HV Ken Posted March 30, 2012 Report Share Posted March 30, 2012 Potential new small business client (S-corp and 1040) who is very unhappy with current preparer. Called current preparer today to get her papers back and was told they already entered her data (it's now 3/30 and the S-Corp was due 3/15 - they never called her about extension even though she gave them her papers in early Feb - personally I think they are bluffing, but that's irrelevant to my post) and she owes them $1300 before they will give her papers back. I am reading Circular 230, and it says on p22: In general, a practitioner must, at the request of a client, promptly return any and all records of the client that are necessary for the client to comply with his or her Federal tax obligations. and The existence of a dispute over fees generally does not relieve the practitioner of his or her responsibility under this section. Seems clear to me that the current preparer has to return her papers whether she pays the bill or not, and then they can continue to bill her. Am I missing something? Never had to deal with this before. The one time one of our clients asked for their papers back, we just gave them to them. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 30, 2012 Report Share Posted March 30, 2012 She has the right to all her original documents back. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 30, 2012 Report Share Posted March 30, 2012 I would get permission on behalf of the TP and you call the other accountant directly, maybe there are other things the TP is not telling, for example there was missing information to prepare the return or they owe a balance that was not taken care of. Sometimes they forget to tell you important things like that. Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 30, 2012 Report Share Posted March 30, 2012 While MAS is correct that they sometimes (frequently?) leave out "insignificant details" like missing info, not responding to repeated requests by former preparer for specific items, etc., that does NOT relieve the Circular 230 responsibility. You could consider filling out a disclosure authorization and sending that to the former preparer, along with a letter quoting the Circular 230 requirement to return all original client documents (or a copy of that portion of C230, with a big circle around that part). The letter should be polite and respectful but clear that you expect them to fulfill their obligation while leaving you OUT of any disagreement with their (former) client. Good luck. Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 30, 2012 Report Share Posted March 30, 2012 Yes, the only thing worse than not getting the client's info from the former preparer might be the prospect of GETTING the client's info from the former preparer. We've all had varying experiences in this regard, but I can only think of one or two times I picked up a client who was having a dispute with the former preparer when things turned out well. More often than not, I came to regret having picked them up as a client and it became obvious why the old relationship soured. 2 Quote Link to comment Share on other sites More sharing options...
michaelmars Posted March 30, 2012 Report Share Posted March 30, 2012 i agree with catherine and once or twice i was in the same situation. Send the letter and cc at the bottom AICPA and NYS OFFICE OF PROFESSIONAL MISCONDUCT. Just those cc's should get you the papers. Quote Link to comment Share on other sites More sharing options...
HV Ken Posted March 30, 2012 Author Report Share Posted March 30, 2012 Thanks everyone. Should she be concerned if they bill her for time and/or the entire cost of the tax return? Or let them take her to small claims court? Quote Link to comment Share on other sites More sharing options...
michaelmars Posted March 31, 2012 Report Share Posted March 31, 2012 they might bill but it becomes a pissing match....he sues, she makes a complaint for somesort of malpractice. He has to answer it or notify his ins carrier.. blah blah blah, all over a small bill. I wouldn't worry about it. - not a legal opinion, just a practical one. she could also counter sue over the missed extension and so on and so on. 2x i billed in this situation [client leaving afte i did most of the work] once i collected and once i didn't but i never sued or did anything but send a few bills and statements till i dropped it. Quote Link to comment Share on other sites More sharing options...
jainen Posted March 31, 2012 Report Share Posted March 31, 2012 >>Send the letter and cc at the bottom AICPA and NYS OFFICE OF PROFESSIONAL MISCONDUCT.<< In my opinion, representing a client in a case like this is too close to practicing law. The client can file a complaint herself if she wants. Anyway, a professional messing up someone else solely on hearsay while competing for the same engagement? Stay away from that position. Generally I feel that if my client isn't comfortable with my work, it's best to stop the work. But I don't invest $1300 worth of my time on a single return, so I defer to whatever her engagement letter says. By the way, what does it say? 1 Quote Link to comment Share on other sites More sharing options...
michaelmars Posted March 31, 2012 Report Share Posted March 31, 2012 >>>>. By the way, what does it say?<<< that funny, i bet 90% of the time there is no engagemetn letter. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 31, 2012 Report Share Posted March 31, 2012 Or maybe the former preparer hasn't heard of Circ. 230 yet.... Quote Link to comment Share on other sites More sharing options...
