Form 7216 Consent Form: Required Language, Format, and Penalties

A Section 7216 consent form must be a voluntary, standalone written document that names the preparer and the taxpayer, identifies the specific information involved and the exact purpose of the disclosure or use, states its duration, explains how to revoke it, and carries the warning language and formatting prescribed by Revenue Procedure 2013-14. Miss any one of those 7216 consent form requirements and the IRS treats the document as no consent at all, exposing the preparer to civil penalties, criminal charges, and professional discipline.

One clarification before going further. The IRS does not publish a fill-in consent form for this purpose. Tax professionals routinely refer to “7216 consent forms,” but each preparer drafts their own document following Treasury Regulation Section 301.7216-3 and Revenue Procedure 2013-14. The actual IRS Form 7216 is an unrelated filing for corporate transactions under Section 355.

When a Consent Is Required

A preparer can freely use your information to prepare your return, help with that preparation, or give tax advice tied to it. Anything beyond that lane needs a written consent. The common triggers are outsourcing return preparation or processing to a third party (including offshore vendors and even read-only offshore access to data on a server), marketing non-tax products or services based on return data, sharing information with affiliated companies inside the same corporate family, and repurposing return information for analytics or financial reports separate from the return itself.¹

Two types of consent exist, and they cannot be combined on a single page. A disclosure consent authorizes sharing information with someone else. A use consent authorizes the preparer to use your data internally for something other than preparing the return. Multiple disclosure consents can share one document, and multiple use consents can share one document, but disclosure and use consents must always be on separate documents. When several consents appear on one page, the taxpayer has to be able to select each one individually.²

What a Valid Consent Document Must Contain

Voluntary and Knowing

Consent must be knowing and voluntary. A preparer generally cannot condition tax preparation services on your signing a consent. If you sign because the preparer said they would otherwise refuse to do your return, that consent is invalid.³

There is one narrow exception. When the consent relates to outsourcing the return preparation itself to another preparer, the firm may decline services or adjust its fees if you refuse. The outsourcing is part of how the firm delivers the preparation service you hired them for.²

Specific, Not Blanket

Vague or open-ended consents fail. The document must name the preparer, name the taxpayer, identify the exact purpose of the disclosure or use, and specify which items of tax return information are involved. If the preparer only needs your adjusted gross income, the consent cannot authorize handing over the entire return. When information will go to a third party, that recipient must be identified by name.³

Standalone Document

The consent has to be its own written document. It cannot be buried in an engagement letter or folded into general terms of service. It can be furnished as an attachment to the engagement letter, but the consent text itself has to stand alone.²

Timing and Duration

The consent must be signed before the preparer discloses or uses the information. Retroactive consent does not fix an unauthorized disclosure. The document has to state how long the consent lasts. If no duration is specified, it defaults to one year from the date of signature.²

Right to Revoke

You can revoke your consent at any time, regardless of the stated duration, and the consent document must explain how to do it. Once the preparer receives a revocation, all further disclosure or use for the previously authorized purpose has to stop immediately.

Mandatory Language and Formatting

Revenue Procedure 2013-14 prescribes specific warning language for every consent document. Three versions exist: one for disclosure to a third party, one for disclosure tied to outsourced preparation services, and one for internal use of the data. All three open with the sentence “Federal law requires this consent form be provided to you.” They then explain that the preparer cannot disclose or use your information without consent, that signing is not required to receive tax preparation services (with the outsourcing exception noted above), and that the consent runs for the period you specify or one year by default.²

The disclosure version adds a warning that once your information is shared with a third party, federal law may not protect it from further redistribution by the recipient.

Formatting is also regulated. On paper, every page must contain only text relating to the consent, and the type size must be at least 12-point. On a screen, the text must be at least as large as the standard body text used elsewhere on the site or in the software, with sufficient contrast between text and background. Small gray print at the bottom of a cluttered screen does not comply.²

Electronic Consent Standards

Consent can be given electronically, but a checkbox or an “I agree” button by itself is not enough. The taxpayer has to take an affirmative action that verifies identity and shows knowing consent. Revenue Procedure 2013-14 allows three methods.²

PIN entry, where the preparer assigns a personal identification number of at least five characters and the taxpayer manually types it in. The software cannot pre-fill the PIN.
Typed name, where the taxpayer types their own name and presses enter. The name field cannot be auto-populated.
Other unique characters, such as the answer to a shared secret question of at least five characters, that the preparer uses to verify identity.

One-click consent never satisfies the rule. The taxpayer has to do something showing they actually read and agreed to the specific disclosure or use.

Disclosures That Do Not Need Consent

Not every sharing of tax return information triggers the consent rules, and drafting a consent for a situation that does not require one wastes effort. The regulations allow disclosure without consent in response to court orders, grand jury and Congressional subpoenas, and administrative demands from agencies that license or regulate preparers; in response to written requests from a professional association’s ethics committee or the Public Company Accounting Oversight Board; to report suspected criminal activity to law enforcement; between related taxpayers whose interests are not adverse and where the first taxpayer has not prohibited it; to a duly appointed fiduciary after a taxpayer’s death, incapacity, insolvency, or bankruptcy; and to retain copies of returns and supporting documents for future preparation or IRS examinations. A separate narrow rule allows sharing with contractors who program, repair, test, or maintain tax preparation software, but only to the extent necessary and only after those contractor employees receive a written notice that Sections 7216 and 6713 apply to them personally. Skipping that written notice makes the disclosure unauthorized.¹

Penalties When the Consent Fails

An invalid consent is treated as no consent, and the fallout stacks across civil, criminal, and professional tracks.

Section 6713 authorizes a civil penalty of $250 for each unauthorized disclosure or use, capped at $10,000 per preparer per calendar year. When the unauthorized disclosure is connected to identity theft, the penalty rises to $1,000 per violation with a $50,000 annual cap, tracked separately from the general cap. Combined civil exposure can reach $60,000 in a single year.⁴

Section 7216 makes a knowing or reckless violation a misdemeanor. The standard criminal penalty is a fine of up to $1,000, imprisonment for up to one year, or both. When the violation involves identity theft, the maximum fine rises to $100,000.⁵

The IRS Office of Professional Responsibility can also impose censure, suspension, or permanent disbarment from practicing before the IRS. These sanctions are published in the Internal Revenue Bulletin, where clients and competitors can see them.⁶

A taxpayer whose information is improperly disclosed may have a civil claim for damages. Section 7431 provides a private right of action for unauthorized inspection or disclosure of return information in violation of Section 6103. A successful plaintiff can recover the greater of $1,000 per act or actual damages, plus litigation costs, and punitive damages when the violation was willful or grossly negligent. The statute of limitations is two years from the date the taxpayer discovers the unauthorized disclosure.⁷

1
eCFR. 26 CFR 301.7216-2 – Permissible Disclosures or Uses Without Consent of the Taxpayer
2
Internal Revenue Service. Revenue Procedure 2013-14
3
eCFR. 26 CFR 301.7216-3 – Disclosure or Use Permitted Only With the Taxpayers Consent
4
Office of the Law Revision Counsel. 26 USC 6713 – Disclosure or Use of Information by Preparers of Returns
5
Office of the Law Revision Counsel. 26 USC 7216 – Disclosure or Use of Information by Preparers of Returns
6
Internal Revenue Service. Announcements of Disciplinary Sanctions in the Internal Revenue Bulletin
7
Office of the Law Revision Counsel. 26 USC 7431 – Civil Damages for Unauthorized Inspection or Disclosure of Returns and Return Information