Q: Does the Taxpayer First Act Require Authorization Before Sharing Certain Tax Return Information?

A: Yes. 

The Taxpayer First Act (Act) requires borrower authorization before tax return information can be shared. Specifically, Section 2202 of the Act provides that: "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."

The Act does not provide further guidance on what constitutes "use" of the information. However, the Act does provide for significant penalties when information is used without consent. Thus, financial institutions that acquire such information will need to decide when to obtain consent before sharing or otherwise using tax return information for purposes other than that for which original consent was granted.

To support these changes, a form will be available in both the origination and closing modules for FIPCO Compliance Concierge users. Nonusers should check with their forms provider to confirm whether a similar form will be provided. The applicable provision of the Act takes effect on Dec. 28, 2019.

Birrenkott is WBA assistant director - legal. For legal questions, please email wbalegal@wisbank.com.

Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution's attorney for special legal advice or assistance.