Can A Tax Preparer Share My Information?Tax preparers generally must obtain written taxpayer consent before releasing tax-return information to any third party or using the information for anything other than filing the return, according to new regulations from the IRS. Odds are most taxpayers never realized that wasn?t the case until now.
The IRS is prohibited by law from disclosing taxpayer return information to third parties, except with taxpayer consent or in circumstances set by Congress. And a 1974 regulation provides penalties for tax preparers who make unauthorized use or disclosure of tax return information.
But the regulation did not address issues raised by electronic preparation and filing of tax returns, a method used by about 57 percent of individual taxpayers.
The new rule places the control of information in the hands of taxpayers. But it also raises questions, most significantly whether tax preparers should have the right to share individual tax data, with or without the taxpayer?s consent.
Consumer advocates argue the new IRS rules expand rather than close existing loopholes. “The rule opens the door to sharing of taxpayer information,” said Ed Mierzwinski, consumer program director at the US Public Interest Research Group.
“Taxpayers will have to sign a form to allow secondary marketing uses, but that is an inadequate level of protection and still places a ‘be careful what you sign’ burden on taxpayers. Taxpayers will still face the real risk that their confidential information supposedly collected only for government purposes under law could be used for commercial purposes.?
Most consumer groups want the IRS to bar the use and sharing of tax-return information for any purpose other than preparing and filing tax returns. Until that happens, just be careful. Safeguard your personal information. Read everything your tax preparer asks you to sign, and don?t let anyone use your tax return for marketing purposes.