Prepare them or not?

[cattaxlady]

I have a married couple who are in the process of getting a divorce. . We have been preparing their taxes for many years, and this year the SP brings the paperwork to us with the instructions to put the refund into her lawyer's bank account, since she and the TP cannot agree on how it should be split. The lawyer will then hold onto the refund until an understanding has been reached. SP currently does not work, nor has she for the last few years. My partner and I are in agreement that the refund will not be put into the lawyers bank account unless there is a court order, but we are wondering if we should even prepare the return or send them to to IRS office and let them deal with it. If this problem landed in your office, what would you do?

[Anarchrist]

You have a conflict of interest. At the very least you probably need a conflict waiver. Call your insurance company.

[Burke]

You can prepare the return if you wish and e-file it if BOTH parties sign off on it (and preferably in your presence.) However, it would be with the understanding that you would NOT do direct deposit under the circumstances. A check will be produced with both names on it, and they can sign it over to the lawyer if they wish or handle it however they desire. They also should stipulate in your presence or sign a statement as to what address will be on the return for mailing the check.

[ATSMAN]

Take it from a fellow who was in the middle of a screaming match between divorcing spouses and asking me to decide how much of the refund belongs to each! I did it the rational way and they were not happy with my answer so I finally had to ask them to "get out" and take this battle to their lawyers. The lawyer kept on e-mailing me with the same questions over and over and I must have spent over 2 or 3 hours that I could not collect!

So stay away from any situation which may explode in your face. I have been doing just that if I get the slight hint that trouble lies ahead!

[cattaxlady]

Thank you for your input. You helped us decide to send them else where.

[JohnH]

I would tell them that I intend no disrespect, but I'm declining the engagement because tax return preparation with lawyers in the middle almost never turns out well for the preparer. At the very least it involves a waste of the preparer's time while the lawyers rack up billable hours at the client's expense. I don't want to be a party to that sort of shenanigans. That being the case, if their lawyers are any good they surely have tax preparers they trust & have worked with in the past, and they should ask their respective lawyers for recommendations on whom to use. That puts the monkey on the lawyers' backs, where it belongs. Besides, it's pretty good advice.