Consent to Use

The Consent to Use must be signed prior to using the taxpayer’s information for any other purpose than to prepare or e-file the return. This would apply to offering the taxpayer any type of product, such as a bank product, that is based on taxpayer information. Blank Consent to Use forms are available under Tools > Blank Forms, and can be completed by the taxpayer by hand.

In data entry of the return, the USE screen can be used if the taxpayer wants to electronically sign the Consent of Use Forms at the beginning phase of tax preparation. Once the taxpayer enters their name and the date signed on the screen, a 7216_USE form generates in view mode showing that they have opted to enter their name. If only the date is entered on the USE screen, the taxpayer can then e-sign, or the form can be printed and signed with a pen. Note that the signed copy should be kept with the return following IRS guidelines.

From the IRS FAQ:

"Uses of tax return information are occurrences where tax return preparers refer to, or rely on, tax return information as the basis to take or permit actions. The regulations authorize two types of uses:

• Certain permissible uses without taxpayer consent

• Uses requiring taxpayer “consent to use tax return information”

The regulations authorize tax return preparers to use specified tax return information without a taxpayer’s prior written consent under certain circumstances: e.g., to create lists for solicitation of tax return business; to produce statistical information in connection with tax return preparation business. These and other exceptions can be found in Treas. Reg. §301.7216-2.

All other uses not specifically authorized require tax return preparers to secure from taxpayers advance signed consents .... authorizing the uses."

Options

Drake Tax has two options:

• Option 1 – Print the forms for taxpayer signature from Tools > Blank Forms.

• Option 2 – Have the taxpayer(s) sign the forms in the software. The taxpayer can electronically sign and date the USE screen. The tax preparer cannot sign and date the USE screen on behalf of the taxpayer. The USE document with the taxpayer's electronic signature will print with the return.

Consent to Disclose

The Consent to Disclose must be obtained prior to sharing taxpayer’s information to a third party. This form is automatically produced when a bank product is selected and prints with the bank documents. Additionally, another option is the DISC screen within the software that the taxpayer can sign electronically.

The following comes from the IRS FAQ:

" Disclosure of tax return information is the act of making tax return information known to any person in any manner whatsoever. The regulations authorize two types of disclosures:

• Certain permissible disclosures without taxpayer consent

• Disclosures requiring taxpayer consent

The regulations provide exceptions allowing tax return preparers to disclose tax return information without a taxpayer’s prior written consent under certain circumstances: e.g., disclosures to the IRS, other taxing jurisdictions or the courts; disclosures to other U.S.-based tax return preparers that assist in preparing the return; and disclosures for the purpose of obtaining legal advice. These and other exceptions can be found in Treas. Reg. §301.7216-2.

All other disclosures not specifically authorized require tax return preparers to secure from taxpayers advance signed consents ... authorizing the disclosures."

Options

Drake Tax has three options:

• Option 1 – Print the forms for taxpayer signature from Tools > Blank Forms.

• Option 2 – For disclosure to a bank for bank products – Have the taxpayer(s) sign the forms in the software.

  • Go to the DISC screen and have the taxpayer electronically sign and date the DISC screen. The disclosure to the appropriate bank will be produced with the return and will contain the electronic signature of the taxpayer.

    Note  The DISC screen in the software is for disclosure to a bank and is for the taxpayer to sign electronically.

• Option 3 – For disclosure to a bank for bank products – Have the taxpayer(s) sign the printed form. Select the appropriate bank screen and complete the screen. The appropriate disclosure will print with the bank signature documents.

  Note  For EPS, when using this method, be sure to check the 7216 signature box at the top of the EPS screen. This will clear EF message 5774.

Master EFIN Consent to Disclosure

If you are operating an office that is not owned by the master EFIN, but the master EFIN needs to see the data on the Online DATABASE or MOM reports. To enable this, go to Setup > ERO. At the bottom, enter the name of the master EFIN.

An entry on this line will cause the software to look for a CONS screen to be completed with every return. Otherwise the software will produce a message 5717 or 5718. To clear the message, use one of the following options:

• Option 1 – Have the taxpayer(s) sign the forms in the software. The CONS screen can be signed and dated electronically by the taxpayer.

• Option 2 – Have the taxpayer(s) sign the printed form from Tools > Blank Forms. Mark the option box on the CONS screen to indicate that the consent was obtained on paper,

• Option 3 – Mark the option box on the CONS screen to indicate that the taxpayer opted out or did not sign the Consent to disclose to the master EFIN. If the taxpayer declines or the tax preparer fails to obtain the consent and the bottom box is marked, the return can be e-filed, but will not be viewable on the ONLINE database or MOM reports.

Summary

Select Use and Disclosure forms are available in the software at Tools > Blank Forms by searching 7216.

Additionally, within the software the following screens can be signed by the taxpayer:

• USE – Consent to Use of Tax Return Information

• DISC – Consent to Disclosure of Tax Return Information

• CONS – Consent to Disclosure of Tax Return Information to Other Firms (for sub EFIN to share data with master EFIN that does not own the sub EFIN – franchise/network situations)

Caution  The taxpayer must enter a signature on these screens. The preparer is not permitted to sign them on the taxpayer’s behalf.

Required use and disclosure forms are generated in view mode when the relevant screen is completed (i.e. PP screen for Protection Plus (for Standard only; not required for Firm Level), the ABCV screen for ABCVoice, and the BANK screen for the banking partner that you have chosen to work with) .

EF Messages

To resolve EF Message 5743 you will need to either:

• Check to make sure that the ERO screen is setup for this function. You can do this by going to Setup > ERO and filling out the section at the bottom of the screen titled Disclosure or Use of Tax Information by Preparers of Returns.

• Go back into the return and delete the CONS screen. You can do this by going to the CONS screen and pressing Ctrl + D when on this screen.

EF Messages 5717 and 5718 are generated when two conditions are met:

1. An entry exists on the Setup > ERO screen in the field Need consent to disclose tax return information to this franchisor/network near the bottom of the screen.

2. The CONS screen is not completed.

To resolve the issue, either

• Clear the Need consent to disclose tax return information to this franchisor/network field from the ERO screen

• Complete the CONS screen

Notes

You do not have to obtain a Consent to Use or Consent to Disclose to e-file through Drake Tax.

On a joint return, best practice is to get the signature of both the taxpayer and spouse, if both are present.

Drake Software recommends that all tax preparers visit the IRS site and become familiar with these regulations.

• View the requirements under Rev. Proc. 2008-35.

• Review the IRS Section 7216 Frequently Asked Questions.

The software does not generate Spanish versions of the 7216 consent to use/disclose documents.