mcb39 Posted July 10, 2007 Report Share Posted July 10, 2007 :huh: What are the moral and ethical ramifications of preparing tax returns and giving tax advice to both halves of a divorced couple who, as a married couple, have been long-term clients? If there are any, how do you decide which one you owe your loyalty to? I want to think that the privacy issues to which we are committed should be adequate; but can foresee some discomfort arising from this type of situation. Comments? Quote Link to comment Share on other sites More sharing options...
Wayne Brasch Posted July 10, 2007 Report Share Posted July 10, 2007 What are the moral and ethical ramifications of preparing tax returns and giving tax advice to both halves of a divorced couple who, as a married couple, have been long-term clients? If there are any, how do you decide which one you owe your loyalty to? I want to think that the privacy issues to which we are committed should be adequate; but can foresee some discomfort arising from this type of situation. Comments? I have three such couples as you describe here. All of them involved with me knows that I will keep their individual situations away from the other party, I believe that is our duty both from an ethical and moral viewpoint. So far we have all gone through about three tax seasons since they split apart their marriages and I am still preparing all of their separate returns and making sure their personal information is between them and me-not to be shared with their ex's. Wayne Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted July 10, 2007 Report Share Posted July 10, 2007 Marilyn, the main problem arises in the year of the divorce. In later years, as Wayne said, it's mainly a matter of making sure you do not share anything from one side to the other, just as with any two unrelated clients. Unless, of course, there are issues over who claims the child, etc. But in the year of the breakup, it is impossible to advise them both without some ethical conflict between what is best for one vs the other, and that is why some preparers simply will not do both returns. I will if the issues are simple and both of them understand the tax effects of their decisions. But it can be a problem, especially where they are 'in the process' at year end, and it may be that what is best for H is not best for W, or vice versa. Quote Link to comment Share on other sites More sharing options...
jainen Posted July 10, 2007 Report Share Posted July 10, 2007 >>In later years, as Wayne said, it's mainly a matter of making sure you do not share anything from one side to the other, just as with any two unrelated clients<< I think problems are far more likely with family members than unrelated taxpayers. And once a problem does arise, it may be impossible to resolve ethically. For example, suppose your client wants to claim 12 months alimony paid, but you already know that three months were missed. Under Circular 230 you MUST resolve the inconsistent information you have, but you can't divulge such information without violating the other client's rights. And you can't even get permission, except in an unenforceably general way, without confidentiality problems! Quote Link to comment Share on other sites More sharing options...
mcb39 Posted July 10, 2007 Author Report Share Posted July 10, 2007 I like all of your answers. However, only Wayne actually said that he accepted both halves of the whole. If you decide to send one "down the road"; how do you decide which one and what reasons do you give? I have handled these types of situations in the past without problems. But, I have one looming on the horizon that could be difficult, even though they are both worthy clients and both feel entitled to my advice and assistance. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted July 10, 2007 Report Share Posted July 10, 2007 I like all of your answers. However, only Wayne actually said that he accepted both halves of the whole. If you decide to send one "down the road"; how do you decide which one and what reasons do you give? I have handled these types of situations in the past without problems. But, I have one looming on the horizon that could be difficult, even though they are both worthy clients and both feel entitled to my advice and assistance. We have only had one situation where the taxpayers did not resolve for us which spouse would stay with our office, and in that case since we have two full-time preparers I took one spouse while the other preparer took the other spouse and we were careful not to discuss the returns with each other. In a case where that is not an option, I would be inclined to explain to both of them that I could not represent them separately without a conflict of interest and therefore recommend that they each get separate advice from someone else. It is easier to show both of them the door and remain impartial than to chose one, IMO. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted July 10, 2007 Report Share Posted July 10, 2007 If you decide to send one "down the road"; how do you decide which one and what reasons do you give? I think you just have to choose, no matter what basis you use. You may choose to keep the one you like the best, personally, or you may choose to keep the one with the more expensive return, or you may simply toss a coin. But either way, you can then recommend someone you trust, to the other person. But if there is a conflict, you have to protect yourself, and your reputation, in order to be fair to yourself and your family. When it comes down to it, there is always a way to make the choice, once you realize that a choice must be made. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted July 11, 2007 Report Share Posted July 11, 2007 I wonder if its ethical for me to still do my ex's return....of course he keeps trying to give me his charitable contributions as 'SALY' and I won't accept it... Quote Link to comment Share on other sites More sharing options...
