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Non-Disclosure Agreement

Non-Disclosure Agreement for Tax Preparation Firm in Illinois

Protect client tax data with a customized Non-Disclosure Agreement for tax preparation firms in Illinois. Complies with GLBA, BIPA, Illinois Consumer Fraud Act & IRS PTIN

By The PaperForge Editorial Team·Last updated June 8, 2026
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Tax preparation firms in Illinois face constant exposure when handling sensitive client information such as W-2s, 1099s, depreciation schedules, estimated tax calculations, and amended returns. A... Read more

Customize your Non-Disclosure Agreement

16 fields · Takes about 2 minutes

Terms

Be specific: trade secrets, client lists, financial data, proprietary processes, etc.

Parties
Signatures
Confidential Information

Describe the exact categories of tax documents and data that must remain confidential under IRS and Illinois rules.

Illinois Compliance
Firm Information
Termination
Liability

Non-Disclosure Agreement

Legal Document

This Non-Disclosure Agreement (this "Agreement") is entered into as of [effective_date] (the "Effective Date"), by and between [disclosing_party] (the "Disclosing Party") and [receiving_party] (the "Receiving Party"). The Disclosing Party and the Receiving Party may be referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, the Disclosing Party possesses certain confidential and proprietary information relating to its business, operations, products, services, research, development, technical data, trade secrets, and other matters (collectively, "Confidential Information"); and

WHEREAS, the Receiving Party desires to receive, and the Disclosing Party is willing to disclose, certain Confidential Information for the purpose of evaluating or pursuing a potential business relationship between the Parties (the "Purpose"); and

WHEREAS, as a condition to the disclosure of such Confidential Information, the Disclosing Party requires that the Receiving Party agree to maintain the confidentiality of such information in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definition of Confidential Information

"Confidential Information" means any and all non-public information, in any form or medium, whether written, oral, electronic, visual, or otherwise, that is disclosed by the Disclosing Party to the Receiving Party, either directly or indirectly, including but not limited to: [confidential_info]. Confidential Information shall also include any notes, analyses, compilations, studies, summaries, or other materials prepared by the Receiving Party that contain, reflect, or are derived from Confidential Information. Confidential Information shall not include information that: (a) is or becomes generally available to the public through no fault, act, or omission of the Receiving Party; (b) was already in the Receiving Party's possession without restriction prior to disclosure by the Disclosing Party, as evidenced by the Receiving Party's written records; (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information, as evidenced by the Receiving Party's written records; or (d) is obtained by the Receiving Party from a third party who is not, to the Receiving Party's knowledge, under any obligation of confidentiality with respect to such information.

2. Obligations of Receiving Party

The Receiving Party agrees that it shall: (a) hold the Confidential Information in strict confidence and protect it with at least the same degree of care that it uses to protect its own confidential and proprietary information, but in no event less than a reasonable degree of care; (b) not disclose, publish, or otherwise disseminate the Confidential Information to any third party without the prior written consent of the Disclosing Party; (c) use the Confidential Information solely for the Purpose and not for any other purpose whatsoever; (d) limit access to the Confidential Information to those of its employees, officers, directors, agents, advisors, and representatives (collectively, "Representatives") who have a need to know such information for the Purpose and who are bound by obligations of confidentiality no less restrictive than those contained herein; and (e) be responsible for any breach of this Agreement by any of its Representatives. The Receiving Party shall promptly notify the Disclosing Party in writing upon discovery of any unauthorized use or disclosure of Confidential Information.

3. Permitted Disclosures

Notwithstanding anything to the contrary in this Agreement, the Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, or valid court order or subpoena (a "Legal Requirement"), provided that the Receiving Party: (a) provides the Disclosing Party with prompt written notice of such Legal Requirement prior to disclosure (to the extent legally permissible), so that the Disclosing Party may seek a protective order or other appropriate remedy; (b) cooperates with the Disclosing Party, at the Disclosing Party's expense, in seeking such protective order or other remedy; and (c) discloses only that portion of the Confidential Information that the Receiving Party is legally required to disclose, as advised by its legal counsel. Any Confidential Information disclosed pursuant to a Legal Requirement shall continue to be treated as Confidential Information for all other purposes under this Agreement.

4. Term and Duration

This Agreement shall become effective as of the Effective Date and shall remain in full force and effect until terminated by either Party upon thirty (30) days' prior written notice to the other Party. Notwithstanding any termination or expiration of this Agreement, the Receiving Party's obligations of confidentiality with respect to all Confidential Information disclosed during the term of this Agreement shall survive and continue for a period as specified below from the date of disclosure of each item of Confidential Information.

5. Return of Materials

Upon the termination or expiration of this Agreement, or upon the written request of the Disclosing Party at any time, the Receiving Party shall promptly: (a) return to the Disclosing Party all originals and copies of any documents, materials, and other tangible items containing or embodying Confidential Information; or (b) at the Disclosing Party's option, destroy all such documents, materials, and tangible items and provide the Disclosing Party with a written certification signed by an authorized officer of the Receiving Party confirming that all such materials have been destroyed. Notwithstanding the foregoing, the Receiving Party may retain one (1) archival copy of the Confidential Information solely for the purpose of monitoring its ongoing obligations under this Agreement, and any Confidential Information retained in routine backup systems shall be subject to the continuing confidentiality obligations of this Agreement.

6. No License or Warranty

Nothing in this Agreement shall be construed as granting to the Receiving Party any license, right, title, or interest in or to the Confidential Information, or any patent, copyright, trademark, trade secret, or other intellectual property right of the Disclosing Party. All Confidential Information shall remain the sole and exclusive property of the Disclosing Party. The Disclosing Party makes no representation or warranty, express or implied, as to the accuracy, completeness, or fitness for any particular purpose of the Confidential Information. The Receiving Party acknowledges that it shall use the Confidential Information at its own risk.

7. Remedies

The Receiving Party acknowledges and agrees that any breach or threatened breach of this Agreement may cause irreparable harm to the Disclosing Party for which monetary damages alone would be an inadequate remedy. Accordingly, the Disclosing Party shall be entitled to seek equitable relief, including injunction and specific performance, in addition to all other remedies available at law or in equity, without the necessity of proving actual damages or posting any bond or other security. Such equitable relief shall not be deemed to be the exclusive remedy for any breach of this Agreement, but shall be in addition to all other remedies available at law or in equity.

