Client balking at having copies of DL and SS cards in my file

[jklcpa]

From client's email:

I am not happy about copying them either. I have never had anyone ask me for these is this something new? Do you just need to look at them as the tax preparer or do the IRS expect a copy be filed with the e-return? Can you go ahead and proceed with the e-filing with just the forms? If you have to look at them, I can bring them by tomorrow when you are going to be home.

So can I just look at the cards and notate in my file that I verified that names, SSN, and DOB match? These are not strangers to me, but are people I've known since elementary school. These are higher income earners, no kids, no credits of any kind on the returns. Return has W-2s, a rental, Sch A, and home office.

[kcjenkins]

Yes, you can just look at the cards and notate in their file that you verified that names, SSN, and DOB match.

[Jack from Ohio]

From client's email:

I am not happy about copying them either. I have never had anyone ask me for these is this something new? Do you just need to look at them as the tax preparer or do the IRS expect a copy be filed with the e-return? Can you go ahead and proceed with the e-filing with just the forms? If you have to look at them, I can bring them by tomorrow when you are going to be home.

So can I just look at the cards and notate in my file that I verified that names, SSN, and DOB match? These are not strangers to me, but are people I've known since elementary school. These are higher income earners, no kids, no credits of any kind on the returns. Return has W-2s, a rental, Sch A, and home office.

Some people are too paranoid for their own good. This comes from listening to the media instead of using one's own mind and intellect.

[JohnH]

Jack's right - too paranoid for their own good.

Interesting thought process on the part of the client. Here are my W-2 forms (WITH MY SS#, BTW), my home mortgage information,. a rundown of every penny I have invested drawing dividends, interest, capital gains, etc. Not to mention my medical bills and whether I'm a cheerful giver or a skinflint.

So I'm giving you more information about my finances than anyone in the world (aside from possibly my spouse), but I just don't feel right knowing you have a copy of my Social Security Card and my Driver's License.

[kcjenkins]

Sure it's silly, but the question was not about that, it was about what the preparer had to keep. Judy is, I am sure, as aware as we are that the client is being paranoid.

[jshtax]

I have never looked at a DL or SS card. Why would I need to?

[Jack from Ohio]

I have never looked at a DL or SS card. Why would I need to?

If your office is ever compliance audited, you must be able to prove the identity of every taxpayer you file a return for. Also, prove that every child in a family that receives EIC is legitimately eligible with proof of residence, age, etc.

Just ask a preparer that has been compliance audited....

[jshtax]

I might have 3-5 client out of 1,000 that get EIC and that is usually due to depreciation write offs. I had a compliance audit for 8879 and they just asked we have both signatures for married people or get the signature emailed or faxed to us for those that do not come in for their meeting. Not once did the compliance agent ask to see proof of how I knew who the people were. Where in circular 230 does it say I have to keep a proof of the people I do work for? Last I checked I was only required to keep a list of the people I do work for and their SS #.

[jklcpa]

Jack's right - too paranoid for their own good.

Interesting thought process on the part of the client. Here are my W-2 forms (WITH MY SS#, BTW), my home mortgage information,. a rundown of every penny I have invested drawing dividends, interest, capital gains, etc. Not to mention my medical bills and whether I'm a cheerful giver or a skinflint.

So I'm giving you more information about my finances than anyone in the world (aside from possibly my spouse), but I just don't feel right knowing you have a copy of my Social Security Card and my Driver's License.

I agree with you John and Jack. The funny and aggravating thing was that she sent other docs with sensitive info to me by unencrypted email, but didn't want to send the cards. After I explained that it was a compliance issue and helped cut down on fraudulent tax returns, and the penalties assessed on preparers, blah, blah, blah, she sent them right away by encrypted email.

She was a new client this year, and will be a good client once I get her trained. She asked a lot of good questions, and part of those came because the preparers she'd used in the past either weren't very good or were loose and sloppy.

[MsTabbyKats]

Judy....how would you feel if someone you've known since elementary school asked you to prove you were you?

:)

[JohnH]

Can't speak for Judy, but here's my take on it.

If they were providing a service regarding sensitive financial information, I'd conclude they were trying to comply with some sort of government requirement designed to protect them or me. I'd assume they have sense enough to know who I am or else I wouldn't be doing business with them in the first place, so there must be a logical explanation.

[jklcpa]

Judy....how would you feel if someone you've known since elementary school asked you to prove you were you?

Just what John said. It's a compliance issue and meant to cut down on fraudulent returns. I've known many of my clients for 30 years or more. One client I've known for 50 years, she's mom's age and her daughter and I went through school together. In fact, she and her late husband grew up with my parents, she was a teller in a local bank.... All have understood the request without having a problem with it.

Like I said, I think the former preparers weren't very good based on what she said and some things I saw on her prior returns. Because they'd never asked, she wondered why the need. I explained and her hesitation vanished.