Is Your Tax Return Being Prepared in Another Country? What Frederick County Taxpayers Need to Know

Your tax return contains your Social Security number, your income, your bank accounts, your children's names, and your business's financials. A growing number of U.S. tax firms send that file overseas for preparation. It's legal — with your consent. The uncomfortable part is how many taxpayers give that consent without ever realizing they did.

This Happens More Than People Realize

Offshore tax preparation is now routine in the industry. Facing staffing shortages and margin pressure, a significant number of U.S. firms — including some large, familiar names — route return preparation to processing centers abroad. The U.S. firm signs the return and manages the client relationship; the data entry, and sometimes substantially more, happens somewhere else.

The IRS has permitted this since 2006. It is not fraud, it is not a scandal, and plenty of offshore providers do competent work under real security protocols. But it operates on one condition — your informed, written consent — and that condition is where the story gets interesting for Frederick County taxpayers.

The Rule: Section 7216

Internal Revenue Code Section 7216 governs what a tax preparer may do with your information. The default is strict: a preparer may not disclose your tax return information to anyone else without your consent. Violating it is a criminal misdemeanor — up to a year in prison and a fine — with a civil counterpart under Section 6713 adding penalties per disclosure.

Sending your file offshore is a disclosure. So the firm must obtain your written consent first, and the regulations are unusually specific about what that consent has to look like:

Requirement	What It Means for You
Standalone document	The consent cannot be buried in the fine print of an engagement letter — it must be its own document you sign
Signed before disclosure	No retroactive consent. If your data already went overseas, a signature afterward doesn't fix it
Cannot be a condition of service	A firm may not require you to consent in order to be a client. If it does, the consent is invalid
Names the recipient and purpose	You're entitled to know who is receiving your information and why
Special SSN language	If your Social Security number is disclosed, the form must say so explicitly and disclose the safeguards in place
The enforcement warning	The form must tell you that U.S. agencies may not be able to enforce American privacy protections against a preparer located abroad
Revocable, and time-limited	You can withdraw consent at any time; absent a stated duration, it expires after one year

"But I Never Agreed to That"

Maybe you did. The consent is a real form with real disclosures — but it's often presented in a pile of onboarding paperwork during the busiest month of the year, next to the engagement letter and the e-file authorization, and most people sign the stack.

Three things worth knowing:

• A blanket clause in an engagement letter isn't valid consent. The regulations require a standalone document. If a firm believes it has your consent because of language embedded in a longer contract, that consent is likely defective.
• "They're our employees" doesn't remove the requirement. Some firms assume that offshore staff working under the firm's own brand don't trigger the rules. The regulations generally say otherwise — disclosure to a preparer located outside the U.S. requires consent regardless of employment status, particularly where SSNs are involved.
• Even data entry counts. The cautious reading — and the one most compliance professionals follow — is that offshore involvement requires consent even if the foreign team is only keying in numbers and all decisions are made stateside.

What You Should Actually Do About It

You don't need to be alarmed. You do need to ask. One direct question to any preparer, chain, or firm you're considering:

Then read what you sign. If you're handed a separate consent form mentioning disclosure outside the United States, that's what it is — and you may decline it. A firm cannot refuse to serve you for saying no (though it may charge more to keep the work in-house, which is an honest tradeoff to be offered).

Why This Matters Beyond Privacy

There's a quality dimension too, and it connects to the reason people hire professionals in the first place.

A preparer working from a checklist thousands of miles away is entering data. They are not going to notice that your Maryland return needs a bonus depreciation addback your federal return doesn't. They're not going to flag that your 1099 income has crossed the threshold where an S-Corp election would save you thousands, or that your Frederick County local rate was applied incorrectly, or that a rental loss is suspended when it needn't be. Those catches come from someone who knows Maryland, knows your history, and is actually thinking about your situation rather than processing a file.

That's the same argument we make in our comparison of CPAs, tax chains, and software — the value isn't in the typing. It's in the judgment.

Where We Stand

At Mercer Flanagan, your return never leaves the United States. Every return is prepared and reviewed here in Frederick, by a licensed CPA you can meet in person, at 1509 Homestead Avenue. We don't outsource preparation offshore, we don't route your file through a processing center, and you'll never be handed a consent form asking permission to send your Social Security number abroad — because we'd have no use for one.

We've been doing it this way since 1971. Our individual tax preparation and business tax work stay in this office, with the people whose names are on the door.

Frequently Asked Questions

By Roy Cogliandolo, CPA · Mercer Flanagan · June 2, 2026

This article is general information, not tax or legal advice. Section 7216 regulations and consent requirements are technical and subject to change — this article describes them in general terms.