8. Governing Law and Jurisdiction

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of [state_law], without regard to its conflict of laws principles. Each Party irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts located in the State of [state_law] for the adjudication of any dispute arising out of or relating to this Agreement, and each Party hereby irrevocably waives any objection it may have to such jurisdiction or venue, including any objection based on inconvenient forum.

9. Miscellaneous

9.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the Parties relating to the subject matter hereof. 9.2 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the remaining provisions of this Agreement shall continue in full force and effect. 9.3 Amendment. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by both Parties. 9.4 Waiver. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Party. The failure of either Party to enforce any provision of this Agreement shall not constitute a waiver of that Party's right to enforce that provision or any other provision of this Agreement in the future. 9.5 Assignment. The Receiving Party may not assign or transfer this Agreement, or any rights or obligations hereunder, without the prior written consent of the Disclosing Party. Any attempted assignment in violation of this provision shall be void and of no effect. 9.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 9.7 Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by confirmed electronic mail, or sent by nationally recognized overnight courier to the addresses of the Parties as set forth in the preamble of this Agreement, or to such other address as either Party may designate in writing.

Additional Provisions

BIPA and Biometric Data Protection

The Receiving Party acknowledges that any biometric identifiers or biometric information (as defined by the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq.) collected from clients during tax preparation identity verification processes constitute Confidential Information. Receiving Party warrants it will obtain written consent before capturing, storing, or transmitting any biometric data in accordance with BIPA and shall not disclose such data to any subcontractor without prior written consent of Disclosing Party. In the event of any unauthorized capture, use, or disclosure, Receiving Party shall indemnify Disclosing Party for all statutory damages, attorneys’ fees, and costs available under BIPA. This provision is required for any Illinois tax preparation firm that utilizes facial recognition, fingerprint, or voiceprint technologies and survives termination of this Agreement indefinitely.

Compliance with Illinois Consumer Fraud and Deceptive Business Practices Act

The parties agree that any unauthorized disclosure of client tax records, including W-2 forms, 1099 statements, or depreciation calculations, shall constitute an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.). Receiving Party represents and warrants that it maintains data security practices at least as stringent as those required by the Gramm-Leach-Bliley Act and will immediately notify Disclosing Party of any suspected breach. This clause allocates risk consistent with Illinois public policy and provides Disclosing Party with all remedies available under the Act, including injunctive relief and recovery of attorneys’ fees. Any ambiguity regarding the scope of protected tax preparation data shall be construed in favor of maximum protection for the clients of the Illinois tax preparation firm.

Circular 230 and IRS Confidentiality Integration

All obligations under this Non-Disclosure Agreement are intended to supplement, and shall be interpreted consistently with, the duties imposed on tax practitioners by Treasury Department Circular 230, 31 C.F.R. §§ 10.0–10.93, and Internal Revenue Code §7216. Receiving Party agrees that any tax return information or client data received from the Illinois tax preparation firm shall be used solely for the purpose of assisting in the preparation, review, or filing of federal and Illinois tax returns. Disclosure to any person other than employees or contractors who have executed equivalent confidentiality agreements and possess a valid PTIN is strictly prohibited. Breach of this clause may subject the Receiving Party to IRS sanctions and shall entitle the Disclosing Party to seek equitable relief in addition to monetary damages. This provision survives any termination or expiration of the agreement.

Illinois Wage Payment and Employee Access Controls

To the extent any employees or independent contractors of the Receiving Party will access Confidential Information, the Receiving Party represents that it complies with the Illinois Wage Payment and Collection Act (820 ILCS 115/1 et seq.) and will not deduct any amounts from wages related to confidentiality training or data-security tools without express written authorization. All individuals granted access must receive documented training on GLBA, BIPA, and Circular 230 obligations. The Receiving Party shall maintain an access log for a minimum of seven years and provide it to the Disclosing Party upon request. Any violation of internal access protocols shall be considered a material breach of this Agreement, allowing immediate termination and recovery of all costs associated with notification to affected Illinois taxpayers.

Additional Details

Specific Client Tax Data to Protect:

[client tax data types]

Third-Party Software or Vendors Receiving Data: [third party vendors]
BIPA Biometric Data Compliance Acknowledgment: No
Your PTIN (Preparer Tax Identification Number): [ptin number]
Data Breach Notification Period (Days): [data breach notification period]
Preferred Method of Confidential Data Return or Destruction: [return destruction method]
Errors & Omissions Insurance Carrier Name: [e and o carrier]

IN WITNESS WHEREOF, the Parties have executed this Non-Disclosure Agreement as of the date first written above.

Disclosing Party

Name: Disclosing Party

Date: ___________________

Receiving Party

Name: Receiving Party

Date: ___________________

Non-Disclosure Agreement

Legal Document

This Non-Disclosure Agreement (this "Agreement") is entered into as of [effective_date] (the "Effective Date"), by and between [disclosing_party] (the "Disclosing Party") and [receiving_party] (the "Receiving Party"). The Disclosing Party and the Receiving Party may be referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, the Disclosing Party possesses certain confidential and proprietary information relating to its business, operations, products, services, research, development, technical data, trade secrets, and other matters (collectively, "Confidential Information"); and

WHEREAS, the Receiving Party desires to receive, and the Disclosing Party is willing to disclose, certain Confidential Information for the purpose of evaluating or pursuing a potential business relationship between the Parties (the "Purpose"); and

WHEREAS, as a condition to the disclosure of such Confidential Information, the Disclosing Party requires that the Receiving Party agree to maintain the confidentiality of such information in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definition of Confidential Information

"Confidential Information" means any and all non-public information, in any form or medium, whether written, oral, electronic, visual, or otherwise, that is disclosed by the Disclosing Party to the Receiving Party, either directly or indirectly, including but not limited to: [confidential_info]. Confidential Information shall also include any notes, analyses, compilations, studies, summaries, or other materials prepared by the Receiving Party that contain, reflect, or are derived from Confidential Information. Confidential Information shall not include information that: (a) is or becomes generally available to the public through no fault, act, or omission of the Receiving Party; (b) was already in the Receiving Party's possession without restriction prior to disclosure by the Disclosing Party, as evidenced by the Receiving Party's written records; (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information, as evidenced by the Receiving Party's written records; or (d) is obtained by the Receiving Party from a third party who is not, to the Receiving Party's knowledge, under any obligation of confidentiality with respect to such information.

