CCA 200907036: Tax return disclosure consents can remain open-ended

Plain-English summary

Chief Counsel advised that a tax return preparer does not need a client's consent to mail a copy of the client's return to the client's home or work address because that remains a direct disclosure to the taxpayer. A disclosure or use consent may last “until further notice” without naming a specific expiration date. Even so, its specified information, recipient, and purpose must remain current, so changed circumstances may require a new consent. The consent must also identify the tax year of the information to be disclosed so that it is knowing and voluntary under the regulation.

Ruling snapshot

• Question: What consent terms apply when preparers mail returns to clients or disclose tax return information to others?
• Outcome: Advice given: direct mailing needs no consent, open-ended duration is allowed, and the disclosed information must identify its tax year.
• Key authorities: IRC § 7216; Treas. Reg. § 301.7216-3(a)(1).

Full text (IRS public release)

ID: CCA_2009012811013443 Number: 200907036
Release Date: 2/13/2009
Office: ----------
UILC: 7216.00-00

From: --------------------
Sent: Wednesday, January 28, 2009 11:01:36 AM
To: ----------------------
Cc:
Subject: RE: Questions on IRC Section 7216

Responses to your questions are below. I hope I have sufficiently answered your questions. Do not hesitate to contact me with anything further.

I do have one more brief question...do the preparers need consents to mail clients copies of their tax returns (either to their home or their work) ?

No, preparers do not need consents to mail clients copies of their tax returns to either their home or work address. This is considered disclosure to the taxpayer, and the fact that the postal system is used has no effect on it being a direct disclosure to the taxpayer.

Firstly, with respect to setting a time limit on the duration of a consent request to disclose or use taxpayer information, can a taxpayer use the phrase "until further notice," or do time limits on consents need a specific date?

Time limits on consents do not need a specific date, and a taxpayer's use of the phrase "until further notice" does not violate the regulation. As a practical matter, however, a preparer should note that although a consent may still be valid by its term, the information specified in the consent and the purpose for the use or disclosure specified in the consent must also be current. In other words, if in 2009 I sign a consent allowing the disclosure of my tax return information to a bank for purposes of obtaining a mortgage loan until further notice, while the consent will still be valid for duration purposes in 2010 and beyond, a new purpose or recipient may be needed that was not set forth in the consent, and therefore, a new consent will be needed.

Secondly, the new rules state that the consent must state the specific information that will be disclosed or used. Does specific information include identifying the tax year as well (e.g. gross receipts and cost of goods sold for tax year ending 12/31/2008)?

Yes, specific information includes the identifying tax year for the tax return information. We believe that the tax year for the information to be disclosed in necessary for the taxpayer consent to be "knowing and voluntary" as required by sec. 301.7216-3(a)(1).