Consent to Use form

[oceanlovin'ea]

I just installed my new software program. When I go in to start a return a screen comes up that tells me that I should have each client sign a consent to use form before I start their return.
It has a link to information on the consent form. Both copies that are there are for RAL's and IRA's. I don't intend to use their information for any purpose or disclose it to anyone.

Do I still need to have them sign a consent form? What would they be consenting to?

Linda

[taxea]

Consent to use form

I suggest you read the form to see what the "consent" addresses...Don't know which program you use...ProSeries doesn't do this.taxea

[dtlee]

I would also like to know what others think here.....

I just installed my new software program. When I go in to start a return a screen comes up that tells me that I should have each client sign a consent to use form before I start their return.
It has a link to information on the consent form. Both copies that are there are for RAL's and IRA's. I don't intend to use their information for any purpose or disclose it to anyone.

Do I still need to have them sign a consent form? What would they be consenting to?

Linda

There is a good chance the software has these forms tailored towards bank products. In general, those cannot be discussed with a taxpayer unless they have given prior consent. You may want to check the wording of these documents in your software and if you do not offer such products, the forms may not apply to you.

I have no idea whether we need to have other consent forms though. I think the "Consent to Disclose" form may not be applicable unless you know specifically that the taxpayer wants you to share the return with another entity and you know this before the return is completed. My reading of this:

http://www.irs.gov/efile/article/0,,id=188398,00.html

says that it must be signed before the return is signed. I had thought we needed a "Consent to Disclose" if a client called and asked us to mail/fax/email their return to a bank months or years down the road, but if I read Q8/A8 correctly, I was totally wrong.

As far as "Consent to Use" that is another issue. I thought I did not need one if I only prepared tax returns and I think I am right, but I was wrong about what I thought preparing tax returns includes. In § 301.7216–1(b)(4)(ii) it says:

Preparer G is a tax return preparer as defined by paragraph (b)(2)(i)(A) of this section. If G determines, upon preparing a return, that the taxpayer is eligible to make a contribution to an individual retirement account (IRA), G will ask whether the taxpayer desires to make a contribution to an IRA. G does not ask about IRAs in cases in which the taxpayer is not eligible to make a contribution. G is using tax return information when it asks whether a taxpayer is interested in making a contribution to an IRA because G is basing the inquiry upon knowledge gained from information that the taxpayer furnished in connection with the preparation of the taxpayer's return.

When I read that last year, I assumed it was talking about a preparer who also sold IRAs, but notice it never says that. Others have pointed out that this is an example of a non tax preparation use that requires a signed "Consent to Use" before discussion. In other words, tax planning and tax advice are not part of tax preparation and require additional consent. See this article from the Intuit site:

http://www.intuitaccounting.com/practice_resources/articles/tax/article.aspx?file=tmdd_TaxRegClientComms

Others have said that this is nonsense and that tax preparation includes such discussions. Still others have said that if you send a client a birthday card using information from their tax return file, it is a disallowed use without prior consent.

I honestly don't know and hope someone has something they can cite that clarifies what we can and cannot do without these two signed consent forms.

[JG EA]

http://www.irs.gov/efile/article/0,,id=188398,00.html

Notice

Q9 What are “uses” of tax return information?

A9 Uses of tax return information are occurrences where tax return preparers refer to, or rely on, tax return information as the basis to take or permit actions. The regulations authorize two types of uses:

Certain permissible uses without taxpayer consent
Uses requiring taxpayer “consent to use tax return information”
The regulations authorize tax return preparers to use specified tax return information without a taxpayer’s prior written consent under certain circumstances: e.g., to create lists for solicitation of tax return business; to produce statistical information in connection with tax return preparation business. These and other exceptions can be found in Treas. Reg. §301.7216-2.

All other uses not specifically authorized require tax return preparers to secure from taxpayers advance signed consents (see 10 below) authorizing the uses.

.

Bolds added.
If we are not selling products then the main question to me is what is "use"? To me this means business as usual unless we are taking the IRA questions and suggestions to the client and telling the bank about it.

[taxmandan]

G will ask whether the taxpayer desires to make a contribution to an IRA.

I never ask if they desire to make a contribution, I point out to them that a contribution to an IRA may lower their taxable income and tax. Don't see any need for 'Consent to Use'. I'm in the group that thinks this is a bunch of nonsense unless you are offering IRAs, mortgages or non-tax preparation products based on info you glean from the tax prep work.

[dtlee]

I never ask if they desire to make a contribution, I point out to them that a contribution to an IRA may lower their taxable income and tax. Don't see any need for 'Consent to Use'. I'm in the group that thinks this is a bunch of nonsense unless you are offering IRAs, mortgages or non-tax preparation products based on info you glean from the tax prep work.

I tend to agree with you which is why I posted here. I still believe we are allowed to offer tax advice as part of our preparation process and if our preparation business includes greeting known clients on the street rather than ignoring them, I don't think I need consent for that either (or for greeting cards, or to attend a wedding or a funeral). However, it was implied that i am ignorant (perhaps "stupid" would be a better word), with a retort that made me re-read everything I had previously read about this:

According to the author of the law, you need it the consent to disclose even to use the tax info to send your client a birthday card. It is failry reasonable to assume you need it period. To offer accounting services, financial services, send birthday cards, to send anonymous info to a franchisor, to publish a book with tax statistics in it, you get the picture.

