Recent Developments

■ CPAs Face Tough Confidentiality Rules. Tough rules restrict CPAs use of tax return information. Treas. Reg. Sec. 301.7216 effective on January 1, 2009. The general rule is that a tax return preparer cannot disclose or use tax return information without first receiving the client’s written consent. So you want to protect yourself from a potential claim of an estate plan gone awry by informing all clients for whom you have addresses of the impact of estate tax repeal. Sure makes sense to do. But hold your horses. Before you trot off consider that the IRS recently issued Revenue Ruling 2010-4 and 2010-5. Love letters they’re not. For you not to be subject to criminal penalties for improper disclosure of client tax return information you have to take precautionary steps. But be careful not to tell the guys around the poker table what old man Jones earned last year is not enough. Yes, the IRS might actually view the names and addresses you extract for mailing your newsletter as constituting tax return data! Consider requesting your printer (and fulfillment house if you use a separate firm) to confirm that they have procedures in place that are consistent with good business practices and designed to maintain the confidentiality of the disclosed tax return information. You should then make a determination that if those procedures are in fact followed the printer will be able to assure the confidentiality of the data. Have your printer acknowledge that it is prohibited from the further use or disclosure of the tax return information (names and addresses) provided to it by you for purposes other than those related to the provision of the printing and mailing of your newsletter.