2. Obligations of Receiving Party

The Receiving Party agrees that it shall: (a) hold the Confidential Information in strict confidence and protect it with at least the same degree of care that it uses to protect its own confidential and proprietary information, but in no event less than a reasonable degree of care; (b) not disclose, publish, or otherwise disseminate the Confidential Information to any third party without the prior written consent of the Disclosing Party; (c) use the Confidential Information solely for the Purpose and not for any other purpose whatsoever; (d) limit access to the Confidential Information to those of its employees, officers, directors, agents, advisors, and representatives (collectively, "Representatives") who have a need to know such information for the Purpose and who are bound by obligations of confidentiality no less restrictive than those contained herein; and (e) be responsible for any breach of this Agreement by any of its Representatives. The Receiving Party shall promptly notify the Disclosing Party in writing upon discovery of any unauthorized use or disclosure of Confidential Information.

3. Permitted Disclosures

Notwithstanding anything to the contrary in this Agreement, the Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, or valid court order or subpoena (a "Legal Requirement"), provided that the Receiving Party: (a) provides the Disclosing Party with prompt written notice of such Legal Requirement prior to disclosure (to the extent legally permissible), so that the Disclosing Party may seek a protective order or other appropriate remedy; (b) cooperates with the Disclosing Party, at the Disclosing Party's expense, in seeking such protective order or other remedy; and (c) discloses only that portion of the Confidential Information that the Receiving Party is legally required to disclose, as advised by its legal counsel. Any Confidential Information disclosed pursuant to a Legal Requirement shall continue to be treated as Confidential Information for all other purposes under this Agreement.

4. Term and Duration

This Agreement shall become effective as of the Effective Date and shall remain in full force and effect until terminated by either Party upon thirty (30) days' prior written notice to the other Party. Notwithstanding any termination or expiration of this Agreement, the Receiving Party's obligations of confidentiality with respect to all Confidential Information disclosed during the term of this Agreement shall survive and continue for a period as specified below from the date of disclosure of each item of Confidential Information.

5. Return of Materials

Upon the termination or expiration of this Agreement, or upon the written request of the Disclosing Party at any time, the Receiving Party shall promptly: (a) return to the Disclosing Party all originals and copies of any documents, materials, and other tangible items containing or embodying Confidential Information; or (b) at the Disclosing Party's option, destroy all such documents, materials, and tangible items and provide the Disclosing Party with a written certification signed by an authorized officer of the Receiving Party confirming that all such materials have been destroyed. Notwithstanding the foregoing, the Receiving Party may retain one (1) archival copy of the Confidential Information solely for the purpose of monitoring its ongoing obligations under this Agreement, and any Confidential Information retained in routine backup systems shall be subject to the continuing confidentiality obligations of this Agreement.

6. No License or Warranty

Nothing in this Agreement shall be construed as granting to the Receiving Party any license, right, title, or interest in or to the Confidential Information, or any patent, copyright, trademark, trade secret, or other intellectual property right of the Disclosing Party. All Confidential Information shall remain the sole and exclusive property of the Disclosing Party. The Disclosing Party makes no representation or warranty, express or implied, as to the accuracy, completeness, or fitness for any particular purpose of the Confidential Information. The Receiving Party acknowledges that it shall use the Confidential Information at its own risk.

7. Remedies

The Receiving Party acknowledges and agrees that any breach or threatened breach of this Agreement may cause irreparable harm to the Disclosing Party for which monetary damages alone would be an inadequate remedy. Accordingly, the Disclosing Party shall be entitled to seek equitable relief, including injunction and specific performance, in addition to all other remedies available at law or in equity, without the necessity of proving actual damages or posting any bond or other security. Such equitable relief shall not be deemed to be the exclusive remedy for any breach of this Agreement, but shall be in addition to all other remedies available at law or in equity.

8. Governing Law and Jurisdiction

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of [state_law], without regard to its conflict of laws principles. Each Party irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts located in the State of [state_law] for the adjudication of any dispute arising out of or relating to this Agreement, and each Party hereby irrevocably waives any objection it may have to such jurisdiction or venue, including any objection based on inconvenient forum.

9. Miscellaneous

9.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the Parties relating to the subject matter hereof. 9.2 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the remaining provisions of this Agreement shall continue in full force and effect. 9.3 Amendment. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by both Parties. 9.4 Waiver. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Party. The failure of either Party to enforce any provision of this Agreement shall not constitute a waiver of that Party's right to enforce that provision or any other provision of this Agreement in the future. 9.5 Assignment. The Receiving Party may not assign or transfer this Agreement, or any rights or obligations hereunder, without the prior written consent of the Disclosing Party. Any attempted assignment in violation of this provision shall be void and of no effect. 9.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 9.7 Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by confirmed electronic mail, or sent by nationally recognized overnight courier to the addresses of the Parties as set forth in the preamble of this Agreement, or to such other address as either Party may designate in writing.

Additional Provisions

BIPA and Biometric Data Protection

The Receiving Party acknowledges that any biometric identifiers or biometric information (as defined by the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq.) collected from clients during tax preparation identity verification processes constitute Confidential Information. Receiving Party warrants it will obtain written consent before capturing, storing, or transmitting any biometric data in accordance with BIPA and shall not disclose such data to any subcontractor without prior written consent of Disclosing Party. In the event of any unauthorized capture, use, or disclosure, Receiving Party shall indemnify Disclosing Party for all statutory damages, attorneys’ fees, and costs available under BIPA. This provision is required for any Illinois tax preparation firm that utilizes facial recognition, fingerprint, or voiceprint technologies and survives termination of this Agreement indefinitely.

Compliance with Illinois Consumer Fraud and Deceptive Business Practices Act

The parties agree that any unauthorized disclosure of client tax records, including W-2 forms, 1099 statements, or depreciation calculations, shall constitute an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.). Receiving Party represents and warrants that it maintains data security practices at least as stringent as those required by the Gramm-Leach-Bliley Act and will immediately notify Disclosing Party of any suspected breach. This clause allocates risk consistent with Illinois public policy and provides Disclosing Party with all remedies available under the Act, including injunctive relief and recovery of attorneys’ fees. Any ambiguity regarding the scope of protected tax preparation data shall be construed in favor of maximum protection for the clients of the Illinois tax preparation firm.

