Note that we are noticing more and more of our colleagues having overseas help as a way to reduce cost in some cases and others because of the lack of accounting and tax professionals in the United States. As of the date of this post, we do not outsource our accounting and tax preparation to overseas workers and we require in office presence to our employees due to the nature of our work and confidential character of the data.

In some cases, the tax software companies might have support staff outside the United States, and the tax practitioner will have to deny tax software assistance from overseas unless the client provided his/her consent according to section 7216 (you can find numerous consent forms online).

However, many of our colleagues might be failing to disclose to their clients and even request authorization from their clients, who in many cases are not even aware of those business practices.

As mentioned in the Tax Adviser article, “… A tax preparer convicted of violating Sec. 7216 may be subject to a fine of up to $1,000 or imprisonment of not more than one year (or both). The monetary penalty increases to up to $100,000 if the disclosure or use is in connection with a crime involving identity theft. In addition to potential criminal penalties, Sec. 7216 infractions can expose tax preparers to a referral to the IRS’s Office of Professional Responsibility, which oversees professional conduct.”

To protect your any unauthorized disclosure of financial or tax information, we recommend any taxpayers that might suspect that their information is going overseas to reach out their tax professional and potentially provide consent (or even nationally if “… substantive decisions related to the return… include, but are not limited to, which filing status is elected, how various types of income are reported, which deductions and credits are claimed, and how income is allocated“). If you discover that information has been shared to third parties without your consent, maybe it is time to consider a change.

IRS guidance – Section 7216 Information Center

The Tax Adviser – The many implications of Sec. 7216

Thomson Reuters – Section 7216 consent for non-US support