IRS Invitation

[taxtoddnyc]

Got an invitation from the IRS today to make an appt. with them to "heighten awareness of preparer responsibilities and to ensure compliance with the IRS' tax return preparer requirements". They want to see "all relevant documents, including but not limited to worksheets, interview notes, correspondence, and a copy of the returns" for all tax forms prepared in 2010. Really?? I mean, I can do this, but honestly... at the start of tax season!!?? I sure had a lot more time to deal with this 3 months ago. Don't they realize what a disruption this is?

[Pacun]

Did you get this invitation by mail? I think they sent a bunch of letters in November and I guess this is your second letter.

[taxtoddnyc]

This is my first notice.

[Pacun]

This is my first notice.

Wow, I guess we need to check our mail this and next week.

[Ray in Ohio]

Well... I just had that inspection done yesterday here at my office. Very polite and cordial IRS agent showed up at around 9:00 AM and was here till about 1:30 PM. The result: "Keep doing what your doing"!!!!

(and I didn't even get a frikkin prize)

[taxtoddnyc]

Well, I'm going to visit them at their offices here in Manhattan... hope it doesn't take 4-1/2 hours!

[taxtoddnyc]

Whoops, upon re-reading, I guess they're coming to see me. I was reading the letter as if they wanted me to go there, but it does say they'll be "visiting" me.

[OldJack]

Sounds like they are interested only in those that efile? Maybe its a efile benefit to get to visit with a young IRS gal.

[Lion EA]

Can we really show them everything about all our clients? What happened to confidentiality? Does the letter specify certain clients by SSN? How do you even know that the stranger that showed up at your door is from the IRS? Anyone can see the list of EROs and send out letters,

[Diane]

I have all my clients on the computer as PDF files. I also scan their paperwork and add to their files. In order for the IRS to see any paperwork they would have to sit down at my computer and view the PDF files. Can they just look at all my clients?

Diane

[Ray in Ohio]

Out of about 1700 clients that I filed for 2009, she had a random list of 28 returns that I had to pull my copy for her to verify Ptins etc. She then also wanted to see the signed 8879 and compared the dates of the signatures with the date the return was efiled. She did an interview for about an hour asking a lot of basic questions about the way we interview clients etc. She also wanted a list of all the returns I filed for TY 2009. She then compared my list with her records of returns filed under my ptin and we were matching within a couple returns and she said thats within acceptable limits for her.

The 28 files she reviewed were all in compliance and she stated that it looks like I'm following proper procedures and told me to have a good day.

She did not even look at income or tax etc. It was all about the preparer etc.

It really was not that bad of a deal at all. She actually had some good IRS war stories and also gave some heplful hints and ideas.

[taxtoddnyc]

Lion, The letter does not specify any clients by SSN. And good point...I would hope that they'll have some type of gov't ID.

Diane, I have the same situation, as all my clients' files are on my computer, along with worksheets, notes, 8879's, etc. The letter states that after an interview to "determine your awareness of your responsibilities as a tax return preparer and your general compliance with the IRS' return preparer rules", and "your compliance with IRS e-file requirements", the examiner "will review a selected number of tax returns you prepared and the accompanying schedules and documentation". So, as galling as it will be to have a stranger sit down at my laptop, I guess that's how it'll be. They will also "review your software setup, your computer security procedures, and your overall compliance with the IRS' e-filing requirements". I work out of my apt., so can't exactly say I do much in the way of computer security, other than leave it at home. I'll re-post once I'm done with all this and let everyone know how it went...

[taxtoddnyc]

Thanks, Ray... that's great info!

[Margaret CPA in OH]

Wouldn't it be possible to drag and drop those clients that are listed to a flash drive or isolated to a separate folder and provide access only to that folder? If you haven't already done so, you could password protect the primary folder of client data to prevent "accidental" access. You could also print off or isolate the 8879's, assuming they are in electronic form, too. Even if you don't have the names before the agent arrives, I should think that you could say something to effect of "Please wait a moment while I access those files for you." If you had a paper file cabinet you would pull them and isolate rather than giving free rein to the cabinet, wouldn't you?

At the very least you could/should password protect your computer I should think. I work out of my home, too, and didn't orginally password protect until the red flag rules deadline loomed large. It's now off the table but I did do that much. My internet is quite secure thanks to my IT guy.

[grandmabee]

What is the "red flag rules deadline?

[Margaret CPA in OH]

They are rules promulgated to reduce identity theft. Originally all entities deemed creditors (you had an open account with a customer or client) were subject to them including CPA's. You know, we don't always get paid immediately for bookkeeping, tax prep, etc. Invoices are sent. Finally at the end of December we were excluded from the definitions of financial institutions or creditors. Here's more:

http://www.aicpa.org/InterestAreas/InformationTechnology/Resources/Privacy/FederalStateandOtherProfessionalRegulations/FairandAccurateCreditTransactionsActof2003/Pages/Identity%20Theft%20Red%20Flags.aspx

The decision came right after I reviewed my security and instructed my 3 hours weekly assistant on protection of client identity and established a plan. My computer still has the password.