The Taxpayer First Act adopted in the summer of 2019 includes the following provision that has an effective date of December 28, 2019:
“Persons designated by the taxpayer under this subsection to receive return information shall not use the information for any purpose other than the express purpose for which consent was granted and shall not disclose return information to any other person without the express permission of, or request by, the taxpayer.”
Industry representatives sought guidance from the Internal Revenue Service (IRS), as there was confusion regarding whether the consent requirements in the provision apply to loans originated before December 28, 2019 that are sold on or after such date. On December 19, 2019, the IRS posted guidance regarding the Act on its website that includes the following guidance on the application of the consent provision:
“This provision limits the redisclosure and use of return information in the case of taxpayers who have consented to the disclosure of their return information by the Internal Revenue Service to a third party under IRC section 6103(c). Section 2202 of the Taxpayer First Act applies only to disclosures made by the Internal Revenue Service after December 28, 2019, and any subsequent redisclosures and uses of such information disclosed by the Internal Revenue Service after December 28, 2019.”
The guidance should be helpful in addressing industry concerns regarding the application of the consent provision to existing loans.