Head-butting after divorce

[FEDUKE404]

Mr. and Mrs. A were happily married, and for several years I prepared their joint tax returns.

Mr. and Mrs. A are now divorced. The former Mrs. A is a long-term client, whereas Mr. A is "newer" (result of marriage).

The former Mrs. A wishes nothing tax-wise to be provided to Mr. A, including copies of their tax returns. (I informed her Mr. A could always get copies of all joint tax returns from the IRS upon request.)

What, if anything, am I obligated to provide to Mr. A if I receive such a request? Obviously I have things other than completed tax returns in my file.

(I'm not looking for a legal brief, just more a "have you encountered such a scenario yourself?" answer.)

Thanks!

FE

[Burke]

I usually inform such clients that Mr A is entitled to a copy of the MFJ joint tax return from me just as she would be, including supporting information, if asked.

[Bert73]

One of many divorce stories

My Mr A client had been my client for 5 years before the marriage. Mrs. A had a child from a previous marriage and 1 year after the marriage they had a child together. Two years after the marriage they were calling it quits.
After I showed Mr.A what their return would look like if they filed together(not yet divorced), they both showed up at my door. I should have left it alone. I thought it would be a win/win for both of them, but I turned out to be wrong. He kept all of the refund for himself. The following year she had her revenge, the divorce was final and she claimed both kids. ( I didnt do her return) But Mr. A came to me angry and hurt. I kept professional but couldnt help but thinking " Good for her."

[ChEAr$]

It's simple

Mr. and Mrs. A were happily married, and for several years I prepared their joint tax returns.

Mr. and Mrs. A are now divorced. The former Mrs. A is a long-term client, whereas Mr. A is "newer" (result of marriage).

The former Mrs. A wishes nothing tax-wise to be provided to Mr. A, including copies of their tax returns. (I informed her Mr. A could always get copies of all joint tax returns from the IRS upon request.)

What, if anything, am I obligated to provide to Mr. A if I receive such a request? Obviously I have things other than completed tax returns in my file.

(I'm not looking for a legal brief, just more a "have you encountered such a scenario yourself?" answer.)

Thanks!

FE

You are not obligated to furnish any copies to either spouse. No law says we
must furnish extra copies after the one copy is given over as stipulated.

[snowbird]

Not many details about the head-butting ... but just using the term suggests a possible conflict of interest. You need to look at Cir 230 section 0.29 Conflicting interests.

http://www.irs.gov/pub/irs-utl/pcir230.pdf

[FEDUKE404]

Copies & conflict of interest

Not many details about the head-butting ... but just using the term suggests a possible conflict of interest. You need to look at Cir 230 section 0.29 Conflicting interests.

http://www.irs.gov/pub/irs-utl/pcir230.pdf

Are you possibly saying that one should never prepare a joint tax return because of a potential conflict of interest issue??

You are not obligated to furnish any copies to either spouse. No law says we must furnish extra copies after the one copy is given over as stipulated.

My goodness, I routinely furnish additional copies of tax returns to clients (home loans/college FAFSA/"where DID I put that thing?") without ever giving a moment's notice to the absence of some law that compels me to do so. I would treat such as "good business practices," even at the expense of a few sheets of paper and some postage.

FE

[snowbird]

Are you possibly saying that one should never prepare a joint tax return because of a potential conflict of interest issue??

FE

It sounds like you now have 2 clients (Mrs A & Mr A) where you once had one (MR&MRS A.) They are currently butting heads. Is Mr A still your client after the divorce?
I read your post that you are currently the tax preparer for two clients that may have a potential conflict of interest (butting heads). That is where Cir 230 is involved.

[FEDUKE404]

Clarification on cranial interactions

It sounds like you now have 2 clients (Mrs A & Mr A) where you once had one (MR&MRS A.) They are currently butting heads. Is Mr A still your client after the divorce?
I read your post that you are currently the tax preparer for two clients that may have a potential conflict of interest (butting heads). That is where Cir 230 is involved.

Pardon the confusion:

Mrs A (formerly Miss A and soon-to-be same again in 2009) is my long-term client and has recently requested I do not make copies of old (joint) tax returns available to Mr A. As stated earlier, that point is kinda moot since Mr A can always get copies through other means, such as the IRS. Any "records" I have for their joint returns are de minimis, as I routinely return everything to the taxpayer to prevent my files (physical or electronic) from becoming enormous.

It is unlikely that I would prepare any future tax returns, especially now, for Mr A (long story - don't ask!!).

