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Terry D EA

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I filed (by snail mail) an amended 2019 1040X for a client in April. An error with the 500.00 other deduction was found. Amending the return changed from a balance due to a refund. No much money but that's not the point. My client received a bill from the IRS for the tax due from the original filing. Once the amendment is processed, the tax due plus penalties will disappear. Normally, I would have told any client to pay the tax due to avoid penalties and interest and wait for the amendment to process for the return. This client did not want to pay so here we are. I contacted the IRS in August to see if the amendment had been received and if they had any record of it. The agent responded yes it was in processing and assigned to a human on Aug 28th. Told to allow 15 weeks. This client received a bill showing additional interest. Once again, I called the IRS PPL and the agent told me the same thing the amendment is still processing and for the client to disregard the bill because it will wash out  and the refund will be issued. So far no problem. But... here is my concern. I have my notes that I maintain in the doc cab of Drake. This client wants copies of my notes to prove I have contacted the IRS and wants me to put in writing that I and the IRS agent advised them to ignore the bills. The client sent me a text message with this request and I told them because of what it appears their intentions are, I have no legal obligations to provide my work or notes. This sounds like the client will say that when and if trouble arises, that I as their preparer and the IRS instructed them to ignore the bills. Would any of you give the client a copy of your notes?

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Because of the tone of the text message and what they may be implying, I considered contacting my E & O insurance as to how they would suggest I handle it. I did the 1040X pro-bono cause I took the blame for leaving the dependent off of the original return due to lack of information. I have not charged anything to handle this at all. Firing them is something that is already in the forefront of my mind.

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1 hour ago, Catherine said:

Looks to me like they're looking for someone to toss under the bus when (in their mind) the feds come after them.  They don't believe what you tell them, and are planning to blame you.  And you're thinking of giving them information to aid those plans, why?

No not at all. That is what I am trying to avoid. The only thing I plan on giving is the opportunity to seek help from someone else. I know I've done nothing wrong at all but I don't need them making something out of nothing. Never put anything in writing that could even remotely put a rope around your neck.

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What type of "trouble" is the client expecting?  $5 per month (or less) of combined interest & penalties on the unpaid balance, which are eventually going to be wiped out?   Sometimes the least profitable clients create the biggest headaches, I suppose because they don't have anything important going on and thus have plenty of time to obsess over the insignificant stuff.  Personally I wouldn't give them any explanation,  nor would I inquire or speculate with them about their motives.

I'd just tell them the info they want will not be forthcoming.  End of discussion. 

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I am kinda on the other side of this.   If the client wants to know when and who you talked to at the IRS, just tell them.   By acting like you have something to hide, you fuel their concerns.   I would "dummy down" the notes if they are very detailed.   Change to something like "Spoke to Mr. West ID#1000XXXXX on xx/xx/2020 concerning client 1040X.   Mr. West confirmed that IRS is still in backlog and that interest and penalties will clear up when 1040X processed".  And that is the truth, so why not put it in writing.   What is he going to do, sue you?   Wait till he sees the backlog at the courts because of Covid.   He will get his refund, and the next 3 or 4 refunds, long before he gets a hearing.

Sometimes, people just don't trust anybody and they are looking for a reason to be upset, especially now.   If you give him the notes, or the summary version of the notes, the problem goes away.

My humble opinion.   Your practice, your decision on how to proceed.

Tom
Modesto, CA

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Now, I have been assuming that @Terry D actually DID provide that information to the client, at the time of the calls.  Perhaps not in that specific detail, or in that detail but by phone instead of email.  (I frequently email a client telling them that I spoke with the IRS today, and they said X, and leave off the agent's name and number.)  It was the wanting copies of the specific notes to "prove" the contact and the recommendations that set off my warning bells.

If someone just needs reassurance, that's one thing.  But when they are asking me to "prove to them" that I contacted the IRS that's different.

For the first, I'll refer them to the original email, or review my original call with them.  I'll reiterate the backlog and maybe even send a link to a press release talking about letters going out in error.  But as soon as a client wants me to put in writing something that "proves" I did something for them, my radar goes off like tin foil in a microwave.

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Okay, I love the discussion on this. To address what Catherine has said, yes I reviewed the conversions from the IRS with the client via telephone. I offered a brief written summary as JohnH suggested. The client said there was no need. After an hour or so had gone by, the client then asked for not only the summary but wanted me to add to the summary that I ask their tax preparer advised them to ignore communications from the IRS regarding this case. That I never did and only repeated what the IRS agent stated. That is what has raised the suspicion on my part. Also, that gave me the rear tire feeling from the bus. Now, after all of this, I am considering again what JohnH suggested to give the summary without anything that indicates any input from me. Maybe that will satisfy the client.

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Maybe you could tell them "I've given you all the information you need.  What you do with it is your responsibility."  🙄 

My guess is that they are going to ask you to pay if they get a notice of $25-$50 of interest/penalty (before the eventual adjustment back down to zero).  Personally, I might be inclined to pay the $25-$50 anyhow, provided they promise not to initiate any further contact and not bother me any more. 🤣

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TerryD, tell the client to call the IRS himself!  Give him the date the original was filed and the amendment, and tell him to ask why he is still getting bills.  Then he can have it from the horse's mouth.  More often than not, I have the clients call instead of me when it's not a complex notice because I do not have the time to wait on hold for half the day.  I have a hunch, though, that maybe your client can't quite substantiate that extra deduction and fears it might be rejected.  Why else would he be looking for an excuse to blame you?  Warn him that IRS doesn't have to accept amendments, but you won't know if they do or don't until they process the return.

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I would resend my prior emails to the client. If some or all of my client communication had been via telephone, I'd email a list of dates we talked via telephone "as a reminder of what he already knows."

In a separate email, I'd suggest client call the telephone number on his latest IRS notice to hear the IRS response for himself.

If I received any further requests from client, I'd call my E&O carrier to ask what they want me to do.

I would almost certainly fire the client, but would consider the timing so it doesn't appear as retaliation for his threats or for a lawsuit if it happens. In normal times, I would say wait until the amendment is processed, but that could be after next tax season, so no to that.

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