a fellow tax preparer died last month (she was only 57). Yesterday, her daughter called me to ask "what is she supposed to do with her mother's client files" daughter is not a preparer so, has no intention of continuing her mother's business. I don't know what to tell her. but i'm thinking i should find out in case same thing happens to me, my daughter has no intention of picking up my business should i die.
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I religiously return all original docs to the client, so my files could presumably accompany me on the Viking ship.
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She should put them
in file boxes and save them!
It is impossible to predict all the various reasons why she or a client may need something from those files.
However, if she destroys them they can never be replaced!
In some cases it can be a matter of life or death to be able to retrieve something from those files.
I can give you a specific example, last year a client of mine called me.
He was being detained by immigrations.
He needed to able to prove immediately that he had been working and filing taxes in the USA for the last 10 years or he was to be immediately deported.
It is dificult, if not sometimes impossible to get copies of old tax returns from the IRS.
If you dont believe me, try it sometime.
I have NEVER discarded a tax return that I have prepared.
If I had not been able to produce copies of these tax returns for this client, he would have been deported.
Sometimes being deported is quite literally a matter of life and death, depending on where you are being deported to.
My advice is ALWAYS SAVE THE OLD TAX FILES.
You can decide on a case by case what to tell a client who is asking for them, ie, "I am only required to save them 3 years, I am not sure if I still have it or not, I can look for it but there would be a $100 retrieval fee as those files are in VERY DEEP STORAGE", or words to this effect.
Also, anytime someone asks me for advice as to wether something should be thrown away or not, I always say, "never". There is no risk in advising someone to keep the records. On the other hand, if you advise, "toss it", and they later desperately needed the info that you advised to toss, guess who the bad guy is?
Harvey LucasComment
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What's going to happen the deceased preparer's clients? If you were looking to gain clients, why not offer your services to them.Comment
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The preparer is required to keep the files for a given number of years. After that they can be destroyed. The preparer is also required to provide a copy of the return to the client...if the client doesn't retain their copy they can purchase a copy from the IRS. there is no need to maintain your client files forever. taxeaBelieve nothing you have not personally researched and verified.Comment
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The preparer mentioned in the OP is dead and past the reach of retention requirements.Originally posted by taxea View PostComment
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rg
i would have offered, but her clients are all out of town and i am in process of cutting down my clientelle as i would like to retire next yearComment
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Her business is not dead. If the daughter, for instance, sells the business, the buyer should maintain his/her client files from the prior business for the required period of time. You gotta think outside the box. taxeaBelieve nothing you have not personally researched and verified.Comment
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