Ethics question

[DTS]

I have a longtime client that is now in an Alzheimer's facility. She's been there for a couple of years now. Her daughter was named in my client's trust to take care of her affairs and did for awhile, but has given that task up and wants out of the responsibility. She has not returned any emails, calls or letters from me.

Her brother is in the long process of having her removed and himself put in her place. In the meantime, my client has a large balance due from '04 and the IRS has sent her a notice to levy. I have informed the brother and sister about this, but nothing can be done until he is put in place.

My question is: With my POA, can I call the IRS and tell them of the situation and why these notices have been unanswered and that the family is trying to rectify this mess? I have not been given permission to do this from the original trustee and the brother would like me to act, but has no authority, yet.

Any suggestions on this mess and my ability to help or not.

Thank you,

Dennis

[veritas]

Poa?

How did you get a POA?

[BOB W]

Dennis> It seems like you have done all that you can, let the IRS do their job and take the money out of their account by levy, not that you will have a choice in the end. Even with a signed POA, your phone call will not stop the levy. In the end they will only pay more interest by trying to stop the levy from withdrawing the money.

[ChEAr$]

I have to disagree

Dennis> It seems like you have done all that you can, let the IRS do their job and take the money out of their account by levy, not that you will have a choice in the end. Even with a signed POA, your phone call will not stop the levy. In the end they will only pay more interest by trying to stop the levy from withdrawing the money.

Since he has a POA covering that year, it was signed by the taxpayer and is still valid
until withdrawn. Having said POA tells us that she was his client for year 2004.

Therefore I think he has a duty to inform IRS as to the current state of affairs. After all,
they do not know why the letters were unanswered and of course acted according to
their operating procedures.

So, by all means, contact IRS and let them know the story so they may contact
the previous trustee. I would do so for any of my long time clients.

[erchess]

Hmmmmmmm

I tend to agree with Harland here. If you wait on the IRS to take the money it seems that more will be taken. At least if they are apprised of the situation they can contact the trustee who may respond even though they have ignored Dennis. If nothing else perhaps the family would get the lead out and get trustees changed.

Also, what is the problem leading up to the Levy? If the IRS is totally or partially wrong, I do not see why Dennis can't argue the point.

[Luis Mopeo]

I have not been given permission to do this from the original trustee and the brother would like me to act, but has no authority.

I'm confused. You said you have POA, but you "have not been given permission to do this."

Does the POA give you authority to communicate with the IRS regarding the tax year Form 1040 for the client? Read the POA. If it's the standard form, I believe it says you can perform any or all acts the taxpayer could perform, with the exception of negotiating refund checks, etc.

If you don't have specific authority to contact the IRS regarding this issue, don't. It may feel like the right thing to do, but with the limited information provided, you can bet there will be a war among the family members for the estate's assets. If you're not careful, you could become a target real quick for appearing to take sides with the "wrong" person.

[DTS]

Poa

I have a signed 2848 by the daughter for her mother and two pages from my client's trust that named her daughter to handle tax matters for the mother. I submitted that a couple years ago. I was contacting the IRS regarding this tax year and other years regularly until this situation arose.

My dilemma is not knowing if I would be violating eithics rules by contacting the IRS on THIS matter, the levy, when I have not been given permission to do so. Presently, there is no one in the family I can even discuss this matter with that has any authority.

My thoughts are that if I can, at least, call on her behalf, the IRS may put this matter on hold until another trustee can be appointed. At that point, he/she can then pay off the liability. Luis, your concern is also my concern.

Dennis

[veritas]

What was the intent of the POA originally?

Stick to the scope of your original engagement. Anything outside that is off limits.

[Corduroy Frog]

Focus on the Problem

DTS, the real cause-and-effect problem here doesn't lie within your POA, or whether you can talk with the IRS, or anything of the sort. The real culprit is that the family has taken no responsibility for anyone serving in the capacity they should.

You don't really have anything to offer the IRS, even if you ARE authorized. They've got to straighten out what they want to do, formulate a plan, and then begin execution. Until they do this, they are tied to the railroad track, and you are unable to stop the train.

Frankly, although I don't wish any evil on anyone's client or my own, a levy may serve notice that this family is not addressing their affairs, and may jolt them into appropriate action.

[erchess]

I just had a thought

How much money does this lady have, how fast is it being depleted by the cost of her care, and how long is she expected to live? If she is in the process of spending down to Medicaid, the heirs may figure that they have nothing to gain by bothering with her finances and may not care in the least whether the Facility or the IRS gets her money. She may also be too "out of it" to know or care what kind of care she is receiving.

[DTS]

Family

Frog,

I was thinking this very thing after my last post. How frustrating it is to sit back and watch this happen. If I ever treated my mother like this, I would hope someone would slap me into the next century! Shameful.

I have given the son trying to step in the names of a couple of attorneys that specialize in this area. I'm hopeful they can get this straightened out quickly.

Thank you all for your help and as always, I appreciate it very much,

Dennis

[DTS]

Client

Erchess,

She has a sizable home in a popular area of CA, which we all know what that goes for, rentals with very nice rental income in the southern part of the state plus a modest portfolio. She has monthly income of approx. $8,500. Nothing that is to be sneezed at.

I don't know what her care costs are, but her health is fine, except for the Alzheimer's. I have not heard when she will pass. Could be many years.

The son trying to take over has no intention of letting his mom's assets be sold off to pay a tax lien, if he can help it. I don't know if he can pay this himself by way of an "advance", but that may be something to consider.

Dennis

[Black Bart]

Dennis

If you've got an '04 POA and the tax is for '04, then I think you could discuss it with IRS, but what do you really have to tell them? You could ask for an extension of time, but there's not much reasonable cause -- basically, the taxpayer's got the money to pay and her trustee daughter would just rather not fool with it. You might get a sympathetic agent who agrees that Mom's illness justifies putting it on hold for a couple of months. Then again, he might say diligent bro has a potential lawsuit for fiduciary breach of trust against irresponsible sis, but in the meantime, the levy goes forward. Only one way to find out.

IRS would probably just grab the $8,500 monthly bank account first (easier than selling off assets). If you can prevent that, then fine. If not...well, as others pointed out, involvement is risky when there's money/family-heirs/problems and things aren't working out. People who waste money by neglect tend to sum up the entire problem by saying "my accountant told me he'd take care of that."

Actually, it's brother's place to go grab daughter by the scruff of the neck and say "Hey, pay this and call Dennis." I think I'd tell him to do that. If he isn't interested, then you don't have a friend in either camp and I'd let the levy-times roll.

[JAinNC]

Just in case

... I would watch my own back. If this is a family situation and the buck gets passed around it might come right back to Dennis. I suggest sending a certified letter (you mention e-mails, phone calls, and letters) to the sister. Keep your copy and the card she signs or keep the one that is returned to you as proof you actually made EVERY effort to act professioanlly and ethically without overstepping your authority.

Obviously, you care more than the responsible person.

Jeannie

Don't you just hate it when you realize you care more about a client's business than they do?

[DTS]

BB and Jeannie

After all the good posts from everyone, which are telling me to watch my back, I've decided to let this play out, how it's going to play out. Personally, I think this is a rattlesnake in the wait, which is the reason for the original post.

I'm in hopes the son will be able to get something going with the referrals I've given him, then contact me after he's in place.

Yes Jeannie, I do hate sitting back and watching all this unfold. I know this client and how she tried to protect herself against this. Obviously, not enough.

Dennis