What is IRC 7216 (Internal Revenue Code Section 7216)
Introduction
Internal Revenue Code Section 7216 (IRC 7216) is a section of the Internal Revenue Code in the United States that sets out rules related to the disclosure of tax return information by tax return preparers. IRC 7216 imposes certain restrictions on the use and disclosure of tax return information by tax return preparers and requires them to obtain consent from the taxpayer before disclosing the information to third parties.
IRC 7216 applies to tax return preparers, which are
- Individuals or organizations that prepare tax returns or other tax documents for a fee.
- It also applies to any employees or agents of a tax return preparer who have access to tax return information.
To be IRC 7216-compliant, tax return preparers and their employees or agents must follow certain rules when collecting, using, and disclosing tax return information. This includes
- obtaining consent from the taxpayer before disclosing the information to third parties and using the information only for the purpose of preparing the tax return or other tax documents.
If a tax return preparer is found to be non-compliant with IRC 7216, it may be subject to
- fines and other penalties.
- The specific penalties depend on the nature and severity of the IRC 7216 violation, and may include civil and criminal penalties.
Some examples of companies that may be impacted by IRC 7216 include
- Accounting firms,
- Tax preparation services, and
- Individual tax return preparers.
IRC 7216 applies to these companies if they prepare tax returns or other tax documents for a fee.
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