Sale of tax business

[Black Bart]

If you sell your tax business, are you required to get a disclosure form signed by every client whose files go to the new owner?

[Jiggers]

Disclosure

If you sell your tax business, are you required to get a disclosure form signed by every client whose files go to the new owner?

Yes, you have to have a disclosure form from each client.

Suppose you sell your tax business without getting the disclosure and you give all your files to the buyer. Then your now ex-client comes in and says that he doesn't want to use that preparer because that preparer is a relative and he doesn't want that new preparer seeing his personal stuff.

What are you going to do?

If you had gotten a disclosure from each client, and this one said no, then you don't have a problem.

[veritas]

Bb

Did you take that wood cutting job?

[erchess]

Question for Jiggers or anyone who knows

I know what you said to BB is true but my questions go beyond that.

We all know that we owe it to the taxing agencies to keep certain information about each return we prepare for a certain amount of time thereafter. In regard to that obligation two questions come to mind.

1. Would you agree that we don't have an obligation to keep anything for the benefit of the client? I realize most of us do and I realize that if we keep any of the records they gave us we have to be willing to give them back even if we keep copies

2. When we sell our business can we transfer the obligation to the taxing agency to retain records to the buyer or must we retain the records and obligation?

[Corduroy Frog]

Buyers' Responsibility

Sale of a tax practice does not guarantee that returning customers will be clients of the new practice.

It would thus appear the responsibility of getting disclosures would fall upon the new owner.
I haven't heard this made clear in the discussion so far...

[geekgirldany]

I got some new clients from a tax business that was sold. Not sure the terms of the sale. The folks that came to me said the owner sent a letter stating the business was sold. Told them to come by the office to pickup their folders and if they did not pick up their folders by January the would be destroyed. The owner moved out of state and could not be reached. The letter just said to go to the person who bought the business or find someone else.

[Bees Knees]

I think part of the question has to do with the value of your business. If you have to get a disclosure from your client before you can sell the business, that decreases the value of the business, as it tips off the client that you are no longer going to be doing their taxes. Without final details on the new business taking over, the clients would likely go out on their own to find a new preparer.

[Black Bart]

Nope.

Did you take that wood cutting job?

I decided to pass on it (as well as the nuclear astrophysicist thingamajig).

I'm afraid that widderwoman's gonna have to go cold this winter. Just when I was fixin' to put an edge on the axe this feisty gal sashayed in and set down on the desk a 13 gallon garbage sack full of tickets, bills, checks, receipts, scribbled notes, and a half-eaten sandwich. Asks "How much for income tax?"

While ordinarily applying a scientific business model metric platform pricing analysis, I had unfortunately loaned the bathroom scales to my cousin last week. Forced to rely on keen business acumen and shrewd Kentucky windage (she's got 11 rent houses), I hoisted the sack, gave it a good theatrical lookin'-at, and (trying to sound assertive) declared: "500 bucks."

"Done!" she said.

And I am now -- quite literally -- out of the woods.

[Lion]

Too Little

Sounds like you should've quoted a higher price! She accepted much too fast. Let us know what else you find in that sack.

[Black Bart]

Snag

Sale of a tax practice does not guarantee that returning customers will be clients of the new practice.

It would thus appear the responsibility of getting disclosures would fall upon the new owner.
I haven't heard this made clear in the discussion so far...

I guess I'm not understanding what you're saying, but I was talking about the seller getting disclosures so he could be allowed to hand the files over to the buyer all at once regardless of which customers might return. Are you talking about them instead waiting to see which customers come back, the buyer then getting disclosures for seller, and picking up the files a piece at a time? Or something else?

[Snaggletooth]

Yes Buyer's Responsibility

Yes BB, buyer's responsibility. Purchase of the business does not commit either the client or the new preparer to anything that would be in the disclosure. So a fresh start is required.

For returning clients, a new disclosure is necessary, and should be executed with the buyer. If the client does not come back, disclosure is a moot point.

Out of good faith, the seller should introduce the new preparer via letter or announcement to the existing clientele. But this by itself does not create a disclosure.