What would others have done?

[erchess]

When I was working for a major storefront firm, I inherited from my mentor a wonderful elderly couple. My mentor told me that in a couple of years they would get correspondence from the IRS advising them that they did not need to file. My mentor said that he had tried to convince them of this himself. After doing two more returns for the couple and being told that there had been no IRS letter, I found out that ever since being told by my mentor that they did not need to file, they had been taking the returns home and sticking them in a drawer in case the IRS should ever question their failure to file. I pleaded with them to let me write a letter explaining why they did not need to file. Since they were long time clients of the firm, I could have done this at no charge to them. My pleas fell on deaf ears. I did something that could have got me in trouble. I went behind their back and rang up their Pastor. They had told me much over the years about what a good kind and smart man he was. It took some explaining to get him to grasp that I wanted him to help me get them to NOT spend money with me. Apparently pastors are often asked to get church members TO spend money with someone. I finally got him to understand that one of the core commitments of my faith is not oppressing the poor and another is not taking anyone's money without returning fair value in goods or services. Anyway, I suggested that the couple could increase their giving to the Church by the money they stopped spending with Block. The pastor indicated that they already gave enough to the church and they should spend the money on something special for themselves. But he did talk to them for me and they did go along with my plan. When I moved out of town I turned them over to another Preparer who I felt would take good care of them.

I have since been told that I broke the rules in approaching the pastor without their permission. I got by with it, and I wonder what else I could have done beyond the obvious step of asking for permission. (Sometimes it is easier to ask for forgiveness than permission but I know that sometimes it isn't.) I was an unenrolled preparer at that time and had never heard of Treasury Circular Thirty. I did know that my employer did not like for me to reveal the identities of clients to anyone.

[gkaiseril]

Enrolled or not, this is a privacy issue and all prepares should respect their clients right to privacy. This extends to securing any copies of their returns you keep and the secure destruction and disposal of those returns. One also has to be careful not to throw out any confidential or identity information in the circular file container or file 13 container. The federal and state identity theft laws may also come into play.

IRS does disclose:

http://www.irs.gov/govt/fslg/article/0,,id=158487,00.html

The problem with older taxpayers not meeting a federal filing requirement one year does mean they will not be required to file in a future year. Then there are also state filing requirements, which could result in having to file a state return but not a federal return. Sometimes it is just easier to have the taxpayer(s) come in and review their information.

This year, this couple can get a refund even if they do not have to file a federal or state income tax returns.

[Zee]

You breached confidentiality ethics

When I was working for a major storefront firm, I inherited from my mentor a wonderful elderly couple. My mentor told me that in a couple of years they would get correspondence from the IRS advising them that they did not need to file. My mentor said that he had tried to convince them of this himself. After doing two more returns for the couple and being told that there had been no IRS letter, I found out that ever since being told by my mentor that they did not need to file, they had been taking the returns home and sticking them in a drawer in case the IRS should ever question their failure to file. I pleaded with them to let me write a letter explaining why they did not need to file. Since they were long time clients of the firm, I could have done this at no charge to them. My pleas fell on deaf ears. I did something that could have got me in trouble. I went behind their back and rang up their Pastor. They had told me much over the years about what a good kind and smart man he was. It took some explaining to get him to grasp that I wanted him to help me get them to NOT spend money with me. Apparently pastors are often asked to get church members TO spend money with someone. I finally got him to understand that one of the core commitments of my faith is not oppressing the poor and another is not taking anyone's money without returning fair value in goods or services. Anyway, I suggested that the couple could increase their giving to the Church by the money they stopped spending with Block. The pastor indicated that they already gave enough to the church and they should spend the money on something special for themselves. But he did talk to them for me and they did go along with my plan. When I moved out of town I turned them over to another Preparer who I felt would take good care of them.

