Cannot get depreciation Schedule from previous preparer

[HV Ken]

Picked up a new client for bookkeeping & tax. None of the assets are recorded in the QuickBooks file. CPA did not include the depreciation summary with the tax return copy and refuses to provide it to client (client is paid in full). Has anyone come up with a way to "persuade" previous CPA to provide this detail?  Isn't CPA under Circular 230 and AICPA obligation to provide this?  Anyone have a letter they use for this?

 

Thanks!

[jklcpa]

Although in many/most cases the depreciation schedules are prepared and maintained by the practitioner, they are considered to be part of the schedules that make the client's books and records complete, and are necessary to fulfill current or future tax obligations. Depreciation schedules are considered client records and not providing it would fall under Sec 501 as an act discreditable to the profession to hostage records. Even if this CPA is not a member of the AICPA, he or she is still held to the state standards and those of Circ 230 and state revenue depts. My state society actually uses the AICPA standards and rules so that even if not a member of the AICPA in this state, we must still abide by the AICPA rules.

 

The rule you are looking for is Circ 230, sec 10.28 (b ).

 

Here's an article from the AICPA's publication, The Tax Advisor, from Aug 2014 that covers your issue.    http://www.aicpa.org/Publications/TaxAdviser/2014/august/Pages/TPR_Aug14.aspx

 

Here's another good summary by the Pennsylvania Institute of CPAs: http://www.picpa.org/Content/cpajournal/2006/summer/8.aspx

 

ETA (again): I see you are in NY. If this CPA is also in NY, here is part of the NY code of professional conduct that says the same thing, that the deprec schedules are part of the client records, and that they must be given to the client: http://www.nysscpa.org/prof_library/ethics/Rules/codeother.htm

[HV Ken]

Judy - thanks for the additional links.  In discussions I have had with CPAs, the Circular 230 requirements seem like a grey area to them and they contend that the depreciation schedules are their work papers.  The additional links (especially for NY) will hopefully help my new client to obtain these records.  Appreciate your comments!

[Lee B]

Ask your new client to call the state CPA board.

[michaelmars]

Ken-they are part of the books and records since he reported his calculated depr on the return.  Write again quoting the above info and don't forget to cc: NYS Office of Professional Licensing and the AICPA and the clients or your attorney.  I have done this without actually sending the cc's [guess they got caught in the mail] but the CPA will realize its better to supply the schedule than deal with the regulatory stuff.

 

It is possible that he never got one from a previous cpa and perhaps backed into it. if that's the case he may feel uncomfortable giving to what he knows is inaccurate but that's no excuse. 

 

client can also file a claim of malpractice saying that he doesn't agree with the depr claimed and force the cpa to provide schedules to back up his number.  Of course if its not really material then I would just send the letter citing the rules and with the cc's on the bottom.

 

one last thought, did you or the client contact him? he might just be pissed at the client for leaving but he may respond professionally to you.

[SaraEA]

This discussion focuses on the rules/requirements for releasing client info.  Let's talk about the pragmatic side.  We always provide depreciation schedules when a client or new preparer asks   What is the point of withholding them?  The client has already chosen a new preparer and they're not going to change their mind and stick with you because you won't release their data.  It costs you little or nothing to print and fax the schedules, so just do it.

 

Maybe the client moved and wants to use someone local, but they'll have a good word for you to people they still know in the area if you're not uncooperative.  Or maybe the new preparer will not be a good match and they'll come back.   (We just had a client return after 2 years away.)  Or maybe the new preparer charges twice what you do so they'll definitely be back.  Don't burn bridges if there's no real reason to.  Sound like this client's old CPA just doesn't get it.

 

Ever notice how CPAs seem to be more competitive and unfriendly with one another than EAs and other tax professionals?  Maybe it comes from their training.  In my Masters in Taxation program one professor said he liked teaching tax people more than MBA students because we were eager to help one another whereas the MBAs hated each other.  Something to think about.

