Taxpayer Bill of Rights: The Right to Confidentiality

From the Desk of Lauran Corcoran

Taxpayer Bill of Rights: The Right to Confidentiality

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect the IRS to investigate and take appropriate action against IRS employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

What does The Right to Confidentiality mean?

• In general, the IRS may not disclose your tax information to third parties unless you give it permission, e.g., you request that the IRS disclose information in connection with a mortgage or student loan application.

• If a tax return preparer discloses or uses your tax information for any purpose other than for tax preparation, the preparer may be subject to civil penalties. If the disclosure or improper use is done knowingly or recklessly, the preparer may also be subject to criminal fines and imprisonment.

• Communications between you and an attorney, with respect to legal advice the attorney gives you, are generally privileged. A similar privilege applies to tax advice you receive from an individual who is authorized to practice before the IRS (e.g., certified public accountant, enrolled agent, and enrolled actuary), but only to the extent that the communication between you and that specific individual would be privileged and confidential, as if the conversation had taken place between you and an attorney.

• In general, the IRS cannot contact third parties, e.g., your employer, neighbors, or bank, to obtain information about adjusting or collecting your tax liability unless it provides you with reasonable notice in advance.

If you missed last week’s blog, check it out: Taxpayer Bill of Rights: The Right to Finality