I have since been told that I broke the rules in approaching the pastor without their permission. I got by with it, and I wonder what else I could have done beyond the obvious step of asking for permission. (Sometimes it is easier to ask for forgiveness than permission but I know that sometimes it isn't.) I was an unenrolled preparer at that time and had never heard of Treasury Circular Thirty. I did know that my employer did not like for me to reveal the identities of clients to anyone.

I'll be the "devils advocate". In my opinion, once you explained clearly to the clients they weren't required to file a tax return and they acknowledged an understanding, you fully satisfied your responsibility. Calling the pastor and discussing your client's tax situation without their knowledge was well-meaning, but highly unethical. Would you also call or write the IRS and "turn-in" those with questionable returns even though they satisfied your due-diligence requirements?

[Luis Mopeo]

You did violate Circular 230 rules, and also most association's rules of professional conduct. Just remember that ethics and professional responsibility are not about being a good decent person or trying to do the thing that's morally right.

You're not supposed to disclose personal information about clients to anyone except under a lawful request by an IRS employee or other enforcement agency, unless you have permission in writing from that person. What you did was kind and you tried to be careful and discreet by talking to the pastor, but you were taking a risk.

One thing that scares me about these situations with elderly clients is how often the family starts acting like angry pit bulls before the old folks are even expired. Remember, you're only seeing one little aspect of the life of these folks, and you don't know 99% of what their life is about. You could be reaching into a lion's den without knowing it.

Unless someone has been judged incompetent by a court to manage their own affairs, you shouldn't take it upon yourself to declare that they need protection from their own decisions. I know there are some who think I act very strange sometimes too. I hope if I get judged incompetent, it's by a qualified person in the mental health field, not by a tax preparer no matter how good their intentions..

[jainen]

On a different issue

On a different issue, I think you were wrong to disobey your employer, which put them at risk. If you are not able to accept the company's policies, ethics requires that you resign.

[Gretel]

The others are all right, but I think you knew about your ethical responsibilities before you posted.

I don't know what I would have done. I had a client who insisted on making estimated payments each year, even so he was far below filing requirement. He just was very scared the IRS would want something from him. It still was his choice to follow his fears for which he is responsible and I respected that choice. Nevertheless I had compassion with him and charged him considerable less.

I have compassion with you too, I, myself, am often enough torn between helping and just respecting someone's choice, which you could have done, but it's no easy thing to do.

[DaveO]

I have a few (too few) of these clients

It's always a joy to see them come in. I take the time to talk with them and about their families. Often I'm doing returns for their children and grand children. I see if they qualify for the Homestead tax exemption and if so I prepare it. I will charge a nominal fee for the return. The filing of the return is a ritual for them and makes them take stock at least once a year of their financial health. It's also a chance for some human contact and a chance to make sure someone isn't taking advantage of their finances.

Oh and yes the ethics thing that was the focus of your post. However well meaning your intentions were it was a violation of their privacy. If they feel better filing a return then it's their right to do so as long as they wish.

I had an elderly client come in and announce, "I turned 87 this year, what do I get for that?" I replied, "The chance to turn 88." We had a good laugh and then did his return.

[sea-tax]

When I was working for a major storefront firm, I inherited from my mentor a wonderful elderly couple. My mentor told me that in a couple of years they would get correspondence from the IRS advising them that they did not need to file. My mentor said that he had tried to convince them of this himself. After doing two more returns for the couple and being told that there had been no IRS letter, I found out that ever since being told by my mentor that they did not need to file, they had been taking the returns home and sticking them in a drawer in case the IRS should ever question their failure to file. I pleaded with them to let me write a letter explaining why they did not need to file. Since they were long time clients of the firm, I could have done this at no charge to them. My pleas fell on deaf ears. I did something that could have got me in trouble. I went behind their back and rang up their Pastor. They had told me much over the years about what a good kind and smart man he was. It took some explaining to get him to grasp that I wanted him to help me get them to NOT spend money with me. Apparently pastors are often asked to get church members TO spend money with someone. I finally got him to understand that one of the core commitments of my faith is not oppressing the poor and another is not taking anyone's money without returning fair value in goods or services. Anyway, I suggested that the couple could increase their giving to the Church by the money they stopped spending with Block. The pastor indicated that they already gave enough to the church and they should spend the money on something special for themselves. But he did talk to them for me and they did go along with my plan. When I moved out of town I turned them over to another Preparer who I felt would take good care of them.

