TTB Consent to release info form

[AZ-Tax]

I have already had some tax clients sign a form I created to release info to quote auto & homeowners insurance and for Securities though I didn’t specify a tax year, the tax form along with any schedules or include the “disclosure” or the “acknowledgement” statements. Is that mandatory or just additional CYA?

[dtlee]

I have already had some tax clients sign a form I created to release info to quote auto & homeowners insurance and for Securities though I didn’t specify a tax year, the tax form along with any schedules or include the “disclosure” or the “acknowledgement” statements. Is that mandatory or just additional CYA?

The form that TheTaxBook provides meets the requirements for §7216 of the code as described in the regulations and revenue procedures. This is for the specific situation where a client is giving consent to a preparer's request to be allowed to disclose information to a third party prior to the completion and signing of a tax return during a tax preparation engagement.

Something quite similar might be used for a client-request to disseminate their information where you consent to perform the requested serivce for the client, but the rules for §7216 apply to preparer requests to disclose and some of the wording in that form are unnecessary. In fact, the words, "You are not required to complete this form. If we obtain you signature on this form by conditioning our services on your consent, your consent would not be valid," seem particularly inappropriate for a client request. If a client asks you to send their return to their broker and you say, "I need you to sign this before I send it," you are conditioning that serivce on their consent. I would certainly not include that phrase in a form used to document a client request.

This is not to say that the rules of §7216 do not apply to client requests. When a client requests disclosure of their information, you are still subject to the rules that require due diligence. You are liable for sanctions if you knowingly or recklessly use or disclose tax return informaiton (which includes much more than what is on a tax return). You must confirm that the requiest is valid and that the extent of information is fully described and that you are diligent in confirming that you are sending it to the recipient they specify. A form simliar to the one TheTaxBook supplies without the irrelevant phrasing might be the safest measure. However, I would add verbiage to specify that the request is being made by the client not by you. Using the same form for both preparer requests to disclose information and client requests to disclose information would be problematic if there were ever an investigation. A true §7216 authorization is not valid if requested after the completion of and signing of a tax return. If you use the same form for both, how would you ever prove that the one signed by a client after the return was done was really a client request (and not your illegal request)?

In summary, I would use the one in TheTaxBook tools (or one similar to it) for your requests for permission to disclose information to a third party and prepare another one that is equally specific for client requests which lacks the mandatory phrases and which specifically and clearly identifies it as a client request. It really should be very specific. The tax year would (I think) be mandatory. The specific forms and schedules they want released would also be something I would want to have documented. Specifics of the third party must also be clearly documented. In the form I use, I also have a section where I cite how I verified that the fax number or address given to me was in actuality correct (usually I have the details of a phone call I made to the third party or a printout from their website) in order to show due diligence. I also attach a copy of the fax or a photocopy of the package showing the mailing address to the request as proof that I sent it in accordance with the instructions.

The complexity of these rules is why most preparers now refuse to even consider a client request to send or fax information to a third party. Most will simply send it to the taxpayer and let the taxpayer decide what to send and to whom.

[JohnH]

--> The complexity of these rules is why most preparers now refuse to even consider a client request to send or fax information to a third party. Most will simply send it to the taxpayer and let the taxpayer decide what to send and to whom. <--

That's my policy.
I don't deal with third parties.

[dtlee]

I have already had some tax clients sign a form I created to release info to quote auto & homeowners insurance and for Securities though I didn’t specify a tax year, the tax form along with any schedules or include the “disclosure” or the “acknowledgement” statements. Is that mandatory or just additional CYA?

In my initial reading of your question, your description of yoru form seemed so informal that I assumed it was for a client initiated request. In re-reading your question, it is unclear whether you are requesting the release or the client is requesting the release. If this is a request you are making, you really need to read the regulations and revenue procedures since it is highly likely that you are not compliant with the law. The form provided by TheTaxBook is for disclosure. A totally separate form is needed for "use" of tax return information. There are situations where both disclosure and use forms must be used. No such requests can be made after a client refuses and no such requests can be made after the return is complete and signed. I believe that the form that TheTaxBook provides for return disclosure contains the mandatory language required for a preparer request to disclose, However, it may not be specific enough for your situation and you may want to add additional particulars. For example, while it contains the language indicating that it is not valid after a year unless the client specifies another period, it does not provide a place where the client can specify that it is only valid for a few days or that it is valid for several years.