Problems could certainly arise as to "who paid what deduction" or "who claimed what income" issues and similar for 2008, and I would not care to be caught in any disputes were I to note a, shall we say, inconsistency there. Tax year 2008 for current Mrs A is likely to be MFS as divorce is not final and possible HOH issues do not exist. The possibility of a MFJ is extremely small in spite of some probable monetary disadvantages to both.

I guess my initial angst was how do I respond to any requests from Mr A. Unless I am missing something here, I would think anything related to their jointly-filed (past) tax returns would be fair game for him.

FE

[ChEAr$]

Except

Pardon the confusion:

(snipped for brevity....)

I guess my initial angst was how do I respond to any requests from Mr A. Unless I am missing something here, I would think anything related to their jointly-filed (past) tax returns would be fair game for him.

FE

Not quite so. Certainly a copy of the finished tax return, but if you happened to have retained a copy of her brokerage statement in your files, you couldn't give that to him
without her permit; or any copies of her original tax documents. And that would include
her W2 form.

[erchess]

Harlan

When you said that you didn't have to give second copies of returns to clients and you cannot give certain things belonging to one member of a now divorced couple to the other member without signed permission, that got me to thinking.

I wonder if you have one or more cites.

I wonder if you have a rationale that would explain what you said in light of Circular 230 Section 10.20.

I realize that only some if any of what the practitioner has is necessary for the production of future returns but if the former couple is being audited you would seem to need to give them both everything. That would in my view make it easier to always just give them everything. At the same time if I need to be aware of special rules when a couple is breaking or broken up, I would like to know it.

[ChEAr$]

cites?

When you said that you didn't have to give second copies of returns to clients and you cannot give certain things belonging to one member of a now divorced couple to the other member without signed permission, that got me to thinking.

I wonder if you have one or more cites.

I wonder if you have a rationale that would explain what you said in light of Circular 230 Section 10.20.

I realize that only some if any of what the practitioner has is necessary for the production of future returns but if the former couple is being audited you would seem to need to give them both everything. That would in my view make it easier to always just give them everything. At the same time if I need to be aware of special rules when a couple is breaking or broken up, I would like to know it.

Was tempted to say: "Cites? I don' t need no stinkin' cites!" (from movie Sierrr madre,
paraphrased.)

But seriously. I think it follows from Gramm leach Bliley... something or other, the privacy
act which says we have to inform our customers of our privacy policy. But maybe there
are more specific federal laws on the subject, too.

So MY privacy policy is to provide neither spouse at loggerheads with any original papers relating to tax return prep which belong only to the other party. Case in point is this couple the husband of which has securities. His year end statement each year doubles as substitute 1099 of course, but included in it is his year end positions in each security.
The wife only has need to see what's on tax return, cost/sales of stocks sold and dividends reported on schedule b. She has no right (unless he permits) to see everything.
Thank God I don't practice in community property states.

Another for instance. same case above. husband furnishes me his information for schedule c. After massaging the information, collating it, verifying, separating equipment
from supplies, etc (you know what i mean) the figures go onto schedule c and I retain a copy of what he gave me. This page she can't see, although she should be able to see what happened on schedule c.
By agreement I furnish each of them a copy of the return each year, only appending to respective copies and supporting W2, 1099r, etc. So he doesn't get a copy of her retirement 1099R or her W2 from current job.

Don't see what sec 10.20 of circular 230 has to do with anything. That relates only to furnishing of information to the IRS.

[DaveO]

Mr. & Mrs. M

I recently had a similar scenario such as FedDuke describes. Long time clients Mr. and Mrs. M., Mr. M drags his heals providing information for 5 years. Finally Mrs. M. tires of waiting and files MFS for all years claiming some but not all exemptions. She is entitled to refunds based on her separate income. I advise her at the time that I would be unable to assist Mr. M. in preparation of his returns.

Mrs. M. moves out and files for divorce. After a few months I receive letter from Mr. M’s attorney accusing me of withholding Mr. M’s tax information and alluding to dire and expensive consequences should I fail to turn over copies of the soon to be ex-Mrs. M’s MFS returns.

I respond by providing copies of “Authorization to release tax information to third parties” release forms and insisted on notarized signatures or that they sign in my presence. I haven’t heard anything for a couple of weeks since.

[JG EA]

...
I respond by providing copies of “Authorization to release tax information to third parties” release forms and insisted on notarized signatures or that they sign in my presence. I haven’t heard anything for a couple of weeks since.

This was for Mrs. M to sign, right?

[erchess]

Harlan

You are correct. I don't know how I got my numbers messed up but I was referring to Circular 230 Section 10.28. It may be that I made a simple typo.

[DaveO]

This was for Mrs. M to sign, right?

Actually both of them. I explained to the attorney that I couldn't even release Mr. M's information to them without a release.