Consent to Disclosure of Tax Return Information: Rules and Penalties

Before a tax preparer can share your return information with anyone outside the return preparation process, federal law requires your signed, written consent to the disclosure of tax return information. The consent must name who is receiving the data, what data is being sent, why, and for how long, and it has to carry specific warning language set by the IRS. Internal Revenue Code Section 7216 makes an unauthorized disclosure a criminal offense, so the form is not a formality; it is the document that legally permits your preparer to release anything.¹

When a Consent Form Is Required

Consent is required any time your preparer wants to share your information for a purpose beyond preparing and filing your return. Typical examples: sending tax data to a mortgage lender verifying income, sharing financials with a bank for a business loan, or passing information to an affiliated company that wants to offer you financial products. Once the information leaves the return preparation context, federal law requires your explicit written permission first.²

The same rule applies to internal use. If a firm wants to mine client data for marketing, that requires its own consent form specifically authorizing that use. Disclosure (sharing with a third party) and use (the preparer’s own non-preparation purposes) are treated as separate actions, and a single form cannot cover both.²

A few situations do not require your consent: disclosures to the IRS, sharing among staff inside the same firm to prepare your return, updating tax software you were provided, and disclosures that another Internal Revenue Code section independently permits. Everything else needs a signed form.³

One thing worth understanding up front: “tax return information” is broader than the return itself. It covers everything you hand over in connection with preparing the return, including pay stubs, bank statements, Social Security numbers, and supporting schedules.¹

What the Consent Form Must Contain

The regulations require a valid consent to identify each of the following. Missing any element can invalidate the entire consent, even if you signed willingly.

The name of the tax return preparer or firm requesting permission.
Your legal name as the taxpayer granting authorization.
The specific third party who will receive your information, identified clearly enough that you know exactly who is getting the data.
A description of exactly which tax return information will be shared, whether that is the entire return or a specific item such as adjusted gross income.
The specific purpose the recipient will use it for, such as evaluating a loan application.

Open-ended consents that fail to name a recipient or pin down a purpose do not satisfy the regulation.²

Mandatory Warning Language

Every consent form must carry warning language dictated by the IRS. The exact wording shifts depending on whether the consent authorizes disclosure to a third party, disclosure to another preparer, or internal use, but all versions share the same core message: you are not required to sign in order to get your taxes prepared, and if a preparer conditions the return itself on your signature, the consent is invalid.⁴

For a disclosure to someone outside the return preparation process, the required language also warns that once your information is shared, federal law may not protect it from further distribution by the recipient. The form must state that your consent lasts only as long as you specify, and that if you do not pick a timeframe, it expires one year from the date you signed.⁴

There is one narrow exception to the no-pressure rule. When the disclosure is to another preparer who will help with your return, the firm may decline the engagement or adjust its fees if you refuse consent, because your decision directly affects how they deliver the service.²

Formatting and Signature Rules

If you file a Form 1040 series return, the consent has to be a standalone document. It cannot be tucked into your engagement letter, fee agreement, or any other paperwork. The point is to force a deliberate decision about your privacy rather than letting the consent slip through in a stack of forms. Business taxpayers filing other return types get looser treatment and may consent within an engagement letter, as long as all the required elements are present.²

Paper Consents

Paper forms must be printed on standard letter-size paper or larger. All text on the page must relate exclusively to the disclosure or use being authorized. Type size must be at least 12-point, meaning no more than 12 characters per inch. You sign and date the form by hand before any information is released.⁴

Electronic Consents

When the consent is delivered electronically, everything on the screen must relate solely to the consent, aside from standard navigation buttons. The text must be at least as large as the body text the website or software normally uses, with enough contrast against the background to be easily readable. The electronic form must also be formatted so you can print a clean copy for your records.⁴

On paper or on a screen, the consent has to be signed and dated before the preparer transmits anything. A consent signed after the fact is not valid.²

How Long a Consent Lasts and How to Revoke It

You set the duration. A short window is appropriate for a one-time transfer to a mortgage lender; a longer duration may make sense when your preparer shares data with an affiliated advisory firm on an ongoing basis. If the form does not specify a duration, the consent expires one year from the date you signed.²

You can revoke your consent at any time, whatever duration is written on the form. Once you tell your preparer you are withdrawing permission, they must stop any further disclosure or use of your information. There is no waiting period and no special form. Put the revocation in writing so you have a record.

Sending Data Outside the United States

When a preparer sends your information to someone located outside the U.S., the rules tighten. The consent must specifically state that your data will be disclosed overseas and that U.S. privacy protections may not apply once it leaves.

If you file a Form 1040 series return, the preparer generally cannot include your Social Security number in anything sent abroad. The SSN has to be removed or masked before transmission. The only exception is when the preparer uses data protection safeguards meeting IRS-published standards and verifies those safeguards in the consent request itself.²

Penalties if a Preparer Skips Consent

Section 7216 makes a knowing or reckless disclosure without authorization a misdemeanor. Each violation carries a fine of up to $1,000, up to a year in prison, or both. When the disclosure is connected to identity theft, the maximum criminal fine jumps to $100,000 per violation.¹

Section 6713 adds a civil penalty of $250 per unauthorized disclosure or use, capped at $10,000 per calendar year. For identity-theft-related disclosures, the civil penalty rises to $1,000 per violation with a $50,000 annual cap, tracked separately from the standard cap. Civil penalties do not require a criminal conviction and can be assessed administratively.⁵

Reporting an Unauthorized Disclosure

If you believe your preparer shared your tax information without a valid consent, file a complaint with the IRS on Form 14157 (Return Preparer Complaint). If the preparer also altered or filed a return without your knowledge, add Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit).⁶

Form 14157 can be submitted electronically through the IRS website. If the complaint relates to an IRS notice or letter you already received, mail the completed forms with a copy of that notice to the address printed on it. Pull your paper trail together first: engagement letters, receipts for fees, whatever consent forms you did or did not sign, and any correspondence with the preparer. The stronger the documentation, the more the IRS Return Preparer Office has to work with.

1
Office of the Law Revision Counsel. 26 Code 7216 – Disclosure or Use of Information by Preparers of Returns
2
eCFR. 26 CFR 301.7216-3 – Disclosure or Use Permitted Only With the Taxpayers Consent
3
eCFR. 26 CFR 301.7216-2 – Permissible Disclosures or Uses Without Consent of the Taxpayer
4
Internal Revenue Service. Revenue Procedure 2013-14
5
Office of the Law Revision Counsel. 26 USC 6713 – Disclosure or Use of Information by Preparers of Returns
6
Internal Revenue Service. Report a Tax Return Preparer