Circular 230 and IRS Confidentiality Integration

All obligations under this Non-Disclosure Agreement are intended to supplement, and shall be interpreted consistently with, the duties imposed on tax practitioners by Treasury Department Circular 230, 31 C.F.R. §§ 10.0–10.93, and Internal Revenue Code §7216. Receiving Party agrees that any tax return information or client data received from the Illinois tax preparation firm shall be used solely for the purpose of assisting in the preparation, review, or filing of federal and Illinois tax returns. Disclosure to any person other than employees or contractors who have executed equivalent confidentiality agreements and possess a valid PTIN is strictly prohibited. Breach of this clause may subject the Receiving Party to IRS sanctions and shall entitle the Disclosing Party to seek equitable relief in addition to monetary damages. This provision survives any termination or expiration of the agreement.

Illinois Wage Payment and Employee Access Controls

To the extent any employees or independent contractors of the Receiving Party will access Confidential Information, the Receiving Party represents that it complies with the Illinois Wage Payment and Collection Act (820 ILCS 115/1 et seq.) and will not deduct any amounts from wages related to confidentiality training or data-security tools without express written authorization. All individuals granted access must receive documented training on GLBA, BIPA, and Circular 230 obligations. The Receiving Party shall maintain an access log for a minimum of seven years and provide it to the Disclosing Party upon request. Any violation of internal access protocols shall be considered a material breach of this Agreement, allowing immediate termination and recovery of all costs associated with notification to affected Illinois taxpayers.

Additional Details

Specific Client Tax Data to Protect:

[client tax data types]

Third-Party Software or Vendors Receiving Data: [third party vendors]
BIPA Biometric Data Compliance Acknowledgment: No
Your PTIN (Preparer Tax Identification Number): [ptin number]
Data Breach Notification Period (Days): [data breach notification period]
Preferred Method of Confidential Data Return or Destruction: [return destruction method]
Errors & Omissions Insurance Carrier Name: [e and o carrier]

IN WITNESS WHEREOF, the Parties have executed this Non-Disclosure Agreement as of the date first written above.

Disclosing Party

Name: Disclosing Party

Date: ___________________

Receiving Party

Name: Receiving Party

Date: ___________________

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Customize your Non-Disclosure Agreement

16 fields · Takes about 2 minutes

Terms

Be specific: trade secrets, client lists, financial data, proprietary processes, etc.

Parties
Signatures
Confidential Information

Describe the exact categories of tax documents and data that must remain confidential under IRS and Illinois rules.

Illinois Compliance
Firm Information
Termination
Liability

Non-Disclosure Agreement

Legal Document

This Non-Disclosure Agreement (this "Agreement") is entered into as of [effective_date] (the "Effective Date"), by and between [disclosing_party] (the "Disclosing Party") and [receiving_party] (the "Receiving Party"). The Disclosing Party and the Receiving Party may be referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, the Disclosing Party possesses certain confidential and proprietary information relating to its business, operations, products, services, research, development, technical data, trade secrets, and other matters (collectively, "Confidential Information"); and

WHEREAS, the Receiving Party desires to receive, and the Disclosing Party is willing to disclose, certain Confidential Information for the purpose of evaluating or pursuing a potential business relationship between the Parties (the "Purpose"); and

WHEREAS, as a condition to the disclosure of such Confidential Information, the Disclosing Party requires that the Receiving Party agree to maintain the confidentiality of such information in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definition of Confidential Information

"Confidential Information" means any and all non-public information, in any form or medium, whether written, oral, electronic, visual, or otherwise, that is disclosed by the Disclosing Party to the Receiving Party, either directly or indirectly, including but not limited to: [confidential_info]. Confidential Information shall also include any notes, analyses, compilations, studies, summaries, or other materials prepared by the Receiving Party that contain, reflect, or are derived from Confidential Information. Confidential Information shall not include information that: (a) is or becomes generally available to the public through no fault, act, or omission of the Receiving Party; (b) was already in the Receiving Party's possession without restriction prior to disclosure by the Disclosing Party, as evidenced by the Receiving Party's written records; (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information, as evidenced by the Receiving Party's written records; or (d) is obtained by the Receiving Party from a third party who is not, to the Receiving Party's knowledge, under any obligation of confidentiality with respect to such information.

2. Obligations of Receiving Party

The Receiving Party agrees that it shall: (a) hold the Confidential Information in strict confidence and protect it with at least the same degree of care that it uses to protect its own confidential and proprietary information, but in no event less than a reasonable degree of care; (b) not disclose, publish, or otherwise disseminate the Confidential Information to any third party without the prior written consent of the Disclosing Party; (c) use the Confidential Information solely for the Purpose and not for any other purpose whatsoever; (d) limit access to the Confidential Information to those of its employees, officers, directors, agents, advisors, and representatives (collectively, "Representatives") who have a need to know such information for the Purpose and who are bound by obligations of confidentiality no less restrictive than those contained herein; and (e) be responsible for any breach of this Agreement by any of its Representatives. The Receiving Party shall promptly notify the Disclosing Party in writing upon discovery of any unauthorized use or disclosure of Confidential Information.

3. Permitted Disclosures

Notwithstanding anything to the contrary in this Agreement, the Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, or valid court order or subpoena (a "Legal Requirement"), provided that the Receiving Party: (a) provides the Disclosing Party with prompt written notice of such Legal Requirement prior to disclosure (to the extent legally permissible), so that the Disclosing Party may seek a protective order or other appropriate remedy; (b) cooperates with the Disclosing Party, at the Disclosing Party's expense, in seeking such protective order or other remedy; and (c) discloses only that portion of the Confidential Information that the Receiving Party is legally required to disclose, as advised by its legal counsel. Any Confidential Information disclosed pursuant to a Legal Requirement shall continue to be treated as Confidential Information for all other purposes under this Agreement.

4. Term and Duration

This Agreement shall become effective as of the Effective Date and shall remain in full force and effect until terminated by either Party upon thirty (30) days' prior written notice to the other Party. Notwithstanding any termination or expiration of this Agreement, the Receiving Party's obligations of confidentiality with respect to all Confidential Information disclosed during the term of this Agreement shall survive and continue for a period as specified below from the date of disclosure of each item of Confidential Information.

