What is factual?

[luke]

Gary B

I had client ask me for the exact same wording (use of business funds for down payment wont adversely affect the business) FROM me! I gave my typical disclaimer and stated "Client has assured ME that he will be using his PERSONAL funds for the down payment on the loan in question, so for that reason his business should not be adversely affected!" ?? Also this was NOT some fly by night financial institution but a major national bank!

[gboykin]

I had client ask me for the exact same wording (use of business funds for down payment wont adversely affect the business) FROM me! I gave my typical disclaimer and stated "Client has assured ME that he will be using his PERSONAL funds for the down payment on the loan in question, so for that reason his business should not be adversely affected!" ?? Also this was NOT some fly by night financial institution but a major national bank!

Mine was from a major national lender also. Could be the same one, and that is their angle.

[JohnH]

You might be comfortable saying that, but I'm not sure I would be.

If your assurance that the client's assurance is good enough for you means anything to the bank, then the bank ought to be willing to acept his assurance without you as the middle man. They shouldn't be basing their decision on anything you say. The bank is clearly up to something, and whatever it might be, it isn't in your best interests.

[Bees Knees]

The fee I charge to prepare a return covers the cost of preparing and e-filing the return for the client. It does not include any correspondence with any third party other than the client (including the IRS) concerning information on the return. For an additional fee, I will correspond with the IRS or some other third party concerning matters on the return, assuming the client has authorized such correspondence.

We are not even allowed to acknowledge to a third party, such as a bank, that so and so is our client, unless the client has signed an authorization form that allows us to correspond with a third party.

Rather than respond to the bank, I would send a letter with the above information to the client and tell them for an additional fee (I charge $90 per hour, including phone calls), I would be happy to talk to the bank and tell them I have not audited your return and provide no assurance that any of the information is correct (that is what my engagement letter says YOU the client are responsible for). Here is the authorization form you (the client) need to sign along with my engagement letter and agreed upon fee for said services.

[JohnH]

Interesting approach.
I'll have to think about that one.
On the surface I like it, but I'd have to be selective in how I apply it.

For some clients it's a slam dunk. For others I wouldn't want to take the chance of losing their business over a simple verification, as long as I'm not being asked to provide a reply ouside the scope of what I actually can say.

[JohnH]

Interesting approach.
I'll have to think about that one.
On the surface I like it, but I'd have to be selective in how I apply it.

For some clients it's a slam dunk. For others I wouldn't want to take the chance of losing their business over a simple verification, as long as I'm not being asked to provide a reply ouside the scope of what I actually can say.

[FEDUKE404]

Well, not everyone.....

Interesting approach.
I'll have to think about that one.
On the surface I like it, but I'd have to be selective in how I apply it.

For some clients it's a slam dunk. For others I wouldn't want to take the chance of losing their business over a simple verification, as long as I'm not being asked to provide a reply ouside the scope of what I actually can say.

I concur, but maybe I am just old fashioned ..... or just old?

I see no problem making a simple statement/letter acknowledging the tax return is, in fact, prepared/efiled by me so long as the request was first presented to me by the client. Heck, my name and signature are already on the tax return anyway.

As for corresponding charges, I would tread very lightly there. While my lawyer may charge me for every phone call/email/text message/smoke signal, I just don't quite operate that way. Never have.....never will!!

If, for instance, a client calls and says he lost his copy of a 4th quarter estimated tax coupon, I will gladly send him another at no cost. Whether it takes one minute or three minutes or five minutes for me to respond, rest assured I would not send him a $90/hour invoice for that. It just falls under good business practices, at least for my clients and my business. I can, and do, always factor in annual charges for my "high" and "low" maintenance clients, but that is a separate issue.

And to be clear: More involved things would be subject to charges, but even so "off-season" rates apply at this time of year.

FE

[Burke]

Mine was from a major national lender also. Could be the same one, and that is their angle.

They are all doing this sort of thing, and have been for a couple of years. Especially where a business is concerned. They seem to think that the tax preparers (regardless of credentials) are some kind of in-house employee/CFO/bookkeeper that knows every in and out of the financial workings of the firm. It's the underwriters who are trying to cover their butts with the banking regulation folks on the validity/worthiness of the loan. I had a mtge broker at a bank ask for tax returns, which were furnished, but then said they were waiting for the IRS transcripts for verification. Duh, why did they ask for the returns if they were going to get transcripts anyway? Then they wanted P&L's on the business for the current year to-date, then they wanted copies of the HOA bylaws (on purchase of a condo), then they wanted to audit the entire condo project as it wasn't completed yet, etc, etc, etc. Finally, after weeks of this coming back for more info, the TP's told them to take a hike, pulled all their $$$ out of their bank and paid cash for the place!

[outwest]

For what it's worth..

1. "The won't hurt the business angle" is apparently a Fannie Mae/Freddie Mac issue for loans to be resold. That's why so many different banks and lenders seem to have the same stupid question. At least that's what the bank underwriter told me when I told them no way, no how..

2. Federally insured banks have had for some time the ability to verify the return presented with the loan app matches the return as filed. Presenting an "dressed up" return to a federally insured bank could be a bank fraud. On the other hand, the IRS might think that the US government should have been sent the return the bank has.

As I understand it, the bank does not get a transcript, just yes/no verification of some figures on the return.

[Gary2]

From a business perspective, I can understand the desire of the lenders to have backup confirmation. For a very large loan (or other scenario), i.e., in the millions, asking for an audit of the books is not absurd.

What's absurd is asking for information that can best be obtained with a 4506-T, or asking for attestation when they should already know, from the information available, that the applicant isn't in a situation that could support the cost of an independent audit. They should understand that not all tax preparers are accountants, and even if a client has their tax return done by a CPA who also handles their bookkeeping and payroll, that CPA is still limited by ethics as to what they can attest.

[JohnH]

I believe what they fail to understand is not so much the ethical limits, but the limits of common sense. When they ask the tax preparer, accountant, or CPA to verify something to the effect that any finanical transaction would not adversely affect the business going forward (or some other silly wording along these lines), they are asking us to look into our crystal ball.

After all, how many underwriters would be willing to sign a statement saying that their bank's current business practices will not adversely affect the bank's profitability going forward?

[Davc]

They understand. They're just hoping to find a preparer that's gullible enough to cover the lender's butt with their own.

[Bees Knees]

They understand. They're just hoping to find a preparer that's gullible enough to cover the lender's butt with their own.

Or more to the point, lenders are looking for more people to attach liability to if the business fails and defaults on the loan. It has nothing to do with helping them make a decision on lending money. They are looking for more pockets to pick.

If you are gullible enough to voice any kind of opinion on the accuracy of a return you prepare, make sure your malpractice insurance is up to date. I stand by my earlier comment. We are not in the business of helping clients get loans. If you think we are, then be prepared to take on the risks associated with that service.