Non-Disclosure Agreement
Protect client tax data with a Texas-specific non-disclosure agreement for tax preparation firms. Complies with GLBA, IRC, and Texas Business & Commerce Code to prevent E
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Tax preparation firms in Texas frequently encounter situations where sensitive client information—W-2 forms, 1099s, depreciation schedules, estimated tax calculations, and amended return data—must be... Read more
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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:
"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.
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.
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.
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.
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.
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.
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.
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.
9.1 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.
Receiving Party shall implement and maintain administrative, technical, and physical safeguards for client tax information as required by the Gramm-Leach-Bliley Act (15 U.S.C. § 6801 et seq.) and the Texas Business & Commerce Code provisions governing disposal of business records containing personally identifiable information. Any destruction of documents or electronic media must follow IRS Publication 4557 standards and Texas data-breach notification timelines. In the event of suspected unauthorized access, Receiving Party must notify Disclosing Party within five business days and cooperate fully in any required IRS or Texas Attorney General reporting. These obligations survive termination of the engagement and any at-will employment relationship.
Receiving Party warrants that any individual accessing Confidential Tax Information holds a valid Preparer Tax Identification Number (PTIN) and will adhere to the due-diligence and competency standards prescribed in Treasury Department Circular 230 § 10.34 and § 10.35. Receiving Party shall immediately notify the Tax Preparation Firm of any IRS inquiry or disciplinary proceeding and shall indemnify the Firm for any penalties assessed under the Internal Revenue Code resulting from the Receiving Party’s failure to meet Circular 230 obligations. This warranty is a material term of the agreement and cannot be disclaimed.
If the Receiving Party is a Certified Public Accountant licensed by the Texas State Board of Accountancy, such party additionally covenants to maintain compliance with all rules and regulations promulgated by that Board, including those governing client confidentiality and conflicts of interest. Any disclosure of tax information that would violate the Texas CPA Code of Conduct shall constitute an immediate and incurable breach of this Agreement. The parties acknowledge that this NDA is ancillary to the engagement letter and satisfies the requirements of Tex. Bus. & Com. Code § 15.50 for enforceability in the context of Texas professional services.
In recognition of the high risk of Errors and Omissions liability faced by Texas tax preparation firms, any claim for damages arising from an alleged breach of this Agreement shall be limited to the amount of insurance coverage actually available under the Firm’s professional liability policy, provided that the Receiving Party has fully cooperated in the defense. This limitation does not apply to willful misconduct, gross negligence, or violations of the Gramm-Leach-Bliley Act or Circular 230. The parties agree that this provision is reasonable under Texas law and does not violate public policy.
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: ___________________
Tax preparation firms in Texas frequently encounter situations where sensitive client information—W-2 forms, 1099s, depreciation schedules, estimated tax calculations, and amended return data—must be shared with independent contractors, software vendors, or seasonal staff. A breach of this data can trigger IRS penalties under Treasury Department Circular 230, substantial Errors and Omissions liability, and identity theft claims. In one concrete scenario, a Houston tax preparation firm was sued after a subcontractor inadvertently emailed a client's full financial package containing SSN and banking details; the resulting class-action litigation cited violations of the Gramm-Leach-Bliley Act and Texas Business & Commerce Code privacy disposal rules. Our Texas-tailored non-disclosure agreement for tax preparation firm in Texas addresses these risks head-on by incorporating strict data-handling obligations aligned with Texas at-will employment doctrines and the Texas Business & Commerce Code § 26.01 Statute of Frauds requirements for written agreements. It limits your exposure to DTPA consumer-protection claims, clarifies return-or-destroy protocols for all client tax documents, and includes enforceable remedies that survive termination. Whether you are onboarding a new preparer with a PTIN, partnering with a CPA licensed by the Texas State Board of Accountancy, or integrating cloud-based tax software, this NDA ensures your firm remains compliant while safeguarding proprietary client lists, pricing models, and internal audit methodologies. Protect your reputation, avoid costly IRS sanctions, and maintain the trust essential to a thriving Texas tax practice.
Beyond the standard non-disclosure agreement sections, this template adds fields specific to Tax Preparation Firm:
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.
Breach of Confidentiality
Implement and maintain Data Protection Policies, comply with GLBA requirements, and use confidentiality agreements to protect client data.
For this non-disclosure agreement to be legally valid:
Common mistakes to avoid:
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
Recommended coverage: Errors and Omissions (E&O) Insurance · General Liability Insurance · Cyber Liability Insurance · Fidelity Bonds
Texas tax preparers handle highly regulated data under the Internal Revenue Code, Treasury Department Circular 230, and the Gramm-Leach-Bliley Act. A generic NDA fails to address Texas-specific risks such as DTPA claims or the strict privacy disposal requirements of the Texas Business & Commerce Code. Our form includes industry-specific definitions for W-2, 1099, and client deduction data, ensuring enforceable protection when sharing information with contractors or vendors.
The agreement explicitly selects Texas law per Tex. Bus. & Com. Code § 26.01 and incorporates at-will employment principles from Tex. Lab. Code § 21.051. It requires PTIN holders and any CPA licensed by the Texas State Board of Accountancy to acknowledge their separate regulatory duties under Circular 230, creating a layered compliance framework that survives termination and reduces E&O exposure.
Confidential information is defined to include all client tax returns, supporting schedules showing deductions and depreciation, estimated tax payment records, amended returns, and any data obtained during preparation. Exclusions follow standard trade-secret law but exclude any information already lawfully in the public domain or independently developed without reference to the client's IRS filings.
Yes. Because Texas is an at-will employment state, the NDA provides additional consideration when signed at hiring or engagement. It meets the 'ancillary to an otherwise enforceable agreement' test under Tex. Bus. & Com. Code § 15.50 and binds all receiving parties—whether W-2 employees or 1099 contractors—who may access protected tax data.
The agreement authorizes injunctive relief without bond, actual and consequential damages, and attorney fees. These remedies are expressly tied to the firm's obligations under GLBA and Circular 230 so that any breach also constitutes a reportable event to the IRS, strengthening the firm's legal and regulatory position.
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