I have since been told that I broke the rules in approaching the pastor without their permission. I got by with it, and I wonder what else I could have done beyond the obvious step of asking for permission. (Sometimes it is easier to ask for forgiveness than permission but I know that sometimes it isn't.) I was an unenrolled preparer at that time and had never heard of Treasury Circular Thirty. I did know that my employer did not like for me to reveal the identities of clients to anyone.

I am usually not like this but shame on you. This is wrong on so many levels I am not sure where to start.

[Black Bart]

Shoud he be hung or shot for this act of kindness?

...Just remember that ethics and professional responsibility are not about being a good decent person or trying to do the thing that's morally right...

Brad has made this quoted statement previously and I guess it's accurate/true (unsure which), but, you know, on the face of it; just looking at it; thinking it seriously, solidly, and throroughly through -- it seems completely crazy. It kind of puts you in mind of something like "The People's Democratic Republic" as a name for an iron-fisted totalitarian dictatorship. An analogy that comes to mind is a wonderful movie of some years ago titled "Absence of Malice." It made the point that if a newspaper reporter wrote a story that was substantively untrue but technically accurate, while demonstrating no apparent malice; then he/she would be deemed to have complied with journalistic principles and could not be held legally liable.

"The World Turned Upside Down" -- Tune played by British general CHARLES LORD CORNWALLIS' band upon losing the decisive battle at Yorktown to Washington's provincial army.

One thing that scares me about these situations with elderly clients is how often the family starts acting like angry pit bulls before the old folks are even expired. Remember, you're only seeing one little aspect of the life of these folks, and you don't know 99% of what their life is about. You could be reaching into a lion's den without knowing it.

Lou's right about this and it's not always the relatives you have to look out for. For three years I strongly emphasized to a sweet little old 85 year-old lady that her returns were unnecessary, but she insisted ("I've been filing 50 years and I'm afraid to stop"). Finally, IRS notified her. Highly irate and waving the letter under my nose, she declared she'd "never been so surprised" and "would most certainly have stopped years ago if I had only known." Now that was an epiphany for me -- people are not always what they seem. Fortunately for me, she had no "pit bull relatives" left. Now, if they don't need it; I don't file it.

...I hope if I get judged incompetent, it's by a qualified person in the mental health field, not by a tax preparer no matter how good their intentions.

Personally, if I get judged incompetent (Lou's probably willing to do it for me -- defensively, I hope), it's my sincere wish that it's by a person with "qualified" good intentions (and a heart) rather than some of the "qualified" technicians I've seen running those places.

[taxea]

What would others have done?

I elf all returns that qualify. If they insisted on filing I would do the return, give them their copy and note on the file copy that the return was not sent to the IRS.\
In Hawaii the elderly get a low income credit, not much, but it pays a bill. So I have to do the fed to do the state. I do both file the state and note of the 1040 that it didn't require filing.
I don't charge the client but give them an invoice with the total fee discounted. I call it a Senior Citizen discount. taxea

[Snaggletooth]

Ease Up

Yes, you broke confidentiality, and no you shouldn't have done it under conventional wisdom. But you don't deserve the scathing and sharp rebuke you have received by others. This trial of ethics reminds me of Jonathan Edwards' "Sinners in the Hand of an Angry God."

Whatever wrong was committed was done so with the best of intentions, it would appear. We should all occasionally break the bonds of restraint and practice random acts for the right reasons. Not always smart, but magnificently human.

Would I have done it myself, even for the right reasons? Probably not. But you are you and I are me.

Besides, Weaverville is such a great place....

[Black Bart]

Great post, Snag

...We should all occasionally break the bonds of restraint and practice random acts for the right reasons. Not always smart, but magnificently human.

