Washington, D.C - The Internal Revenue Service and the Treasury have released final regulations and a revenue procedure requiring tax preparers to obtain consent before they can distribute taxpayer information to third parties, along with a proposal to restrict the marketing of refund anticipation loans and similar products.

Preparers must obtain a taxpayer's consent, either by paper or electronically, before tax return information can be disclosed to any third party or used for any purpose other than filing the return. If the taxpayer agrees, the consent must identify the intended purpose of the disclosure, identify the recipients and describe the particular authorized disclosure or use of the information.

Taxpayers must also be informed that they are not required to sign the consent. If they sign, they have to be told that federal law may not protect their information from further disclosure, and that they can set a time period for the duration of the consent. If taxpayers don't set a time period, the consent is valid for up to a year.

The paper consent documents must be in 12-point type on 8-1/2 by 11-inch paper. Electronic consent requests have to be in the same type as the Web site's standard text so they are equally visible.

If a taxpayer declines to consent, the preparer cannot try to pressure the taxpayer by repeating the consent request. Consent from taxpayers is also required if the tax information will be sent outside the U.S. for processing. If the return is sent offshore, the individual taxpayer's Social Security number must be redacted.

The IRS also proposed restricting the marketing of refund anticipation loans, pointing out that RALs provide tax preparers with a financial incentive to take improper tax positions in order to inflate refund claims.


Kansas City, Mo. -- Tax prep chains H&R Block and Jackson Hewitt said that they are not concerned by the Internal Revenue Service's proposals to restrict the marketing of refund anticipation loans and require consent before preparers can share taxpayer information with third parties.

Block plans to work with the IRS on the proposal. "We look forward to working with the IRS on continuing to develop best practices for refund anticipation loans, just as we did over the past two years on the privacy rules ... which reflect many of H&R Block's existing guidelines," the company said in a statement.

Jackson Hewitt expressed doubts that the proposal would lead to the elimination of refund anticipation loans. The tax prep giant noted that the IRS said that it was in the very early stages of determining whether changing the method for delivering RALs would increase tax compliance.

Jackson Hewitt also said that it would go along with the IRS's plans to require taxpayer consent before tax preparers can share taxpayer information with third parties.

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