What is IRS Section 7216?

How will Revenue Ruling 2010-4 affect you?

IRS Section 7216 Compliance 


IRS Section 7216 grew out of concerns relating to solicitation of services based on information deemed private under the law.

Governmental intervention in the matter of a citizen's privacy began when The Privacy Act of 1974 was passed by the United States Congress following revelations of the abuse of privacy during the administration of President Richard Nixon. Since then there have been amendments to The Privacy Act and new laws such as The Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule to protect a citizen's privacy have been added.

The Internal Revenue Code Section 7216, that went into effect January 1, 2009  contains a criminal provision  enacted by the U.S. Congress originally in 1971 that prohibits anyone who is involved in the preparation of tax returns from knowingly or recklessly disclosing or using the tax-related information provided other than in connection with the preparation of such returns.  For the last year, this law has mandated that tax preparers get consent to both disclose their contact information to a third party and use their contact information for purposes other than sending tax related information.

Of special importance to business today are revisions to the original IRS 7216 Code, that went into effect in  2010. 

Below is an excerpt from the IRS Revenue Ruling 2010-4, as it relates to sending newsletters.

"(Provides guidance on whether a tax return preparer is liable for criminal and civil penalties under Internal Revenue Code sections 7216 and 6713 when the tax return preparer uses tax return information to contact taxpayers to inform them of changes in tax law that could affect the taxpayers? income tax liability reported in tax returns previously prepared or processed by the tax return preparer; uses tax return information to determine which taxpayers? future income tax return filing obligations may be affected by a prospective change in tax rule or regulation and to contact such taxpayers to notify them of the changed rule or regulation, explain how the change may affect them, and advise them with regard to actions they may take in response to the change; or discloses tax return information contained in the list permitted to be maintained by the tax return preparer under section 301.7216-2(n) to a third-party service provider that creates, publishes, or distributes, by mail or e-mail, tax information and general business and economic information or analysis for educational purposes or for purposes of soliciting additional tax return preparation services for the tax return preparer, for the purpose of obtaining the ?newsletter? creation, publication, and or distribution services offered by the third-party service provider.)"

Does BizActions Compliance Center benefit not only tax preparers, but businesses in other industry sectors?  Yes.

View BizActions Compliance Center ToolsSection 7216 withstanding, your firm's business still depends on compliance with a host of laws and their revisions.  BizActions can help you not only with an easy way to get approval when you are asked to or must share private client information, but give you a secure, trackable record of that approval through our Compliance Center.

Every firm needs to get authorization to proceed with some activity or to notify clients of some activity and keep a record of their responses for those transactions. BizActions Compliance Center is the solution.

Additionally, BizActions allows you to establish Content Classes within your database to segment your newsletter recipients in ways that are meaningful to you and beneficial to your target groups.  This feature allows you to send different articles to different recipients based on criteria you set.

Please note the following items regarding security and some specific 7216 issues that you may find relevant in your evaluation process.

  1. We own our hardware - no cloud-based servers - 100% Red Hat Enterprise Linux
  2. Servers are co-located at a SAS 70 Type II Certified Carrier Neutral Datacenter more info
  3. Customer application runs through 256-bit SSL encryption (April 2011)
  4. BizActions Privacy Policy is TRUSTe certified (May 2011)
  5. BizActions Privacy Policy is WebTrust certified for Confidentiality
  6. Each customer's email is delivered through a Personal Sending Domain (PSD) with a dedicated IP, not shared IPs
  7. PSDs are configured with SPF, Sender ID, and DomainKeys/DKIM
  8. Our site is protected daily through www.Controlscan.com regarding security.
  9. We have recently added site protection through a Web Server Certificate. Transactions on the site are protected with up to 256-bit Secure Sockets Layer encryption.
  10. BizActions has commissioned an audit of our confidentiality procedures by the same CPA firm that audited us for the Web Trust Seal, which we earned and was issued through the AICPA.
  11. Report of Independent Accountants.pdf
  12. Management_Assertion - IRS_Section_7216_Compliance.pdf
  13. Compliance requirements are available at http://www.IRS.gov