Can You Use Tax Return Information for Marketing?

Source: Pennsylvania CPA Journal

According to this article, using information from clients' tax returns for promotional purposes is a dangerous business. Under Internal Revenue Code Sec. 7216, improperly using or disclosing tax return information without the taxpayer's consent is a misdemeanor punishable by a $1,000 fine, imprisonment for up to one year, and civil penalties of $250 per infraction (up to $10,000 per year). CPAs who violate this provision also risk professional sanctions or even loss of their license.

Under IRS regulations, however, there's an exception that allows preparers to make limited use of the following information:

• Name
• Addresses
• E-mail addresses
• Phone numbers
• Entity type
• Form number of tax return prepared

Preparers can do two things with this information:

1. Send clients information about tax law or business and economic conditions for educational purposes
2. Solicit additional tax return preparation services (but not other types of services) from the client. See Revenue Ruling 2010-4 for examples.

Keep in mind that these rules do not restrict a firm's ability to market to tax clients using information that's readily available from sources other than their tax returns. But it's a good idea to maintain documentation that clearly identifies your information sources.

To read the original article, click here.

From Pennsylvania CPA Journal, Spring 2010, "Use of Tax Return Information is Dangerous."