Does Use of TaxDome Require to Obtain Taxpayer Authorization Pursuant to IRS Regulation 7216?
Using TaxDome does not require obtaining from a taxpayer Section 7216 authorization.
IRS Regulation 7216 refers to 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 the safeguarding and use of 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 violation of the regulation can result in penalties and even criminal charges.
In summary, Regulation 7216 is aimed at protecting the privacy and confidentiality of taxpayer information and ensuring that tax return preparers handle such information in a responsible and ethical manner.
Under IRS Regulation 7216, a tax preparer may only disclose a taxpayer's confidential information to specific individuals or entities with the express consent of the taxpayer. These include:
- 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.
It's important to note that 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, meaning the taxpayer must be fully aware of who will receive their information and how it will be used.
What are permissible disclosures or uses without the consent of the taxpayer? As per
Cornell Law School Legal Information Institute:
A. Disclosures to the IRS. The provisions of section 7216(a) and § 301.7216-1 shall not apply to any disclosure of tax return information to an officer or employee of the IRS.
B. Updating taxpayer's tax return preparation software. If a tax return preparer uses computer software in connection with the preparation or filing of a tax return, the tax return preparer may use the taxpayer's tax return information to update the taxpayer's software for the purpose of addressing changes in IRS forms, e-file specifications and administrative, regulatory and legislative guidance or to test and ensure the software's technical capabilities without the taxpayer's consent under § 301.7216-3.
While data is stored on TaxDome servers, it is not disclosed to TaxDome. All data sent to us is encrypted, so we do 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.
See our complete
privacy policy.
The IRS reference addressing Section 7216 is also
available on the IRS website.