[RitaB]

This discussion focuses on the rules/requirements for releasing client info.  Let's talk about the pragmatic side.  We always provide depreciation schedules when a client or new preparer asks   What is the point of withholding them?  The client has already chosen a new preparer and they're not going to change their mind and stick with you because you won't release their data.  It costs you little or nothing to print and fax the schedules, so just do it.

 

Maybe the client moved and wants to use someone local, but they'll have a good word for you to people they still know in the area if you're not uncooperative.  Or maybe the new preparer will not be a good match and they'll come back.   (We just had a client return after 2 years away.)  Or maybe the new preparer charges twice what you do so they'll definitely be back.  Don't burn bridges if there's no real reason to.  Sound like this client's old CPA just doesn't get it.

 

 

 

Agree!  I always attach the depreciation schedule to the client copy of the return.  Some might say, "Don't do that, you want the client to have a reason to contact you if they are leaving," presumably so you can persuade them to stay.  Ain't nobody got time for that.  Don't bust somebody's chops in an effort to make them stay or punish them for leaving. The Golden Rule is still classy.

[kcjenkins]

Totally agree with Rita.  By the time the 'new' preparer or the client asks, their decision has been made.  All you can do, assuming you wish you could retain them, is keep the road back to you smooth and open.  And if you don't want them back, why delay tying up loose ends?  So be nice, be helpful, and be professional.  

[DANRVAN]

I agree with you 100% Rita. Also, since I am a one man operation, it is important that my clients have the information if anything should happen to me.

[RitaB]

 Also, since I am a one man operation, it is important that my clients have the information if anything should happen to me.

 

That is a great point!  Also, you'll know someone is gone when he doesn't show up.  If you want to know why he left, just call him and ask.  It might be viewed as good customer service.

[jklcpa]

I agree with you 100% Rita. Also, since I am a one man operation, it is important that my clients have the information if anything should happen to me.

 

I do that too because I am also a solo practitioner.

[mcb39]

That is a great point!  Also, you'll know someone is gone when he doesn't show up.  If you want to know why he left, just call him and ask.  It might be viewed as good customer service.

 

Believe it or not.; I called a long time client a couple of years ago just to make sure that they knew they had to file.  Turns out, she had taken the return to VITA.  I asked them to bring it in so I could look it over free of charge.  Unbelievable, how many serious errors were on that return; plus the preparer had never even filed it.  I fixed that one and filed it and they have been the most appreciative and generous clients again, ever since.  I lowered their fee to accommodate their lower incomes and all is well.  She brings me something every time she shows up; along with hugs and even cooks a Thai meal for my husband during tax season.  So, really,. you just never know.

[mcb39]

And, in re-reading the title of this thread, it reminded me that when this particular client came to me in 1998, we were unable to obtain the depreciation schedule from the prior preparer.  We ended up rebuilding it from scratch; according to the 4562 info on the prior returns.  These clients have fallen on extremely hard times since 1998 when things were "flush".  I have no animosity toward them.  Everyone has the right to choose; and in the end, they chose me.......again.

[Lee B]

In an article I read some months ago the official error rate on VITA prepared returns was close to 50 %.

[kcjenkins]

Yes, VITA serves SOME people OK, the very simplest returns, but so often they don't know enough to know when they should not try one.  They mean well, but screw up lots of times out of ignorance.  Which says more about our complex and convoluted tax code than about the volunteers.  

[Catherine]

Yes, VITA serves SOME people OK, the very simplest returns, but so often they don't know enough to know when they should not try one.  They mean well, but screw up lots of times out of ignorance.  Which says more about our complex and convoluted tax code than about the volunteers.  

 

Maybe also the desire to "help" even when a return is past your level of expertise.  I had a kid working for me a couple of years ago who had worked for VITA.  He had an MS in accounting.  I wouldn't let him work on returns after one look at the work he did; kept him on document prep only.  He was real good at printing returns out in the right order.