IRC Section 7216: Impact on CPA Firm Marketing

There has been a lot of chatter about compliance with this new code released in July 2008, and put into effect January 1, 2009, and what it means for firms.

Directly reading the code, you'll find a lot of scary verbiage about restrictions to cross-marketing or cross-selling of services to tax clients.

This is to be "managed" via annually-required, signed, consent forms, from EACH client BEFORE their tax returns are delivered in order to be allowed to send said client information about ANYthing else your firm does. And you may only ask the client for their consent ONE time.

First thought, it's sounding a lot like crazy lawyer state bar restrictions on marketing and advertising. However, the intent is to protect taxpayer information including addresses.

Second thought, in keeping with tradition of most accounting regulatory language, this code is challenging, at best, to interpret. I've asked several tax professionals to give me their thoughts, and each professional has seen its implications differently.

(This explains my silence, to date, on this issue).

The accounting marketing community has been abuzz for the last few months about what the new regulations under Internal Revenue Code Section 7216 (26 CFR Part 301 Section 7216) will mean as they continue existing communication efforts with their clients such as print newsletter mailings, e-mail newsletters, and even seminar invitations for events that cover non-tax topics.

Fortunately, some vendor friends of the accounting industry like BizActions (a customizable e-mail news provider with awesome back-end click-through reporting) and PDI Global (long known for their high-quality print newsletters and planning guides, now offering some e-delivery too) have been sharing some insights on applicability of the code, especially as it pertains to the use of products like theirs.

Definitely look at this because, if you think you will use a mail house or a third‐party to distribute things like print or e‐mail newsletters, you may need to get the client’s consent first. Again, "first" means BEFORE you deliver their tax return to them. So you don't have much time.

LOOKING FOR INFORMATION AND RESOURCES?

I'm proud of my long-time trade association, Association for Accounting Marketing, for compiling this list of resources that partners and marketers can use as they embark on interpreting the code and deciding what approaches are best, for THEIR firms.

See AAM's IRC Section 7216 Information and Resource Page (marked Members Only, but access does not seem to be limited) and be sure to check out the AAM/PDI whitepaper found on that page as well as fellow blogger Rick Telberg's post on CPA Trendlines sharing sample consent forms released by the AICPA.

Happy implementing (ugh).

Appended: Also try the IRS Frequently Asked Questions about Section 7216

Comments

[SBL Accounting services]

Thanks for this excellent information...
Regards,
SBL - Accounting services

[Phil Sutton]

Michelle,

Thanks for raising the awareness of this new challenge for accounting firm marketers.

I have noticed that most of the chatter about this subject focuses on printed or email communication with the client.

It is important to note that these new regulations also cover verbal communications (via the phone or in person). We are attempting to coach our entire staff to be sensitive to which topics they might bring up in tax client conversations.

On a related note, I would hope your readers would share with you their experiences in attempting to comply with these regulations.

Phil Sutton
Director of Business Development and Marketing
Jones & Roth CPAs