CCA 201105036: Consent timing depends on whether a preparer is soliciting additional services

Plain-English summary

Chief Counsel advice addressed when a tax return preparer must obtain a taxpayer's consent under IRC § 7216. The advice stated that consent did not have to be signed before the taxpayer signed the return when it was not being obtained to solicit additional services. If the preparer sought consent to solicit services such as financial planning, the taxpayer had to sign before the preparer presented the completed return for signature. The advice also confirmed an exception for using or disclosing information to determine estimated tax for a particular taxpayer under § 7216(b)(2).

Ruling snapshot

• Question: When must a taxpayer sign a consent under IRC § 7216, and does the statute restrict use or disclosure for determining that taxpayer's estimated tax?
• Outcome: Advice given.
• Key authorities: IRC § 7216(b)(2).

Full text (IRS public release)

ID: CCA_2011010614475243 Number: 201105036
Release Date: 2/4/2011
Office: --------------
UILC: 7216.20-00

From: --------------------
Sent: Thursday, January 06, 2011 2:47:54 PM
To: ---------------------
Cc: -------------------
Subject: RE: 7216 Presentations

Hi------- -

Yes, the taxpayer would not need to sign the consent prior to signing the return, because the consent is not being obtained in the context of solicitation of additional services. If the tax return preparer were to obtain a consent for purposes of soliciting other services (e.g., financial planning services), then the taxpayer would need to sign the consent prior to the preparer's presentation of the completed return to the taxpayer for signature.

You are correct that there is no restriction under 7216 on use or disclosure as it relates to determining estimated tax for a particular taxpayer, as 7216(b)(2) provides an exception to the general rule.

I will defer to ------ as to your third concern.

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