Disclosure or Use of Information by Preparers of Returns, 76400-76406 [2012-31185]

Agencies

• Internal Revenue Service
• Department of Treasury

[Federal Register Volume 77, Number 249 (Friday, December 28, 2012)]
[Rules and Regulations]
[Pages 76400-76406]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-31185]


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DEPARTMENT OF TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 9608]
RIN 1545-BI85


Disclosure or Use of Information by Preparers of Returns

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations and removal of temporary regulations.

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SUMMARY: This document contains final regulations that provide rules 
relating to the disclosure or use of tax return information by tax 
return preparers. These regulations provide updated guidance affecting 
tax return preparers regarding the use of information related to lists 
for solicitation of tax return

[[Page 76401]]

business; the disclosure or use of statistical compilations of data 
under section 7216 of the Internal Revenue Code (Code) by a tax return 
preparer in connection with, or in support of, a tax return preparer's 
tax return preparation business; and the disclosure or use of 
information for the purpose of performing conflict reviews.

DATES: Effective date:
    These regulations are effective on December 28, 2012.
    Applicability date: For date of applicability see Sec.  301.7216-
2(s).

FOR FURTHER INFORMATION CONTACT: Emily M. Lesniak, (202) 622-4910 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    This document contains final regulations amending the Regulations 
on Procedure and Administration (26 CFR part 301). On January 4, 2010, 
the IRS and the Treasury Department published a notice of proposed 
rulemaking (REG-131028-09) in the Federal Register (75 FR 94), cross-
referencing temporary regulations (TD 9478, 75 FR 48), providing rules 
relating to the ability of a tax return preparer to use tax return 
information for the purposes of compiling, maintaining, and using lists 
for solicitation of tax return business under Sec.  301.7216-2T(n); to 
disclose or use statistical compilations of data described in Sec.  
301.7216-1(b)(3)(i)(B) under Sec.  301.7216-2T(o); and to disclose or 
use tax return information for the purpose of performing conflict 
reviews under Sec.  301.7216-2T(p) without taxpayer consent. The 
modifications to Sec.  301.7216-2(o) in the temporary and proposed 
regulations were made following the issuance of Notice 2009-13 (2009-6 
IRB 447 (February 9, 2009)), and the receipt of comments submitted in 
response to that Notice. These comments were summarized in the preamble 
to TD 9478. No public hearing on the notice of proposed rulemaking was 
requested or held. Written and electronic comments responding to the 
notice of proposed rulemaking were received. All comments were 
considered and are available for public inspection at 
www.regulations.gov or upon request. After consideration of all the 
comments, the proposed regulations, with minor clarifications and 
revisions to ensure the language of the regulations is internally 
consistent and technically correct, are adopted by this Treasury 
decision. This preamble summarizes the significant comments received by 
the IRS and Treasury.

Summary of Comments

    The IRS and Treasury received seven (7) comments in response to the 
proposed regulations. Some of the discussion contained in the comments 
did not relate to the rules in the proposed regulations but instead was 
directed towards other unrelated content contained in the section 7216 
regulations or other published guidance pertaining to section 7216. 
This Summary of Comments focuses solely on comments relating to the 
proposed regulations and does not address comments relating to other 
published guidance pertaining to section 7216, which are outside the 
scope of this rule.

