Third party

[DTS]

I posted a reply to Bees under the ethics question thread, but was afraid it would get buried without an answer.

Do we need to obtain written permission from a client when their documents have been subpoenaed in a Worker's Comp case?

Thank you,

Dennis

[Luis Mopeo]

I posted a reply to Bees under the ethics question thread, but was afraid it would get buried without an answer.

Do we need to obtain written permission from a client when their documents have been subpoenaed in a Worker's Comp case?

Thank you,

Dennis

You'll probably need an attorney to get reliable advice on that one. A subpoena is a different animal from the IRS asking questions. If the court demands that you turn over documents, if it was me I'd turn them over.

There was some noise a few years back about tax professionals getting something similar to attorney/client privilege, but that's worked its way through the courts to where it's meaningless. Congress passed a law that said there was the same confidentiality protection between a tax practitioner and a client that applied to an attorney and a client. Alas, the courts have determined that this "protection" doesn't apply unless the tax practitioner is doing attorney's work. Bottom line: In the vast majority of cases you have no confidentiality protection.

[DTS]

Documents

Luis,

I just got off the phone with this client 5 minutes ago and told him I was not sure if this was needed or not, but he told me to email the letter to him for signing, just in case. All I have are his returns and supporting documents used in the returns.

Thank you,

Dennis

[S T]

Subponea

Trying to bring this back to the top for you.
Curious question!

Quote:
Originally Posted by Bees Knees
You can talk to us hypothetically. You can never discuss someone else's return using real names with another accountant or a third party even if you do have PO, unless the client gives you written permission to do so.

Does this apply if a client's records are subpoenaed in a Worker's Comp case? From Dennis

I would think that the State or Federal courts subponea supercede any jurisdication over the IRS circ 230 rules, but I am not for sure!

I know that I have received these on employers and subponea's on payrolll issues, but not on an individual taxpayer's actual tax return. All having to do with either child support issues or Workman's Compensation issues.

The employer gave me the release to provide the information.

Sandy

[Black Bart]

Sandy / Dennis

I''ve never received a subpoena before and am curious.

Who is it from? Is it requested by the court or is it one of the lawyers who want the papers to study in preparation for their case?

How do you receive it? Does it come in the mail, or is it served by a deputy or lawyer or who?

What do they ask for? Copies of: payroll reports? Sales tax? Income tax? Your work papers? Original data supplied by client to you?

Do they ask for specific things like those (or others) or does it just ask for "all tax papers,
etc. etc.".

When do you have to turn over the records? Immediately? At court date? On a specified date?

[Bees Knees]

TTB page 3-11 says:

DID YOU KNOW? A paid preparer must obtain a written consent signed
by the taxpayer before sending a copy of the taxpayer’s return to a third
party, such as a mortgage company, even if the taxpayer calls the paid
preparer on the phone requesting that the preparer fax a copy of his or
her return to the mortgage company. [Reg. §301.7216-3(a)(2)]

As with all rules, there is always an exception. Regulation section 301.7216-3(a)(2), which is cited above says:

Permissible disclosures to third parties. If a tax return
preparer has obtained from a taxpayer a consent described in
paragraph (b) of this section, he may disclose the tax return
information of such taxpayer to such third persons as the
taxpayer may direct. However, see section 301.7216-2 for certain
permissible disclosures without formal written consent.

Regulation section 301.7216-2(f) gives the following permissible disclosures without the need of the taxpayer’s written consent:

• The order of any court of record, Federal, State, or local.
• A subpoena issued by a grand jury, Federal or State.
• A subpoena issued by the United States Congress.
• An administrative order, demand, summons or subpoena that is issued in the performance of its duties by…(i) any Federal agency as defined in 5 U.S.C. 551(l) and 5 U.S.C. 552(f), or…(ii) A State agency, body, or commission charged under the laws of the State or a political subdivision of the State with the licensing, registration, or regulation of tax return preparers.
• A written request from a professional ethics board investigation the ethical conduct of the tax return preparer.
• A formal demand from the Public Company Accounting Oversight Board to registered public accounting firms in connection with an inspection under section 104 of the Sarbanes-Oxley Act of 2002…or an investigation under section 105 of the Act.

