Do the Privacy Provisions of the GLB Act and the Privacy Rule Supersede the Restrictions in Section 7216 of the Internal Revenue Code?

Compliance > Privacy
Q: I am a tax return preparer and I understand that I may be subject to the Privacy Rule concerning the disclosure of my clients’ nonpublic personal information. However, I also am subject to section 7216 of the Internal Revenue Code, which restricts the use and disclosure of my customers’ federal tax return information. Do the privacy provisions of the GLB Act and the Privacy Rule supersede the restrictions in section 7216? May I now disclose my customers’ federal income tax return information after I provide them with the proper notices and give my customers a reasonable opportunity to opt out?

A: No. The Privacy Rule does not supersede the restrictions in section 7216. The GLB Act and the Agencies’ implementing regulations do not authorize a financial institution to disclose nonpublic personal information in a way that is prohibited by some other law. Therefore, you may not avoid the restrictions of section 7216 by providing your customers with an opt out notice and a reasonable opportunity to opt out.

This can be found in FAQ A.5. of the Regulation P FAQs.  The FAQs can be found at http://www.federalreserve.gov/regulations/cg/faq.pdf.

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