Bankruptcy

[AccTaxMan]

New client came in today. Everything went smoothly. Just at the moment he was ready to leave, he told me he would file bankruptcy soon and asked if I really wanted to do his tax return...

From the way he asked me the question, it seems to me at least one accountant has already refused to do his tax return because of the imminent bankruptcy filing. Does anyone know what they might be concerned about? Now I started worried about the liabilities of a bankruptcy related tax return and I am digging a hole for myself to file his tax return. Thought?

[JG EA]

Maybe he was warning you that you won't get paid.

[taxjungle]

Bankruptcy

Yes, that is what happened to me years ago. The taxpayer included me on his list of creditors and I never got paid, instead, received a letter from the Bankrupty Court inviting me to a meeting for creditors. I didn't attend and so never got paid.

Beware, especially now-a-days. I suggest tax-preparers ask all clients during the interview process if they are involved in bankruptcy. If they are clients involved or thinking about the process I may not prepare their return.

[S T]

Hmm Bankruptcy

I just had a long time client file bankruptcy,and had not paid my 2009 Tax Invoice. She immediately sent me an email, let me know what she was doing, and sent me money orders for payment. Now after filing bankruptcy, we have the request for filing the 2010 tax return and supplying to the BK Court Trustee. So those fees now, for those services will also be collected in front, before release.

My thought is that your tax client is giving you a warning, not in bankruptcy yet, so you would need to collect your "Fees" to prepare the tax return, then any additional info/returns the BK court trustee will need, you also need to collect before preparing.

Documentation for the accuracy of the tax return filing would be imperative, particularly if a new client you have no history on.

Sandy