5. Return of Materials

Upon the termination or expiration of this Agreement, or upon the written request of the Disclosing Party at any time, the Receiving Party shall promptly: (a) return to the Disclosing Party all originals and copies of any documents, materials, and other tangible items containing or embodying Confidential Information; or (b) at the Disclosing Party's option, destroy all such documents, materials, and tangible items and provide the Disclosing Party with a written certification signed by an authorized officer of the Receiving Party confirming that all such materials have been destroyed. Notwithstanding the foregoing, the Receiving Party may retain one (1) archival copy of the Confidential Information solely for the purpose of monitoring its ongoing obligations under this Agreement, and any Confidential Information retained in routine backup systems shall be subject to the continuing confidentiality obligations of this Agreement.

6. No License or Warranty

Nothing in this Agreement shall be construed as granting to the Receiving Party any license, right, title, or interest in or to the Confidential Information, or any patent, copyright, trademark, trade secret, or other intellectual property right of the Disclosing Party. All Confidential Information shall remain the sole and exclusive property of the Disclosing Party. The Disclosing Party makes no representation or warranty, express or implied, as to the accuracy, completeness, or fitness for any particular purpose of the Confidential Information. The Receiving Party acknowledges that it shall use the Confidential Information at its own risk.

7. Remedies

The Receiving Party acknowledges and agrees that any breach or threatened breach of this Agreement may cause irreparable harm to the Disclosing Party for which monetary damages alone would be an inadequate remedy. Accordingly, the Disclosing Party shall be entitled to seek equitable relief, including injunction and specific performance, in addition to all other remedies available at law or in equity, without the necessity of proving actual damages or posting any bond or other security. Such equitable relief shall not be deemed to be the exclusive remedy for any breach of this Agreement, but shall be in addition to all other remedies available at law or in equity.

8. Governing Law and Jurisdiction

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of [state_law], without regard to its conflict of laws principles. Each Party irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts located in the State of [state_law] for the adjudication of any dispute arising out of or relating to this Agreement, and each Party hereby irrevocably waives any objection it may have to such jurisdiction or venue, including any objection based on inconvenient forum.

9. Miscellaneous

9.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the Parties relating to the subject matter hereof. 9.2 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the remaining provisions of this Agreement shall continue in full force and effect. 9.3 Amendment. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by both Parties. 9.4 Waiver. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Party. The failure of either Party to enforce any provision of this Agreement shall not constitute a waiver of that Party's right to enforce that provision or any other provision of this Agreement in the future. 9.5 Assignment. The Receiving Party may not assign or transfer this Agreement, or any rights or obligations hereunder, without the prior written consent of the Disclosing Party. Any attempted assignment in violation of this provision shall be void and of no effect. 9.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 9.7 Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by confirmed electronic mail, or sent by nationally recognized overnight courier to the addresses of the Parties as set forth in the preamble of this Agreement, or to such other address as either Party may designate in writing.

Additional Provisions

BIPA and Biometric Data Protection

The Receiving Party acknowledges that any biometric identifiers or biometric information (as defined by the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq.) collected from clients during tax preparation identity verification processes constitute Confidential Information. Receiving Party warrants it will obtain written consent before capturing, storing, or transmitting any biometric data in accordance with BIPA and shall not disclose such data to any subcontractor without prior written consent of Disclosing Party. In the event of any unauthorized capture, use, or disclosure, Receiving Party shall indemnify Disclosing Party for all statutory damages, attorneys’ fees, and costs available under BIPA. This provision is required for any Illinois tax preparation firm that utilizes facial recognition, fingerprint, or voiceprint technologies and survives termination of this Agreement indefinitely.

Compliance with Illinois Consumer Fraud and Deceptive Business Practices Act

The parties agree that any unauthorized disclosure of client tax records, including W-2 forms, 1099 statements, or depreciation calculations, shall constitute an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.). Receiving Party represents and warrants that it maintains data security practices at least as stringent as those required by the Gramm-Leach-Bliley Act and will immediately notify Disclosing Party of any suspected breach. This clause allocates risk consistent with Illinois public policy and provides Disclosing Party with all remedies available under the Act, including injunctive relief and recovery of attorneys’ fees. Any ambiguity regarding the scope of protected tax preparation data shall be construed in favor of maximum protection for the clients of the Illinois tax preparation firm.

Circular 230 and IRS Confidentiality Integration

All obligations under this Non-Disclosure Agreement are intended to supplement, and shall be interpreted consistently with, the duties imposed on tax practitioners by Treasury Department Circular 230, 31 C.F.R. §§ 10.0–10.93, and Internal Revenue Code §7216. Receiving Party agrees that any tax return information or client data received from the Illinois tax preparation firm shall be used solely for the purpose of assisting in the preparation, review, or filing of federal and Illinois tax returns. Disclosure to any person other than employees or contractors who have executed equivalent confidentiality agreements and possess a valid PTIN is strictly prohibited. Breach of this clause may subject the Receiving Party to IRS sanctions and shall entitle the Disclosing Party to seek equitable relief in addition to monetary damages. This provision survives any termination or expiration of the agreement.

Illinois Wage Payment and Employee Access Controls

To the extent any employees or independent contractors of the Receiving Party will access Confidential Information, the Receiving Party represents that it complies with the Illinois Wage Payment and Collection Act (820 ILCS 115/1 et seq.) and will not deduct any amounts from wages related to confidentiality training or data-security tools without express written authorization. All individuals granted access must receive documented training on GLBA, BIPA, and Circular 230 obligations. The Receiving Party shall maintain an access log for a minimum of seven years and provide it to the Disclosing Party upon request. Any violation of internal access protocols shall be considered a material breach of this Agreement, allowing immediate termination and recovery of all costs associated with notification to affected Illinois taxpayers.

Additional Details

Specific Client Tax Data to Protect:

[client tax data types]

Third-Party Software or Vendors Receiving Data: [third party vendors]
BIPA Biometric Data Compliance Acknowledgment: No
Your PTIN (Preparer Tax Identification Number): [ptin number]
Data Breach Notification Period (Days): [data breach notification period]
Preferred Method of Confidential Data Return or Destruction: [return destruction method]
Errors & Omissions Insurance Carrier Name: [e and o carrier]

IN WITNESS WHEREOF, the Parties have executed this Non-Disclosure Agreement as of the date first written above.