1. Comments Relating to Sec.  301.7216-2(n) of the Proposed Regulations

A. Use of the List
    As proposed, Sec.  301.7216-2(n) allows tax return preparers to 
maintain a list of limited tax return information that may be used by 
the compiler to contact taxpayers to provide tax information and 
general business or economic information or analysis for educational 
purposes or to solicit tax return preparation services.
    One commentator asked to expand the acceptable list maintenance 
purposes to include solicitation of ``accounting services'' 
``consistent with legal and ethical responsibilities.'' The commentator 
explained that these accounting services include, for example, 
assistance with bookkeeping, the preparation of payroll returns, and 
the preparation of regulatory returns. The commentator also included 
the preparation of state and local income tax returns as an accounting 
service. The preparation of state and local income tax returns is, 
however, tax return preparation expressly authorized by the statute, 
and use of the list is permissible to solicit this service.
    The language of section 7216(a)(2) prohibits the use of ``any such 
information for any purposes other than to prepare, or assist in the 
preparing, of any such return * * *'' except as specifically excepted 
by section 7216(b). The IRS and Treasury have determined that it is 
inconsistent with the purpose of section 7216 to exercise regulatory 
authority to provide an exception under section 7216 for the use of tax 
return information to solicit accounting services. Taxpayers may 
consent in writing to allow tax return preparers to use their tax 
return information to solicit non-tax return preparation services, such 
as the accounting services listed by the commentator. Accordingly, to 
the extent the commentator requested the inclusion of accounting 
services as a list maintenance purpose, this comment was not adopted.
    The proposed regulations provide: ``This list may be used by the 
compiler solely to contact the taxpayers on the list for the purpose of 
providing tax information and general business or economic information 
or analysis for educational purposes, or soliciting additional tax 
return preparation services. The list may not be used to solicit any 
service or product other than tax return preparation services.'' A 
commentator asked that the final regulations clarify this statement. 
The commentator specifically asked whether, under the rule set forth in 
the proposed regulations, articles could be included in a newsletter 
that address several topics that do not constitute tax return 
preparation services.
    Under the final regulations, a tax return preparer may, without 
taxpayer consent, compile a list of certain taxpayer specific 
information that may be used to contact the taxpayers on the list for 
two purposes: (1) Providing tax information and general business or 
economic information or analysis for educational purposes, and (2) 
soliciting additional tax return preparation services. A tax return 
preparer may not use the list to solicit non-tax return preparation 
services. The final regulations do not attempt to describe every 
scenario that may constitute either a permissible or prohibited use of 
the list. Rather, a tax return preparer seeking to use tax return 
information in the manner proposed by the commentator must carefully 
consider, on a case-by-case basis, the specific content of a particular 
newsletter article to ensure that the content meets the requirements of 
Sec.  301.7216-2(n). For example, a newsletter that summarizes recent 
case law or describes current legal developments would be considered to 
be for educational or informational purposes and a permissible use of 
the list. If a tax return preparer wishes to solicit non-tax return 
preparation services in the preparer's newsletter, a consent must be 
obtained from clients that authorizes the use of specified tax return 
information to solicit those non-tax return preparation services in the 
preparer's newsletter.
    The final regulations retain the provisions in the proposed 
regulations that require written consent for all other purposes not 
expressly allowed by the regulations. This is consistent with the 
congressional discussion regarding section 7216, which provides that 
``[section 7216] simply preserves the confidentiality of information 
provided by the taxpayer to the one who prepares the returns as a 
professional act.'' Senate

[[Page 76402]]

