Taxpayers' expanded ability to authorize disclosure of return information.

• Author: Zarzar, Robert

Taxpayers now can authorize disclosure of return information to designated persons without providing a written document to the IRS. This change results from amendments to Sec. 6103(c) made by the Taxpayer Bill of Rights II. Before the change, under Sec. 6103(c), the taxpayer's request for, or consent to, such disclosure had to be in writing. Earlier this year, the Service published temporary and proposed regulations to implement the new rules.

Purpose and Impact of Change

The legislative history to the 1996 amendment indicates that the change was intended to promote transition to a paperless tax system. Congress further recognized that for the IRS to modernize more effectively its tax administration system, it was necessary to promote use of electronic communications through FAX machines, computers and communications networks.

The new regulations set forth the procedures under which taxpayers can authorize orally a disclosure of return information to a designated person, allowing them to resolve issues with the Service in a more efficient manner. For example, a taxpayer now can consent orally to disclosures by the IRS to persons accompanying the taxpayer to meetings or participating in telephone conversations with Service personnel. Often, the decision to include third parties in meetings or calls is not made until immediately prior to their commencement, and the appropriate paperwork is not in place that allows them to begin as scheduled. Such disruptions should no longer occur.

Authorization Procedures

As has been the case with written requests or consents, the IRS will not disclose return information to a third party pursuant to a nonwritten request or consent, unless it can confirm the identities of the taxpayer and the designee. Therefore, the regulations provide that a disclosure pursuant to a nonwritten request will be made only after the Service has:

* Obtained sufficient facts underlying the request for information or assistance from the taxpayer that allow it to determine the nature and extent of the information or assistance requested, to comply with the taxpayer's request;

* Confirmed the identities of the taxpayer and the designee; and

* Confirmed the date, nature and extent of information or assistance requested (Temp. Regs. Sec. 301.6103(c)-1T(c)(2)).

Although taxpayers now can provide oral consents to disclose their return information, the new rules do not eliminate the need to file Form...