Disclosing Party

Name: Disclosing Party

Date: ___________________

Receiving Party

Name: Receiving Party

Date: ___________________

Non-Disclosure Agreement

Legal Document

This Non-Disclosure Agreement (this "Agreement") is entered into as of [effective_date] (the "Effective Date"), by and between [disclosing_party] (the "Disclosing Party") and [receiving_party] (the "Receiving Party"). The Disclosing Party and the Receiving Party may be referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, the Disclosing Party possesses certain confidential and proprietary information relating to its business, operations, products, services, research, development, technical data, trade secrets, and other matters (collectively, "Confidential Information"); and

WHEREAS, the Receiving Party desires to receive, and the Disclosing Party is willing to disclose, certain Confidential Information for the purpose of evaluating or pursuing a potential business relationship between the Parties (the "Purpose"); and

WHEREAS, as a condition to the disclosure of such Confidential Information, the Disclosing Party requires that the Receiving Party agree to maintain the confidentiality of such information in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definition of Confidential Information

"Confidential Information" means any and all non-public information, in any form or medium, whether written, oral, electronic, visual, or otherwise, that is disclosed by the Disclosing Party to the Receiving Party, either directly or indirectly, including but not limited to: [confidential_info]. Confidential Information shall also include any notes, analyses, compilations, studies, summaries, or other materials prepared by the Receiving Party that contain, reflect, or are derived from Confidential Information. Confidential Information shall not include information that: (a) is or becomes generally available to the public through no fault, act, or omission of the Receiving Party; (b) was already in the Receiving Party's possession without restriction prior to disclosure by the Disclosing Party, as evidenced by the Receiving Party's written records; (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information, as evidenced by the Receiving Party's written records; or (d) is obtained by the Receiving Party from a third party who is not, to the Receiving Party's knowledge, under any obligation of confidentiality with respect to such information.

2. Obligations of Receiving Party

The Receiving Party agrees that it shall: (a) hold the Confidential Information in strict confidence and protect it with at least the same degree of care that it uses to protect its own confidential and proprietary information, but in no event less than a reasonable degree of care; (b) not disclose, publish, or otherwise disseminate the Confidential Information to any third party without the prior written consent of the Disclosing Party; (c) use the Confidential Information solely for the Purpose and not for any other purpose whatsoever; (d) limit access to the Confidential Information to those of its employees, officers, directors, agents, advisors, and representatives (collectively, "Representatives") who have a need to know such information for the Purpose and who are bound by obligations of confidentiality no less restrictive than those contained herein; and (e) be responsible for any breach of this Agreement by any of its Representatives. The Receiving Party shall promptly notify the Disclosing Party in writing upon discovery of any unauthorized use or disclosure of Confidential Information.

3. Permitted Disclosures

Notwithstanding anything to the contrary in this Agreement, the Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, or valid court order or subpoena (a "Legal Requirement"), provided that the Receiving Party: (a) provides the Disclosing Party with prompt written notice of such Legal Requirement prior to disclosure (to the extent legally permissible), so that the Disclosing Party may seek a protective order or other appropriate remedy; (b) cooperates with the Disclosing Party, at the Disclosing Party's expense, in seeking such protective order or other remedy; and (c) discloses only that portion of the Confidential Information that the Receiving Party is legally required to disclose, as advised by its legal counsel. Any Confidential Information disclosed pursuant to a Legal Requirement shall continue to be treated as Confidential Information for all other purposes under this Agreement.

4. Term and Duration

This Agreement shall become effective as of the Effective Date and shall remain in full force and effect until terminated by either Party upon thirty (30) days' prior written notice to the other Party. Notwithstanding any termination or expiration of this Agreement, the Receiving Party's obligations of confidentiality with respect to all Confidential Information disclosed during the term of this Agreement shall survive and continue for a period as specified below from the date of disclosure of each item of Confidential Information.

5. Return of Materials

Upon the termination or expiration of this Agreement, or upon the written request of the Disclosing Party at any time, the Receiving Party shall promptly: (a) return to the Disclosing Party all originals and copies of any documents, materials, and other tangible items containing or embodying Confidential Information; or (b) at the Disclosing Party's option, destroy all such documents, materials, and tangible items and provide the Disclosing Party with a written certification signed by an authorized officer of the Receiving Party confirming that all such materials have been destroyed. Notwithstanding the foregoing, the Receiving Party may retain one (1) archival copy of the Confidential Information solely for the purpose of monitoring its ongoing obligations under this Agreement, and any Confidential Information retained in routine backup systems shall be subject to the continuing confidentiality obligations of this Agreement.

6. No License or Warranty

Nothing in this Agreement shall be construed as granting to the Receiving Party any license, right, title, or interest in or to the Confidential Information, or any patent, copyright, trademark, trade secret, or other intellectual property right of the Disclosing Party. All Confidential Information shall remain the sole and exclusive property of the Disclosing Party. The Disclosing Party makes no representation or warranty, express or implied, as to the accuracy, completeness, or fitness for any particular purpose of the Confidential Information. The Receiving Party acknowledges that it shall use the Confidential Information at its own risk.

7. Remedies

The Receiving Party acknowledges and agrees that any breach or threatened breach of this Agreement may cause irreparable harm to the Disclosing Party for which monetary damages alone would be an inadequate remedy. Accordingly, the Disclosing Party shall be entitled to seek equitable relief, including injunction and specific performance, in addition to all other remedies available at law or in equity, without the necessity of proving actual damages or posting any bond or other security. Such equitable relief shall not be deemed to be the exclusive remedy for any breach of this Agreement, but shall be in addition to all other remedies available at law or in equity.

8. Governing Law and Jurisdiction

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of [state_law], without regard to its conflict of laws principles. Each Party irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts located in the State of [state_law] for the adjudication of any dispute arising out of or relating to this Agreement, and each Party hereby irrevocably waives any objection it may have to such jurisdiction or venue, including any objection based on inconvenient forum.

