The Internal Revenue Service issued proposed guidance on the disclosure or use of tax return information by tax return preparers.

A key principle underlying the guidance is that preparers may not disclose information for purposes other than return preparation without the knowing, informed and voluntary consent of the taxpayer.

The existing regulations in the Internal Revenue Code were drafted in the early 1970s, before the development of much of the business and technology practices that allows for the electronic preparation and transmission of returns.

The new regulations:

  • Broaden the definitions of tax return preparer and tax return information;
  • Revise the manner and form of obtaining taxpayer consent to use or disclose tax return information; and,
  • Add a requirement to obtain taxpayer consent before preparers send tax return information offshore.

"Safeguarding of tax return information is critical," said IRS Commissioner Mark W. Everson, in a statement. "It's vital we update the preparation rules for the 21st century. Americans ought to know when their tax returns are being outsourced and prepared abroad."The new regulations also take into account the use of computers in tax preparation. If a tax return preparer hires contractors who will need access to tax return information to repair computers or data files, the tax return preparer must notify those contractors that they will also be subject to restrictions on their use or disclosure of tax return information.
The regulations, which can be viewed in their entirety at, are open to public comment for the next 90 days. A public hearing has been scheduled for April 4, 2006.

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