Tax Return Preparation and Data Confidentiality: Obligation of Tax Preparer

Taxes are the price of civilization. Man must stand with the tax as a civilization is in existence. And while taxes are in existence, the tax preparers will be in effect (abundance?) Who help taxpayers calculate their income taxes and file tax return.

Calculating the tax is to collect sensitive information about a person as: 1. What is the marital status of the person during the year? 2. If the person is a widow, since when the spouse has ended? 3. If the person is unmarried, was he ever married? And if so, when the divorce happened? 4. How many dependent children do we have and what are the expenses for them? 5. What are the person's income from various sources and what are the expenses during the year?

All this information is very sensitive to any person when that person wants the help of a professional tax preparer, the tax preparer must have a high degree of integrity and dignity of confidence. With this type of responsibility regarding the confidentiality of data based on tax preparation, is it not necessary that the leaders of the right to impose some form of accountability for tax preparers? For years, members approved the AICPA (referred to as PPC) were first in line to assist taxpayers in calculating their taxes and tax return. And since the code of ethics of the AICPA (Ethical Decision No. 112, pursuant to Article 120: The integrity and objectivity) makes it mandatory for members to take the express permission of taxpayers before disclosing confidential information related to paying tax, taxpayers have generally been comfortable with the CPAS. However, off late, many tax preparers others came to help taxpayers file their declarations and these processors are not primarily members of the AICPA. Thus, the code of ethics does not apply to these people. This meant that the tax preparer may use the services of third service provider in the preparation of tax returns to disclose confidential information the tax payer for the third party service provider, unless the taxpayer get to know that his information was shared with a person he / she does not even know! To remedy this deficiency, the IRS has updated the section 7216, rules for tax preparers on DEC'08 18. These rules update would be effective from 1 January'09. By this rule, "any person who is engaged in the business of preparing or providing services in the preparation of, returns of tax imposed by chapter 1, or any person who prepares for compensation this return to any other person who knowingly or recklessly – (1) communicates information provided to him, or in connection with the preparation of this return, or (2) uses this information for purposes other than preparing or assist in preparing this return, is guilty of a misdemeanor and on conviction is liable to a fine not exceeding $ 1,000 or imprisoned not more than 1 year, or both, and costs of prosecution.

Thus, any tax preparer must now must take the express permission of the taxpayer before the services of a third party service provider is used. It thus marks a new departure in the outsourcing business. Tax preparers who are looking to outsource part of their work would now take the customers' consent before doing so. This would make outsourcing a service more transparent and acceptable.

The tax preparer would have to be very catious This alliance with outsourcing companies. A taxpayer does not give his information to someone who has no responsibility relating to the confidentiality of data. But now, the tax preparer partner with a CPA or indian CA, taxpayers would have no problem with sharing information because it is public knowledge that these professionals are governed by the strict code of ethics that prohibits them from disclosing data. Thus, it is logical to tax preparers seeking partners for outsourcing to opt for outsourcing these companies are owned and managed by the CPA.

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