The rules on providing client records

[Elrod]

Suppose a CPA who prepared a client’s tax returns receives a request from the client that the CPA transfer all of the client’s tax records to a new firm. The client includes the appropriate Sec. 7216 consent to disclose authorization to transfer the records. What are the CPA’s responsibilities and obligations?

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[ILLMAS]

No shoes no shirt no service, how about when a TP owns money to a CPA for work, shouldn't they be paid first?

[Guest Taxed]

I could be wrong but I think circular 230 allows you to hang on to documents and work product until you are paid.

[jklcpa]

No shoes no shirt no service, how about when a TP owns money to a CPA for work, shouldn't they be paid first?

No, it is considered unethical to "hostage" the records in demand for payment. If the client requests the records be returned, the CPA is to give them back.

[Gail in Virginia]

I think you are allowed to hang on to your work product, but you cannot refuse to return the paperwork the client provided you to prepare his return. And that is specifically stated in Circular 230, Section 10.28.

[kcjenkins]

No shoes no shirt no service, how about when a TP owns money to a CPA for work, shouldn't they be paid first?

Marcuntil paid.o, you must reurn THEIR documents, paid or not. But you may retain your work product

[SaraEA]

Just transfer the records as long as you have the authorization. The client wants to go to someone else, so let them. They won't be happy if they're forced to stay with you because you won't let their records go. Clients move on for all sorts of reasons--maybe they found someone closer to them, think your prices are too high, decided to try someone a friend or colleague swears by, whatever.

I get really angry when a new Sch C or E client can't get depreciation schedules from their former accountant. Why make their lives (and mine) miserable? They've already left you and aren't coming back. Be the grown up, act like a professional, and help with the transition. If that's how you conduct yourself, new clients will soon take the place of the former ones. I never withhold depreciation schedules, NOL worksheets, claim of rights histories, or anything except my own research and notes. What's the point?

[Terry O]

I agree SaraEA - - breaking up is hard to do (just TRY to go to another hairdresser!!!), but it is a fact of life. They probably came to YOU from someone!

:dunno:

[mcb39]

I agree SaraEA - - breaking up is hard to do (just TRY to go to another hairdresser!!!), but it is a fact of life. They probably came to YOU from someone!

:dunno:

Funny you should say that. I just switched to a new hairdresser who is a client of mine; I am extremely happy with the results and hope to remain friends with the old one; who is also a client, but overburdened.

[jainen]

>>never withhold depreciation schedules, NOL worksheets, claim of rights histories, or anything except my own research and notes. What's the point?<<

Sometimes that lowball offer they were chasing gets away when they come in with the details! I only deliver documents to clients directly. They can give them to the third party. All I release is what was already in their packet anyway, including carryover worksheets. If the current year isn't complete, then it is simply the source documents. If they need a prior year, after January 31 I generally charge a copy fee.

[joelgilb]

I could be wrong but I think circular 230 allows you to hang on to documents and work product until you are paid.

I have personally sued accountants for not returning the clients Original Documents when they haven't been paid. You are allowed to withhold your work product and copies of the original documents though, so long as you return the originals.

Oh Yea, the above comment suggests I have won this type of case. In fact, every time I have brought it to court.

Also as said earlier in this post circular 230 pretty much says the same and really is just reiterating already established law on the subject.

[ILLMAS]

I have personally sued accountants for not returning the clients Original Documents when they haven't been paid. You are allowed to withhold your work product and copies of the original documents though, so long as you return the originals.

Oh Yea, the above comment suggests I have won this type of case. In fact, every time I have brought it to court.

Also as said earlier in this post circular 230 pretty much says the same and really is just reiterating already established law on the subject.

Do you sue on behalf of your clients and your clients pay the legal fees or you sue because you really want the client and are happy to cover the legal expenses yourself?

[ILLMAS]

>>never withhold depreciation schedules, NOL worksheets, claim of rights histories, or anything except my own research and notes. What's the point?<<

Sometimes that lowball offer they were chasing gets away when they come in with the details! I only deliver documents to clients directly. They can give them to the third party. All I release is what was already in their packet anyway, including carryover worksheets. If the current year isn't complete, then it is simply the source documents. If they need a prior year, after January 31 I generally charge a copy fee.

This is a good way to get your client to come in your office and pay their balance.

[joelgilb]

I have sued on behalf of my clients, when the tax preparation firm refused both my demands and my clients demands for the records. And I did not do this gratus, but charged for my time in the State Court.

[Guest Taxed]

Other than specific performance, do you recover any punitive damages? Does the prior accountant counter sue for their fees?

[joelgilb]

Other than specific performance, do you recover any punitive damages? Does the prior accountant counter sue for their fees?

In the cases I brought, they were all specific performance.

In one case the accountant's defense was he wasn't paid and he requested his fees as part of the judgement (he had not filed a counter claim however). The Judge then proceeded to rip him to shreds! After Court, that accountant asked me how could I sue him, knowing he wasn't paid. My response, "I warned you when I requested the documents that I would take this to Court and you said to go ahead and try it... [and] How could you illegally withhold client documents?"

The cases I brought, the taxpayers had refunds, so we never went after the accountant for specific damages, and punitive is not likely to happen.

All the cases the accountants felt they could represent themselves. Probably a good move, as they would have lost anyway and just ran up legal fees.