I've been doing taxes for almost thirty years. For the first time, my office received a subpoena to produce copies of a client's tax returns. The subpoena was issued by an attorney representing the client's ex-spouse. The case is a straightforward matter. The ex-spouse is seeking a reduction in child support or alimony payments. The subpoena seeks copies of the last four years' tax returns.

IRC Section 7216 generally prohibits disclosure of tax return data to a third party without the client's consent. But there are a number of exceptions, where the preparer may indeed disclose the data without first obtaining the client's consent.

This does not appear to be one of the exceptions. The exceptions are listed in Treas. Reg. 301.7216-2. The relevant text of the regs is as follows:

The provisions of section 7216(a) and 301.7216-1 will not apply to any disclosure of tax return information if the disclosure is made pursuant to any one of the following documents:

(1) The order of any court of record, Federal, State, or local.

(2) A subpoena issued by a grand jury, Federal or State.

(3) A subpoena issued by the United States Congress.

(4) An administrative order, demand, summons or subpoena that is issued in the performance of its duties by -

(i) Any Federal agency as defined in 5 U.S.C. 551(1) and 5 U.S.C. 552(f), or

(ii) A State agency, body, or commission charged under the laws of the State or a political subdivision of the State with the licensing, registration, or regulation of tax return preparers.

(5) A written request from a professional association ethics committee or board investigating the ethical conduct of the tax return preparer.

(6) A written request from the Public Company Accounting Oversight Board in connection with an inspection under section 104 of the Sarbanes-Oxley Act of 2002, 15 U.S.C. 7214, or an investigation under section 105 of such Act, 15 U.S.C. 7215, for use in accordance with such Act.
The document sent to my office is not a subpoena issued by a grand jury, or by the US Congress, or by a federal agency. And it is not a court order. A subpoena and a court order are two different things. This document is not signed by a judge. It is signed by an attorney and by the Clerk of Court.

We are planning to write to the attorney and explain that federal law prohibits us from producing the tax returns in response to a subpoena, and that we will only respond to a court order. We will also notify the client and explain our position in this matter.

Anyone have any thoughts on this? Am I missing something here?

My first reaction to this was, well, a subpoena must be one of the exceptions to IRC 7216. But then I decided to actually read the regs...

BMK