Discussion on Conference Report, 117 Cong. Record S. 18,627 (daily ed. 
November 15, 1971) (statement of Sen. Mathias). This floor discussion 
further provides that ``[p]resumably, where appropriate, the Treasury 
Department will permit the use of the information within the business 
organization of the preparer of the return if the taxpayers [sic] has 
indicated in writing that he desires the information to be used by the 
organization for some purpose specifically benefitting the taxpayer.'' 
(Emphasis added). House Discussion on Conference Report, 117 Cong. Rec. 
H12,118 (daily ed. Dec. 9, 1971) (statement of Rep. Mills).
B. Authorized Delivery Methods
    One commentator recommended that the proposed regulations be 
clarified to state that Sec.  301.7216-2(n)(1) permits a tax return 
preparer to use any delivery method that employs or is based on the 
list information sanctioned by that regulation provision. The 
commentator expressed a concern that the two examples provided in the 
temporary regulations limited the method of delivery to only email or 
U.S. mail. The examples were not intended to limit the scope of the 
rule. The final regulations authorize any delivery method that will 
facilitate direct contact with the taxpayers on the list through the 
use of only the information authorized for compilation of a list under 
Sec.  301.7216-2(n). The examples were modified to clarify this point.
C. Limits on Tax Return Information Contained in Lists
    One commentator suggested removing any limits on the tax return 
information a tax return preparer may include in compiling and 
maintaining lists for the solicitation of tax return business under 
Sec.  301.7216-2(n). This comment appears to be based upon an 
interpretation that the policy of section 7216 was intended to protect 
only privacy concerns. Section 7216(b)(3) provides the Secretary with 
broad authority to issue regulations authorizing specific disclosures 
or uses of tax return information. When publishing regulations allowing 
for these disclosures or uses, the IRS and Treasury must balance 
congressional intent and concerns for the protection of sensitive 
taxpayer data with the benefits taxpayers may receive from the proposed 
disclosures or uses. Removal of all restrictions on the allowable types 
of tax return information that may be included in the compilation and 
maintenance of lists is inconsistent with section 7216's underlying 
purpose. The proposed regulations expanded the types of tax return 
information a tax return preparer may use to compile a list for the 
purpose of soliciting tax return preparation business in a manner 
consistent with the purpose of section 7216 and the regulations. 
Accordingly, this comment was not adopted.
    The commentator also stated that the temporary regulations 
contained ambiguous and vague language that required clarification 
regarding the entities and form numbers that may be maintained, such as 
whether an S corporation can be distinguished from a C corporation or 
whether a Form 1120 can be distinguished from a Form 1120-S. The rule 
and examples in the regulations already address whether entity 
classifications maintained in a list pursuant to Sec.  301.7216-2(n) 
include individuals and the types of businesses that would file 
different types of returns. The regulations provide that the ``specific 
type of business entity'' may be maintained in the list. Further, 
Example 1 in Sec.  301.7216-2(n)(2) illustrates that tax return 
preparers may limit the provision of information based upon filer type. 
In addition, the income tax return form number refers to the form 
number that appears on the first page of the particular tax return form 
that the tax return preparer prepares (for example, Form 1120-S). To 
clarify this point, a parenthetical has been added to Sec.  301.7216-
2(n).
    One commentator stated that the proposed regulations should be 
clarified regarding whether nontax return information may be included 
in a list maintained pursuant to Sec.  301.7216-2(n) and that the 
regulations should be modified to state that nontax return information 
can be included in the list with the allowed items of tax return 
information. This comment was not adopted. The inclusion of nontax 
return information in the list could facilitate circumvention of the 
restrictions of section 7216 as to items of tax return information that 
may not be kept on the list by permitting tax return preparers to 
obtain the tax return information from other sources. In any event, if 
tax return preparers wish to include additional information in a list, 
they may obtain consent to do so from their clients. The language in 
Sec.  301.7216-2(n), however, has been clarified to eliminate any 
potential confusion arising from the wording of the provision.
    One commentator recommended that the IRS and Treasury issue 
guidance, pursuant to the terms of Sec.  301.7216-2T(n), to further 
expand the types of tax return information that may be included in a 
list compiled for solicitation of tax return business. This comment was 
not adopted. This comment requested that the tax return information 
that may be included in a list compiled for solicitation purposes be 
expanded to include tax schedules filed, certain information regarding 
tax preparation software, the date taxpayers file their returns, the 
employer identification number of taxpayers' employers, the number and 
age of taxpayers' dependents, and whether taxpayers file with a tax 
balance due. The IRS and Treasury considered adding each item to the 
information that may be included in a list compiled for solicitation of 
tax return business. Including these items, however, would be 
inconsistent with the taxpayer protection purpose of section 7216, as 
demonstrated by the congressional discussion. Moreover, certain items 
present a risk of abuse by tax return preparers that would exceed any 
potential benefit to the taxpayer.

2. Comments Relating to Sec.  301.7216-2(o) of the Proposed Regulations

A. Clarify meaning of ``Bona Fide Research'' and ``Public Policy 
Discussions''
    One commentator recommended that the final regulations clarify the 
meaning of ``bona fide research'' and ``public policy discussions'' by 
explicitly including examples of individuals or entities that engage in 
these activities, including lawmakers, academics, nonprofit 
organizations, and other agencies that facilitate tax policy. While 
these individuals and entities may, at times, conduct bona fide 
research or engage in public policy discussions, tax return preparers 
must determine, on a case-by-case basis, whether a disclosure or use is 
in support of bona fide research or public policy discussions. For 
example, public policy discussions would include discussion of the 
implications of legislative amendments and tax reform proposals.
B. Limitations on the Use and Purpose of Statistical Compilations of 
Data
    One commentator recommended limiting the discretion afforded to tax 
return preparers to determine appropriate disclosures of statistical 
compilations. The commentator expressed concern that tax return 
preparers will disclose more information than is lawfully permissible 
or even sell data to third parties. This comment was not adopted. The 
availability of anonymous statistical compilations can assist lawmakers 
and others in the private and public sectors in discussing, 
formulating, and implementing sound tax policy. The final regulations 
sufficiently limit the construction of the statistical