Bart Posted July 11, 2007 Report Share Posted July 11, 2007 I wonder if its ethical for me to still do my ex's return....of course he keeps trying to give me his charitable contributions as 'SALY' and I won't accept it... Ok, I'll show my ignorance and ask, what is 'SALY'? Quote Link to comment Share on other sites More sharing options...
joanmcq Posted July 11, 2007 Report Share Posted July 11, 2007 Same As Last Year Quote Link to comment Share on other sites More sharing options...
mcb39 Posted September 18, 2007 Author Report Share Posted September 18, 2007 What are the moral and ethical ramifications of preparing tax returns and giving tax advice to both halves of a divorced couple who, as a married couple, have been long-term clients? If there are any, how do you decide which one you owe your loyalty to? I want to think that the privacy issues to which we are committed should be adequate; but can foresee some discomfort arising from this type of situation. Comments? Mercy me! Just got a call from another one. Together for five years; married for 8 months and getting divorced. She didn't think he should have told me they were getting divorced; but now she needs info for her attorney. I assured her that all is confidential and I won't discuss him with her or her with him. :mellow: Quote Link to comment Share on other sites More sharing options...
jainen Posted September 18, 2007 Report Share Posted September 18, 2007 >>I won't discuss him with her or her with him.<< I don't think that's good enough. I mean, how can you even tell what is her information and what is his? That is one of the main reasons they need attorneys and a judge, neither of which are you. For example, if the divorce is not final by the end of the year, how can you advise her whether MFS or MFJ is better without considering the spouse's income? And generally how can you be sure that a position on one return won't have a negative impact on your other client's return? Pick one. Use any criteria you want, but just pick one. Quote Link to comment Share on other sites More sharing options...
JohnH Posted September 18, 2007 Report Share Posted September 18, 2007 Marilyn: If you're having trouble deciding which one to choose and they are both equally desirable as a client, why not tell them they must decide which one will continue with you? If they refuse, then tell them the only way you can prepare both their returns would be if both of them are present at all meetings or discussions, and both will be a party to any advice you give the other. I'll bet that requirement will cause one of them or both of them to go somewhere else. Whatever they decide, you win, because you're better off with either: 1) one of them or 2) neither of them. Quote Link to comment Share on other sites More sharing options...
jainen Posted September 18, 2007 Report Share Posted September 18, 2007 >>both will be a party to any advice you give the other<< That's really the only way, and not just ethically. Remember that these two lovers are in litigation. The lawyers are looking for anything with a hint of trouble and a dollar sign -- and Exhibit #1 is the tax return you prepare. Do you really want Exhibits 1 & 2? Quote Link to comment Share on other sites More sharing options...
mcb39 Posted September 19, 2007 Author Report Share Posted September 19, 2007 >>both will be a party to any advice you give the other<< That's really the only way, and not just ethically. Remember that these two lovers are in litigation. The lawyers are looking for anything with a hint of trouble and a dollar sign -- and Exhibit #1 is the tax return you prepare. Do you really want Exhibits 1 & 2? Since I prepared their joint return last year when they had only been married a few months, I will have Exhibit 1. The reason she called is because she moved out and she wants a copy of that return for her attorney. It is just as much hers as it is his, but if he refuses to give it to her, I feel that I should, for a copy and fax fee. I am pretty sure she will go her own way afterward as she never was a client of mine before they married. I don't intend to give advice to either of them. Their income is pretty clear-cut. She is employed; he is self-employed. There is no Real Estate nor are there children involved. Of course, it IS all about money. Thanks for the input. As he is the son of a friend and client, there is no question as to which one I will keep. Quote Link to comment Share on other sites More sharing options...
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