AICPA Urges IRS to Pause Regulatory Effort Concerning Sharing of Taxpayers' Information

April 4, 2006

The American Institute of Certified Public Accountants (AICPA) testified today at an IRS hearing that the agency should pause the regulatory process to allow further discussion about proposed regulations under Internal Revenue Code section 7216, which has also drawn criticism from consumer organizations concerning sharing of taxpayers' information.

• Read the proposed regulations and background information.
• Review AICPA comments to the IRS expressing practitioner concerns.
• Key professional issues are summarized as they relate to consumers. CPAs are encouraged to share this information with clients.

The AICPA told the IRS that protection of tax return information should remain a top priority. "As professional providers of tax services, our members know first-hand that their clients expect them and everyone else who comes in contact with their return data to hold it confidential. As a result, the Institute has strongly supported the historically high standards for return information confidentiality."

The AICPA recognized the need to modernize the section 7216 disclosure rules, which have not been updated since 1974, in order to accommodate today's electronic capabilities for transferring data. However, the AICPA said about the proposed regulations that "it does not appear the IRS fully considered their impacts. In our view the proposed regulations, as currently designed, will impose unnecessary burdens on taxpayers and service providers alike. We believe the IRS could produce more effective disclosure modernization proposals if it took the time to fully engage the impacted parties in a consideration of the impacts and alternatives." The AICPA noted it made specific recommendations in its comments to the IRS on March 8, 2006.