[[Page 76403]]

compilations to prevent the disclosure of any individual's tax return 
information. In addition, Sec.  301.7216-2(o)(1) specifically prohibits 
the sale of a statistical compilation of data except in conjunction 
with the transfer of assets made pursuant to the sale or other 
disposition of the tax return preparer's tax return preparation 
business. Finally, there are penalties imposed by sections 7216 and 
6713 for the improper disclosure or use of tax return information.
    One commentator recommended removing all restrictions on the 
disclosure or use of anonymous statistical compilations. This comment 
was not adopted. The purpose of section 7216 and its accompanying 
regulations is to preserve taxpayer confidentiality by protecting 
taxpayers from the unauthorized disclosures or uses of sensitive tax 
return information by tax return preparers. Eliminating all 
restrictions on the use of statistical compilations would contravene 
this purpose and could increase opportunities for taxpayer's personal 
information to be improperly disclosed or misused. In particular, it is 
possible to craft statistical compilations in a way that allows for the 
data to be associated with a particular taxpayer.
    One commentator recommended that the restriction on the disclosure 
or use of anonymous statistical information be eliminated to allow for 
the compilation of statistically anonymous information relating to the 
dollar amounts of refunds, credits, or deductions. This comment was not 
adopted. Section 7216 authorizes the IRS and Treasury to promulgate 
rules regulating how tax return preparers may disclose or use tax 
return information while ensuring that the taxpayer protection purpose 
of section 7216 is fulfilled. Eliminating all restrictions on the use 
of statistical compilations regarding the dollar amounts of refunds, 
credits, or deductions would provide tax return preparers the 
unfettered ability to use tax return information. This would undermine 
the purpose and basic protections of preventing inappropriate 
disclosure or use of tax return information by tax return preparers 
afforded by section 7216.
    One commentator requested that volunteer income tax assistance 
programs be exempted from the restrictions on the disclosure or use of 
statistical compilations for marketing or advertising purposes. This 
comment was not adopted. Taxpayers who receive volunteer income 
assistance and taxpayers who receive tax preparation assistance from 
compensated preparers deserve the same protection of their tax return 
information. Section 301.7216-2(o) already makes appropriate allowances 
for a preparer's status as a participant in a volunteer income tax 
assistance program by allowing for use of statistical compilations in 
fundraising activities conducted by volunteer return preparation 
programs and other entities described in section 501(c). As a result, 
IRS and Treasury believe that the regulations already address the 
concerns expressed by this commentator.

3. Comments Relating to Sec.  301.7216-2(p) of the Proposed Regulations

    No comments were received in response to Sec.  301.7216-2(p) of the 
proposed regulations, and Sec.  301.7216-2(p) is being finalized 
without change.