Please note that the quote above directly contradicts what JG quoted from the IRS about compiling statistics, so perhaps the author of the law is also at odds with the IRS interpretation.

Now, I do not believe the author of the law was the author of the regulations and the regulations do say (in §301.7216-2(e)) that "A tax return preparer who is lawfully engaged in the practice of law or accountancy and prepares a tax return for a taxpayer may use the tax return information of the taxpayer...to render other legal or accounting services to or for such taxpayer." Now, I don't know if I am interpreting that properly, but I am not engaged in the practice of law or accountancy, but I believe that clause allows me to use what I learned from the tax return to give tax advice.

However, the following, I believe is the basis for a separate assertion that you do not need to get consent to use the tax information for another client's return:

A tax return preparer who is lawfully engaged in the practice of law or accountancy and prepares a tax return for a taxpayer may (i) take such tax return information into account, and may act upon it, in the course of performing legal or accounting services for a client other than the taxpayer or (ii) disclose such information to another employee or member of the preparer's law or accounting firm to enable that other employee or member to take the information into account, and act upon it, in the course of performing legal or accounting services for a client other than the taxpayer, when such information is or may be relevant to the subject matter of such legal or accounting services for the other client and its consideration by those performing the services is necessary for the proper performance by them of such services.

Does anyone else read this that way? Does this say we can use one client's return information to properly complete another's?

[ChEAr$]

Consent

I just installed my new software program. When I go in to start a return a screen comes up that tells me that I should have each client sign a consent to use form before I start their return.
It has a link to information on the consent form. Both copies that are there are for RAL's and IRA's. I don't intend to use their information for any purpose or disclose it to anyone.

Do I still need to have them sign a consent form? What would they be consenting to?

Linda

is needed only if you're going to be divulging info to a third party. See the recent EA Alert in your email box, in particular referring to section 7216 and disclosure requirements.

Also check irs.gov on the practitioners' page for more comentary.

[oceanlovin'ea]

Thanks

chEAr$ and the rest of you. I don't offer any other products. I will tell a client if I think an IRA contribution would benefit them but don't get involved in the process of acquiring this for them.

So I think that I am fine the way I am. If I run into the situation, I will print out a form and have them sign it. But I don't think I will ask all my clients to sign a consent form.

Linda

[dtlee]

is needed only if you're going to be divulging info to a third party. See the recent EA Alert in your email box, in particular referring to section 7216 and disclosure requirements.

Also check irs.gov on the practitioners' page for more comentary.

Harlan,

Thanks for the reference.

I found the EA Alert and the course it mentioned and purchased the course and am more disheartened than before (probably because I am not an accountant nor a lawyer).

The presenter emphasized in the course that an attorney or lawyer can use the information as an attorney or lawyer but asking a clients interest in an IRA is a use that requires consent.

The course instructor herself does not offer other services but has a Consent to Use form. I presume this is to allow tax advice and planning discussions.

The course was good, but I cannot believe how muddy these rules are so late in the year.

[luke]

consent form needed

I believe the following link to IRS site will answer MOST questions about Consent Form...

http://www.irs.gov/efile/article/0,,id=188390,00.html

Good luck and have a Great Tax Season

Randy, EA in WV

[Jesse]

I recently attended a seminar which discussed this. It seems a blanket disclosure authorization form signed by the taxpayer for the mortgage company, bank, attorney, etc... to provide a copy of a tax return or any information will not suffice.

If you follow the link luke provided you'll see the authorization must be much more specific with all details spelled out.

[dtlee]

Thanks Luke and Jesse, that is the link I posted two days ago when I posed the follow-up questions I asked.

[joanmcq]

This just came to me...I wonder if the IRA reference is due to Block offering the IRA option in the past where they created the IRA from the refund to generate a retirement saving credit. The IRA was with Block Bank and Block generated fees from the account as well as fees for selling the IRA product. This is a different circumstance than simple tax planning 'Are you going to make an IRA/Roth contribution?' and explaining the tax benefit or retirment benefit of such where you don't have an interest in selling a product.

[dtlee]

This just came to me...I wonder if the IRA reference is due to Block offering the IRA option in the past where they created the IRA from the refund to generate a retirement saving credit. The IRA was with Block Bank and Block generated fees from the account as well as fees for selling the IRA product. This is a different circumstance than simple tax planning 'Are you going to make an IRA/Roth contribution?' and explaining the tax benefit or retirment benefit of such where you don't have an interest in selling a product.

I have no doubts that at least some of these procedure revisions were because of "shrewd" companies relying on the confidence their customers place in their preparers to cross sell mortgages and IRAs. I can understand these rules in the sense of times when you want to sell something to a client, but just discussing the potential for opening an IRA and the types there are, or converting one from type to another, or a discussion of refinancing and how that might affect mortgage deductibility seems like it would be a normal discussion with a client and not something that should require consent.

[David1980]

I have no doubts that at least some of these procedure revisions were because of "shrewd" companies relying on the confidence their customers place in their preparers to cross sell mortgages and IRAs.

Probably, but what a total failure if so. Any company that can be described as "shrewd" probably already has them sign off on 47 pages of printouts with 12 signatures (exagerated numbers - I hope). It's not like customers read anything before and one more signature isn't going to get them to start reading.

People basically give away their signature without second thought nowadays and never read what they're signing. I'm not sure they ever did.