Ethics III

[Bees Knees]

Here is the third scenario Paul Roberts from TheTaxBook posed to us Thursday evening at the Minnesota EA monthly meeting.

A 92-year-old taxpayer who has been a client for 30 years is showing signs of inability to handle personal financial affairs. Information provided by the client during the tax interview indicates that thousands of dollars have been sent to overseas and Canadian lottery scams. On one occasion the client gave bank routing numbers and account numbers to a stranger over the pone. The elderly gentleman’s son is also a client of mine. I am torn between feeling responsible for alerting the son to the deteriorating condition of his parent and my responsibility for respecting the privacy of a client. I have urged my client to share with his son the letters, phone calls, etc., from these scams, but he apparently is not doing so. There is no court-appointed guardian, and the client has not committed any crime. Is there anything I can do?

[Bird Legs]

This exact scenario

happened to one of my clients. He sent approximately 230,000 overseas.

What I did was call the church he belonged to and find who was close to him in
the church. The name of an attorney was given to me and I called. The
atorney said he was aware of the situation and thought about having himself court
appointed to handle the clients financial matters.
Secondly, I called the local FBI office and told them what was going on.
Thirdly I called his son who lived about 250 miles from his dad.
Did not tell them anything about how much money the client had, just that
he was sending a lot of it overseas.
The son came in and took his father back home with him, then later, when
required, placed his father in a nursing home. Father is still living and his son his
handling all financial matters for him.
In this instance did I do the right or wrong thing?

[Bees Knees]

In this instance did I do the right or wrong thing?

Cast your vote. In a day or so, I will give you the answer.

Armando, this time, please let everyone vote before you start to give away answers!

[Bees Knees]

BTW, this is one reason for all the lurkers out there to register. The system won't accept your vote unless you are registered and signed in.

[veritas]

This one is almost identical to the continuing ed for my securities license covering ethics I had last week.

Which by the way was administered by Prometric. It was fun because after 30 minutes or so into the questions we lost power. They don't have battery backups on their computers. Had to start over.

[Armando Beaujolais]

Armando, this time, please let everyone vote before you start to give away answers!

The answer is.....

...wait, the phone's ringing.

[fliszt]

yes

you did the right thing Bird Legs. It is exactly what I hope I would have done. Yes we all have the duty to keep our clients information private, but there comes a line where I feel (right or wrong) we must try to cross over. If I felt a client husband was battering his wife, I would also phone authorities and report. A crime is a crime and we have an ethical duty to not only God, but also to our collegues and IRS to stand up. Sending $ overseas or anywhere else that is a scam I feel is a crime and should be reported to not only the client's relative but also authorities.
Larry M.

[Oxtrainer]

Poll III

I believe notifying the family is the ethical thing to do however I doubt that it is the
legal thing. I would be interested in hearing more of this from a legal standpoint. Have
any lawyers out there? I voted to notify the family.

[WhiteOleander]

Well, I haven't decided how I want to vote. I don't like the choices.

Here in Texas we have "Elder Abuse" laws. If you think an elderly person is being abused, you are to report that to a special dept in the Sheriff's dept. Just like reporting child abuse.

So, I believe that the scammers may be commiting elder abuse. I think I might be required to report it.

[DTS]

Elderly clients

This diminished capacity story is all too familiar to me with the exception of lottery tickets.

To avoid a very long story, I will say I did not interfer, upon the wishes of my client, but when one of her daughters called to check on the status of returns, that's when I provided her with the circumstances. I only did this knowing her mental state had gone downhill. She had her tested for competancy, took over her affairs and everything is much better, at least, from a care standpoint.

I strongly feel I should have intervened long before I did and would have regretted my decision to stay out of her affairs if something terrible had happened to her.

Right or wrong, I feel I did the right thing, just wish I had done it sooner.

Dennis

[Bees Knees]

So far it is unanimous. Is that because nobody dares to go against the common consensus? Or does the right answer seem obvious this time? Ethics I had a high percentage of correct answers. Ethics II had a very low percentage of correct answers. Is there a pattern? Or is this a trick question?

[DTS]

Trick?

I thought about that when I read the question carefully. It's worded like he could do with his money what he wanted, but then you threw in "inability to handle his affairs".

I went with the latter. I'm assuming there's a mental condition here. Maybe not!

Where's Armando? Is he off that darn phone yet?



(I'm just teasing. I want the poll to run its course)

[WhiteOleander]

I believe there is an exception for releasing info about a client if person #2 is a relative and it would not be adverse to your client to release such info.

So, in this case, you are not actually releasing any tax info. And it is the client's son. And it is not adverse to your client. So, it would be OK to contact the son.

[jainen]

Adult Protective Services

>>there is an exception for releasing info about a client if person #2 is a relative and it would not be adverse to your client<<

Actually, relatives are the MOST problematic issue of confidentiality. Naturally the heir is not going to appreciate money going to charity or frivolous pursuits like gambling. You do NOT have the right to tell him about your client's financial activities just because in your limited annual review you noticed things you don't like.

If you think your client is being cheated or abused, report it to the professionals in Adult Protective Services.

[S T]

Parallel

Actually like Veritas, this scenario, is very similar to one on my Calif Insurance Agent's Ethics Test, that we now have to take. The one that I completed was Sendior Market Ethics. Again we have to abide by disclosure rules.

In that test the answer was that it was not ethical for us to pass the information on to the client's family, but should rather contact the client's attorney if there was one, or refer the family member to seek Attorney/Legal assistance. It was "unethical" for us to contact the Family or discuss with a Family Member. The matter should be determined by the court system for evaluation of any cognitive disorders and competency and then if determined the court would appoint guardianship or conservatorship.

Question, if the client/taxpayer had a Financial Power of Attorney that named a family member, then would we be able to share the taxpayer's information or at the very least express our concerns about what we might uncover during the tax interview process?

Another add on to the engagement letter?

Question, if the client/taxpayer had no Financial Power of Attorney, but you as a Tax Advisor knew that the client/taxpayer had an Attorney relationship, could you contact the Attorney and express your concerns based on the information gathering? Or could you advise the Family Members that they might want to contact an Attorney?

Question, are we allowed to contact the Regulatory Agencies, such as Elder Abuse, local police or FBI.

Question, if none of the above, then what would the appropriate action be? Some of us as tax advisors have a long standing relationship not only with the immediate client/taxpayer in question, but with the other members of the family. Would it not be prudent to alert another responsible family member if you uncovered something that was amiss and not quite right? If you advised the responsible family member that maybe they should talk to Dad/Mom, etc about their finances or offered to assist, and not divulge any particular information would that be within the scope of maintaining confidentiality and not breaching the "ethics".

Seems this would be not only an "ethics" issue according to Circ 230, but also a moral issue to assist to protect those that can not protect themselves from predatory scams!

Sandy