4. Effective Date of TD 9478

    One commentator questioned the appropriateness of applying Sec.  
301.7216-2(o) of the temporary regulations contained in TD 9478 with an 
immediate effective date, stating that one provision of this section is 
more restrictive than prior guidance (Notice 2009-13) indicated. The 
commentator requested that the effective date of this particular 
proposal be made fully prospective and only after regulations are 
finalized. This comment was not adopted for the following reasons.
    By its specific terms, Notice 2009-13 expired on December 31, 2009, 
while TD 9478 is applicable to disclosures or uses of tax return 
information occurring on or after January 4, 2010. Because there is no 
conflicting or overlapping period of application of this related 
guidance, tax return preparers could not have relied upon Notice 2009-
13 beyond December 31, 2009. As TD 9478 was not applicable until 
January 4, 2010, there is no retroactive application of the rule 
contained in that Treasury decision.
    Further, Notice 2009-13 requested comments, and comments in 
response to the notice were taken into account in the drafting and 
publication of TD 9478. As explained in the preamble to TD 9478, 
concerns were expressed regarding the scope of the language used in 
Notice 2009-13 on this specific issue. The amendments provided in TD 
9478 are responsive to public comments on and a logical outgrowth of 
the language in Notice 2009-13.
    Finally, the general rule under section 7216 prohibits the 
disclosure or use of tax return information unless a written consent is 
obtained or an exception applies. With the expiration of Notice 2009-13 
on December 31, 2009, the uses of statistical compilations allowed for 
in the notice were no longer permissible. If Sec.  301.7216-2(o) was 
made effective only upon publication of the final regulations, as the 
commentator seems to suggest, neither the exceptions provided for 
Notice 2009-13 nor those provided for in Sec.  301.7216-2T(o) would be 
applicable after December 2009. The permissible use of statistical 
compilations without taxpayer consent would be more, not less, 
restrictive than if Sec.  301.7216-2(o) had not been published as a 
temporary regulation.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866, as 
supplemented by Executive Order 13563. Therefore, a regulatory 
assessment is not required. It also has been determined that section 
553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does 
not apply to these regulations, and because the regulations do not 
impose a collection of information on small entities, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to 
section 7805(e) of the Code, the temporary regulations and the proposed 
regulations preceding these final regulations were published in the 
Federal Register to provide notice and the opportunity to comment. 
Pursuant to section 7805(f) of the Code, the proposed regulations 
preceding these regulations were submitted to the Chief Counsel for 
Advocacy of the Small Business Administration for comment on its impact 
on small business, and no comments were received.

Drafting Information

    The principal authors of these regulations are Skyler K. Bradbury 
and Emily M. Lesniak, Office of the Associate Chief Counsel (Procedure 
and Administration).

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, 26 CFR part 301 is amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
Paragraph 1. The authority citation for part 301 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *


0
Par. 2. Section 301.7216-0 is amended by revising the entries for

[[Page 76404]]

Sec.  301.7216-2, paragraphs (n), (o), and (p) to read as follows:


Sec.  301.7216-0  Table of contents.

* * * * *
Sec.  301.7216-2 Permissible disclosures or uses without consent of 
the taxpayer.
* * * * *
    (n) Lists for solicitation of tax return preparation business.
    (o) Producing statistical information in connection with tax 
return preparation business.
    (p) Disclosure or use of information for quality, peer, or 
conflict reviews.
* * * * *


Sec.  301.7216-0T  [Removed]

0
Par. 3. Section 301.7216-0T is removed.

0
Par. 4. Section 301.7216-2 is amended by revising paragraphs (n), (o), 
(p), and (s) to read as follows:


Sec.  301.7216-2  Permissible disclosures or uses without consent of 
the taxpayer.

* * * * *
    (n) Lists for solicitation of tax return preparation business. (1) 
A tax return preparer, other than a person who is a tax return preparer 
solely because the person provides auxiliary services as defined in 
Sec.  301.7216-1(b)(2)(iii), may compile and maintain a separate list 
containing solely items of tax return information. The following items 
of tax return information are permissible: The names, mailing 
addresses, email addresses, phone numbers, taxpayer entity 
classification (including ``individual'' or the specific type of 
business entity), and income tax return form number (for example, Form 
1040-EZ) of taxpayers whose tax returns the tax return preparer has 
prepared or processed. The Internal Revenue Service may issue guidance, 
by publication in the Internal Revenue Bulletin (see Sec.  
601.601(d)(2)(ii)(b) of this chapter), describing other types of 
information that may be included in a list compiled and maintained 
pursuant to this paragraph. This list may be used by the compiler 
solely to contact the taxpayers on the list for the purpose of 
providing tax information and general business or economic information 
or analysis for educational purposes, or soliciting additional tax 
return preparation services. The list may not be used to solicit any 
service or product other than tax return preparation services. The 
compiler of the list may not transfer the taxpayer list, or any part 
thereof, to any other person unless the transfer takes place in 
conjunction with the sale or other disposition of the compiler's tax 
return preparation business. Due diligence conducted prior to a 
proposed sale of a compiler's tax return preparation business is in 
conjunction with the sale or other disposition of a compiler's tax 
return preparation business and will not constitute a transfer of the 
list if conducted pursuant to a written agreement that requires 
confidentiality of the tax return information disclosed and expressly 
prohibits the further disclosure or use of the tax return information 
for any purpose other than that related to the purchase of the tax 
return preparation business. A person who acquires a taxpayer list, or 
a part thereof, in conjunction with a sale or other disposition of a 
tax return preparation business falls under the provisions of this 
paragraph with respect to the list. The term list, as used in this 
paragraph (n), includes any record or system whereby the types of 
information expressly authorized for inclusion in a taxpayer list 
pursuant to the terms of this paragraph (n) are retained. The 
provisions of this paragraph (n) also apply to the transfer of any 
records and related papers to which this paragraph (n) applies.
    (2) Examples. The following examples illustrate this paragraph (n):

