PA chasing taxes due via preparer

[BP.]

Last night (nearly 8pm) I got my third recent phone call from PA DOR. The caller first identifies as being from PA DOR, then asks for a client by name, without acknowledging they've called the preparer. I've simply said, "Wrong number," and that was it.

But last night the caller called right back, acknowledged he's called the preparer, and says he's trying to reach the taxpayer about a balance due. I replied that I was sure the caller realizes that I am barred from discussion, and furthermore I cannot even verify caller's identity. He says, "Oh, we talk to accountants all the time!" What the heck??

So he feigns surprise that I won't talk about a client, I keep my heels dug in, telling him I prepare tax returns, but I'm not responsible for payment of clients' taxes, and the brief call ends. Do you have this experience, in PA or other states? What do you think?

[Bees Knees]

The prohibition against disclosing confidential tax information by a preparer does not apply to authorized government entities, including a State agency. Reg. §301.7216-2(f)

Of course, you do have to first verify that it is actually the State that is calling you. Assuming it is, you are authorized by law to cooperate with the State. Preparing a tax return is not in any way an Attorney Client privilege situation. The State is perfectly within their right to contact the tax preparer to help them track down a taxpayer. That is, after all, the reason why you are required to sign the return and provide them with your address and phone number.

If you don’t mind getting an administrative summons from the State and then have to go down to their offices to answer their questions, then go ahead and dig in your heels and play hard to get. My opinion is it will be better for you to cooperate and answer their questions.

[jimmcg]

Tell them you do not respond to phone calls or emails only propely documemted written requests from the appropriate state agency.

[KBTS]

I have not had this happen to me, but the call does not surprise me considering the budget mess in PA. The state needs money and must be getting desperate.

I met with a local business owner yesterday and he said PA DOR came to his store because he was behind in filing sales tax returns. I do not know exact figures, but the store is just a part-time thing and total sales are probably less than $5,000 a year. I cannot imagine the revenue from getting him to comply is going to be worth the effort DOR is putting into it.

[outwest]

On the other hand..

If he hasn't been filing, how would they know what the sales are? For all they know, it could be $5 million. or $5. or $50,000.

[BP.]

Thanks for your replies.

If you don’t mind getting an administrative summons from the State and then have to go down to their offices to answer their questions, then go ahead and dig in your heels and play hard to get. My opinion is it will be better for you to cooperate and answer their questions.

I do truly appreciate you providing the information, Bees Knees, that it doesn't violate privacy standards to answer questions about clients when the State calls.

Concerned (and I was wrong) about privacy violation- yes, I was. Playing hard to get- that doesn't characterize it. This isn't playing to me, and hey, who has time for those kinds of games anyway?

I like to keep it simple, cooperate, get to solutions, and not trying to risk a summons - just taken aback by the phone calls, never having experienced that before, and seeking valued feedback. Love that I can count on that here!
_____________
Barbara

[JohnH]

The State of NC started using private collections agencies a few years back. They would add 20% to the bill if the account actually got turned over to the private agency. One advantage to the state was that although these agencies had to follow personal consumer regulations in their activities, they still had less restrictions on them than the state agencies. I'm a little rusty on this, but I think they were free to speak with anyone associated with the return without having to get a POA, for example.

I had a few clients who received calls from them, which the clients would refer to me. In each case, I simply told the collector that we weren't trying to dodge the issue, but we would need a written inquiry in order to respond. As I recall, we managed to resolve every one of them with a minimum of problems. And we bought the client a little bit of time to get their finances in order while we waited for the written inquiry.

[BOB W]

I would never provide info just on a phone call. I need proof of the caller's identity. "Can you fax me that proof", I would say.

Don't forget, there is a difference between Refusing to give info and having Authority to give info. I this case having authority means knowing who you are giving it to.

[taxmandan]

Couldn't disagree more.

If you roll over for the taxing authorities in any manner without court order you risk your reputation in the community and will be branded an agent of the state not your clients. I would never provide any information except under court order (admin summons, etc.) Even if I verify it is an actual state tax person contacting me. At NTPI they even provided the correct phraseology to use: "The courtesy of a summons is requested."
Is the state going to talk with you without a POA? No.

There is no attorney/client privilege but unless you have a POA in place for that client you owe nothing to the state when they're on a fishing trip. Keep them honest, it's not playing hardball, it's being professional.

The prohibition against disclosing confidential tax information by a preparer does not apply to authorized government entities, including a State agency. Reg. §301.7216-2(f)

Of course, you do have to first verify that it is actually the State that is calling you. Assuming it is, you are authorized by law to cooperate with the State. Preparing a tax return is not in any way an Attorney Client privilege situation. The State is perfectly within their right to contact the tax preparer to help them track down a taxpayer. That is, after all, the reason why you are required to sign the return and provide them with your address and phone number.

If you don’t mind getting an administrative summons from the State and then have to go down to their offices to answer their questions, then go ahead and dig in your heels and play hard to get. My opinion is it will be better for you to cooperate and answer their questions.

