Circ 230

[jimenright]

This is how we are to rely on client information:

(d) Relying on information furnished by
clients. A practitioner advising a client to take
a position on a tax return, document, affidavit or
other paper submitted to the Internal Revenue
Service, or preparing or signing a tax return as a
preparer, generally may rely in good faith without
verification upon information furnished by the
client. The practitioner may not, however, ignore the
implications of information furnished to, or actually
known by, the practitioner, and must make reasonable
inquiries if the information as furnished appears to
be incorrect, inconsistent with an important fact or
another factual assumption, or incomplete.

[taxea]

Your point being? or do you have a question?

[taxxcpa]

I think the point is that you can rely on what you are told without verification UNLESS it appears to be incorrect.
For example if you know he lives in a million dollar house, is paying for two kids at Harvard and owns a yacht, and has reported that his income for the last five years is $20,000 a year, you should ask where he gets all the money it takes to pay for all this.

However, if he reports that he makes a million a year, then you would be less likely to ask how he pays for everything.

[Burke]

Exactly. I had this conversation with a client once, non-confrontationally, and she knew exactly where I was coming from. If it was obvious to me, it would be the first thing the IRS would want to know. Turns out her retired parents were giving her $$$ whenever she needed it. (Which was often.)

[taxea]

I was just trying to figure out why Jim posted this without comment or question

[jimenright]

circ 230

I sensed some paranoia going on concerning preparer obligations about the validity of client info. It seemed worthwhile to show the IRS published policy.