Secure Offshore Tax Prep: A Plain-English Guide to 7216 Consent and Controls

Offshore tax support can be a huge capacity unlock for CPA and accounting firms, but it comes with one question that matters more than cost or turnaround time: are you handling taxpayer data the right way?

In the U.S., IRC Section 7216 and its related regulations restrict a tax return preparer’s disclosure or use of tax return information. In plain terms, you cannot share a client’s tax return information outside the permitted boundaries without the right consent and the right safeguards. The IRS maintains a helpful overview here: Section 7216 information center. For firms building an overseas support model, this is not a “nice to have.” It is a core part of operating responsibly.

The good news is that a secure, compliant offshore workflow is very achievable when you combine two things: the correct consent process and a control framework that eliminates casual data sprawl.

Why Section 7216 shows up in offshore workflows

Most firms do not run into 7216 because they are reckless. They run into it because tax work is collaborative, and modern collaboration often includes people, tools, and systems that are not physically in the same place.

If a taxpayer’s information is accessed by a preparer team outside the U.S., many firms treat that as a disclosure that requires the proper taxpayer consent. If you want the most conservative, defensible posture, your workflow should assume consent is required for overseas disclosure and build it into intake, onboarding, and engagement paperwork.

You do not need to turn this into a legal thesis. You need a repeatable standard that your team follows every time. For practical templates and guidance, the AICPA provides a resource that many firms reference: Section 7216 guidance and sample consent forms.

What “consent” really needs to look like

A consent form is only useful if it is valid. Treasury regulations focus heavily on consent being knowing and voluntary. The consent must be properly presented, properly signed, and not buried in a way that a client could reasonably claim they did not understand.

A few points matter operationally:

• Consent is not a generic blanket statement buried in a long engagement letter.
• Consent needs to be explicit about what information is being disclosed or used, and for what purpose.
• Consent timing matters, and your process should not treat it as an afterthought once work has started.

If your team wants the exact regulatory language, this is the core section many firms look to:26 CFR 301.7216-3. If you use electronic signatures, the IRS also addresses requirements for electronic consents in Rev. Proc. 2013-14.

The practical takeaway is simple: make consent a standard, front-end gate, not a scramble mid-season.

The consent workflow that works in the real world

Firms succeed with 7216 when consent is built into the same places you already control: engagement setup, organizers, and portals.

A clean approach usually includes:

• A clear consent request at onboarding for any client whose work may involve overseas team members.
• A short explanation in plain language about why the consent is requested, tied to capacity and turnaround time.
• A consistent storage method so your team can prove consent existed before any offshore access occurred.
• A simple exception route for clients who decline, so your team knows what happens next.

This is also where client trust is won. When you communicate clearly, most clients do not object. They object when it feels hidden or improvised.

The controls that make offshore work feel safe to a U.S. firm

Consent is necessary, but consent alone is not security. What makes offshore delivery safe is that the work is done inside a controlled operating environment.

Here are the controls that matter most in practice.

Tight access and identity management

Every user should have their own login, with role-based access. Avoid shared accounts. Use multi-factor authentication wherever your tools allow it. Access should be granted based on role and removed immediately when a person rolls off the engagement.

“Your tech, your workflow” as a design rule

The safest offshore model is one where your offshore team works inside your firm’s approved tools rather than exporting data into side systems. That means your portal, your tax software, your document management, your task tracker, and your communication channels.

This is one reason embedded delivery tends to work better than a disconnected outsourcing queue. As one client put it, “the Finsmart team has always felt like a part of our team.” That is not just a culture statement, it is an operational advantage when everyone is using one system of record and one set of controls. (Elizabeth Bergen, on the Testimonials page.)

Standardized file handling and naming conventions

Security improves when chaos decreases. A consistent folder structure, naming standard, and “one place for everything” policy reduces the odds that sensitive files get duplicated across desktops, emails, or personal drives.

Auditability and logging

You want a clear trail of who accessed what and when, especially during peak season. If a client asks “who saw my information,” you should not be guessing.

Data minimization

Offshore teams rarely need everything. Give access to what is required for the task, and avoid unnecessary exports. If you must export, define a rule for how it is stored, how long it lives, and how it is destroyed.

A written playbook for exceptions

Busy season creates edge cases: a client emails a PDF, someone forwards it, someone downloads it, and suddenly data is in three places. A simple playbook prevents that pattern. It gives staff a safe default response: “please upload this to the portal,” plus a clear escalation path when the client cannot.

The most common mistakes firms make with 7216 and offshore support

Most 7216 issues are process failures, not intent failures:

• Treating consent as a one-off instead of a standard gate.
• Inconsistent storage of signed consents, so nobody can prove timing.
• Allowing sensitive data to travel through email because it felt faster.
• Using rotating external teams that never fully adapt to your internal controls.
• Mixing “tax prep support” with unrelated marketing or upsell uses of client data without the right consent boundaries.

If you want a deeper discussion of tricky edge cases, this overview in The Tax Adviser is a good starting point: The many implications of Sec. 7216.

Why the delivery model matters as much as the consent form

A lot of firms focus on paperwork and miss the bigger lever: the delivery model itself.

When offshore support is treated like anonymous task execution, control tends to weaken. When offshore support is structured as an embedded, dedicated capacity model, control tends to strengthen, because people learn your SOPs, your review standards, and your security expectations.

That is exactly the positioning behind an embedded approach like the Accounting Seat Model, and for tax-specific work, dedicated US Tax Seats. The goal is not “outsourcing.” The goal is building a stable extension of your team inside your system.

A practical way to put this into motion

If you are building or refining an offshore tax support model, start by getting three things right:

• A consistent 7216 consent gate for any engagement that may involve overseas access
• A controlled workflow where work stays inside your tools and your security perimeter
• A documentation standard that makes your process defensible, even under pressure

If you want, email [email protected] and ask for a 7216 readiness pack, or schedule a meeting to walk through it together. Share your current intake flow (organizer, portal, engagement letter process) and how you plan to use offshore support, and we will send a practical checklist of controls plus a suggested consent workflow you can adapt to your firm.