Copy of return to non-majority owner

[AuditorTurnedGood]

All,
I have a disclosure question I'm having a hard time figuring out. Husband and wife own an S-Corp. Wife is 75% shareholder, husband is 25%. Taxpayers are in the middle of a very messy divorce. The husband has requested a copy of the S-Corp return from me. For a variety of reasons I won't disclose due to privacy concerns, I am treading very lightly on this one, and want to do everything by the book. My questions are:

1. Does he, as non-majority shareholder, have a right to a copy of the return?
2. If he does, do I have to secure the permission of the wife, who is the CEO, President, and Chairwoman of the Board?

I appreciate any insight you all have. Thanks!

ATG

[JohnH]

My sense of right & wrong says he does have a right to a copy of the return, but I'll be very interested in what others have to say about this. I often provide multiple copies to S-Corps with several shareholders, but I just give all the copies to the representative & leave it to them to distribute.

[Nashville]

Perfect Answer

There is, of course, the "perfect" answer, so long as the preparer has documented every possible scenario prior to the engagement.

Each entity should have designated the "tax affairs" person. Unless that person has been formally rescinded by the authority of the entity itself, then the preparer is to disclose to this "tax affairs" person, and it is presumed that this person will relay information deemed to be essential to others comprising the entity.

It is possible that this person may be a minority shareholder.

I'm not sure I would take the pains to acquire pre-engagement paperwork from a customer to this extent. In the case of an entity, the process of doing so in a manner to protect the preparer may be more extensive than the time I am willing to spend on it. I am by no means purporting that my approach is correct, but I am more interested in getting on with the work than wallowing around endlessly in extra paperwork to cover my butt.

[Jiggers]

Copy of return

Our obligation is to provide one copy of the tax return to the taxpayer.

If the majority shareholder is the one who I dealt with, and I had provided that person with a copy, then I would direct the minority shareholder to that person.

If the minority shareholder still insists, then I would have the majority shareholder sign off on giving the minority shareholder a copy.

If the majority shareholder refused, then I would direct the minority shareholder to have his attorney subpoena a copy through the courts. Of course you can bill him for this, and require payment before you release the copy.

[AuditorTurnedGood]

Jiggers

You and I think alike. I'll have to jump directly to step 2 in this case. I'd almost rather skip to step 3 and be served with a subpeona.

ATG

[ChEAr$]

Minority stockholders

have no right to a copy of a return. Our duty is to furnish only one completed copy to the
person who hired us and had such authority to hire us.

Only in the case of a publicly traded corporation do these get a copy of the annual report.

However, if this 25% husband goes to court and judge orders it, who can refuse?
That is provided for by federal law of course.

[JON]

I find it hard to

believe that a minority shareholder of a publicly traded company have any difference in rights for getting a copy of a tax return. That being said I have never heard of a publicly traded corporation sending copies of returns to their stockholders.

I do think in this case the husband has a right to have a copy. If messy I can not believe in the discovery this has not already have been requested. Divorces I have been involved in the other side gets a copy of financials and tax returns even if the opposite has no direct ownership in the company.

[ChEAr$]

believe that a minority shareholder of a publicly traded company have any difference in rights for getting a copy of a tax return. That being said I have never heard of a publicly traded corporation sending copies of returns to their stockholders.

I do think in this case the husband has a right to have a copy. If messy I can not believe in the discovery this has not already have been requested. Divorces I have been involved in the other side gets a copy of financials and tax returns even if the opposite has no direct ownership in the company.

I should have been clearer perhaps. I was referring to financial statements being the right
of all publicly traded corporate shareholders.

The only right the husband will have to a copy of a tax return will be what the corporate management deems or what a judge in the messy divorce case might dictate.

[AuditorTurnedGood]

In this case

discovery has begun, and the wife has been served. I just found out she turned over what she had to the requesting attorney, but the husband seems to believe that the copy she has is not the "final" copy of the return. I will likely tell the husband I'll need a subpeona to hand over a copy from my records, even though it's the same one he already has.

Now might be a good time to mention the husband is clinically unstable. Where do I find these people?

ATG

[Jiggers]

IRS has copy!

You didn't find this one, his soon to be ex did!

The IRS has a copy that he can obtain. Maybe! If he is an authorized representative.

[thomtax]

Now might be a good time to mention the husband is clinically unstable. Where do I find these people?

ATG

This must just be a special acquired talent.

LT