[AZ-Tax]

So does the 3rd party rule apply to....

myself, the tax preparer, also the licensed Securities Rep and Licensed insurance agent for which the tax clients info would go to? Its really no big deal to have my tax clients sign the TTB consent form especially at the same time my tax client signs their tax return. I have been following the post on tax clients info requested by the mortgage cos and I am considering not getting involved anymore as one post said "I give them a copy of their return on a disk and the tax client can send their tax return to who ever they desire". I think I am also going to pursue that this spring with my tax clients.

[dtlee]

I probably could recite the rules and regulations here much to the boredom of others, but it is better if you review these rules yourself.

In general, if you ask all clients for permission to quote these services, you may be okay using the form provided by TheTaxBook. However, if you use any level of intelligence based on your interview or the contents of the return before asking (such as only ask about disclosing information for homeowners insurance to someone who has a real estate tax deduction), you must also have authorization to use the information. In fact, you must have this permission prior to actually using it that way.

See Rev. Proc. 2008-35 and the regulations. It should take you several days of review before you are comfortable with the rules.

Otherwise, you probably should just create both an authorization to use the information for the purpose of deciding whether to offer them the specific products you offer and create an authorization to disclose to you in each of the businesses you represent (since you probably have multiple businesses) and have all of those forms signed before you start the return preparation engagement (or at least have the "use" form signed before you "use" any of the information).

Depending on the type of authorization, there are different wording requirements. Also, note the restrictions on the size of the type and understand that the IRS specifies both a minimum point size and a minimum number of characters per inch (i.e., pitch).

[taxea]

The law requires us to provide the client with a copy of the filed tax return. I don;t understand why the client does not make a copy and give it to the third party.
How many of you charge for additional copies of the return once you have provided the required copy?
I also don't understand why the third party doesn't present us with a waiver signed by the client instead of us having to have one signed.

[JohnH]

My tax prep charges are sufficient to enable me to provide copies to the occasional client who loses their copy and needs help. I don't do business with people who nickel and dime me unless it's absolutely necessary, and I treat my clients with more respect than to do that sort of thing to them. My philosophy is that good customer service includes occasional help like this, especially since I can email a pdf to the client faster than I can type this response. Until I start paying for email by the electron, that will continue to be my policy. I understand that others have a different approach to this "problem".

[Bees Knees]

My policy is I will send the client another copy of the return, and the client can then forward that to the third party. Its easier and faster for both me and the client, than it is for me to send the client the form to sign, have the client sign and send it back, and then send the tax return to the third party.

[newbie]

myself, the tax preparer, also the licensed Securities Rep and Licensed insurance agent for which the tax clients info would go to? Its really no big deal to have my tax clients sign the TTB consent form especially at the same time my tax client signs their tax return. I have been following the post on tax clients info requested by the mortgage cos and I am considering not getting involved anymore as one post said "I give them a copy of their return on a disk and the tax client can send their tax return to who ever they desire". I think I am also going to pursue that this spring with my tax clients.

The law requires us to provide the client with a copy of the filed tax return. I don;t understand why the client does not make a copy and give it to the third party.
How many of you charge for additional copies of the return once you have provided the required copy?
I also don't understand why the third party doesn't present us with a waiver signed by the client instead of us having to have one signed.

In AZ's case he is wearing two hats. If I were in this position I would have every client sign a waiver because there is the potential to use the tax information - which you have to prepare the tax return- to sell securities.

Often the client finds it easier to call than to look for their copy and often the third party does have a waiver but it's basically I authorize you to give this party whatever they ask for and not contain the necessary language to CYA.

[Gary2]

In AZ's case he is wearing two hats. If I were in this position I would have every client sign a waiver because there is the potential to use the tax information - which you have to prepare the tax return- to sell securities.

Often the client finds it easier to call than to look for their copy and often the third party does have a waiver but it's basically I authorize you to give this party whatever they ask for and not contain the necessary language to CYA.

Unfortunately, the 7216 language makes it clear that if the waiver is required by the tax preparer, then it's not a valid waiver. I don't think there's any provision in the regulations for this sort of situation. Possibly the only legal solution would be to refuse to provide services related to securities or insurance for a tax preparation client who refused to sign the waiver.

In other words, if you tell clients "I won't do your taxes unless you sign this", that could invalidate the waiver for all clients. But if you tell them "I can still do your taxes if you don't want to sign this, but I'll have to resign as your insurance and investment adviser," it might be ok - I don't know.