II 109th CONGRESS 2d Session S. 2484 IN THE SENATE OF THE UNITED STATES March 30, 2006 Mr. Obama (for himself, Mr. Menendez, Mr. Harkin, Mrs. Clinton, and Mr. Lieberman) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to prohibit the disclosure of tax return information by tax return preparers to third parties.

1.

Short title

This Act may be cited as the Protecting Taxpayer Privacy Act.

2.

Prohibition on tax preparers disclosing tax return information to third parties

(a)

In general

Paragraph (3) of section 7216(b) of the Internal Revenue Code of 1986 (relating to regulations) 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)

Disclosure to third parties

The regulations under this section shall not permit the disclosure or use of information, with respect to the return of any taxpayer, to or for any person unless such taxpayer has granted consent to such disclosure or use and such person is— (i)a member of the same affiliated group (within the meaning of section 1504) as the person preparing providing services in connection with the return; or (ii)a corporate fiduciary with respect to the taxpayer. (C)

Other disclosures

Notwithstanding subparagraph (B), the regulations under this section may permit (subject to such conditions as such regulations shall provide) the disclosure or use of information— (i)to a person related to the taxpayer with respect to whose return the information was obtained, but only in connection with preparing, or providing services in connection with the preparation of, the return of such related taxpayer; (ii)to an attorney, an employee of the Internal Revenue Service, or an officer of a court for use in revenue investigations or court proceedings; (iii)to the fiduciary of the taxpayer with respect to whose return the information was obtained if such taxpayer dies or becomes incompetent, insolvent, or bankrupt; (iv)to another person engaged in the business of preparing, or providing services in connection with the preparation of, a tax return for the purposes of assisting with the preparation or processing of the tax return; (v)to report the commission of a crime; (vi)for quality or peer reviews; and (vii)to another person for the purpose of assisting the operation of the business of the person described in subsection (a) in the case such person dies or becomes incapacitated. . (b)

Conforming amendment

Subparagraph (B) of section 7216(b)(1) of the Internal Revenue Code of 1986 is amended by inserting , a Federal agency, or a State agency which regulates tax return preparers after court. (c)

Effective date

The amendment made by this section shall take effect on the date of the enactment of this Act.