In a prior posting here, I reported on the GAO report about tax return preparer errors, including omission of income from non-W2 sources and other advice that appears to abet client tax evasion. At the same time, I reminded readers of the IRS decision to facilitate commercial use of tax return information by allowing preparers, with consent, to sell taxpayer information to unaffiliated third parties, discussed in this posting. The consent requirement may well be insufficiently protective of taxpayers, especially if preparers ask taxpayers to sign the form without explaining it, provide the form routinely with other forms that require signatures, or mislead taxpayers about the uses and protection of their information.
Representatives Stark, McDermott, Inslee and Bean have introduced legislation to prevent tax return preparers from selling taxpayer tax return information to third parties. The legislation also restricts outsourcing abroad of tax return preparation work. See this April 4 release on Representative Stark's website. The text of the "Taxpayer Privacy Act of 2006" is available on RIA's Checkpoint service, here. If you'd like to weigh in on the importance of restricting return preparers' ability to commercialize tax return information, you can contact your congressional representatives through the following link: http://www.congress.org/congressorg/dbq/officials/.
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