Randall Posted March 31, 2012 Report Share Posted March 31, 2012 I'd back out of it. It's March 31. Tell the client if they've already done most of the work, make amends and try to get thru this year with them. Tell client to work with them, negotiate fee if possible. Come to me to review their work and for next year if they're unhappy with the preparer. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 31, 2012 Report Share Posted March 31, 2012 No body here does business on a hand shake any longer? 1 Quote Link to comment Share on other sites More sharing options...
jainen Posted March 31, 2012 Report Share Posted March 31, 2012 >>No body here does business on a hand shake any longer?<< No, we don't. And if the original post in this thread isn't enough to show you why not, I'll copy the link from Eli's post on the same day. It's a shame, but the financial services industry has rather knowingly destroyed the client trust it used to enjoy, all in the name of unbridled greed. Now we honest folks have to spell out exactly what we can do, what we can't do, and what the client has to do. >>http://news.yahoo.com/texas-jury-slaps-195-million-penalty-taxmasters-ceo-004001134.html Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 31, 2012 Report Share Posted March 31, 2012 >>No body here does business on a hand shake any longer?<< No, we don't. And if the original post in this thread isn't enough to show you why not, I'll copy the link from Eli's post on the same day. It's a shame, but the financial services industry has rather knowingly destroyed the client trust it used to enjoy, all in the name of unbridled greed. Now we honest folks have to spell out exactly what we can do, what we can't do, and what the client has to do. >>http://news.yahoo.com/texas-jury-slaps-195-million-penalty-taxmasters-ceo-004001134.html So for example, if you are going to prepare a simple 1040 and you are going to charge your client $50, you prepare an engagement letter? And for every year they come back? I know the orignal post was for a business and I know times have changed from when things were done with a hand shake, but don't get me wrong, an engagment letter pretty much puts in writing what is and whats not going to be done and what will be the fees, but some of us have clients that are old fashioned. I think in my case I will lose some clients if I have them sign an engagement letter, but I think it's a good a idea to have one in place for new business clients. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted March 31, 2012 Report Share Posted March 31, 2012 I instituted an engagement letter for all my clients in my personal practice. 165 sent and not one single objection. I have clients that are age 15 to 88, and income from $500 to $750K. If your clients would leave you because thay are not willing to allow you to protect yourself with an engagement letter, then the issue of how much they trust your professionalism, ethics and honesty comes into play. Quote Link to comment Share on other sites More sharing options...
jainen Posted March 31, 2012 Report Share Posted March 31, 2012 >>if you are going to prepare a simple 1040 and you are going to charge your client $50, you prepare an engagement letter?<< It really is no big deal to include a standardized letter with your organizer. There are plenty of examples around. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted March 31, 2012 Report Share Posted March 31, 2012 atx organizer has an engagement letter that i modify each year, but its a good starting point and doing it through atx makes it automatic. Mine is about 3 pages long and discusses fees, how and when i get info, their responsibilty for keeping records, fees, penalties if they want estimated vouchers for any amount not 100/110 of current year, etc. The few questions i got when i started i just answered with, its required and we need it for our files., never had an objection either. 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 31, 2012 Report Share Posted March 31, 2012 I've used an engagement letter for years that I put together from bits and pieces of a half-dozen or more samples available on the web, from folks in this group, and from other tax newsgroups. Never had anyone refuse to sign. Couple of small questions from the few who have actually read it. Separate and somewhat more detailed letter for businesses. Put a couple hours into customizing one in the off-season and it's pretty much reusable from year to year. My word _is_ my bond. Can't say the same for my clients, though - even if it's true - as I just don't know any of them well enough. 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted March 31, 2012 Report Share Posted March 31, 2012 Every client (besides my mother in law - but she doesn't pay, so she may not be a client) signs an engagement letter in my office. Every year. If anyone balks, they don't get a return. No one has ever balked. Tom Lodi, CA 1 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted April 1, 2012 Report Share Posted April 1, 2012 I admit I seldom used them, but I agree that they are a good idea, especially these days. And if a client questions it, you can also point out that it protects THEM as well as you, by spelling out what you are expected to do if they do what they are expected to do. Quote Link to comment Share on other sites More sharing options...
GeneInAlabama Posted April 1, 2012 Report Share Posted April 1, 2012 When do you get the client to sign the letter? If they are sitting in front of you when you prepare the return, do you give it to them before you start? If they drop the info off for you to do later, do you give them the letter at that time? If they mail the info to you, do you send the letter to them to sign before you start on it? It all seems very awkward. I know it's important, but after 32 years not using one, it is just hard to get started doing it. With most of my clients, I have being doing their returns for years. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted April 1, 2012 Report Share Posted April 1, 2012 I send a letter to each of my clients in January. I talk about the high points of new laws, and include the list for them to bring or send. I include the engagement letter with it. I use Microsoft Word to customize each letter with their name(s) and address on it. I state in my letter that without the signed form, I cannot prepare their return. I have had ZERO resistance. I format the letter to the client so the addresses show in a double window envelope. 1 printing, fold, stamp and mail. Quote Link to comment Share on other sites More sharing options...
bstaxes Posted April 1, 2012 Report Share Posted April 1, 2012 I also send the engagement letter (2) 1 for them and 1 for me, with the organizer if they need one and "Hi happy tax season letter" with updates or special interest items. Some times they send them back sometime they don't but they do sign them when they come for pickup. Quote Link to comment Share on other sites More sharing options...
Randall Posted April 2, 2012 Report Share Posted April 2, 2012 I think the engagement letter is one of those things, that if you don't have them, it can hurt you, but if you do have them, it doesn't help you. Quote Link to comment Share on other sites More sharing options...
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