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Regulation 7216 Policies & Procedures Background on Regulation Section 7216 has been on the books since 1971, when Congress imposed criminal penalties on tax return preparers who disclosed or used tax return information without authorization. The IRS has recently modified the regulations under Sec. 7216 with the goal of better protecting taxpayers’ tax return information, particularly in today’s technologically advanced business environment where electronic theft and security data breaches are all too common. The updated regulations generally prohibit “tax return preparers” from disclosing or using clients’ “tax return information” (which includes name, addresses, and email addresses) for purposes other than tax return preparation without taxpayers’ knowing, informed and voluntary consent. Our Process – Existing Clients 1) Run a report of all of our tax return only (TRO) clients– individuals and businesses. In cases where the owner(s) of a firm are also individual clients, we would still send mailings, etc. to the owners at the business address and no information will be sent to the owners at their home address (unless we receive a signed consent form back). 2) Marketing will mark the TRO clients as “Do not solicit” in DATABASE, which means that they will no longer receive any mailings or emails from us. 3) Marketing will continue our existing process and content with all or our newsletters (i.e. Profit Margins will continue to have articles from affiliated companies). 4) Marketing will send a cover letter from the engagement partner and two consent forms to our TRO clients with business reply envelopes going to MARKETING ASSISTANT’S attention. The consent letters will include verbiage that their signature/consent is for the duration of time that they are a client of FIRM. We will not send a consent form to children; they will remain marked as “Do not solicit” in our database. 5) Marketing will use this list to create a tracking list of whether or not we received their signed consent forms back. 6) Once the consent forms are received back, MARKETING ASSISTANT will remove the “Do not solicit” from our database and update the tracking list to show the forms have been received. The original letters will be scanned and stored in DATABASE(S). 7) When the tax return is ready, and the assistant contacts the client, they will first check to see if we have received their signed consent forms by looking on the tracking list. If we have not received the forms back, the assistant will ask the client if they received the form and ask if they are planning to sign or not. If they respond they have not received, the assistant will resend the forms. Once the tax return is delivered, we are prohibited from asking about the consent forms until the next tax engagement (e.g., mid-year tax planning). Disclosure to Unrelated Third Parties 1) In situations where a tax client requests their tax return information be disclosed to an unrelated third party (e.g., attorney, banker, etc.) either a separate disclosure form will be sent to the taxpayer or the tax return information will be sent directly to the taxpayer. Our Process –New Tax Only Clients 1) Instead of sending out a welcome letter, they will receive a revised letter which will also include the consent forms. 2) The new client name will be added to the tracking log by MARKETING ASSISTANT and they will be marked as “Do not solicit” in DATABASE. 3) The same procedures as outline above will be followed regarding the tracking and handling of the consent forms.
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