H.R. 5075 – Reading Mode

109th CONGRESS

2d Session

H. R. 5075

IN THE HOUSE OF REPRESENTATIVES

April 4, 2006

Mr. Stark (for himself, Mr. McDermott, Ms. Bean, and Mr. Inslee) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to clarify the restriction on disclosures and use of information by tax return preparers.

Short title

This Act may be cited as the Taxpayer Privacy Act of 2006.

Clarification of restriction on disclosures and use of information by tax return preparers

(a)

Restriction on foreign use and disclosure

Section 7216 of the Internal Revenue Code of 1986 (relating to disclosure or use of information by preparers of returns) is amended by adding at the end the following new subsection:

(c)

Restriction on foreign use and disclosure

(1)

In general

Any disqualified foreign use or disclosure by a tax return preparer shall be treated as a violation of subsection (a).

(2)

Disqualified foreign use or disclosure

For purposes of this subsection—

(A)

In general

The term disqualified foreign use or disclosure means—

(i)

any use by the tax return preparer (or any officer or employee of such preparer) outside the United States of information described in subsection (a), and

(ii)

any disclosure by the tax return preparer of information described in subsection (a) to any person (including any officer or employee of any person) who is located outside the United States.

(B)

Exceptions

Such term shall not include any use or disclosure of information if—

(i)

the taxpayer initially furnishes such information to a tax return preparer located outside the United States, or

(ii)

the taxpayer has significant business activities outside the United States and use or disclosure is appropriate given such activities.

(3)

Tax return preparer

For purposes of this subsection, the term tax return preparer means any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns of the tax imposed by chapter 1, or any person who for compensation prepares any such return for any other person.

(4)

United States

For purposes of this subsection, the term United States includes any territory or possession of the United States.

(b)

Prohibition on taxpayer consent to disclosure or use of information

Paragraph (3) of section 7216(b) of such Code is amended to read as follows:

(3)

Regulations

(A)

In general

Subsection (a) shall not apply to a disclosure or use of information which is permitted by regulations prescribed by the Secretary under this section.

(B)

Quality or peer reviews

Such regulations shall permit (subject to such conditions as such regulations shall provide) the disclosure or use of information for quality or peer reviews.

(C)

Prohibition on disclosure and use based on taxpayer consent

(i)

In general

Such regulations may not permit the disclosure or use of any information on the basis of the taxpayer’s consent to such disclosure or use.

(ii)

Exceptions

Clause (i) shall not apply to any disclosure or use with respect to tax administration, legal proceedings, related parties or fiduciaries of the taxpayer, the performance of accounting or legal services (other than the solicitation therefor), and other similar purposes.

(c)

Effective date

The amendments made by this section shall apply to disclosures and uses after the date of the enactment of this Act.