News reports last year suggested the proposed regulations would allow, for the first time, tax preparers to “sell” taxpayer information to unrelated marketers. Is that true?
No. Since 1974, tax preparers had the authority, if taxpayers gave their consent, to disclose tax information to third parties and use it for non-return preparation purposes. The statute uses the terms “disclosure” and “use” and does not refer to the “sale’’ of taxpayer information. The IRS does not sanction or encourage the disclosure of return information by return preparers for non-tax purposes, nor is it aware of tax preparers engaging in the practices suggested by the media. The final regulations are intended to strengthen taxpayer protections in this area by making it clear that tax preparers must clearly inform taxpayers with whom their information will be shared (disclosure) and for what purpose it is being shared (use) and sets out the form and content of the consent request. Why doesn’t the IRS just prohibit tax preparers from sharing taxpayer information with any third party? The general rule expressed in both the 1974 regulation and the 2007 regulation is that taxpayers – n
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