Transfer Client Data to New CPA / Client Consent?

[bbrownatl]

I understand in general terms about the strict provisions of not providing client data outside your firm without the specific consent of the client. I have a situation here where a local practitioner was near retirement and wound down his operations with the exception of a handful of clients. Subsequently, he has now referred them all to me. Some have contacted me while others have not yet (probably will due so, early April, ha!). We use the same tax software but I don't think it is appropriate for me to just get a backup of these client's 2012 tax return file without the specific client consent. Note, I'd like to get them all so when April rolls around I'm not having to go back to this practitioner who will be in retirement and potentially traveling. As we know, it is much easier and efficient to just import the prior year than to manually input all the information. So, any ideas? How does it work when one firm purchases another and essentially the client list of that firm? If seems like they don't necessarily go back to all clients and tell them they are selling and accordingly request consent to provide their tax info to the succeeding tax practitioner. I want to obviously get the backups but certainly want to stay within the professional guidance. How about if I executed a mini "sale" agreement with the retiring practitioner. Just searching for ideas. Any input appreciated.

Thanks,
Brian

[ATSMAN]

The way I do it when I am selected by a retiring tax preparer is to send a letter signed by both of us to the taxpayer giving them their options. If they do not want to switch to me they can pickup their materials (if any left with the retiring preparer) by a certain time otherwise it would be destroyed.

For taxpayers who do not switch to me I DO NOT get any information other than name and address. The following year I do send them another follow-up letter just to see if they were happy with where they went. I find that about 5% of them will come back to me after trying someone for a year, especially if they went to any of the franchise stores.

One retiring tax preparer insisted that I store all his records and I walked away.

[ChEAr$]

If the seller is subject to circular 230, the onus is upon him to obtain clients' consents to the transfer, and not on the buyer. Thus if he gives you a thumb drive with client files which you can simply install on your computer as another preparer, you're covered.

[bbrownatl]

Medical Condition / Can't get consents

How about if the retiring practitioner is physically unable (ie. just had an extreme medical condition, survived but is in no condition to really comprehend much)? The decision was made by his family to farm out the remaining returns and wind down what was left of his practice. Thus, the staff persons are sending out a few letters with a recommendation to contact me. Seems like their firm still needs to get client consent. Much thanks for your insights.

[MDEA]

transfer client data

I bought and moved a large store front office this year.I sent letters to over 3000 prior two year clients telling them of the move.When they came in they signed a release and then I went into the prior server and moved up to the last five years of returns.I will have access to that server for three years.I am paying for that to be available.

[ATSMAN]

In my opinion it is better to play it safe than be sorry later. I understand that the onus is on the preparer getting rid of their clients but as the preparer trying to convert them into playing clients I prefer to do it right just so that there is no situation in the future that causes problems. More than likely the retiring preparer will have nothing to do with any issues once he gets fully paid and his contract obligations with you have ended.

I have actually kept the fees the same with certain exceptions for the first year just so that the transition does not cause a sour feeling right off the gate.

[Snaggletooth]

Doesn't change your obligation

How about if the retiring practitioner is physically unable (ie. just had an extreme medical condition, survived but is in no condition to really comprehend much)? The decision was made by his family to farm out the remaining returns and wind down what was left of his practice. Thus, the staff persons are sending out a few letters with a recommendation to contact me. Seems like their firm still needs to get client consent. Much thanks for your insights.

The situation you describe does add more complications, but nothing you say removes the truth of what ChEAr$ said. It's not your dog, Charlie Brown.

There may be some bumps in the road. It is an overwhelming probability that some his prior clients will get notices in the mail dropping back to the periods where he filed the return. The normal recourse for a practitioner is to refer the client BACK to the preparer who filed the return. If what you say is true, this may be cumbersome or impossible. I don't know what can be done other than ask the family for three years' prior returns, and then deliver them back to the family when the SOL expires.

I hope you're not talking about my friend Doug Singleton, so ultimately a fan of the Braves that he went stark raving mad when they lost to the Dodgers this year...