Release of Tax Return

[Snaggletooth]

We discussed people some time ago that file an extension so they won't have to pay. I have some that do this, and I wish the IRS would penalize the gazoo out of them, because without exception, they ALL seem to have money to buy a new truck or take a vacation.

One of mine owes $6500. He has never saved $6500 in his life, but lives well on credit cards I guess.

He has asked me to release his 1040 to him so he can use it to make a loan at the bank. Of course, until it's filed it is NOT filed.

Should I release the return that we plan to e-file? If not, I can always just mail him a paper return and leave it up to him when to mail it in.

[JohnH]

Give him a paper return and put the monkey on his back.
You're not his momma and daddy.

[taxea]

Has he paid for your work? Why hasn't it been filed? The bank does not want an unfiled return. Their reason for asking for it is so that they can verify the figures against the filed return to insure they are both the same.

If he hasn't paid for your work he doesn't get a copy of the return.

[S T]

Snags, I would not release any tax return for bank loans, unless the return has been filed (paper) or e-filed and you have acceptance of same. I do not know what your client payment for your services arrangements are, however, you might want to think about being paid.

Keep in mind, banks and lending institutions will require the taxpayer to not only submit to them for the preliminary underwriting purposes a copy of the tax return , but lenders also require a form 4506 to retrieve a "filed copy" from IRS.

Client needs to file return during the process and pay any taxes due!

Sandy

[Snaggletooth]

Paper Return

Changes to a return can be made anytime prior to e-filing. And if the situation warrants, I will change the return.

If I send him a paper return to mail in, he can do with it whatever he pleases. Mail in when he wants. Pay when he wants. When I send him the paper return, I essentially no longer have whatever burden comes with custody of the thing.

He has already paid for everything up front.

[AZ-Tax]

I probably mail him a paper return but...

There is a many many things the IRS should do but most would have to go thru Congress, need I say more. Unless I am missing something, why wouldn't you mail him a paper return obviously unsigned and I probably would hand write on there "not yet filed". Chances are the loan officer at the bank wouldn't know the difference between a filed tax return and a cottonwood tree but the bank's underwriter will. Cant obtain a tax return transcript on a tax return that has yet to be filed. The other day I got a call from a client who was out of town and wanted me to fax her filed tax return directly to a lender and I informed her not unless I have written authorization from you but I went on to tell her the lender is probably going to need a tax transcript for which she had no idea what that was but told me they gave her a form 4506. I replied obviously they need your tax transcript from the IRS which takes about a week via U.S. mail unless you sign a POA and I can have your tax transcript in my hands within a couple hours after I fax it to the IRS.

This brings up a question, do any of you charge for this request?

I think we all have a client or 2 that owes but mentally believes if they file an extension they will delay the payment then later on complain they were assessed interest and penalties.

[JohnH]

In reading this thread, I'm reminded of the subtle effect e-flinging has created in the minds of some preparers regarding our responsibilities. Our job isn't to baby-sit the client or to make financial & life decisions for them. Neither is it our job to look out for the interest of the government, the bank, or any other third party. Our job is to prepare an accurate tax return. Period.

When the client gets sideways with his tax payments, wants to borrow money (wisely or unwisely), or wants to delay filing using a valid extension, that's his problem - not ours. For example, we should always inform them that filing an extension will still involve some costs, but they are vastly lower in comparison to filing late. When they file, when they pay, how much extra it costs them - none of this is our responsiblity.

And if they file an extension and then want to borrow money, as in this case, give them the paper return (original and client copy) with filing instructions. That places the responsibility for filing, applying for their loan, explaining their circumstances, and all other financial matters squarely on their shoulders, which is WHERE IT BELONGS.

I would also NEVER mail, fax, or email a tax return copy to a lender, no matter what type of permission the client gave me. I'll email a password-protected copy to the client. They can then do whatever they wish with the information (which would, or course, include forwarding the email to the lender and verbally giving them the password). Although I did have one client who "Replied All", including the password in the body of the email, which completely defeated the purpose. But again, that isn't my problem. I had one lender object, saying I must email the info to them. I told the lender that if that was their position, then my advice to the client was to take their business elsewhere. Oddly enough, they figured out that it was possible to accept it from the client after all.

Incidentally, many lenders never obtain the transcripts. They just want the 4506 on hand in case they decide to do so. But I'd never tell the client that (it isn't my responsiblity. )

[RitaB]

Exactly

[QUOTE=JohnH;165385]In reading this thread, I'm reminded of the subtle effect e-flinging has created in the minds of some preparers regarding our responsibilities. Our job isn't to baby-sit the client or to make financial & life decisions for them. Neither is it our job to look out for the interest of the government, the bank, or any other third party. Our job is to prepare an accurate tax return. Period.
QUOTE]

This is exactly what I was thinking. On everything else, you are way ahead of me, as usual.

[JohnH]

I doubt I'm ahead of you.
But wherever I may be, it's because I always listened well in your Algebra class.

[TXEA]

Maybe I am missing something.......

I guess the client plans to e-file the tax return when ready to pay (probably October 15, 2014). Tell the client you will be glad to give the client a copy of the tax return when the client comes in and signs the e-file authorization and pays the tax preparation fee.

Or, otherwise, Give the client the e-file form, copy of tax return, and collect the fee. Have the client sign a statement they understand the return will not filed until they return the e-file signature authorization to your office. Put the responsibility on their shoulders.

Finally, if the client gives the unsigned return to the bank, that is not your problem.

[Burke]

Banks these days ALWAYS ask for a transcript from the IRS. So, they won't get the loan until the tax return is filed and in the computer as accepted, whichever method is used. The paper copy of the return is usually requested so that they can give "preliminary" approval (or not.) But nothing happens until the underwriters sign off on it and they won't without the official transcript.

[taxea]

Isn't your client aware that an extension is for the purpose of delaying the filing and not for delaying the payment. When you file there will be penalty and interest for late payment. If anything I would watermark the return as "draft copy/unfiled" and charge him for the copy. I would not sign this copy.
Clients can get transcripts from the IRS themselves so if I have to do it for them there is a fee.
I never sign a copy of a return even after filing because it is not the "actual filed return". I also recommend to my clients that they not sign it. If whomever they are providing it to has a problem I tell the client to have them call me.

[JohnH]

Officially, an extension of time to file is not an extension of time to pay.
Practically, it is both.
Unless you don't consider saving 4.5% per month to be an important consideration.
The remaining less-than-1% per month effective interest rate is a bargain for someone who doesn't have the money handy to pay the tax liability.

IRS fools a lot of people with their doublespeak concerning extensions - tax preparers should not be among those who are fooled. Clients count on us for accurate & relevant information, not the IRS party line.

And what's all this business about signing or not signing a client's return? Does anybody ever sign a client copy for any reason? I sign a paper copy given to the client for filing, but I'm not signing anything else, especially for a third party. My business name, contact info, and PTIN are on the client copy, but certainly not my signature. Any loan processor who required my signature on a client's return would just have to figure out how to handle things another way, or else the client can find someone else to borrow from.

[geekgirldany]

If the return is finished and he wants to "mail" it in... then attach a Form 8948 to the return. Then it is all on him to file the return.