    Example 1. Preparer A is a tax return preparer as defined by 
Sec.  301.7216-1(b)(2)(i)(A). Preparer A's office is located in 
southeast Pennsylvania, and Preparer A prepares federal and state 
income tax returns for taxpayers who live in Pennsylvania, New 
Jersey, Maryland, and Delaware. Preparer A maintains a list of 
taxpayer clients containing the information allowed by this 
paragraph (n). Preparer A provides quarterly state income tax 
information updates to his individual taxpayer clients by email or 
U.S. mail. To ensure that his clients only receive the information 
updates that are relevant to them, Preparer A uses his list to 
direct his outreach efforts towards the relevant clients by 
searching his list to filter it by zip code and income tax return 
form number (Form 1040 and corresponding state income tax return 
form number). Preparer A may use the list information in this manner 
without taxpayer consent because he is providing tax information for 
educational or informational purposes and is targeting clients based 
solely upon tax return information that is authorized by this 
paragraph (n) (by zip code, which is part of a taxpayer's address, 
and by income tax return form number). Without taxpayer consent, 
Preparer A also may deliver this information to his clients by 
email, U.S. mail, or other method of delivery that uses only 
information authorized by this paragraph (n).
    Example 2. Preparer B is a tax return preparer as defined by 
Sec.  301.7216-1(b)(2)(i)(A). Preparer B maintains a list of 
taxpayer clients containing the information allowed by this 
paragraph (n). Preparer B provides monthly federal income tax 
information updates in the form of a newsletter to all of her 
taxpayer clients by email or U.S. mail. When Preparer B hires a new 
employee who participates or assists in tax return preparation, she 
announces that hire in the newsletter for the month that follows the 
hiring. Each announcement includes a photograph of the new employee, 
the employee's name, the employee's telephone number, a brief 
listing of the employee's qualifications, and a brief listing of the 
employee's employment responsibilities. Preparer B may use the tax 
return information described in this paragraph (n) in this manner 
without taxpayer consent because she is providing tax information 
for educational or informational purposes to provide general federal 
income tax information updates. Preparer B may include the new 
employee announcements in the form described because this is 
considered tax information for informational purposes, provided the 
announcements do not contain solicitations for non-tax return 
preparation services. Without taxpayer consent, Preparer B also may 
deliver this information to her clients by email, U.S. mail, or 
other method of delivery that uses only information authorized by 
this paragraph (n).

    (o) Producing statistical information in connection with tax return 
preparation business. (1) A tax return preparer may use tax return 
information, subject to the limitations specified in this paragraph 
(o), to produce a statistical compilation of data described in Sec.  
301.7216-1(b)(3)(i)(B). The purpose for and disclosure or use of the 
statistical compilation requiring data acquired during the tax return 
preparation process must relate directly to the internal management or 
support of the tax return preparer's tax return preparation business, 
or to bona fide research or public policy discussions concerning state 
or federal taxation. A tax return preparer may not disclose the 
statistical compilation, or any part thereof, to any other person 
unless disclosure of the statistical compilation is anonymous as to 
taxpayer identity, does not disclose an aggregate figure containing 
data from fewer than ten tax returns, and is in direct support of the 
tax return preparer's tax return preparation business or of bona fide 
research or public policy discussions concerning state or federal 
taxation. A statistical compilation is anonymous as to taxpayer 
identity if it is in a form which cannot be associated with, or 
otherwise identify, directly or indirectly, a particular taxpayer. For 
purposes of this paragraph, marketing and advertising is in direct 
support of the tax return preparer's tax return preparation business 
provided the marketing and advertising is not false, misleading, or 
unduly influential. This paragraph, however, does not authorize the 
disclosure or use in marketing or advertising of any statistical 
compilations, or part thereof, that

