During the 1980s, Paige Marvel, Esq. wrote a letter for me that was at least three paragraphs long for disclosure of Client Income Tax Information. The letter was written to comply with the requirements of the criminal aspects of unauthorized disclosure at the time. I have not thrown out this letter but I do not remember where it is in my files.
I do not believe that the laws concerning criminal penalties of one year in jail and up to a $1,000 fine have been changed since 1971. These new consents and disclosure letters that we are having our clients sign do not address this prior criminal law. To my knowledge the earlier law concerning criminal prosecution of unauthorized third party disclosure of client income tax information still applies.
Due to the complexity of the law and the possibility of criminal prosecution any third party requests for tax information in our office are not honored. We give the information or copies of the documents (such as a tax return) to the client and tell them to do what they like with the information.
Paige Marvel is now a tax court judge who was appointed by President Clinton. Paige said that we were to use her letter to avoid criminal prosecution. The letter composed by Judge Marvel is very detailed and specific, but none of the language that was contained in the letter is contained in the recent sample consent and disclosure letters that the IRS requires us to get our clients to sign to get permission to use the clients' information to prepare an income tax return, provide tax advice, etc. (Google Paige Marvel for further information on Judge Marvel.)
Does anyone know why the IRS failed to include any language that would protect practitioners from criminal prosecution under the prior laws? Does anyone have more information concerning these laws?