Announcement

Collapse
No announcement yet.

Subpoena issued to preparer to produce tax return copies

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    Subpoena issued to preparer to produce tax return copies

    I've been doing taxes for almost thirty years. For the first time, my office received a subpoena to produce copies of a client's tax returns. The subpoena was issued by an attorney representing the client's ex-spouse. The case is a straightforward matter. The ex-spouse is seeking a reduction in child support or alimony payments. The subpoena seeks copies of the last four years' tax returns.

    IRC Section 7216 generally prohibits disclosure of tax return data to a third party without the client's consent. But there are a number of exceptions, where the preparer may indeed disclose the data without first obtaining the client's consent.

    This does not appear to be one of the exceptions. The exceptions are listed in Treas. Reg. 301.7216-2. The relevant text of the regs is as follows:

    The provisions of section 7216(a) and 301.7216-1 will not apply to any disclosure of tax return information if the disclosure is made pursuant to any one of the following documents:

    (1) The order of any court of record, Federal, State, or local.

    (2) A subpoena issued by a grand jury, Federal or State.

    (3) A subpoena issued by the United States Congress.

    (4) An administrative order, demand, summons or subpoena that is issued in the performance of its duties by -

    (i) Any Federal agency as defined in 5 U.S.C. 551(1) and 5 U.S.C. 552(f), or

    (ii) A State agency, body, or commission charged under the laws of the State or a political subdivision of the State with the licensing, registration, or regulation of tax return preparers.

    (5) A written request from a professional association ethics committee or board investigating the ethical conduct of the tax return preparer.

    (6) A written request from the Public Company Accounting Oversight Board in connection with an inspection under section 104 of the Sarbanes-Oxley Act of 2002, 15 U.S.C. 7214, or an investigation under section 105 of such Act, 15 U.S.C. 7215, for use in accordance with such Act.
    The document sent to my office is not a subpoena issued by a grand jury, or by the US Congress, or by a federal agency. And it is not a court order. A subpoena and a court order are two different things. This document is not signed by a judge. It is signed by an attorney and by the Clerk of Court.

    We are planning to write to the attorney and explain that federal law prohibits us from producing the tax returns in response to a subpoena, and that we will only respond to a court order. We will also notify the client and explain our position in this matter.

    Anyone have any thoughts on this? Am I missing something here?

    My first reaction to this was, well, a subpoena must be one of the exceptions to IRC 7216. But then I decided to actually read the regs...

    BMK
    Burton M. Koss
    koss@usakoss.net

    ____________________________________
    The map is not the territory...
    and the instruction book is not the process.

    #2
    I believe you need to contact your client regarding the subpoena. He/she has the right for their attorney to squash it. At least that is what we have been taught where I work. I believe this is really just a demand by the ex-spouse's attorney. But, I am not an attorney.
    You have the right to remain silent. Anything you say will be misquoted, then used against you.

    Comment


      #3
      Responding to a subpoena

      Most interesting.

      Although (thankfully) I'm not a lawyer, I've been on the receiving end of many subpoenas (state/federal/UCMJ) over the years.

      I thought any subpoena was issued via an applicable court, which would fall under Section 1 of your list.

      From your description, Lawyer Joe drew up a subpoena and delivered it to you. Of course, as an "officer of the court" his subpoena may carry similar weight?

      I'm sure the attorney can, quite easily, get a subpoena signed by a magistrate / judge and then you pretty much have to comply. Until that occurs, I see nothing wrong with your current position.

      ( Of course, all of this depends upon the applicable laws in the state in which you live. )

      FE

      Comment


        #4
        KOSS, 1st, you should strongly consider contacting your attorney. In general, a valid subpoena can be signed by the court clerk and/or by the attorney if authorized to practice in the issuing court (again contact your attorney for legal advice).
        Always cite your source for support to defend your opinion

        Comment


          #5
          Why didn't they issue the subpoena to your client? He could certainly get you to send him copies (for a fee) if he doesn't have them.

          Comment


            #6
            Originally posted by Burke View Post
            Why didn't they issue the subpoena to your client? He could certainly get you to send him copies (for a fee) if he doesn't have them.
            At this point it does not matter since the preparer received the subpoena. Preparer can try to bill for costs to whoever issued the subpoena but preparer should definitely contact their attorney for legal advice.