[[Page 76405]]

identify dollar amounts of refunds, credits, or deductions associated 
with tax returns, or percentages relating thereto, whether or not the 
data are statistical, averaged, aggregated, or anonymous. Disclosures 
made in support of fundraising activities conducted by volunteer return 
preparation programs and other organizations described in section 
501(c) of the Internal Revenue Code (Code) in direct support of their 
tax return preparation businesses are not marketing and advertising 
under this paragraph. A tax return preparer who produces a statistical 
compilation of data described in Sec.  301.7216-1(b)(3)(i)(B) may 
disclose the compilation to comply with financial accounting or 
regulatory reporting requirements whether or not the statistical 
compilation is anonymous as to taxpayer identity or discloses an 
aggregate figure containing data from fewer than ten tax returns.
    (2) A tax return preparer may not sell or exchange for value a 
statistical compilation of data described in Sec.  301.7216-
1(b)(3)(i)(B), in whole or in part, except in conjunction with the 
transfer of assets made pursuant to the sale or other disposition of 
the tax return preparer's tax return preparation business. The 
provisions of paragraph (n) of this section regarding the transfer of a 
taxpayer list also apply to the transfer of any statistical 
compilations of data to which this paragraph applies. A person who 
acquires a statistical compilation, or a part thereof, pursuant to the 
operation of this paragraph (o) or in conjunction with a sale or other 
disposition of a tax return preparation business is subject to the 
provisions of this paragraph with respect to the compilation.
    (3) Examples. The following examples illustrate this paragraph (o):

    Example 1. Preparer A is a tax return preparer as defined by 
Sec.  301.7216-1(b)(2)(i)(A). In 2009, A used tax return information 
to produce a statistical compilation of data for both internal 
management purposes and to support A's tax return preparation 
business. The statistical compilation included an aggregate figure 
containing the information that A prepared 32 S corporation tax 
returns in 2009. In 2010, A decided to embark upon a new marketing 
campaign emphasizing its experience preparing small business tax 
returns. In the campaign, A discloses the aggregate figure 
containing the number of S corporation tax returns prepared in 2009. 
A's disclosure does not include any information that can be 
associated with or identify any specific taxpayers. A may disclose 
the anonymous statistical compilation without taxpayer consent.
    Example 2. Preparer B is a tax return preparer as defined by 
Sec.  301.7216-1(b)(2)(i)(A). In 2010, in support of B's tax return 
preparation business, B wants to advertise that the average tax 
refund obtained for its clients in 2009 was $2,800. B may not 
disclose this information because it contains a statistical 
compilation reflecting average refund amounts.
    Example 3. Preparer C is a tax return preparer as defined by 
Sec.  301.7216-1(b)(2)(i)(A) and is a volunteer income tax 
assistance program. In 2010, in support of C's tax return 
preparation business, C submits a grant application to a charitable 
foundation to fund C's operations providing free tax return 
preparation services to low- and moderate-income families. In 
support of C's request, C includes anonymous statistical data 
consisting of aggregated figures containing data from ten or more 
tax returns showing that, in 2009, C provided services to 500 
taxpayers, that 95 percent of the taxpayer population served by C 
received the Earned Income Tax Credit (EITC), and that the average 
amount of the EITC received was $3,300. Despite the fact that this 
information constitutes an average credit amount, C may disclose the 
information to the charitable foundation because disclosures made in 
support of fundraising activities conducted by volunteer income tax 
assistance programs and other organizations described in section 
501(c) of the Code in direct support of their tax return preparation 
business are not considered marketing and advertising for purposes 
of Sec.  301.7216-2(o)(1).
    Example 4. Preparer D is a tax return preparer as defined by 
Sec.  301.7216-1(b)(2)(i)(A). In December 2009, D produced an 
anonymous statistical compilation of tax return information obtained 
during the 2009 filing season. In 2010, D wants to disclose portions 
of the anonymous statistical compilation from aggregated figures 
containing data from ten or more tax returns in connection with the 
marketing of its financial advisory and asset planning services. D 
is required to receive taxpayer consent under Sec.  301.7216-3 
before disclosing the tax return information contained in the 
anonymous statistical compilation because the disclosure is not 
being made in support of D's tax return preparation business.

