In June 2018, the PEEC released an exposure draft, Disclosing Client Information in Connection with a Quality Review. If adopted, the interpretation would allow members to disclose confidential client information in connection with tax practice quality reviews. That is, the member would not have to obtain specific consent from a client whose engagement is subject part of the review.
Currently, the code allows certain exceptions to the Confidential Client Information Rule, including when a member's firm is undergoing review of its professional practice under AICPA, state CPA society or Board of Accountancy authorization (e.g., peer review). An interpretation provides an additional exception when a review is performed in conjunction with a prospective purchase, sale, or merger of all or part of a member’s practice.
This proposal would provide similar treatment to review of a member's tax practice, a "quality review" including voluntary tax practice reviews as described in the AICPA Tax Practice Quality Control Guide. At minimum, the member should comply with Treasury regulation 7216, which allows disclosure of confidential client information without specific consent if it is provided or obtained in connection with a quality or peer review.
To qualify for the exemption under the proposal, the member should meet certain requirements:
- comply with Treasury Regulation 301.7216-2(p) related to disclosures of tax information, and
- if the member determines that threats have not been sufficiently reduced to an acceptable level, the member should apply additional safeguards, for example, by having the reviewer sign a confidentiality agreement or de-identifying the tax return information given to reviewer
Also, the member performing the review should not use to his or her advantage any confidential client information that comes to his or her attention as a result of the review and should also refer to 301.7216-2(p) for further guidance.
Comments on the proposal were due August 20, 2018.