I am in a panic - HELP _ kind of a legal question

[frazzled]

Situation:

Married clients, wife does not accept that her new SS benefits are taxable. After 2 months sitting in my drawer waiting for signatures, he showed up and told me he wanted to get his papers back and pay me for my time. He was going to take them somewhere else to get them done - he knew I did them right, but he had to live with his wife! He paid me my fee and signed the following paper that I whipped up on the spur of the moment:

"I, taxpayer name, have directed "my business name" not to file my Federal & State tax returns for tax year 2011. I am only paying them for their work done on the returns, we will not file the returns."

He gave me no issues or grief.

Fast forward to the following day, I had realized I forgot to give him his w-2 back, so I called and left a message apologizing and letting them know I could mail it or they could pick it up. Yesterday, she shows up to get the W-2 and then proceeds to "educate" me that her SS benefits are not taxable but then contradicts herself saying "this paper shows I have two years to pay them". Then she wanted the actual returns so she could paper file them. I told her I would have to re-do them for a paper file return, because additional documentation would have to be attached, because as a tax pro I have to file them electronically. Then she says , "I don't want to file them cause they are wrong." So, she was very confused and contradictory.

They were never given any copies of the prepared returns.

This morning, she called demanding the returns and saying her lawyer says I have to give it to them because that is what they paid for, the lawyer said I can't just charge for my time. I read to her the statement that her husband signed, she continued to threaten the lawyer action, I finally just said have him call me! I was getting nowhere with her.

I do not want to give them any completed copy of the return. Am I required to in this case? I thought the signed statement would cover me. Am I wrong? Have I opened mouth and inserted a stinky foot? Thoughts and opinions PLEASE!

Thank you very much

Very Worried,

Debbie

[frazzled]

Why does this crap wait for the last few days!?! :wall:

[RitaB]

Attorneys like to flex. If you were paid for your time, then of course you can bill for your time. What do they think they are doing when they sit in your deposition, texting another client, billing you both?

[kcjenkins]

The statement he signed should protect you just fine. Ignore her, and ignore the lawyer, who probably did not have the full story anyway, if he got his info from her !!!!!

[RitaB]

It was a great day when I realized that "my attorney said" carries exactly the same weight as "my hairdresser said".

[Margaret CPA in OH]

Prepare and add Form 8948, Preparer Explanation for Not Filing Electronically. She/they can then choose to paper file.

With my clients that refused to accept that their 29 year son was NOT a dependent, on advice of my liability insurance, I sent paper copies of the returns with instructions to sign 8879 so that I could efile. Of course, they did not return the signed form and I sent an invoice for preparation knowing full well that they had someone else file incorrectly.

[Margaret CPA in OH]

Here is the link in irs.gov. http://www.irs.gov/taxpros/providers/article/0,,id=223832,00.html

Explain paper returns

Even if you are an authorized e-file provider, clients for whom you prepare one of the returns identified above may choose to file on paper if the return will be submitted to the IRS by the taxpayer. As described in Rev. Proc. 2011-25, tax return preparers in this situation should obtain and keep a signed and dated statement from the client. Also, in this situation and in the cases of administratively exempt returns or returns filed by a tax return preparer with an approved hardship waiver, specified tax return preparers generally should attach Form 8948, Preparer Explanation for Not Filing Electronically, to the client's paper return.

[RitaB]

I do not want to give them any completed copy of the return. Am I required to in this case?

You did not charge for a return, so don't give them a return. You don't have to cough up a return just cause somebody came in your office, didn't pay for a return, and their attorney wants you to give them one.

[frazzled]

You did not charge for a return, so don't give them a return. You don't have to cough up a return just cause somebody came in your office, didn't pay for a return, and their attorney wants you to give them one.

He paid me "for my time" as he put it.

[jklcpa]

Perhaps this couple checked around and found that the H&R or the other big chain preparers would charge them a higher fee to prepare their returns than they've already paid to you, and now the wife is trying to get a return from you to file. They've probably already done that, received the same result as your return showed, and they, or the wife, have again demanded their documents back and refused to pay, this time under the pretense of the return being wrong.

I think you could ingor the whole thing and be done with it.

Or you could attach Form 8948 and also get the signed statement from them that they've requested you not file the returns electronically and give them a completed package. If you do give them a complete package, be sure to attach any W-2s and 1099s showing withholding, and any other required attachments. You might tell the wife that there will be some nominal charge for printing, assembly and signing the return since those functions were not included in the amount they already paid to you.

I would not simply give them a copy of the return if you go this route.

[Pacun]

There is nothing to be worried about. You did everything right and the attorney doesn't have the whole story. Do not provide any other service for this client and just tell their attorney that they wanted you to prepare a return incorrectly and that's why you charged for your time. Let the attorney know that you told the consequences of not paying taxes on their SS and fired them following circ 230.