Releasing Information

[Tim]

Client owes me money. The new CPA called requested a bunch of information, depreciation schedules, work papers etc.

I told him, client pays in full I give you the requested information.

Told me that was unethicial.

[jainen]

I agree with the new CPA

I agree with the new CPA. It is unethical of him to ask you for that.

[BOB W]

CPA's

In NY CPAs are required to pass on info to a new accountant reguardless of any fees owed to the old accountant. You may be able to bust chops for a while, but your state society, if they called them, will contact you requiring you release the info or receive sactions.

I would go to Small Claims Court and file for a hearing/judgment ASAP. Maybe the ex-client will cave in when he gets the notice to appear. Don't go to court with your hands dirty, give the info before it gets worse.

[Bees Knees]

I'm not a CPA, but I was under the impression that it is unethical to hold back the documents that belong to the client, such as a check register or other papers the client gave you to prepare the tax return. Any calculations or documents you create in preparing the return are a part of the tax return, which you do not have to turn over to the client until you are paid.

If the client paid for the return, then a depreciation schedule you created in order to prepare that return belongs to the client, and a new accountant is entitled to that information upon request. But if the client did not pay for the return, anything you created belongs to you, and a new accountant is not entitled to that.

Is that different than NY CPA rules?

[Armando Beaujolais]

Client owes me money. The new CPA called requested a bunch of information, depreciation schedules, work papers etc.

I told him, client pays in full I give you the requested information.

Told me that was unethicial.

Treasury Circular 230, section 10-28, Return of Client's Records:

"In general, a practitioner must, at the request of a client, promptly return any and all records of the client that are necessary for the client to comply with his or her Federal tax obligations...The existence of a dispute over fees generally does not relieve the practitioner of his or her responsibility under this section..."

It goes on to say that if there is a state law that allows retention of a client's records the practitioner must still let the client review and copy any additional records necessary to comply with federal tax law.

Seems pretty clear.

[BOB W]

Cpa

Brad> you are correct, workpapers and "accountant" documents are not to be released only client documents and tax returns. I believe the rule is basically, info needed to continue the business without interruption or delay.

[Bees Knees]

So in other words, if you create a depreciation schedule, and the client never paid you, then you do not have to turn that over to a new accountant.

Correct?

[BOB W]

Well.......

.........I believe the rule is basically, info needed to continue the business without interruption or delay.

In todays world depreciation schedules are part of the tax return. I have not seen too many hand compiled depreciation schedules. But if it is needed to complete the next year's return, then I would say "yes" to giving it to the new accountant.

[jainen]

Seems pretty clear.

>>promptly return any and all records of the client<

Yep, seems pretty clear. You can't "return" something that was never given to you in the first place. In determining what records belong to whom, "of the client" does not mean "about the client."

As to the "info needed to continue the business," that would be the source documents. The new CPA can develop the same kind of workpapers from them as you did (and will probably get the same kind of compensation).

[BOB W]

Yep!

Sounds like a plan of attack. Let the new accountant re-due what you have done.

I'm more concerned with getting paid and would be willing to give everything for the payment. Holding out on info to the new accountant would cause the new accountant to bill the client to re-do those worksheets, is a good idea. When I go to court I want to make sure that I have done nothing wrong and all the burden in on the client(ex).

[veritas]

In NY CPAs are required to pass on info to a new accountant reguardless of any fees owed to the old accountant. You may be able to bust chops for a while, but your state society, if they called them, will contact you requiring you release the info or receive sactions.

I would go to Small Claims Court and file for a hearing/judgment ASAP. Maybe the ex-client will cave in when he gets the notice to appear. Don't go to court with your hands dirty, give the info before it gets worse.

I would never take a client to court over a fee. They could make nothing but problems for you.

[Joe Btfsplk]

Depr schedules, etc.

I would give him anything that he brought to me. If he didn't pay, I am not sure depreciation schedules and the tax return could be considered something he is entitled to regardless of whether you had furnished the client a copy originally or not.

You might offer to give the papers to the new accountant for a fee from the accountant himself.

[jainen]

I don't release it

>>a fee from the accountant himself<<

When you refinance your home, the old mortgage company charges sixty bucks just to tell you the payoff amount!

I think a copy charge of fifty cents a page is reasonable. I don't want to delay things, so I'll get it ready and the new CPA can just pay at the same time he brings in the confidentiality release.

I will provide the originals or copies of client source documents. The depreciation schedule is NOT part of the tax return--it is my own internal workpaper and I don't release it.

[Bees Knees]

I will provide the originals or copies of client source documents. The depreciation schedule is NOT part of the tax return--it is my own internal workpaper and I don't release it.

Why did you create the depreciation schedule? Just for the fun of it? Or was it because your client paid you to figure it out?

It's part of the tax return.

[OldJack]

I agree with Bees and others that say the information the new accountant is asking for appears to be information that you are required to provide (ie: depreciation schedule info), at no cost to you, regardless if the client has paid your fee.

edit: you may not be required to actually give the depreciation schedule, but you are required to give the information from the schedule that was used in calculating the tax return. I don't know how you would do that without just giving a copy of the schedule or it would take more unpaid work on your part.