Local Earned Income Tax Audit Request 2009-2011 - Tax Business

[Crank]

Hello all,

In Pennsylvania in addition to federal and state income taxes we also have a local earned income tax.

Today I received a notice that they are auditing my tax business (sole prop) for the tax years of 2009 - 2011. I didnt even realize they could do this. The notice is from a CPA. Apparently he was hired by the local taxing district. Here are the items that are bothering me.

First, tomorrow I will contact the local taxing authority to make sure that this is legitimate.

1.) the local taxing authority accepts Pa Sch C for their returns. They dont require any federal returns. However the audit specifically requests both Federal & State Schedule C's.

2.) I spoke to the CPA and stated that my revenues would not contain asociated client data, except for revenue. He stated that client data is needed and stressed that he is a CPA and it is confidential.

I dont feel comfortable submitting Federal Schedules, since they dont enter into the calculation of the local return, only state forms do. And, I strongly object to providing client information. Im a CPA and Im not sure I can even provided that data to another CPA.

Your thoughts/comments are greatly appreciated.

Thanks

Crank

[jainen]

>>Your thoughts/comments<<

Same advice you would give your own clients--don't represent yourself. Call your insurance agent and lawyer, and find a qualified tax professional to handle this audit. It sounds ominous.

[Jack from Ohio]

Agree TOTALLY with jainen. Don't attempt to be a hero. Verify, then get help. In the meantime, say nothing to them AT ALL until you talk to the attorney.

[kcjenkins]

I'd agree with the advice on getting the lawyer, but also, would add that the Fed C and the State C should be the same, or with easily explained state differences, so giving them both should not be an issue, but giving client data makes zero sense to me, so I'd only give them access to what my lawyer told me to give them. And I'd want the notification to come from the taxing authority, not the CPA that says that they hired.