Daily Tax Update - April 3, 2006

IRS HOLDS PUBLIC HEARING ON PROPOSED RULES REGARDING DISCLOSURE OF TAXPAYER INFORMATION TO THIRD PARTIES:
Tomorrow, the IRS is scheduled to hold a public hearing to receive comments on proposed rules regarding disclosure of taxpayer information to third parties. In December 2005, the IRS issued a proposed regulation to update the 1974 regulations. In an announcement, the IRS stressed that taxpayer information held by the IRS is "private and protected." The IRS and Treasury stated that, after tomorrow's hearing, they will consider all comments and finalize a rule that takes them into account.

  • According to the IRS, "Contrary to some recent press reports, the proposed rules significantly tighten existing requirements regarding the customer consent a return preparer must obtain to disclose the customer's tax return information to third parties."
  • The IRS further made the following points:
    • "Under the proposed rules, if a return preparer wants to obtain consent, it must give the customer a strong warning. The mandated language for the warning is attached. Existing rules contain no such warning."
    • "The proposed rules add a number of limitations on the customer's consent, including limiting the time period over which the customer's consent is valid, and mandate that the provision of return preparation services cannot be conditioned on giving a consent. These limitations do not exist under the current rules."
    • "The proposed rules have a separate customer consent provision that applies to return preparers who outsource their work overseas."
    • Additional information can be accessed here.  

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them.  Read  more information on Steptoe's tax practice