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Shareholder Requesting Copy of Tax Return

Technical topics regarding tax preparation.
#1
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Can anyone confirm that if a shareholder (one that I don't normally deal with) requests a copy of the corporate tax return, that it is ok to give them one under code section 6103? In most cases, I give one copy and would get other shareholders to get the information from that point of contact. This situation is a little different, as the one I normally deal with is not really on the ball, still has not gotten me information for the 2019 return, etc. and basically runs the entire business. The other 50% shareholder would like to see the tax return, as I don't think they have access to much other information. Also is a brother-in-law, so don't think they want to rock the boat.
 

#2
LW25  
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Seaside CPA wrote:Can anyone confirm that if a shareholder (one that I don't normally deal with) requests a copy of the corporate tax return, that it is ok to give them one under code section 6103? In most cases, I give one copy and would get other shareholders to get the information from that point of contact. This situation is a little different, as the one I normally deal with is not really on the ball, still has not gotten me information for the 2019 return, etc. and basically runs the entire business. The other 50% shareholder would like to see the tax return, as I don't think they have access to much other information. Also is a brother-in-law, so don't think they want to rock the boat.


If you're an ordinary tax practitioner (not a government officer or employee), section 6103 normally would not apply to you.

The statute that could apply is section 7216. Based on a reading of the statute and the related Treasury regulations, I think you would need to go through your point of contact person. It's not super clear, though.
 

#3
JR1  
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And I wonder what state law requires?
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#4
Nilodop  
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Tell them there's a form for everything. https://www.irs.gov/pub/irs-pdf/f4506.pdf
 

#5
deniz  
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I did the research on this for a 50/50 partnership.

I found that the information needs to be provided unless a partner tells explicitly tells you not to provide it. If you have that direction, you cant provide it and the partner making the decision is liable for not acting in good faith. The opposing partner was not happy with me, but eventually accepted that was not my decision to make.
 

#6
Nilodop  
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6103(e)(1)(D)
(iii) any bona fide shareholder of record owning 1 percent or more of the outstanding stock of such corporation,
(iv) if the corporation was an S corporation, any person who was a shareholder during any part of the period covered by such return during which an election under section 1362(a) was in effect, or
 

#7
LW25  
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any bona fide shareholder of record owning 1 percent or more of the outstanding stock of such corporation,
(iv) if the corporation was an S corporation, any person who was a shareholder during any part of the period covered by such return during which an election under section 1362(a) was in effect, or


Note: That applies generally to government personnel, not to a regular tax practitioner. But, in my opinion, the Treasury Department should come up with some sort of similar ("common sense"?) rule for tax practitioners.
 

#8
LW25  
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deniz wrote:I did the research on this for a 50/50 partnership.

I found that the information needs to be provided unless a partner tells explicitly tells you not to provide it. [ . . . ]


Do you have any citations handy that you can provide?
 

#9
deniz  
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Treasury Regulations Section 301.7216-2(e)(1)(iii)] of the Internal Revenue Code does not allow a tax return preparer to disclose tax return information to a related party when the first taxpayer has expressly prohibited its disclosure. A related taxpayer is defined in Regulations Section 301.7216-2(e)(2) as a partner in a partnership.
 

#10
Nilodop  
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That applies generally to government personnel, not to a regular tax practitioner.. No kidding? That's where he can get the copy.
 

#11
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deniz wrote:Treasury Regulations Section 301.7216-2(e)(1)(iii)] of the Internal Revenue Code does not allow a tax return preparer to disclose tax return information to a related party when the first taxpayer has expressly prohibited its disclosure. A related taxpayer is defined in Regulations Section 301.7216-2(e)(2) as a partner in a partnership.


Does it make a difference that the OP mentions a Corporate return, not a partnership?
 

#12
deniz  
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Yes (as I mentioned) but § 301.7216-2 - Permissible disclosures or uses without consent of the taxpayer, is the relevant provision and has references applicable to corporate disclosure.
 

#13
LW25  
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Nilodop wrote:That applies generally to government personnel, not to a regular tax practitioner.. No kidding? That's where he can get the copy.


Yes, but you're referring to the 4506. (I hadn't seen your post about that.)
 

#14
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Thank you all for the feedback and LW25 for the correction regarding the code section. I ended up calling my insurance provider. They advised me to only release the tax return to my contact person, and have the other shareholder get a copy from them. They said the other option would be to get written permission from my contact person to give the other shareholder a copy. In my case, my contact has not prohibited me from giving a copy, but has not yet authorized me to do it.

I just sent the other shareholder requesting the copy an email stating the above, as well as letting them know they can request a copy from the IRS. It really doesn't seem fair, since they are equal shareholders and the one requesting the copy is actually the President of the company. Really do wish they would put some "common sense" guidance out for us!
 

#15
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I agree just the verbiage of the guidance would have to be very specific or it could be open to abuse. I mean, think of it, if any shareholder could request a copy of the tax return conceivably then any shareholder of Microsoft or Amazon could get a copy.
 


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