Discussion:Debate with partner about ethics

Client retained us to prepare her taxes (on extension), and also some accounting. My partner handled it all. Total bill around $1,500, $800 of it for tax prep. Client paid $250 retainer, then $500 by credit card via phone. Form 8879 was signed, and return was e-filed.

She emailed a few weeks ago, unhappy about the total charge, so unwilling to pay the remainder and demanding a copy of her tax return and paperwork. I was surprised, couldn't see how it happened that she didn't have a copy of her return (we normally ALWAYS print and provide it when the client signs the 8879). My memory is dim, but it may have been she was out of town so signed the 8879 via fax, and thus we never had a meeting to give her the return. Anyhow, I told my partner, "So, give it to her, and her source docs." Partner says, "I offered to meet with her to do that and discuss what she still owes." No response from client, nothing happened, we didn't follow through, and now a month later the client has consulted an attorney. I'm furious: why the devil didn't my partner just mail the client her stuff? Partner says not until we get paid, and claims there's no legal or ethical obligation to the contrary.

So now WE'RE fighting over this. I said IRS and Oregon state laws require (1) a printed copy of the return be given to any client when the return is e-filed, and (2) we have to promptly return original docs when requested, fees owing or not. It's understood we don't have to surrender any accounting work product. Partner says, "Prove it. Cite the Code." And darn it, I can't find anything.

We're unenrolled agents, but Pub 470 -- which does not address this -- says (Sec. 7.01) we have to abide by the rules of Circular 230, Sec. 10.51.

Circular 230 Sec. 10.51 says only that we must surrender papers necessary for the client to prepare his or her taxes. But in this instance, the returns WERE prepared, and filed, something that section doesn't cover. I swear I read, just a week or two ago, a requirement that a printed copy of every return MUST be given a client when e-filing. But I can't find it to cite to my partner.

Beyond IRS rules, Oregon has tougher laws for preparers than most places. I found a section on the state website, "Advice to Consumers," saying that preparers must provide a printed copy of every federal and state tax return. But no citation to the applicable law or administrative rule. Code 800.010-0025 (6) essentially repeats the federal code, and again doesn't seem to cover a situation like this.

I don't blame my partner for demanding that we get paid, because we certainly deserve it. But we are almost coming to blows over this, because I've insisted that we HAVE to provide -- promptly -- a copy of the (already-filed) tax return, by mail if the client won't come in, as well as her original source docs whether we're paid or not. What say you folks? Is there another code section somewhere supporting me on this, or is my partner right? (Again, even if the code IS on my partner's side, I think we ought to get a printed copy of the return and any original docs into her hands ASAP as just an ethical issue. But we were stiffed for perhaps $3K or more in fees this past year by clients, in part by my being a push-over, and so my partner is adamant about this now).

check out Reg §1.6107-1

then the penalty under §6695(a)

the AJCA 2004 states that the IRS may impose penalties on ANY tax preparer (not just Circular 230 preparers) who fail to comply with Circular 230. Then read Circular 230 §10.28

No payment of services:

164.125 Theft of services. (1) A person commits the crime of theft of services if:

     (a) With intent to avoid payment therefor, the person obtains services that are available only for compensation, by force, threat, deception or other means to avoid payment for the services; or

     (b) Having control over the disposition of labor or of business, commercial or industrial equipment or facilities of another, the person uses or diverts to the use of the person or a third person such labor, equipment or facilities with intent to derive for the person or the third person a commercial benefit to which the person or the third person is not entitled.

     (2) As used in this section, “services” includes, but is not limited to, labor, professional services, toll facilities, transportation, communications service, entertainment, the supplying of food, lodging or other accommodations in hotels, restaurants or elsewhere, the supplying of equipment for use, and the supplying of commodities of a public utility nature such as gas, electricity, steam and water. “Communication service” includes, but is not limited to, use of telephone, computer and cable television systems.

     (3) Absconding without payment or offer to pay for hotel, restaurant or other services for which compensation is customarily paid immediately upon the receiving of them is prima facie evidence that the services were obtained with intent to avoid payment therefor. Obtaining the use of any communication system the use of which is available only for compensation, including but not limited to telephone, computer and cable television systems, or obtaining the use of any services of a public utility nature, without payment or offer to pay for such use is prima facie evidence that the obtaining of the use of such system or the use of such services was gained with intent to avoid payment therefor.

