IRS 7216 Consent for Offshore US Tax Preparation

If you’re a CPA or accounting firm owner, you probably know this feeling:

“I want to offshore US tax preparations, but I’m scared clients will push back when I ask them to sign the IRS 7216 consent.”

So you stay comfortable using offshore help for bookkeeping and accounting, but you hold back on tax. Not because the model doesn’t work—but because of one piece of paper: IRS Section 7216 consent.

At Finsmart Accounting, we see this pattern all the time. Firms are happy using our Accounting Seat model for day-to-day accounting, but hesitate to tap into our USA Tax Seat because they’re worried clients will say “no” when they see a 7216 form.

The reality we see in practice is very different:

• The legal requirement is real.
• The client resistance is usually imagined.

Let’s unpack that and we will show you just how much of this fear lives on the firm side, not the client side.

Quick refresher: What is IRS Section 7216, and why does it matter for offshoring?

Internal Revenue Code Section 7216 is a criminal provision that restricts how tax return preparers can use and disclose taxpayer information. In simple terms:

• You can use client tax data to prepare and file their tax returns.
• If you want to use or disclose that information for anything else – like sending it to an offshore tax preparation team—you must obtain the taxpayer’s informed, written consent.

The IRS guidance and regulations make a few things very clear:

• Consent must be affirmative (no opt-outs or pre-checked boxes).
• It must be signed by the taxpayer (paper or allowed e-sign).
• The client must be told if their information will be sent overseas.

So yes, if you’re planning to use an offshore team for US tax preparation outsourcing, you must get 7216 consent. That part is non-negotiable.

But “non-negotiable legally” is not the same as “clients will be upset.”

The real blocker: It’s often the firm owner’s fear, not the client’s

Here’s the emotional pattern we see with many firms:

1. Assumption:
   
   “If I ask clients to sign a 7216 consent mentioning overseas processing, they’ll think I’m cutting corners, lowering quality, or putting their data at risk.”
   
   
2. Result:
   
   Owners delay or avoid offshore US tax preparations, or over-explain nervously when they finally present the form.
   
   
3. Reality:
   
   Most clients:
   • Already know their data flows through multiple digital systems and providers.
   • Care more about accuracy, deadlines, and communication than the physical location of the tax preparer.
   • Are used to signing privacy, consent, and disclosure forms.

When your internal narrative is fearful, 7216 looks like a “big ask.” When you treat it as standard compliance paperwork you use to protect clients, they usually see it that way too.

A real client story: Two years of worrying… and then “That’s it?”

One of our long-term clients—a US-based bookkeeping and accounting firm—started with us on the Accounting Seat model:

• We provided dedicated offshore accountants who worked inside her tech stack and processes.
• They handled day-to-day bookkeeping and accounting while her team focused on reviews and client relationships.

She loved the model for accounting. But for US tax preparations, she hesitated:

• She knew that moving to our USA Tax Seat would mean having clients sign 7216 consent forms.
• She worried clients would question the offshore element, refuse to sign, or see it as a downgrade in service.

So for two full years, she:

• Ran tax season in-house.
• Shouldered capacity strain and late nights.
• Avoided the 7216 conversation entirely.

Eventually, the pressure on her internal team was too much. She decided to:

• Prepare a clear explanation about how and why her firm uses a secure offshore US tax preparation team.
• Send 7216 consents to clients as part of her normal tax process.
• Start using a USA Tax Seat for first-pass preparation while her firm remained in charge of review and final sign-off.

Here’s what actually happened:

• All but one client signed the 7216 form without any issue.
• Most signed it without asking a single follow-up question.
• A few clients said the equivalent of:
  “If this helps get my return done on time and securely, I’m fine with it.”

Her reflection after that first season was simple:

“I built up two years of fear in my head. My clients barely blinked.”

Now:

• Her USA Tax Seat handles a large portion of the heavy prep work.
• Her team spends more time on review, planning, and higher-value conversations.
• Tax season is still busy – but far more controlled and sustainable.

Why clients usually don’t push back on 7216

When 7216 is framed properly, most clients see it as routine:

1. They trust you, not the form

Clients stay for your judgment and reliability:

• “Will my return be right?”
• “Will it be filed on time?”
• “Will my questions be answered?”

If you communicate that using a specialist offshore team is how you staff their work properly, clients usually follow your lead.

2. You’re complying with the law and protecting them

You can truthfully say:

“IRS rules (Section 7216) require us to obtain your written consent before we share your tax return information with any offshore team member. This form is there to protect your rights and keep us fully compliant.”

