IRS LOOSENS RULES ON USE OF TAXPAYER INFO

Washington, D.C. - The Internal Revenue Service has issued a set of proposed rules that would make it easier for tax preparers to contact clients about tax law developments, send out newsletters and deal with liability insurance claims.

The proposed and temporary regulations, and related revenue rulings, pertain to Section 7216 of the Tax Code, and enable tax preparers to use or disclose tax return information without explicit taxpayer consent in certain limited circumstances. Tax preparers can contact their clients regarding tax law developments that may affect them. They can also disclose information in connection with the potential sale or purchase of a tax preparer's business and during the process of conducting client conflict-of-interest checks.

Revenue Ruling 2010-4 provides guidance on whether a preparer is liable for criminal and civil penalties when the preparer uses tax return information to contact taxpayers to inform them of changes in tax laws that could affect them. The ruling also governs the disclosure of information to third-party newsletter service providers.

Revenue Ruling 2010-5 provides guidance on whether a preparer is liable for criminal and civil penalties when theydisclose to a professional liability insurance carrier information required for coverage, or for reporting or investigating claims.

IRS WIDENS DISCLOSURE WINDOW

Washington, D.C. - In Notice 2010-8, the Internal Revenue Service has expanded the time window to 120 days during which it may share a taxpayer's tax return information with third parties, based upon a taxpayer's written disclosure authorization. The newly expanded time window is retroactive to Oct. 19, 2009. The old time window had been 60 days.

Forms affected by the change include Form 4506, Request for Copy of Tax Return; Form 4506-T, Request for Transcript of Tax Return; Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript; and Form 8821, Tax Information Authorization.

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