     (4) The value of single theft transactions may be added together if the thefts were committed:

     (a) Against multiple victims by a similar means within a 30-day period; or

     (b) Against the same victim, or two or more persons who are joint owners, within a 180-day period.

     (5) Theft of services is:

     (a) A Class C misdemeanor if the aggregate total value of services that are the subject of the theft is under $50;

     (b) A Class A misdemeanor if the aggregate total value of services that are the subject of the theft is $50 or more but is under $750;

     (c) A Class C felony if the aggregate total value of services that are the subject of the theft is $750 or more; and

     (d) A Class B felony if the aggregate total value of services that are the subject of the theft is $10,000 or more. [1971 c.743 §133; 1973 c.133 §1; 1985 c.537 §1; 1987 c.907 §8; 1993 c.680 §21]

NOTICE THE CLASS C FELONY

reasonable charge: In Texas and as a CPA I can charge a fee for providing those records, not sure what it would be for an EA.

Goog Luck and let the board know how it turns out!

TexCPA 10:37, 19 November 2008 (CST)

Western says he is 'unenrolled'. Which means he is not enrolled.

Send her the stuff and then, if you really, really feel the need, sue for your fees in whatever Oregon has for a small claims court.

Proposed §1.6695-1(b)(2) provides that, in the case of an electronically signed tax return a tax return preparer need not sign the return prior to presenting a completed copy of the return to the taxpayer. The tax return preparer, however, must furnish all of the information to the taxpayer contemporaneously with furnishing the Form 8879, IRS e-file Signature Authorization, or similar IRS efile signature form The information may be furnished on a replica of an official form that provides all of the information.

The regulation itself states:

(2) In the case of electronically signed tax returns, the tax return preparer need not sign the return prior to presenting a completed copy of the return to the taxpayer. The tax return preparer, however, must furnish all of the information that will be transmitted as the electronically signed tax return to the taxpayer contemporaneously with furnishing the Form 8879, "IRS e-file Signature Authorization," or other similar Internal Revenue Service (IRS) e-file signature form. The information may be furnished on a replica of an official form. The tax return preparer shall electronically sign the return in the manner prescribed by the Commissioner in forms, instructions, or other appropriate guidance.

no charge for returning originals (sorry for the misunderstanding), but for copies and working papers yes (not on actual copy of return), on a PITA client like this, make sure you get them to sign a release that they have rec. all originals

Here's a suggestion, give the b a copy of her tax return and paperwork, tell her she has 3 business days to pickup, otherwise there is a $25 / day storage fee

TexCPA 15:49, 19 November 2008 (CST)

Do you have a teenager? If so, see if they will fix up a group of photographs on the computer of you and certain "heavies". For instance, I have one of me and John Gotti. Another, I'm arm wrestling with Mr. T. Another, throwing the football with Tony Soprano. Another, one of me playing golf with Hillary Clinton. And, my favorite, one of me holding a 98 year old man up by his feet and shaking the coins out of his pocket.

Put these up on the wall behing your desk. When the client comes in, he will get the message fast that you are no one to trifle with. Good luck.

Kevinh5, if you're not an EA, CPA or attorney, the IRS says you're an unenrolled agent. That's their term, one they use a lot since there are tons of such folks nationwide. We do have our state licensing, and may by next year be EAs too, but until then the IRS has us in our own enormous category.

We ended up mailing the client her return. I went over the invoices and realized she actually had paid more than the tax prep fee (but she still owes us about $760 for accounting work). Once I could review the file this morning, I also realized that her printed copy with source docs was all neatly bound and ready in our pick-up drawer. It really came down to the fact that the woman just refused to come into the office, and my partner didn't want us wasting money on postage for this deadbeat. If she came in and remained unwilling to pay up, she was still going to get her tax return. In fact, I now recall that she wasn't even out of town, it was just "inconvenient" for her to come to our office on October 15th. (And, yes, it WAS deadline day, because she had been terrible about getting info to us all along).

Next year or perhaps the one after, we hope to go "paperless" (Ha! Like that actually is the case!!), and so scan original docs in where they're brought to us. Then, the client gets everything back and our obligations on that matter go away.

Anyhow, lots of good info in your replies. Thank you much for all of it!