Dealing with Clients in a Divorce

[geekgirldany]

I have a couple of clients going through a divorce. I am not sure what one knows and the other doesn't know. I prepare individual and corporate returns each year.
Client is wanting tax returns and financial statements for current year.

I do not mind the tax returns and last years financial info as that is how I prepared the tax return. Again I can print off financials from the QBs but I do not want to responsible as to the accuracy of the information contained.

I guess my fear is getting pulled into some kind of divorce proceeding. I had a similar situation earlier this year and it wasn't a very good situation to be involved in.

How do you all usually handle situations like this?

[ATSMAN]

We all will run into these situations with divorced or divorcing clients sooner or later. After consulting with an attorney I have made this a practice in my operation:

1) If it is a joint return signed by both spouses, I will give a copy to each. I will NOT mail or fax to their attorney or another accountant. If I receive a court order, I will follow the order.

2) I will only prepare one of the spouses returns going forward unless both of them sign a waiver that they want me to prepare their MFS or Single returns.

3) For business returns 1065, 1120S I will ONLY supply info to the tax matters partner or officer.

[geekgirldany]

Thank you for posting that information.

If I may ask, do you generate any Financial Statements for the client to give their attorney? Or only deal with giving copies of tax returns?

[ATSMAN]

In a divorce or litigation situation I only provide copies of tax returns that I prepared and filed to the taxpayer. If the attorney wants me to prepare a financial statement there will be a separate engagement and the scope of work will be defined so that I don't look like a fool in front of the judge.

[Burke]

Attorneys often want such things. And they often ask that this information be "certified." They sometimes think the preparer is the TP's personal accountant, esp when business returns are involved. And sometimes they are. Just as often, the preparers are not able to verify income/expenses except to the extent those figures are furnished to the preparer by the TP.

[ATSMAN]

Attorneys often want such things. And they often ask that this information be "certified." They sometimes think the preparer is the TP's personal accountant, esp when business returns are involved. And sometimes they are. Just as often, the preparers are not able to verify income/expenses except to the extent those figures are furnished to the preparer by the TP.

In my experience most attorney's like to push you around to show who is in control! I had a situation once where the attorney wanted me to produce all "books and records" for the last 3 years in one day because they agreed to go to arbitration and time was of the essence. When I told him all I did was "prepare and file the tax forms', I was not the bookkeeper so can't certify anything he got testy with me.

[Burke]

Have had the same experience. He didn't get it either. Wanted me to "certify", in writing, that all figures on the tax return were verified, true and correct. And why do they wait until the last minute?

[geekgirldany]

Thank you both for posting. I will be telling my client that I will only provide the tax returns. I need to enter adjustments in QBs for the tax return. That is about the only thing I am willing to do and then he can print out the reports from Quickbooks to hand to the attorney. From my conversation with the client this may turn into a big mess.

Earlier in the tax season I dealt with another client divorcing. I wish I would have asked here before getting involved because I was being asked a lot of things I had no knowledge of and was told by my client that I would be called as a witness. I told her not to call me because I did not have anything to say other than I prepared the returns from the paperwork she handed me. It taught me a HUGE lesson as I have known this client for 19 years and I really did not expect to be treated in such a way. So now I am "friendly" with clients but not overly and I am not so trusting anymore. Business first.

[Burke]

Emotions overrun everything in an other-than-amicable divorce. Clients say a lot of things. Preparers are rarely ever called as "witnesses." Witnesses to what? You prepared the tax returns and they signed them swearing that they were true and correct. And they have those. If not, you give them copies. A bookkeeper might be able to shed more light on a financial situation when a business is involved, sometimes not, depending on what they had access to.