Framed this way, the consent is about client protection, not firm convenience. The IRS has repeatedly emphasized that taxpayers must control how their information is used and disclosed.

3. They see the benefits: better capacity and fewer delays

Offshore US tax preparation, done right, lets you:

• Avoid bottlenecks around a couple of overworked in-house preparers.
• Deliver returns more consistently and on time.
• Give partners and managers more time for planning conversations instead of firefighting.
  

When you connect 7216 to these outcomes, clients understand why you’re doing it.

Data Confidentiality & Security: the question behind the question

Often, 7216 fear is really a data security fear:

“If I send tax data offshore, is it as safe as if I keep it in my own office?”

That’s a fair question – and it’s exactly where we invest heavily.

At Finsmart Accounting, we prioritise confidentiality and data security to protect sensitive financial and tax information. Our processes are built on secure IT infrastructure, encrypted communication, and strict access controls to ensure data integrity. We comply with global data security standards and implement robust confidentiality agreements with all team members. With multi-layered security protocols, your clients’ financial and tax data stays safe, private, and accessible only to authorised personnel.

In practice, this includes controls such as:

• Restricted data access and role-based permissions
• Secured networks and continuous monitoring
• Limited or controlled internet access on production systems
• Disabled USB ports and strict device policies
• Strong password policies and audited login trails

When you explain to clients that:

• You are required to ask for consent (7216), and
• You have serious, documented security protocols with your offshore partner

the conversation becomes a lot less emotional and a lot more professional.

You can also share links with your clients – for example, your own firm’s website privacy or security page, along with Finsmart’s site and data security information – so they can see exactly how their data is protected end to end.

This transparency builds trust.

How to explain 7216 to clients (a simple script you can adapt)

Here’s a plain-language explanation you can use in emails, organisers, or meetings:

**“To manage workload and maintain quality during tax season, our firm works with a dedicated specialist team that includes qualified professionals based outside the U.S.

IRS rules (Section 7216) require us to obtain your written consent before we share your tax return information with any offshore team member. The consent form you’ll receive is simply to document that permission.

Our firm remains fully responsible for your tax preparation. All work is done using secure systems, under our supervision, and we continue to review and sign off on your return before it is filed. If you’re comfortable with that, please sign the consent so we can proceed.”*

You can customise this with:

• A brief line on your security standards
• A link to Finsmart’s role if you want to be fully transparent about your offshore partner

(Standard note: this article is for information only and is not legal advice, always have your 7216 consent reviewed by your legal or compliance advisor.)

Make 7216 routine, not special

To reduce friction for both you and your clients:

1. Use a solid 7216 template
   
   Start with a template aligned with IRS and professional guidance and get it reviewed once. You don’t need to rewrite it every year – just deploy it consistently.
   
   
2. Build it into your standard process
   
   Include 7216 as part of:
   • Your annual US tax preparation packet
   • Your digital organiser or client portal checklist
   • Your standard onboarding for new tax clients
     
     
3. Use e-sign and a short summary
   
   Where allowed, use e-sign tools and add a short, human-readable summary above the legal text. Most clients will read the summary and sign without fuss – especially if they already trust your firm.
   
   
4. Pilot with a friendly segment
   
   If you’re still nervous, start with:
   • Long-term clients who already love your service
   • A limited group of tax clients with recurring work

You’ll quickly see the difference between what you feared and what actually happens.

Where Finsmart fits in: Safe, structured offshore US tax preparation

With Finsmart’s Accounting Seat model and USA Tax Seat solutions, CPA and accounting firms can:

• Add pre-vetted, pre-trained accounting and tax professionals who work inside your systems, on your processes, and under your direction.
• Scale US tax preparation outsourcing without losing control over quality or client relationships.
• Combine multi-layered data security with the capacity they need for a busy season.

If a client ever declines to sign 7216, you always have the option to support that engagement in-house and charge a premium for the additional time and resources required, while still leveraging offshore support for other clients.

Recap: Don’t let 7216 fear stall your firm’s growth

To recap:

• IRS Section 7216 does require proper, signed consent before sending tax data offshore.
• But in practice, most clients sign without drama when you:
  • Explain it simply,
  • Show you take data security seriously, and
  • Stay confident in your decision.

As our client discovered after two years of worrying:

The fear was mostly in her own mind – not in her clients’. Ready to explore compliant, secure offshore support for US tax preparations? Book a meeting with our team to get started.