Ethics II

[Bees Knees]

Scenario:

A client came in last week with a MFJ tax return. He told me that his wife was not aware of his financial situation and he wanted to keep it that way. The only items on the tax return showing his financial situation are stock sales. I don’t want to get in the middle of a marital dispute, much less be the cause of one. Is it ethical for me to honor my client’s request and prepare the return without first contacting my client’s wife?

[abby]

preferences vs ethics

I wouldn't prepare this return, but I don't think we are obliged to monitor marital honesty.

If a taxpayer brings back a signed 8879 with two signatures, we don't ask for signature verification from the absent spouse.

Caveat emptor - more so in marriage than just about anything else.

[TaxBird]

If the wife called with questions I would answer them (if it's a joint TR). And if she asked for a copy of the TR, I would give her one. Otherwise, I would presume that the rest is none of my business and wouldn't approach her on it.

[DTS]

Financial situation

Bees,

If the only thing in the return to report was stock sales, I would say you could prepare the return without the call to the wife, but she would have to be aware of everything being reported on the return since she is signing it.

I would not feel it was my business to let her know what his situation was, as I would assume they have an agreement, of sorts, about this.

I've had a couple of situations like this. One like this example and one where the husband did not want to include income so his wife would not see it. Obviously, the last one did not happen.

Dennis

[Joe Btfsplk]

Financial situation

Generally only one spouse comes in with their tax information. Often neither comes in, they just mail it, fax it or email the information. Therefore, you must prepare many returns without witnessing both clients review and sign it.

However, since the client told you he did not want her to know his financial situation, then you have reason to suspect that he will sign her name and mail it without her seeing it. However, you cannot be sure. He may take it to her and say, "sign here."

It would be difficult to say what his reason for concealing his financial situation. If the stock sales are the only thing involved, it may be that he feels guilty about playing the market instead of buying her that new fur coat she wanted.

If you are concerned about your role from an ethical standpoint, maybe you should tell him that you will prepare it only on the condition that he promises to show her the return and have her sign it in as much as it is a joint return.

I'm not sure that you are really obligated to do more than prepare the return correctly based on what you know. If he told you he was concealing income, then it would be unethical to prepare it.

[Bees Knees]

Just so everyone understands the poll, this is a question on ethics, as it relates to our profession. What does our professional code of conduct say we can do in a situation such as this?

[veritas]

To Bees

This is a great topic. I looked to your cpe exams and see nothing about ethics. Is it covered in the exam? Does it meet the 2 hour yearly requiremnet EAs' are supposed to acquire? I don't see where your cpe is approved by the Director of Practice for EAs'? Also in order for me to use your cpe it must be approved by Oregon Tax Board which is seperate from the Board of Accountancy.

[TMI Moderator]

Cpe

This year our CPE will focus on 1040 issues (8 hour) and 1040 plus small business issues (12 hour). We will not have an ethics edition available this year, but we do plan to introduce that product next year.

We have entered into an agreement with the Office of Professional Responsibility, Internal Revenue Service, to meet the requirements of 31 Code of Federal Regulations, section 10.6(g), covering maintenance of attendance records, retention of program outlines, qualifications of instructors, and length of class hours. This agreement does not constitute an endorsement by the Office of Professional Responsibility as to the quality of the program or its contribution to the professional competence of the enrolled individual.

Our sponsor number is 637.

We do not have specific approval by accountancy boards of any individual states at this time.

[veritas]

Thank you!

You might add that to your web site under CPE.

[DTS]

???

<<Just so everyone understands the poll, this is a question on ethics, as it relates to our profession. What does our professional code of conduct say we can do in a situation such as this?>>

I may be dumber than dirt, but I can't find anything, anywhere that gives me an ethical direction for this situation.

Dennis

[veritas]

The way I read it the client is asking the tax preparer to be complicit in hiding financial information from the client's wife.

[Armando Beaujolais]

If the husband said his wife didn't know about his financial situation and he wanted to keep it that way, yet he wanted you to complete a joint return, how could you not think there was a conflict of interest?

Just because a spouse signs a return doesn't automatically mean the spouse knew what was going on and reviewed all the information. What are innocent spouse laws all about? IMO, it's a copout to say "She signed the return, don't look at me." Especially since you took the action before the action occurred that supposedly exonerated you.

Let's look down the road. Let's say that soon after the return is filed, the wife does some filing of her own and an attorney gets involved to put an end to this deceiptful relationship. Let's say there's been a pattern of deceipt by the husband, along the same lines that would provide innocent spouse relief. Let's say the attorney contacts you and says "Is it true that Mr. Husband told you that he was intentionally hiding financial information from Mrs. Wife, and you prepared a joint return anyway knowing Mr. Husband was deceiving Mrs. Wife about their joint tax situation?"

Let's look at this train wreck from a different perspective. Let's say after you take Mr. Husband's information, then Mrs. Wife makes an appointment with you. Mrs. Wife lays down some 1099's of her own with substantial income and says she doesn't want Mr. Husband knowing about it.

I don't think you can say it was fine to honor Mr. Husband's wishes, but then cry foul when Mrs. Wife does the exact same thing. If it was fine for Mr. Husband to do it, you need to be equally as supportive when Mrs. Wife does it.

Sorry, my vote is that you need to contact Mr. Wife. Circular 230 says the permission to represent both must be in writing.

Unless you believe there's no conflict of interest.

[Bees Knees]

I had a situation years ago where the husband and wife were on the verge of a divorce. Then the husband found out from his attorney how much to expect to pay in alimony. All of a sudden, they are back together again. All through this, the wife would come in after the interview with 1099-Rs from all the IRA money she took out without her husband’s knowledge. I of course just did the return and kept my mouth shut. Once he asked me if she had done that. I said yes. I thought for sure he was going to punch me in the face.

[BOB W]

My take

If a client wants to request that I withhold info to his/her spouse I would simply say " I cannot withhold any info unless you file a MFS return". He either takes it or leaves it. It is a joint return and both are entitled to joint info from me and copy of returns, if asked for, over and above of the required copy.

Would I inform the other spouse, No.

[Bees Knees]

If a client wants to request that I withhold info to his/her spouse I would simply say " I cannot withhold any info unless you file a MFS return". He either takes it leaves it. It is a joint return and both are entitled to joint info and copy of returns, if asked for, over and above of the required copy.

Would I inform the other spouse, No.

MFS is an option, but it is not one of the options in the poll. Lets say the clients do not want to file MFS. What is your choice then?