[BP.]

except under court order (admin summons, etc.)

I've operated with the understanding this would be the standard, or at the very least, something in written form. And thanks, too, Bob W, for the "fax me the proof" for verifying identity. Tough to verify identity with a phone call.

[kpangelinan]

Agreed...

The prohibition against disclosing confidential tax information by a preparer does not apply to authorized government entities, including a State agency. Reg. §301.7216-2(f)

Of course, you do have to first verify that it is actually the State that is calling you. Assuming it is, you are authorized by law to cooperate with the State. Preparing a tax return is not in any way an Attorney Client privilege situation. The State is perfectly within their right to contact the tax preparer to help them track down a taxpayer. That is, after all, the reason why you are required to sign the return and provide them with your address and phone number.

If you don’t mind getting an administrative summons from the State and then have to go down to their offices to answer their questions, then go ahead and dig in your heels and play hard to get. My opinion is it will be better for you to cooperate and answer their questions.

Great information. Thanks Bees Knees.

Tell them you do not respond to phone calls or emails only propely documemted written requests from the appropriate state agency.

This is what I do and faxes are more than enough for me to give them whatever info they want. I've been getting hammered by the state of Maine, probably because of our financial woes as well, however, that being said, I've NEVER had a problem dealing with anyone over there. They fishing trips are totally legit and the client needs to resolve their account.

If he hasn't been filing, how would they know what the sales are? For all they know, it could be $5 million. or $5. or $50,000.

Good point.

[Bees Knees]

If you roll over for the taxing authorities in any manner without court order you risk your reputation in the community and will be branded an agent of the state not your clients. I would never provide any information except under court order (admin summons, etc.) Even if I verify it is an actual state tax person contacting me. At NTPI they even provided the correct phraseology to use: "The courtesy of a summons is requested."

I hate to break the news to you, but tax preparers are agents of the government. Circular 230, which now applies to all practitioners says on page 15 under Section 10.20:

"A practitioner must, on a proper and lawful request by a duly authorized officer or employee of the Internal Revenue Service, promptly submit records or information in any matter before the Internal Revenue Service unless the practitioner believes in good faith and on reasonable grounds that the records or information are privileged."

There is no requirement that IRS (or a State agency) first obtain a court order for this request. Our duty is to give the government information that is requested, unless we believe attorney client privilege is at issue (which tax preparation does not fall under).

If I were an IRS agent asking this information from you, and you gave me the "get a court order" response, I'd tell the PTIN guys to suspend your license for failing to follow Circular 230, Section 10:20.

[Bees Knees]

If I were an IRS agent asking this information from you, and you gave me the "get a court order" response, I'd tell the PTIN guys to suspend your license for failing to follow Circular 230, Section 10:20.

Just in case anyone has not yet put 2 + 2 together, this is, after all, the prime reason why IRS has decided to put some teeth into their authority over the tax preparation business. They want us to act as agents for the State. There is no doubt about that.

[Terry]

Authorized agent

I think the difficulty is determining, over the phone, that the caller is an authorized agent of the state (PA, in this case).
I had a call from PA concerning one of my clients and his sales tax return. I don't prepare his sales tax return, only his PA-40. I told the caller that I don't prepare his sales tax returns. They obviously got my name from the PA-40, though, as paid preparer. When I told her I don't prepare his sales tax returns, she said she would take my name off her contact list.

[kpangelinan]

Just in case anyone has not yet put 2 + 2 together, this is, after all, the prime reason why IRS has decided to put some teeth into their authority over the tax preparation business. They want us to act as agents for the State. There is no doubt about that.

I don' t know about this. Since when did the IRS care about state taxing authorities?....they've always kept their business separate in my state and in a decade with dealing with the state of Maine taxing authority, they're just in it for their own.

I personally see this as a way to get rid of some of those preparers and to get people to go to higher more reputable and educated professionals....doing this at least cuts down on the fraud portion of tax prep and mistakes. Studies have shown that unlicensed preparers are much more aggressive or likely to cheat for their clients (in order to make them happy for a great referral business) then a licensed representative such as a CPA, EA or Tax Attorney. They have a lot more to lose....in their eyes anyways. Only 2 years ago, a guy got caught doing just what I suggested and is spending 6 years in a federal prison.

I also see this with the changing of the EA licensing process and continuing ed requirements (ease of).

I think the difficulty is determining, over the phone, that the caller is an authorized agent of the state (PA, in this case).
I had a call from PA concerning one of my clients and his sales tax return. I don't prepare his sales tax return, only his PA-40. I told the caller that I don't prepare his sales tax returns. They obviously got my name from the PA-40, though, as paid preparer. When I told her I don't prepare his sales tax returns, she said she would take my name off her contact list.

Like I said and was already mentioned here....a fax from a state taxing authority should be fine and is good enough for me and have never had a problem to date.