| As long as a person stays in a Civilized Society, taxes | | | | permission of the tax payers before disclosing the |
| are inescapable and to most extent are mandatory. In | | | | confidential data pertaining to the tax payer, tax |
| fact some say that taxes are the price one pays for | | | | payers usually have been comfortable with the CPAs. |
| civilization. And as long as taxes are in existence, the | | | | However, off late, many other Tax Preparers have |
| world will have its own share of Tax preparers who | | | | come up to help tax payers in filing their returns and |
| help tax payers compute their incomes & taxes | | | | these preparers are not essentially members of |
| and file the tax return. | | | | AICPA. Thus the code of ethics does not apply to |
| Computation of tax involves gathering of sensitive | | | | such people. This meant that such tax preparer could |
| information about a person like: | | | | use the services of a third party service provider in |
| 1. What was the marital status of the person during the | | | | preparing the tax return, thereby disclosing the |
| year? | | | | confidential data of the tax payer to the third party |
| 2. If the person is a widow, when did the spouse | | | | service provider, without the tax payer getting to know |
| expire? | | | | that his/her information has been shared with a person |
| 3. If the person is single, was he ever married? And if | | | | he/she does not even know! |
| yes, when did the divorce come through? | | | | To address this loophole, the IRS has updated Section |
| 4. How many dependent children does a person have | | | | 7216, rules for tax preparers on 18th Dec'08. These |
| and what is the expenditure on them? | | | | updated rules would be effective from 1st January'09. |
| 5. What are the incomes of the person from various | | | | Per this rule, "any person who is engaged in the |
| sources and what are the expenses during the year? | | | | business of preparing, or providing services in |
| All these information are highly sensitive to any person | | | | connection with the preparation of, returns of the tax |
| and when that person wants the help of a tax | | | | imposed by chapter 1, or any person who for |
| preparer, the tax preparer has to have a very high | | | | compensation prepares any such return for any other |
| degree of integrity and trust worthiness. In fact, it would | | | | person, and who knowingly or recklessly - |
| not be a bad idea to compare a Tax preparer with a | | | | (1) discloses any information furnished to him for, or in |
| doctor! With such kind of responsibility as regards data | | | | connection with, the preparation of any such return, or |
| confidentiality, is it not necessary for Law makers to | | | | (2) uses any such information for any purpose other |
| impose some kind of accountability on the tax | | | | than to prepare, or assist in preparing, any such return, |
| preparers? | | | | shall be guilty of a misdemeanor, and, upon conviction |
| For long, the certified members of AICPA (referred as | | | | thereof, shall be fined not more than $1,000, or |
| CPAs) have been in the forefront in helping tax payers | | | | imprisoned not more than 1 year, or both, together with |
| with their tax computation and tax return filing. And | | | | the costs of prosecution. |
| since the code of ethics of AICPA (Ethics Ruling No | | | | Thus any tax preparer now has to compulsorily take |
| 112 under Rule 120: Integrity and Objectivity) makes it | | | | the express permission of the tax payer before the |
| mandatory for the members to take express | | | | services of a third party service provider is utilized. |