Regulation section 301.7216-2 gives several other examples of times when written consent by the taxpayer is not required. However, I think the first one listed above will cover a Worker’s Comp subpoena assuming it is issued by a court. If it is issued by the Worker's Comp insurance company doing a normal payroll audit, I'd say you need written consent.

In any case, it would probably be advisable to seek legal counsel, as everyone else has suggested.

[Jiggers]

Request for records

Do you belong to NAEA, NATP, NSA, NSTP, etc. and can you request guidance from them? I would hope that they could give you some insight.

Otherwise, I would want assistance from an attorney. Just to cover your A**.

I had a situation involving an estate and who I was lead to believe was the executor. He wasn't. The real executor's attorney demanded copies of returns and I obtained assistance from an attorney clarifying this matter.

[Black Bart]

Now these

Regulation section 301.7216-2(f) gives the following permissible disclosures without the need of the taxpayer’s written consent:

• The order of any court of record, Federal, State, or local.
• A subpoena issued by a grand jury, Federal or State.
• A subpoena issued by the United States Congress.
• An administrative order, demand, summons or subpoena that is issued in the performance of its duties by…(i) any Federal agency as defined in 5 U.S.C. 551(l) and 5 U.S.C. 552(f), or…(ii) A State agency, body, or commission charged under the laws of the State or a political subdivision of the State with the licensing, registration, or regulation of tax return preparers.
• A written request from a professional ethics board investigation the ethical conduct of the tax return preparer.
• A formal demand from the Public Company Accounting Oversight Board to registered public accounting firms in connection with an inspection under section 104 of the Sarbanes-Oxley Act of 2002…or an investigation under section 105 of the Act.

are some situations I've wondered about for a good long while. They don't happen frequently, but if they did, it would be important to know what you could and couldn't do.

Thank you for the information.

[taxmandan]

Third party requests

Something else you need to be aware of regarding subpoenas, and court orders is this: The target of the subpoena/court order has the right to go to the court and quash the request. There is usually a time period for that them to file a motion with the court, usually ~20 days to petition the court and request a hearing. If you hand over the information immediately to the person with the subpoena, you may be violating the due process rights of the individual who is the target of the subpoena. And if so, you better have good E&O insurance 'cause you're gonna get sued.

The suggestion to talk to your attorney is good advice and this is one reason to do so. I learned this from a prominent attorney teaching at the NAEA National Tax Practice Institute.

Now the question becomes, do you contact the target and let them know about the subpoena or not? TheIRS would have you believe that doing so will get you in trouble for tipping off the target, not true.

[Bees Knees]

The suggestion to talk to your attorney is good advice and this is one reason to do so. I learned this from a prominent attorney teaching at the NAEA National Tax Practice Institute.

Now the question becomes, do you contact the target and let them know about the subpoena or not? TheIRS would have you believe that doing so will get you in trouble for tipping off the target, not true.

At the NATP Famous 1040 Workshop last year in St. Cloud, during the Ethics portion of the seminar, the speaker gave his own real life experience with being caught in the middle between IRS criminal investigation and his client. Bottom line is before you do anything, call your attorney.

[DTS]

Subpoena

First of all, thank you all for the advice.

I did get written permission from my client to release this information. However, I'm not comfortable with this now and do think I should make sure his attorney is on board with this request.

Taxmandan said something about the parties may not agree with this request and going to court to squash this request. As I was looking over this subpoena later in the day yesterday, the prep dates and service dates on this subpoena are a little too close together and I'm not sure either party would be able to work this out or not within this timeframe. Nothing I'm looking at tells me my client's attorney is on board with this.

I do think a talk with an attorney may be the smart way to go, if for no other reason than to look over the subpoena I received. ONE word that I may not understand can change the entire meaning of something and have adverse consequences. I am meeting with a attorney/friend on Wednesday afternoon and I will have her look this over and maybe she can tell straight away or make a call or two on my behalf. At that point, I'll feel more comfortable if I have her blessing to proceed.

Bart, the subpoena came to me in the mail. However, I received it late, as I have a forwarding order at the PO, which any mail involved with this forwarding sometimes takes a week or two to finally get to me. The opposing attorney is requesting "any and all financial records in my possession". Also, it states I am to either appear in person on a particular date, which has come and gone (not my fault) or mail the items in. That's about all.

Anyway, I'll email my friend and see if she can glance over the papers and see how to proceed.

It's amazing where a simple, straightforward question can take you!

Dennis