The Internal Revenue Service has extended the deadline for including mandatory language in consent forms that tax preparers are expected to send to clients before disclosing or using their tax return information.
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Many firms ask tax preparers to market additional services to clients during and after tax season, particularly for financial planning, based on the information in their tax returns. In some cases, the financial advisory work is handled by another person at the firm or by outside financial planning or wealth management firms who might need access to taxpayer information. However, the ability to offer such services to clients needs to be balanced with the right to privacy and the duty to safeguard confidential financial information.
Last December, the Treasury Department and the IRS released Revenue Procedure 2013-14, which provides updated guidance regarding consents to disclose or use tax return information with respect to taxpayers who file a return in the Form 1040 series, including Form 1040, Form 1040NR, Form 1040A, or Form 1040 EZ.
Section 9 of Rev. Proc. 2013-14 provides that “[a]ny consent obtained on or after Jan. 14, 2013 must contain the mandatory language provided in Section 5.04 of this revenue procedure.” Prior to Jan. 14, 2013, Rev. Proc. 2013-14 provides that consents to disclose or consents to use tax return information may contain either the mandatory language in Section 4.04 of Rev. Proc. 2008-35 or the mandatory language in Section 5.04 of Rev. Proc. 2013-14.
Examples of such language include, “Federal law requires this consent form be provided to you. Unless authorized by law, we cannot disclose your tax return information to third parties for purposes other than the preparation and filing of your tax return without your consent. If you consent to the disclosure of your tax return information, Federal law may not protect your tax return information from further use or distribution. You are not required to complete this form to engage our tax return preparation services. If we obtain your signature on this form by conditioning our tax return preparation services on your consent, your consent will not be valid. If you agree to the disclosure of your tax return information, your consent is valid for the amount of time that you specify. If you do not specify the duration of your consent, your consent is valid for one year from the date of signature."
The IRS said that any consent to disclose or consent to use tax return information obtained on or after Jan. 1, 2014, must contain the mandatory language.