The Internal Revenue Service has issued interim guidance on the ability of a tax return preparer to use statistical compilations of anonymous tax return information to support their business.
The guidance in Notice 2009-13 does not apply to the disclosure or use of statistical compilations of tax return information that contains any taxpayer-identifying information, which continues to be governed by Section 301.7216-2(o) of the Tax Code.
That section of the code currently prohibits the disclosure of all statistical compilations, both taxpayer-identifying and anonymous, unless the disclosure is made in order to comply with financial accounting or regulatory reporting requirements, or in conjunction with the sale or other disposition of the compiler's tax preparation business.
The IRS said the availability of anonymous statistical data can be useful from a public policy perspective, and can assist lawmakers, academics, nonprofits and other agencies in the facilitation of sound tax policy analysis and decisions. In addition, volunteer tax return preparers that provide free tax return preparation services to low- and moderate-income taxpayers and families would be able to use the data to demonstrate the impact of their efforts in order to obtain funding.
The interim guidance provides that tax return preparers may use and disclose, without taxpayer consent, statistical compilations of tax return information to support the preparer's business, but any disclosure of a statistical compilation must be in a form that cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.
To further ensure anonymity, the interim guidance prohibits the disclosure of statistical compilations with cells containing data from fewer than 25 tax returns. Finally, the sale or exchange for value of all or any part of an anonymous statistical compilation is prohibited except if the sale occurs in conjunction with the transfer of assets pursuant to the sale or other disposition of the tax preparer's business.
The interim guidance continues to prohibit disclosure of anonymous statistical compilations of average refund, credit or rebate amounts, or a part thereof, for advertising or marketing purposes. The Treasury Department and the IRS said they are concerned that advertising and marketing that discloses average refund, credit or rebate amounts could create inaccurate expectations on the part of taxpayers and improper incentives on the part of tax return preparers to meet those expectations at the expense of tax return accuracy.
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