Discussion:Is this ethical?
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| Revision as of 18:27, 10 August 2009 Sandysea (Talk | contribs) (Hey D&T and Stev) ← Previous diff |
Revision as of 18:53, 10 August 2009 LJACPA (Talk | contribs) (I can't believe) Next diff → |
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| + | {{ForumReplyPost|UserID=LJACPA|Date=10 August 2009|Text=I can't believe someone hasn't commented that Taxtech2 has no profile. I looked because of his/her comment, ..."you are setting yourself up for a breach of contract suit if you have the client sign the 8879 without actually efiling the return." What? I tell my clients that I will not efile their returns [as paid preparer] until I have been paid - usually. I'm very, very careful about making certain that I have the signed 8879 before efiling, but let one slip by recently that I had not yet been paid for and efiled (because I had the signed 8879). Just sent the THIRD reminder (and called her after I sent the second) and could kick myself for being so careless. I'd sure like to know where Taxtech2 got this information. I don't think it's correct.}} | ||
Revision as of 18:53, 10 August 2009
Discussion Forum Index --> Basic Tax Questions --> Is this ethical?
Discussion Forum Index --> Tax Questions --> Is this ethical?
| 7 August 2009 | |
| I have quite a few long time clients who are in dire financial straights. I am trying to figure out ways to continue doing the tax/accounting work they need done and yet somehow make sure I get paid. The old "make them pay when they pick up" just isn't possible for some of these clients and yet I hate to abandon these clients when they really need my services. My latest situation is a client who has filed both corporate and personal bankruptcy. To complete both his 1120S and 1040 tax returns will generate a fee of $1,900. He absolutely has no way of coming up with this amount of money, yet he desperately needs his tax return done so that he can apply for state medical assistance. He has suggested that I complete the tax returns, he and his wife will come in, review the returns and sign the 8879. I will then efile his 1040 and have his refund direct deposited. When he gets his refund he will come in and pay me and at that time receive a copy of his tax return. So I will be holding his tax return (that he needs for state assistance) until I actually get paid. Is this ethical? | |
| 7 August 2009 | |
| More importantly, how is your engagement letter worded? If your written engagement letter or contract does not provide for advance payment, you could get into trouble with this type of arrangement. Otherwise, I see no problem with this arrangement. | |
| 7 August 2009 | |
| This has been a tough year for folks. I generally have clients sign the 8879 and give them their returns. They write me a check that I agree to hold and cash on a later day that they prefer. Some clients ask me to hold the check until their next pay day, and for others, I wait until refund arrives. I've never had a problem with the checks being bad, and the clients have been very appreciative of the understanding. | |
| 7 August 2009 | |
| Pent-Up - I have lived in Florida for 20 years, have had my own accounting office for 15 years, and have never experienced anything like this. It's really been a very depressing year. I cringe whenever someone walks in the door or calls because I'm tired of hearing all the bad financial news they have to tell me. It's a double whammy - I feel bad for them (most of whom I have known for a long time and know how hard they have worked over the years) and then get upset because I've lost more business. A few days ago a client called to tell me they won $5,000 in the lottery. I was so excited to hear some good news for a change | |
| 7 August 2009 | |
you would be in violation of Circular 230 (and subject to a preparer penalty) for doing what you are proposing. It is not just unethical, it is against the tax law.
Why not just hold his post-dated check for 2 or 3 weeks? | |
| 7 August 2009 | |
| That's an excellent idea Kevin, something I've never had to do in the past so I had not even thought of that. Thanks for the advice - that's what I was looking for. | |
| 7 August 2009 | |
| I see no violation of Circular 230 under FLAcct's proposal. In fact, Circular 230 specifically authorizes this. See last sentence in Reg §10.28(b). | |
| 7 August 2009 | |
| Not really. That penalty only applies to returns that are actually delivered to the taxpayer. If the preparer is never paid, he would presumably never deliver the return. | |
| August 7, 2009 | |
| Bankruptcy is NOT my area of expertise (yet...but with this economy....going to be learning!), but wouldn't any tax refunds be snagged by the bankruptcy courts? If so, waiting for the refund to get payment wouldn't work. But if the returns are required by the bankruptcy court, do preparers have priority status for getting paid? | |
Death&Taxes (talk|edits) said: | 7 August 2009 |
| "If the preparer is never paid, he would presumably never deliver the return." But FLA is getting the 8879 signed and will file; is that tantamount to delivering the return? I honestly don't know. I must be the last fool in the country to give credit to almost everyone. | |
| 7 August 2009 | |
| Preparer Penalties - the Service publishes regularly Discipline Actions against Circular 230 Practitioners, do they publish any statistics (or the actual notice) of Preparer Penalties.