    (p) Disclosure or use of information for quality, peer, or conflict 
reviews. (1) The provisions of section 7216(a) and Sec.  301.7216-1 
shall not apply to any disclosure for the purpose of a quality or peer 
review to the extent necessary to accomplish the review. A quality or 
peer review is a review that is undertaken to evaluate, monitor, and 
improve the quality and accuracy of a tax return preparer's tax 
preparation, accounting, or auditing services. A quality or peer review 
may be conducted only by attorneys, certified public accountants, 
enrolled agents, and enrolled actuaries who are eligible to practice 
before the Internal Revenue Service. See Department of the Treasury 
Circular 230, 31 CFR part 10. Tax return information may also be 
disclosed to persons who provide administrative or support services to 
an individual who is conducting a quality or peer review under this 
paragraph (p), but only to the extent necessary for the reviewer to 
conduct the review. Tax return information gathered in conducting a 
review may be used only for purposes of a review. No tax return 
information identifying a taxpayer may be disclosed in any evaluative 
reports or recommendations that may be accessible to any person other 
than the reviewer or the tax return preparer being reviewed. The tax 
return preparer being reviewed will maintain a record of the review, 
including the information reviewed and the identity of the persons 
conducting the review. After completion of the review, no documents 
containing information that may identify any taxpayer by name or 
identification number may be retained by a reviewer or by the 
reviewer's administrative or support personnel.
    (2) The provisions of section 7216(a) and Sec.  301.7216-1 shall 
not apply to any disclosure necessary to accomplish a conflict review. 
A conflict review is a review undertaken to comply with requirements 
established by any federal, state, or local law, agency, board or 
commission, or by a professional association ethics committee or board, 
to either identify, evaluate, or monitor actual or potential legal and 
ethical conflicts of interest that may arise when a tax return preparer 
is employed or acquired by another tax return preparer, or to identify, 
evaluate, or monitor actual or potential legal and ethical conflicts of 
interest that may arise when a tax return preparer is considering 
engaging a new client. Tax return information gathered in conducting a 
conflict review may be used only for purposes of a conflict review. No 
tax return information identifying a taxpayer may be disclosed in any 
evaluative reports or recommendations that may be accessible to any 
person other than those responsible for identifying, evaluating, or 
monitoring legal and ethical conflicts of interest. No tax return 
information identifying a taxpayer may be disclosed outside of the 
United States or a territory or possession of the United States unless 
the disclosing and receiving tax return preparers have procedures in 
place that are consistent with good business practices and designed to 
maintain the confidentiality of the disclosed tax return information.
    (3) Any person (including administrative and support personnel) 
receiving tax return information in connection with a quality, peer, or 
conflict review is a tax return preparer for purposes of sections 
7216(a) and

[[Page 76406]]

6713(a). Tax return information disclosed and used for purposes of a 
quality, peer, or conflict review shall not be disclosed or used for 
any other purpose.
* * * * *
    (s) Effective/applicability date. Paragraphs (n), (o), and (p) of 
this section apply to disclosures or uses of tax return information 
occurring on or after December 28, 2012. All other paragraphs of this 
section apply to disclosures or uses of tax return information 
occurring on or after January 1, 2009.


Sec.  301.7216-2T  [Removed]

0
Par. 5. Section 301.7216-2T is removed.

Stephen T. Miller,
Deputy Commissioner for Services and Enforcement.
    Approved: December 20, 2012.
 Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2012-31185 Filed 12-26-12; 11:15 am]
BILLING CODE 4830-01-P