or entity authorized by law to receive such information, such as a court or government agency.

Tax preparers must obtain written consent from the taxpayer before disclosing their information to any of these individuals or entities. The consent must be specific and informed—the taxpayer must be fully aware of who will receive their information and how it will be used.

Disclosures allowed without taxpayer consent

As per the Cornell Law School Legal Information Institute , two categories of disclosure don’t require taxpayer consent:

• Disclosures to the IRS: Section 7216(a) and § 301.7216-1 don’t apply to disclosures of tax return information to an officer or employee of the IRS.
• Updating tax return preparation software: If a tax return preparer uses software to prepare or file a tax return, they may use the taxpayer’s tax return information to update that software—to address changes in IRS forms, e-file specifications, or regulatory guidance, or to test the software’s technical capabilities—without the taxpayer’s consent, under § 301.7216-3.

Why using TaxDome doesn’t require 7216 consent

While data is stored on TaxDome servers, it is not disclosed to TaxDome. All data sent to TaxDome is encrypted, so TaxDome does not have access to clients’ documents. In this capacity, your relationship with TaxDome is similar to using Dropbox, Google Drive, or other such internet service providers. Therefore, using TaxDome does not require Section 7216 consent.

TaxDome’s privacy policy covers data handling in full detail, and the IRS publishes its own Section 7216 reference for further reading.

Share

Link copied