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IRS wants tighter rules for overseas tax prep

The Internal Revenue Service proposed regulations Wednesday that would increase privacy protections for financial information that people share with their tax preparers.
/ Source: The Associated Press

The Internal Revenue Service proposed regulations Wednesday that would increase privacy protections for financial information that people share with their tax preparers.

The revised rules say tax preparers must get prior, written consent before sending a customer's information abroad to an offshore tax preparer. Tax preparers also must notify contractors, including those who work on computers and data files, that they must abide by privacy restrictions.

The proposed changes also require a tax preparer to obtain a taxpayer's informed consent before the preparer uses any information learned during tax return preparation for other uses, such as offering other financial products.

The revised rules cover a broader range of information known to a tax preparer, including information about expected refunds and their size.

The IRS said changes update privacy rules drafted in 1970s to reflect new needs for electronic tax preparation.