Contributions-Preparer's Responsibility

[Jiggers]

Interview Sheet

Does anyone have a good interview sheet that covers all the new Circular 230 stuff that they would be willing to share by posting on this board?

[BOB W]

Does anyone have a good interview sheet that covers all the new Circular 230 stuff that they would be willing to share by posting on this board?

I was thinking of just doing a "Good Faith" worksheet/checklist form for each interview and have the client sign it. This would cover client non-documented items that are ALLOWED under 230 to take under "Good Faith". Maybe that is not enough??????

[Jiggers]

Engagement Letter

I was thinking of just doing a "Good Faith" worksheet/checklist form for each interview and have the client sign it. This would cover client non-documented items that are ALLOWED under 230 to take under "Good Faith". Maybe that is not enough??????

I was looking for a good interview sheet that asked "those" specific questions.

Then I was going to upgrade my engagement letter that specifically mentioned certain items such as charitable contributions, meals and entertainment, vehicle mileage and use, and any others that come to mind and have the client sign that. They are currently signing the engagement letter with generalities about substantiation of all items on the return, including travel and entertainment and vehicle use.

[skhyatt]

So client gives me info reporting $500 in cash contributions. I ask, do you have documentation, receipts, canceled checks, etc., to support those contributions and also, in my engagement letter, it has language to the effect that the taxpayer has supporting docs for all deductions, etc. Are we saying that now that is not sufficient?

[BOB W]

So client gives me info reporting $500 in cash contributions. I ask, do you have documentation, receipts, canceled checks, etc., to support those contributions and also, in my engagement letter, it has language to the effect that the taxpayer has supporting docs for all deductions, etc. Are we saying that now that is not sufficient?

What I'm talking about is to document "Good Faith" replies from clients that say they have the necessary documentation but not with them. For the most part preparers are supposed to pre-audit most items on the tax return but are allowed to take some items on "Good Faith" from the client. To protect myself, I'm asking the client to sign a statement (checklist) of items that was taken on good faith. This proves to the IRS at a later date the source of the information entered on the clients tax return. This will save me any penalties for a "Frivilous or Undocumented" info placed on a tax return. I believe the penalty can be as high as $1,000.

[Jiggers]

Pre-audit????

What I'm talking about is to document "Good Faith" replies from clients that say they have the necessary documentation but not with them. For the most part preparers are supposed to pre-audit most items on the tax return but are allowed to take some items on "Good Faith" from the client. To protect myself, I'm asking the client to sign a statement (checklist) of items that was taken on good faith. This proves to the IRS at a later date the source of the information entered on the clients tax return. This will save me any penalties for a "Frivilous or Undocumented" info placed on a tax return. I believe the penalty can be as high as $1,000.

I do not pre-audit or audit or whatever you want to call it, the information that the client brings me.

He has a Schedule F, income and expenses. Under expenses are $XX,XXX for feed, $XX,XXX for supplies, $XX,XXX for repairs & maintenance.

I do not audit those items or ask for receipts. The return is audited under feed is feed for his dog and cat. Under supplies are a refrigerator that he purchased for his home. And under repairs are repairs to remodel his bathroom in his residence.

I do not get a penalty for not verifying those amounts.

If the client gave me the receipts with a tape attached and I allows those items, then I get penalized.

I do not have the time to verify or check every item on the return. If I did, my fee for each return would double and I would be out of business next year.

[BOB W]

I do not pre-audit or audit or whatever you want to call it, the information that the client brings me.

He has a Schedule F, income and expenses. Under expenses are $XX,XXX for feed, $XX,XXX for supplies, $XX,XXX for repairs & maintenance.

I do not audit those items or ask for receipts. The return is audited under feed is feed for his dog and cat. Under supplies are a refrigerator that he purchased for his home. And under repairs are repairs to remodel his bathroom in his residence.

I do not get a penalty for not verifying those amounts.

If the client gave me the receipts with a tape attached and I allows those items, then I get penalized.

I do not have the time to verify or check every item on the return. If I did, my fee for each return would double and I would be out of business next year.

The items you mentioned are taken on "good faith" and I will check them off on my good faith checklist. But "Repairs" you are required to review to see if any of it should be reclassified as a depreciable asset. The checklist should also contain "Were any of your schedule F expenses used for personal use or have a mixed use"?

That is why I said that I will develop a checklist of "Good Faith" items as I'm doing the interview. I can start out with some basics and add on to that as I go.

[DaveO]

I too resent having to work unpaid for the IRS

But anyone who is doing a payroll is already working for free or paying one of us to do it for them. I would prefer to trust my client and accept their representations to me unless I have evidence to the contrary.

I just finished an audit for one of those clients we all dread. Just numbers in the organizer, no backup. And very large round numbers including charity. After compiling the taxpayers information the actual numbers were quite close to the large round numbers provided. The charity was quite a bit higher than the large round number provided. Lack of some mileage documentation will cost them a bit but no where near what I originally feared.

[erchess]

We all dislike becoming auditors

and the only remedy I know of is that as individuals and through our professional organizations we must lobby Congress and at times the IRS.

How would it be if the preparation of a return involved the creation of a detailed statement of what records and documents lay behind each number on the return and clarification of what the preparer had and had not actually seen? It looks to me as though this could be built into the software and copies made part of the client and preparer records. Society could also increase the reporting of deductible expenses by the businesses that receive the money. It is possible to imagine a system in which nearly all the information necessary to prepare a return would be on documents similar to broker statements and forms W2 and 1099. If we're not already at a point where computers make this possible, we soon will be.

[WhiteOleander]

If I am to be an auditor, does, the IRS expect me to "audit" the person's income? Will I have to check their bank records and assets and be sure they are reporting all income? Will I have to check the public records to see if they own property that seems to be more expensive than their reported income can sustain?

The IRS cannot expect us to responsible for all this type of stuff.

Just as Jiggers said, it would take me weeks to complete one return. And then the T/P will stop filing because the can't afford our fees. Then the IRS will be chasing all the nonfilers down.

They have opened a real can of worms here.

[BOB W]

Income items are not a major issue but if an item was on the prior years return it should be questioned why it is not on this years return. I will probably add that to my good faith list. Need less to say, that when we sign a tax return we are saying that the info is ALL that we know about for income and expenses.