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IRC 7216 consent and AI data licensing: what the regulations require

How the 7216 consent rules (signed, dated, one-year default, separate use and disclosure documents) bear on licensing tax data to AI buyers.

Last updated 3 sources cited1 min read

Short answer: Any disclosure or use of tax return information not specifically allowed needs the taxpayer's written consent. It must be signed and dated, lasts one year if no duration is stated, and uses and disclosures need separate documents. In practice, most firms keep tax return information out of any AI data license.

On this page
  1. What the regulation requires
  2. Why that's hard for a license
  3. Related rules
  4. Frequently asked questions
  5. Sources

What the regulation requires

  • No disclosure or use 'prior to obtaining a written consent from the taxpayer' unless specifically authorized (26 CFR 301.7216-3).
  • 'A consent to disclose or use tax return information must be signed and dated by the taxpayer.'
  • No stated duration means the consent lasts one year from signing.
  • 'A single written document, however, cannot authorize both uses and disclosures.'

Why that's hard for a license

A license is a disclosure to a third party. You would need a valid consent from every taxpayer whose information is in scope, renewed as consents expire. That's why most firms scope tax return information out entirely.

See the statute (26 U.S.C. § 7216) and the permitted-disclosure rules (301.7216-2). Our 7216 overview covers the basics.

This is general information, not legal advice. Talk to your own attorney or compliance advisor before you share or license any records.

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Frequently asked questions

Can we add a line to our engagement letter?

The regulation has specific form requirements. Don't improvise; ask counsel.

Does de-identification avoid 7216?

Ask counsel. The rules are about tax return information, and the safe course is to exclude it.

Sources

  1. 26 CFR § 301.7216-3, Disclosure or use permitted only with the taxpayer's consent (Cornell LII)law.cornell.edu
  2. 26 U.S.C. § 7216 (Cornell LII)law.cornell.edu
  3. 26 CFR § 301.7216-2 (Cornell LII)law.cornell.edu

Referral-fee disclosure: we may be paid by a program if your company signs with it after using this site. General information only, not legal advice.

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