9. Miscellaneous

9.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the Parties relating to the subject matter hereof. 9.2 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the remaining provisions of this Agreement shall continue in full force and effect. 9.3 Amendment. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by both Parties. 9.4 Waiver. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving Party. The failure of either Party to enforce any provision of this Agreement shall not constitute a waiver of that Party's right to enforce that provision or any other provision of this Agreement in the future. 9.5 Assignment. The Receiving Party may not assign or transfer this Agreement, or any rights or obligations hereunder, without the prior written consent of the Disclosing Party. Any attempted assignment in violation of this provision shall be void and of no effect. 9.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 9.7 Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed given when delivered personally, sent by confirmed electronic mail, or sent by nationally recognized overnight courier to the addresses of the Parties as set forth in the preamble of this Agreement, or to such other address as either Party may designate in writing.

Additional Provisions

BIPA and Biometric Data Protection

The Receiving Party acknowledges that any biometric identifiers or biometric information (as defined by the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq.) collected from clients during tax preparation identity verification processes constitute Confidential Information. Receiving Party warrants it will obtain written consent before capturing, storing, or transmitting any biometric data in accordance with BIPA and shall not disclose such data to any subcontractor without prior written consent of Disclosing Party. In the event of any unauthorized capture, use, or disclosure, Receiving Party shall indemnify Disclosing Party for all statutory damages, attorneys’ fees, and costs available under BIPA. This provision is required for any Illinois tax preparation firm that utilizes facial recognition, fingerprint, or voiceprint technologies and survives termination of this Agreement indefinitely.

Compliance with Illinois Consumer Fraud and Deceptive Business Practices Act

The parties agree that any unauthorized disclosure of client tax records, including W-2 forms, 1099 statements, or depreciation calculations, shall constitute an unlawful practice under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.). Receiving Party represents and warrants that it maintains data security practices at least as stringent as those required by the Gramm-Leach-Bliley Act and will immediately notify Disclosing Party of any suspected breach. This clause allocates risk consistent with Illinois public policy and provides Disclosing Party with all remedies available under the Act, including injunctive relief and recovery of attorneys’ fees. Any ambiguity regarding the scope of protected tax preparation data shall be construed in favor of maximum protection for the clients of the Illinois tax preparation firm.

Circular 230 and IRS Confidentiality Integration

All obligations under this Non-Disclosure Agreement are intended to supplement, and shall be interpreted consistently with, the duties imposed on tax practitioners by Treasury Department Circular 230, 31 C.F.R. §§ 10.0–10.93, and Internal Revenue Code §7216. Receiving Party agrees that any tax return information or client data received from the Illinois tax preparation firm shall be used solely for the purpose of assisting in the preparation, review, or filing of federal and Illinois tax returns. Disclosure to any person other than employees or contractors who have executed equivalent confidentiality agreements and possess a valid PTIN is strictly prohibited. Breach of this clause may subject the Receiving Party to IRS sanctions and shall entitle the Disclosing Party to seek equitable relief in addition to monetary damages. This provision survives any termination or expiration of the agreement.

Illinois Wage Payment and Employee Access Controls

To the extent any employees or independent contractors of the Receiving Party will access Confidential Information, the Receiving Party represents that it complies with the Illinois Wage Payment and Collection Act (820 ILCS 115/1 et seq.) and will not deduct any amounts from wages related to confidentiality training or data-security tools without express written authorization. All individuals granted access must receive documented training on GLBA, BIPA, and Circular 230 obligations. The Receiving Party shall maintain an access log for a minimum of seven years and provide it to the Disclosing Party upon request. Any violation of internal access protocols shall be considered a material breach of this Agreement, allowing immediate termination and recovery of all costs associated with notification to affected Illinois taxpayers.

Additional Details

Specific Client Tax Data to Protect:

[client tax data types]

Third-Party Software or Vendors Receiving Data: [third party vendors]
BIPA Biometric Data Compliance Acknowledgment: No
Your PTIN (Preparer Tax Identification Number): [ptin number]
Data Breach Notification Period (Days): [data breach notification period]
Preferred Method of Confidential Data Return or Destruction: [return destruction method]
Errors & Omissions Insurance Carrier Name: [e and o carrier]

IN WITNESS WHEREOF, the Parties have executed this Non-Disclosure Agreement as of the date first written above.

Disclosing Party

Name: Disclosing Party

Date: ___________________

Receiving Party

Name: Receiving Party

Date: ___________________

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Why You Need This Non-Disclosure Agreement

Tax preparation firms in Illinois face constant exposure when handling sensitive client information such as W-2s, 1099s, depreciation schedules, estimated tax calculations, and amended returns. A concrete scenario occurs when a CPA firm preparing complex Schedule C returns for small business clients in Chicago inadvertently shares a client's depreciation worksheets with a third-party software vendor without proper safeguards; the vendor suffers a breach, triggering IRS penalties, identity theft claims, and potential liability under the Illinois Consumer Fraud Act. Without a tailored Non-Disclosure Agreement for tax preparation firm in Illinois, your firm risks E&O claims, violations of Gramm-Leach-Bliley Act (GLBA) data safeguards, and costly private actions under the Biometric Information Privacy Act (BIPA) if client fingerprints or facial scans are used in identity verification. This document clearly defines confidential information including client tax records and IRS correspondence, imposes strict obligations aligned with Treasury Department Circular 230, and includes Illinois-specific jurisdiction under 740 ILCS 80/1 Statute of Frauds and 820 ILCS 115 Illinois Wage Payment rules for internal staff access. By using this NDA, Illinois tax preparers limit breach-of-confidentiality exposure, enforce return-or-destruction protocols for all client data, and create enforceable remedies that courts in Cook County or DuPage County will uphold. Protect your PTIN-licensed practice today and avoid the common pain point of unlimited liability when client financial data leaves your secure environment.

Confidentiality & Trade Secret Protections

What This NDA Protects

Beyond the standard non-disclosure agreement sections, this template adds fields specific to Tax Preparation Firm:

+Specific Client Tax Data to Protect(Confidential Information)
+Third-Party Software or Vendors Receiving Data(Parties)
+BIPA Biometric Data Compliance Acknowledgment(Illinois Compliance)
+Your PTIN (Preparer Tax Identification Number)(Firm Information)
+Data Breach Notification Period (Days)
+Preferred Method of Confidential Data Return or Destruction(Termination)
+Errors & Omissions Insurance Carrier Name(Liability)

The core legal purpose of a Non-Disclosure Agreement (NDA) is to establish a legal framework to protect confidential and proprietary information shared between parties. It restricts the unauthorized disclosure or use of such information, thereby enabling parties to collaborate, negotiate, or explore business opportunities while safeguarding sensitive information.