            Hopefully Original Poster will share the results.
            Last edited by TAXNJ; 07-14-2017, 09:23 PM.
            Always cite your source for support to defend your opinion

            Comment


              #7
              Just had one

              called my liability insurance carrier and for no charge they put me in contact with their attorney and he handled it. It is still confusing to me - as there are methods of fighting it. I think I had a very short time, but when "my" attorney handled it he said there was good reason.?? I "E'd" the client saying I was turning over the requested information to "my" attorney with his telephone number. My attorney did talk to them, I never heard what happened, but believe information was given as requested. Yes, the attorney for the other side had me bill them and I was paid quickly.

              I really became confused as to who had to do what, but the legal people can talk Latin to each other and I will not understand it.

              Comment


                #8
                Originally posted by JON View Post
                called my liability insurance carrier and for no charge they put me in contact with their attorney and he handled it. It is still confusing to me - as there are methods of fighting it. I think I had a very short time, but when "my" attorney handled it he said there was good reason.?? I "E'd" the client saying I was turning over the requested information to "my" attorney with his telephone number. My attorney did talk to them, I never heard what happened, but believe information was given as requested. Yes, the attorney for the other side had me bill them and I was paid quickly.

                I really became confused as to who had to do what, but the legal people can talk Latin to each other and I will not understand it.
                Can you explain - was it two separate instances or one? Why? When you say "my" attorney handled it..... was that the your liability insurance carrier's attorney whom you gave the tax returns?

                Did you ask the attorney when you say My attorney did talk to them, I never heard what happened what the result was?
                Always cite your source for support to defend your opinion

                Comment


                  #9
                  I am away, but isn't a subpoena technically an order to turn over information to a court and wouldn't IRC Section 7216 (b)(1)(B)allow you to comply?
                  Doug

                  Comment


                    #10
                    I've had one. I informed my ex-client and then called my E&O insurer. They assigned an attorney who handled everything. I ended up providing the financial statements requested by the plaintiff's attorney since the ex-client didn't want to bother paying his attorney to fight the subpoena.

                    Nice surprise that my E&O coverage provided the attorney at no out of pocket. It seems they rep me in the case of a subpoena without a deductible.

                    Comment


                      #11
                      Did the E&O atty require you to release the return copies to him/her? I don't think I would have done that. I would have released them directly to the ex-spouse's atty if ordered to do so by the E&O atty. I am curious as to what authority he/she has to see the confidential documents. Seems to me the responsibility should lie with the clients atty.
                      Believe nothing you have not personally researched and verified.

                      Comment


                        #12
                        Originally posted by taxea View Post
                        Did the E&O atty require you to release the return copies to him/her? I don't think I would have done that. I would have released them directly to the ex-spouse's atty if ordered to do so by the E&O atty. I am curious as to what authority he/she has to see the confidential documents. Seems to me the responsibility should lie with the clients atty.
                        I think we are allowed to give tax return information to an attorney for legal counsel by the regulations and Revenue Ruling 2010-5 gives us permission to supply this information to our E&O insurance carrier if necessary.
                        Doug

                        Comment


                          #13
                          It was the insurance company's attorney and after I sent the E to the client they contacted him.

                          Comment


                            #14
                            I had the same request

                            I agree with BMK 100%......

                            I had the same request from an attorney. I could not reach the taxpayer to get her consent. I responded the same as BMK. I also sent the attorney a copy of rule 7216 and explain why I could not consent to his request. I inform him if he could get the taxpayer to contact me and sign a Consent to Release her information, that I would do so at a price which I stated.

                            A tax preparer must be very careful when releasing a taxpayer's tax return information. IRS enforces some expensives penalties for violating the Privacy Act.

                            Comment


                              #15
                              Originally posted by Toobusy View Post
                              I agree with BMK 100%......

                              I had the same request from an attorney. I could not reach the taxpayer to get her consent. I responded the same as BMK. I also sent the attorney a copy of rule 7216 and explain why I could not consent to his request. I inform him if he could get the taxpayer to contact me and sign a Consent to Release her information, that I would do so at a price which I stated.

                              A tax preparer must be very careful when releasing a taxpayer's tax return information. IRS enforces some expensives penalties for violating the Privacy Act.
                              Since you referenced rule 7216 do you think that CFR 301.7216-2 - (f) would apply in this post?
                              Always cite your source for support to defend your opinion

                              Comment

                              Working...
                              X