What Is IRS Section 7216? Tax Preparer Disclosure Rules

IRS Section 7216 is a federal criminal statute that makes it a misdemeanor for a paid tax return preparer to disclose or use your tax return information for any purpose other than preparing the return you hired them to file. Violations carry criminal fines of up to $1,000 per offense (up to $100,000 in aggravated cases), up to a year in prison, and a separate civil penalty of $250 per violation under Section 6713.¹ Treasury Regulations under the statute lay out a short list of situations where a preparer can share your information without asking, and a strict written-consent process for everything else.

Who the Rule Applies To

The definition of “tax return preparer” is wide on purpose. It reaches the person who signs the return, anyone else in the business of preparing or helping prepare returns, employees whose job duties support the preparation process, software developers whose products are used to prepare or file returns, authorized IRS e-file providers, and data processors or other firms providing auxiliary services connected to return preparation.²

Volunteers are covered too. The IRS has confirmed that Section 7216’s consent requirements apply to volunteer preparers, including those in the VITA and TCE programs.³

What Information Is Protected

The statute protects “tax return information,” meaning everything a taxpayer furnishes for the preparation of a return and anything the preparer obtains during that process.¹ Income figures, deductions, investment details, Social Security numbers, addresses, and names all qualify.

One category surprises many preparers: the mere fact that a specific person is or is not a client counts as protected tax return information. A preparer cannot confirm your status as a customer to an outside party without going through the disclosure rules.

What Preparers Cannot Do Without Consent

The default rule is that a preparer who knowingly or recklessly discloses or uses tax return information for any purpose other than preparing the return has committed a misdemeanor.¹ The regulations treat disclosure and use as two separate acts. Disclosure means making tax return information known to someone else, like handing client data to an unrelated vendor. Use means acting on the information, like mining a client list to pitch financial planning services.

Both are prohibited unless a regulatory exception applies or the taxpayer has signed a valid written consent. The burden sits with the preparer to justify anything outside the original return work.

When Consent Is Not Required

Treasury Regulation §301.7216-2 identifies specific situations where a preparer can proceed without asking.⁴ The ones that matter most to a taxpayer trying to understand where their information can travel:

Sharing information with IRS officers or employees.
Disclosures required by law, such as a valid court order or subpoena.
Sharing with another officer, employee, or member of the preparer’s own U.S.-based firm to help with the same taxpayer’s return.
Preparing state and local returns or estimated tax declarations for the same taxpayer.
Quality and peer reviews, as long as the reviewer follows confidentiality rules.
Maintaining a limited list of client contact information solely to solicit additional tax preparation services or send educational materials.
Disclosures to an attorney for legal advice, or to a Treasury Department employee in connection with an investigation of the preparer.⁵

Preparers who are also licensed attorneys or accountants have extra room. They can use or share a client’s tax return information within their law or accounting firm to provide other legal or accounting services to the same client, and in the normal course of those services can make the information available to third parties such as stockholders, management, or lenders, unless the taxpayer has directed otherwise and unless applicable ethical rules say no.⁵

Offshore Disclosures Are Different

None of these exceptions apply when the information is going to a preparer or service provider located outside the United States. Every offshore disclosure requires the taxpayer’s explicit written consent, even if the disclosure would otherwise fit an exception.¹

What a Valid Consent Has to Look Like

Outside the exceptions, a preparer must obtain written consent before disclosing or using your information. The consent has to be knowing and voluntary. A preparer generally cannot make their services contingent on your signing one, because that renders the consent involuntary and invalid. The narrow exception: if the disclosure is actually necessary to prepare the return, such as sending data to a foreign-based service provider, conditioning services on consent is permitted.⁶

Every consent must identify the preparer and the taxpayer, state the purpose of the disclosure or the specific use authorized, identify the recipient (or class of recipients) for disclosure consents, specify the particular information involved, and be signed and dated by the taxpayer before anything happens.⁷

Each consent has to appear in its own separate written document. It cannot be buried inside an engagement letter or fee agreement, and separate disclosures and separate uses each require their own consent documents. For individual Form 1040 filers, additional formatting rules apply under Revenue Procedure 2013-14, including a minimum 12-point type on paper consents, specific mandatory language depending on whether the consent covers disclosure or use, and rules for electronic consents such as displaying the consent on its own screen with adequate contrast between text and background colors.⁷

How Long a Consent Lasts and When It Ends

A consent can specify its duration. If it doesn’t, the consent expires one year from the date the taxpayer signed it. Taxpayers can revoke consent at any time, and the form must inform them of that right.⁶

There are limits on how preparers can ask. A preparer cannot request consent to use your information for non-tax solicitation purposes after your completed return has been provided to you for signature. And if you decline a consent request, the preparer cannot come back with a substantially similar request for that same return.⁶

Penalties for Preparers Who Violate the Rule

Consequences run on two tracks. Criminally, each unauthorized disclosure or use is a misdemeanor punishable by a fine of up to $1,000, imprisonment of up to one year, or both, plus the costs of prosecution. In aggravated cases described under Section 6713(b), the maximum criminal fine rises to $100,000 per offense.¹

Civilly, Section 6713 imposes a $250 penalty for each unauthorized disclosure or use, capped at $10,000 per preparer in a calendar year. Those civil penalties apply regardless of whether criminal charges are filed, so a preparer can face both at once.⁸

A violation can also trigger a referral to the IRS Office of Professional Responsibility under Circular 230. Available sanctions include censure, suspension from practice before the IRS, disbarment, and monetary penalties.⁹

How to Report a Preparer Who Misused Your Information

If you believe a preparer disclosed or used your tax return information improperly, file Form 14157, Return Preparer Complaint. It covers unauthorized disclosure of taxpayer data as well as related misconduct like falsifying information on returns, filing without consent, and misrepresenting credentials. You can submit the form through the IRS website or by mail. If you have specific, credible information about tax law violations, you may also be eligible for a whistleblower award by filing Form 211.¹⁰

1
Office of the Law Revision Counsel. 26 USC 7216
2
GovInfo. 26 CFR 301.7216-1 – Penalty for Disclosure or Use of Information by Preparers of Returns
3
Internal Revenue Service. IRC Section 7216 Questions and Answers Related to the Affordable Care Act
4
eCFR. 26 CFR 301.7216-2 – Permissible Disclosures or Uses Without Consent of the Taxpayer
5
eCFR. 26 CFR Part 301 – Permissible Disclosures or Uses Without Consent of the Taxpayer
6
GovInfo. 26 CFR 301.7216-3 – Disclosure or Use Permitted Only With the Taxpayer’s Consent
7
Internal Revenue Service. Revenue Procedure 2013-14 – Guidance Regarding Form and Content of Taxpayer Consents
8
Office of the Law Revision Counsel. 26 USC 6713 – Disclosure or Use of Information by Preparers of Returns
9
Internal Revenue Service. Frequently Asked Questions – Section: What Sanctions Are Authorized by Circular 230
10
Internal Revenue Service. Report Tax Fraud, a Scam or Law Violation