Disclosure Risks in Your Industry

Breach of Confidentiality

Implement and maintain Data Protection Policies, comply with GLBA requirements, and use confidentiality agreements to protect client data.

Trade Secret Law in Illinois

740 ILCS 80/1 — Illinois has its own version of the Statute of Frauds which requires certain types of contracts to be in writing. This includes any promise to answer for the debt of another, contracts for the sale of goods over $500, agreements that cannot be performed within a year, etc. It differs from the common law by specifically enumerating these provisions.
735 ILCS 5/2-606 — In Illinois, the Uniform Commercial Code's acceptance and revocation of acceptance rules can differ slightly, affecting how breaches are handled.

What Makes This NDA Enforceable

For this non-disclosure agreement to be legally valid:

  • +The document must be signed by both parties to manifest mutual consent.
  • +Clear identification of the parties involved must be present.
  • +Consideration must be present, which could be mutual disclosure or as part of another contract.
  • +The agreement should be in writing to satisfy SOF (Statute of Frauds) requirements in contexts involving trade secrets.
  • +In some states, NDAs involving employees may need to be signed with additional consideration if presented after the start of employment.

Common mistakes to avoid:

  • !Failing to clearly define what constitutes 'Confidential Information', leading to ambiguities.
  • !Not specifying the duration of the confidentiality obligation, which can result in indefinite or unenforceable terms.
  • !Excluding a clear description of what happens to confidential information after the termination of the agreement.
  • !Omitting jurisdiction and governing law which can lead to complexities in case of legal disputes.
  • !Neglecting to include remedies for breach which can limit legal recourse.

Illinois-Specific Provisions to Watch

  • +Biometric Information Privacy Act (BIPA), which is stricter than other states, requiring consent before collecting biometric data and providing a private right of action.
  • +Illinois is not a community property state, but instead follows an equitable distribution rule for assets.
  • +Illinois has strict non-compete enforceability standards as governed by common law and the Illinois Freedom to Work Act (820 ILCS 90/) that limits use of non-compete agreements for low-wage employees.
  • +The Illinois Human Rights Act (775 ILCS 5/) provides stronger protections against employment discrimination than federal standards, covering more categories of discrimination and applying to smaller employers.
  • +Illinois has its own unique Corporate Fiduciary Act (205 ILCS 620/), affecting financial institutions and their governance.

Regulations Tax Preparation Firm Must Know

Internal Revenue Code (IRC)

Governs all federal tax-related activities including tax preparation. Tax preparers must comply with the rules and standards defined by the IRS under the IRC.

Enforced by Internal Revenue Service (IRS)

Treasury Department Circular 230

Sets forth regulations governing practice before the IRS, including the duties and restrictions relating to tax preparers and standards of competence.

Enforced by U.S. Department of the Treasury

Gramm-Leach-Bliley Act (GLBA)

Requires tax preparers to protect the privacy of consumer financial information, specifically ensuring safeguards for client data.

Enforced by Federal Trade Commission (FTC)

State Board of Accountancy Regulations

State-specific regulations which may require registration of tax preparation firms, especially if they offer CPA services.

Enforced by State Board of Accountancy

Licensing & Insurance for Tax Preparation Firm

  • +Obtain a Preparer Tax Identification Number (PTIN) from the IRS to legally prepare tax returns for compensation.
  • +In some states, registration with the state's consumer protection unit or tax authority may be required.
  • +If offering CPA services, licensing as a CPA by the relevant State Board of Accountancy is necessary.

Recommended coverage: Errors and Omissions (E&O) Insurance · General Liability Insurance · Cyber Liability Insurance · Fidelity Bonds

Contract Pitfalls Specific to Tax Preparation Firm

  • !Scope of Services: Clearly defining the scope of work to avoid disputes related to unspecified tasks or services.
  • !Fee Disputes: Clear delineation of how fees are calculated and when payments are due can alleviate conflicts.
  • !Liability Limitations: Establishing limits on liability in the event of errors or omissions in tax preparation.
  • !Confidentiality and Data Security: Clearly defined obligations for protecting client data and the implications of data breaches.
  • !Dispute Resolution: Specifying the mode of dispute resolution (e.g., arbitration or litigation) and applicable law.

Frequently Asked Questions

01

Why does a tax preparation firm in Illinois need a specific Non-Disclosure Agreement?

Illinois tax preparation firms must comply with unique state laws such as the Biometric Information Privacy Act (BIPA) and the Illinois Consumer Fraud Act when handling client W-2, 1099 and amended return data. A generic NDA fails to address IRS Circular 230 duties, GLBA safeguards, or Illinois-specific remedies for data breaches. This document ensures confidentiality obligations survive termination and aligns with 740 ILCS 80/1 writing requirements so courts will enforce it against vendors or subcontractors.

02

What tax-related information should be listed as confidential in an Illinois NDA?

Define confidential information to include client names linked to Social Security numbers, depreciation schedules, estimated tax payments, amended return worksheets, and any biometric data collected for identity verification. Under BIPA and GLBA, these must be explicitly listed. The NDA should also cover IRS transcripts, workpapers prepared under Circular 230 standards, and internal pricing models to prevent competitors from using your Illinois tax preparation methodologies.

03

How long should confidentiality last for an Illinois tax preparation firm NDA?

For Illinois tax preparers, the confidentiality term should extend at least five years after the engagement ends, with trade-secret tax methodologies protected perpetually. This aligns with Illinois common law and federal tax return confidentiality rules under IRC §7216. The agreement must specify that obligations survive even after the client relationship terminates to mitigate identity theft risks and potential Illinois Consumer Fraud Act claims.

04

Can this NDA help limit liability for data breaches in Illinois?

Yes. By incorporating permitted disclosures only to employees bound by 820 ILCS 115 wage and privacy rules, return-of-materials clauses, and explicit remedies including injunctive relief, the NDA creates a strong defense against E&O and breach claims. Illinois courts look for clear contractual language referencing GLBA and BIPA compliance; this document provides it while satisfying the Statute of Frauds under 740 ILCS 80/1.

Non-Disclosure Agreement for Tax Preparation Firm by state

State laws affect what must be in this document. Pick your jurisdiction.

  • Florida
  • Georgia
  • New Jersey
  • New York
  • Ohio
  • Pennsylvania
  • Texas

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