There is a very sweet, hard-working couple at my church who paid a CPA to take care of their payroll taxes, etc. He was paid faithfully. The lady at my church just realized that her income taxes have not been filed since 2003, this CPA has all the paperwork and always took care of the returns in the past. Is he bound by some sort of ethics? When this lady tried to get her paperwork (after about a month of no answers, no returned calls and blinds drawn at the office) She was told she owes him money that she says she does not and can prove. Can he withhold her paperwork for money? I would really like to help this lady if possible, any help or suggestions would be very greatly appreciated!!
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Tax preparers are required to return original documents (W2, 1099, etc) to a client upon request. Any work papers the CPA may have generated are his and he does not have to return them. Your client could try contacting them again by registered mail and state in the letter if their documents are not returned, they will contact the state board of accountancy and file a complaint. Of course all this is based on the presumption that you have all the facts in this case - there are often two sides to every story. I'm not saying this couple would not tell the truth, but just that things like this tend to get ugly on both sides. -
Very True
That is very true, there are 2 sides to every story, that was great advice, thanks!!!Comment
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Circular 230
The IRS rules in Circular 230 are applicable to CPAs.
Section 10.28 explicitly requires a tax pro to return client records upon request.
If your client decides to send a strong letter to the guy, she may wish to cite that section in the letter.
The IRS has the authority to take disciplinary action against a CPA. Although the IRS cannot suspend or revoke the licensure issue by the state accountancy board, they can suspend or bar a CPA from practicing before the IRS. That means no representation at audits or appeals, etc.
I would probably help the client write the letter, although I probably wouldn't sign it. I would have the client sign it. If you're not comfortable actually providing the client with the text of the letter, you could simply print one page from Circular 230, to provide the client with the applicable citation, and maybe highlight it for her.
If the client is unsophisticated or uneducated, or can't write in complete sentences, or doesn't have a PC, it is sometimes better for a person to use plain and simple English rather than try to do something elaborate. A simple handwritten note to the CPA could just say: "I need my books and records back. This is my third request. If you don't send them back by xx/xx/xxxx, I plan to file a complaint with the IRS Office of Professional Responsiblity and with the accountancy board." And then simply attach that page from Circ. 230.
Sometimes something this simple actually works better than a fancy business letter with four paragraphs. It all depends on who you are dealing with...
BMKBurton M. Koss
koss@usakoss.net
____________________________________
The map is not the territory...
and the instruction book is not the process.Comment
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Seriously?
What happened?! Did she not get copies of returns? Was every year zero tax liability, and no taxes paid in, so she didn't realize because she thought CPA e-filed? I know people sometimes know nothing, but how could they NOT know their returns weren't filed? They own a business, too? Sorry, I'm not being mean, I just am amazed at this.Originally posted by Super Mom View PostIf you loan someone $20 and never see them again, it was probably worth it.Comment
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I would agree this story doesn't pass the "smell". Did she ask the CPA to prepare her income taxes each year, or just payroll?
Assuming the facts are correct, I wouldn't advise trying to work through the IRS. It would be much quicker to simply draft a letter to the Board of Accountancy or other State CPA licensing agency, fax a draft to the CPA, and simply tell him that if the documents aren't made available within 48 hours, the letter will be mailed. That should provide adequate motivation. If she hasn't paid for services, the CPA still cannot keep her original documentation hostage.Comment
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How about getting a POA and just making a phone call to start?Comment
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Of course, that would be the prudent way to start. I should have added that to my suggestion.Originally posted by Burke View PostComment
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This sounds like one of the "onion" cases, you just keep pealing away the layers. We had a fellow come in to start a construction business back in 2001. He incorporated and had us prepare payroll forms for him each quarter (he figured his own checks). We did the 941, 940, W-2, W-3 and state and local filings. We inquired about the corporate return the first year and got a noncommittal response. We assumed he was having someone else do it. Many CPA's don't do payroll so it didn't seem strange and we didn't press the matter.
So for all those years we continued to prepare the payroll reports until 2 years ago when he comes in with a failure to file notice on some payroll reports. Come to find out none of the payroll reports we prepared had been filed and none of the tax had been paid. He never prepared or filed his corporate return but had filed his 1040 using his W-2 which we had prepared. His employees filed with their W-2 forms. It took the IRS 6 years to figure out that no reporting was behind all those W-2's.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
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We, of course, are assuming the "CPA" is actually a CPA. Clients often assume that anyone who does any kind of tax work is a CPA.Originally posted by Zee View PostComment
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Regardless
Any person representing themselves as a "professinal" in business of preparing bookkeeping, acounting or tax returns, whether it be a tax preparer, CPA, EA, bookkeeper, can not hold "hostage" the original paperwork. Even if for non payment
The client can also file in small claims court and the judge will admonish the person being sued and demand that they release the paperwork.
I tried that once years and years and years ago before EA status!
The original papers are the property of the t/p-client.
SandyComment
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Originally posted by S T View Post
Agreed, but contacting the state board would do no good unless the person is subject to that board.Comment
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Agreed
Maybe t/p will have to become more agressive and file small claims action, as maybe there is no oversight board. Maybe the "professional" holds no licenses!
Again, maybe no one really knows the full story! Maybe the practioner, closed his offfice, is sick, left town, died, etc.
SandyComment
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Filing Now
Thanks!! These people got their paperwork. I'm filing these taxes now. It has been suggested that I mail each year seperately and let the IRS figure out what they need to and go from there. I was originally thinking about being proactive with "voluntary disclosure" and a letter or something, any thoughts?Comment
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Don't know how much these people are going to owe but I'd save the talking until you get to the point when someone is listening. Just file the returns for now. Once you know how much penalty is accessed you might be able to get some abated especially if they can pay the tax quickly.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de TocquevilleComment
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