I'm very interested in the larger ones, $1,000 and $5,000 - just to get a feel of how they intend to impose and lay down the hammer. | |
| 7 August 2009 | |
| the 8879 is not the return, but it is the 'presentation for signature' which requires the delivery of the completed return. the section of Circ 230 that Taxteck2 cites is the section on the return of client documents and information, (but not the presentation of a completed return when unpaid.) | |
| 7 August 2009 | |
| The simple answer is to grab a check and hold it until the refund is direct deposited in the bank. I do this each year for a few clients and have never had a problem. I check the refund status and when the IRS says money is in bank, I cash. | |
| 7 August 2009 | |
| I'm sorry, but I strongly, strongly disagree with the concept of Wimpy paying for hamburgers tomorrow that he ate today. In 16 years, I have handled MANY cases where we got levies released today in order to get paid "tomorrow". I swear to you...and this is NOT an exaggeration in the least...we have NEVER once been paid "tomorrow" for a levy released today. Not once, not ever. You are becoming another creditor for your clients and that is a horrible business practice that you would never endorse for that client if the tables were reversed. | |
| 7 August 2009 | |
| Yes, I know this is return prep and not collection work, but it doesn't change things one iota. The client can't pay and you have work that you have done. | |
| 7 August 2009 | |
| In one sense I agree with you and in the other, I don't. If I have a check in hand that I am simply holding until the refund comes in to the same account. I can track that and then deposit when refund there. Done same day, my money is good.
For some accounting service work for a client, they are not doing well, I feel bad, but I expect to be paid for my time, if they can't afford me, then services need to be stopped. | |
| 7 August 2009 | |
| Can't the bankruptcy court help you out as the acct for the bankrupt estate? | |
| 7 August 2009 | |
| In hard times, in really desperate places like parts of Florida, you may have to embrace the "pawn shop mentality" -- what does the client have to secure the debt?
White glove office types, like accountants, are not usually heavy in that way - but when you read stories like Steve Kassel relates - those squeezed in all different directions do not place a high priority on maintaining a Professional Relationship - when putting food on the table is paramount. | |
| 7 August 2009 | |
| I have a small practice and have held checks or waited until the refund came in on many occasions. I've never been stiffed and have only had one check ever bounce. Maybe I'm lucky. In your situation, you should arrange to get paid by the bankruptcy trustee since the returns are required for the bk. | |
| 7 August 2009 | |
| Bankruptcy court would do NOTHING for you. You are a general unsecured creditor. Frankly, any trustee would laugh and tell you how foolish you were to have done the work for someone in that situation. | |
| 7 August 2009 | |
| NO different that when you tell the auto mechanic..."but if you don't give me my car I won't be able to work. And if I can't work I can't pay you..."
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| 7 August 2009 | |
| I have had clients file bankruptcy against their fees they owed me. It left me with a bad feeling. But I don't know if I was madder at them for stiffing me legally, or mad at myself for having allowed the balance to get that high. | |
| 7 August 2009 | |
| Death & Taxes, having the client sign an 8879 is the same as physical delivery. In addition, you are setting yourself up for a breach of contract suit if you have the client sign the 8879 without actually efiling the return. | |
| 8 August 2009 | |
| When people don't have a dollar to pay you, that tells you something about the dollar. Maybe she's not what she's cracked up to be.
Start taking hard assets (except real estate). Learn to test gold (but don't take diamonds or colored stones unless you really know the business). I noticed that Barnes & Noble bookstore has all these magazines about living off the land. Learn how to clean and dress a chicken. Start taking in chickens and fresh produce. It's legal in a lot of big cities now to keep laying hens (I guess you need a rooster too, I'm not an expert). Good experience for the kids, also. P.S. this is one time that I'm not exactly sure if I'm kidding. | |
| 8 August 2009 | |
| Maybe I'm confused but it seems to me that we have a lot of clients sign form 8879 and just put the return on hold if they can't pay at the time. | |
| 8 August 2009 | |
| you only need a rooster if you want the eggs to be fertile to raise chicks | |
| 10 August 2009 | |
| Ask Sandy in FL!!! hehehe
No money, no return. Sorry but if you are not afraid of IRS, then you sure aren't afraid of my collection proceedings | |
Death&Taxes (talk|edits) said: | 10 August 2009 |
| Good to hear from a voice of sanity, Sandy! | |
| 10 August 2009 | |
| Sandy, you put that better than I've ever heard previously and I will begin to use that with ALL of my clients that want me to start work before payment. | |
| 10 August 2009 | |
| Hey D&T and Steve!
My new motto is CUF!!!! "cash up front".... I need to pay my bills too. I have at least 18 extensions in my office; corporate and individual, but I refuse to throw good money after bad anymore. Yes, I feel sorry for them, but it appears they USE us to get them out of trouble, then where does that leave us? CUF!!!! | |
| 10 August 2009 | |
| I can't believe someone hasn't commented that Taxtech2 has no profile. I looked because of his/her comment, ..."you are setting yourself up for a breach of contract suit if you have the client sign the 8879 without actually efiling the return." What? I tell my clients that I will not efile their returns [as paid preparer] until I have been paid - usually. I'm very, very careful about making certain that I have the signed 8879 before efiling, but let one slip by recently that I had not yet been paid for and efiled (because I had the signed 8879). Just sent the THIRD reminder (and called her after I sent the second) and could kick myself for being so careless. I'd sure like to know where Taxtech2 got this information. I don't think it's correct. | |