Would I have done it myself, even for the right reasons? Probably not. But you are you and I are me.

No, I wouldn't have done it either. If those clients want to disregard tax advice and have got good sense, then it's their choice and their money. After that I figure it's none of my business.

Still, if that's the worst thing anybody here's ever done, then they're as pure as the driven snow and we better step aside 'cause lots of first stones are going to be cast.

Bowie: "Travis, you can't help bein' you and I can't help bein' me."

[erchess]

Thank you all for the replies

It was unethical. The only thing I can say in my defense, and it's not much, is that we had not been specifically told that the very identity of a client is one of the secrets we hold in sacred trust for them. We had been told that we protected client identities so other firms would not steal them from us. I had no business parsing the rationale behind rules and had I been in any doubt at all I could have talked to a more experienced peer or someone up the chain of command. I meant well for my clients but I was arrogant, ignorant, stupid, and in violation of professional ethics. The fact that my clients would have given permission if asked saved me, the two or three managers above me, and the firm from more trouble than I personally have ever been involved in. I would like to think that the incident is atypical of me.

On another occasion when I knew I did not have the power to do what I thought should be done, I phoned the Regional Manager because my Office and District Managers were unavailable. The complaining client had received a partial refund anticipation loan. He was going on active duty with the military the next day and he did not know where he would be over the next couple of weeks so he could not tell us where send the second check. He said that he had been promised the full loan. I could see in our software that the preparer had overridden a warning that he would most probably receive the partial loan. (We could call the bank to get a final decision, and having called and been given permission we could override.) Had she not overridden, the possibility of the partial would have been disclosed on a form he would have had to sign before we transmitted the return. Just that morning I had questioned her when I could not help but notice similar behavior. She had assured me that while she knew she was not supposed to override those warnings, when she did so the bank had no recourse but to make the full loan. So I felt that I had good reason to believe his story and good reason to disturb someone who could quickly spend the kind of money that would make this man whole. The RM cut the complaining client a check for the missing money and overnighted it to the DM along with a contract in which the client promised to pay the Regional Office back when he got the second check. The DM met the client before he left town and all was taken care of.

I particularly like the statement that one of you efiles all eligible returns. Now that I have my own shop I already do that. Now I have one more reason for the policy. If I had the first incident to do over again I would not violate client confidentiality.

Oh to answer one question, I have never turned anyone in to the IRS. I never thought about it until I was in training to become a tax professional. Then I did think about it when I found out that the IRS can be very generous to snitches who are not tax professionals. But in training I was told that as of the date I signed my first contract as a tax professional, I would not be able to spill the beans on anyone to the taxing agencies even if I happened to learn about the situation outside of any professional to client relationship between them and my firm or them and me. The consequence for breaking that rule would be discharge from that employer and possible civil or criminal penalties and certainly would include not being eligible for any financial gain from the disclosure. (I don't know about any of you, but I would disclose if a court ordered me to and I might disclose if a tax attorney in whom I had considerable faith expressed the opinion that a court would so order.)

On the other hand I have refused to do returns when I was sure that a client was trying to break the rules. I remember one couple in particular where the man introduced the woman as "my wife" and both had on wedding rings, but they each wanted to file head of household with the same address on the return. (That had been done by my company the previous year. They had lived at another address in another state and seen different preparers but on the same day. and in the same office.) When I pointed out the problem he said that they were not really married and pointed out a recent case in which the tax court had allowed two households at the same address. I told them flatly that I didn't believe them. They probably knew where they went wrong this time, but in case they didn not, I didn't spell it out. But even these folks I have not ratted out to the IRS.

[jainen]

Such traits

>>I was arrogant, ignorant, stupid, and in violation of professional ethics<<

Such traits may not serve you that well in business, but I'll bet you are wicked on the 8 x 8.

[erchess]

Actually no

I don't usually display such traits in business or otherwise. And I'm not that great at chess either but I love to play.