Circ 230 and Mississippi law

[dkss]

Does Mississippi law permit tax practitioners to withhold client records (source docs) due to fee dispute? I have a new client...I know sounds like trouble... but I have been doing the fiancee's taxes for years. He used to live in MS in 06 and part of 07 (also had a business during that time). Prior preparer is withholding docs, will no longer talk to him, and would not even tell him his final results until he paid her. All she would say is he didn't owe. He doesn't want to get married until this is cleared up. I advised him to file 08 & 09 and pay her with the refunds (if the IRS doesn't keep the $ - he said he 's received no letters), but in case they keep the $, can she lawfully keep the records from him?

[erchess]

Trump

Would State or Local Law trump Federal Law in this case? I realize that the prior preparer does not have to release anything she produced and I believe she can retain copies of anything she wishes but I thought that upon request she had to give him anything he gave her that he needed to fulfill his Federal Tax Obligations.

[Edsel]

Can a Leopard...

...change its spots? If he hasn't paid his former preparer for two years' work, why would you rush in to prepare his taxes? If you wish to do so, the Mississippi lady is HIS problem and not yours.

He says he wants to clean up this mess before he gets married. How bad does he want to clean it up? Or how bad does he want to get married? Enough to pay his bills?

[thomtax]

Does Mississippi law permit tax practitioners to withhold client records (source docs) due to fee dispute? I have a new client...I know sounds like trouble... but I have been doing the fiancee's taxes for years. He used to live in MS in 06 and part of 07 (also had a business during that time). Prior preparer is withholding docs, will no longer talk to him, and would not even tell him his final results until he paid her. All she would say is he didn't owe. He doesn't want to get married until this is cleared up. I advised him to file 08 & 09 and pay her with the refunds (if the IRS doesn't keep the $ - he said he 's received no letters), but in case they keep the $, can she lawfully keep the records from him?

Not to be argumentative, but you are making the assumption that he used a Cir. 230 preparer. This may be one of the kitchen table preparers that does not even sign the return. This group, for all practical purposes, does not seem to be liable in any way for their actions.

Sad, but in my experience, true.

LT

[dkss]

some assumptions

The guy has no idea if she is licensed or not. I am an unenrolled preparer, but I still adher to ethical standards - perhaps she may be persuaded by a copy of the applicable section in circ 230 to return his receipts.

The reason for my question stems from this line in section 10.28 - "Nevertheless, if applicable state law allows or permits the retention of a client’s records by a practitioner in the case of a dispute over fees for services rendered, the practitioner need only return those records that must be attached to the taxpayer’s return."

My take on this means she would only have to return documents that would have to be attached to the return (w-2, 1099-r,...), and not any of his business records if Mississppi law allows the retention.

I am also leary of new clients with shady payment histories, but his story seemed legit, I received payment ahead of time, and he had a simple w-2 only return. I will give him a copy of the cir 230 section 10.28 that he can send to her, and I will be done with "helping" him.

Thanks all
Debbie

[dkss]

clarification

If he hasn't paid his former preparer for two years' work, why would you rush in to prepare his taxes?

Let me clarify, he has not paid for 2006 return - she never had 2007's info. He has his 2007 business records, but I would need 06 return in order to do final Sched C on 2007 return.