Discussion:Can I serve them both - divorced clients

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Discussion Forum Index --> Tax Questions --> Can I serve them both - divorced clients

Sunny (talk|edits) said:

2 October 2007

I have been doing the couple's tax returns for the past 3 three years. They are in the process of divorcing. I know they will be filing their 07 returns MFS, and their 08 returns as two single taxpayers. They have both indicated that they would still retain me as their accountant after the divorce. Is it a common practice to keep serving them both? Is there any conflict of interest issue? What would you do? Thank you for your comments.

Natalie (talk\|edits) said:	October 2, 2007
Conflict of interest. I would say probably yes. I think I would try to pick one of them. It's easy to say not being in that position.

JAD (talk|edits) said:

2 October 2007

I was previously in that position. My insurance co said no way. One left and later I fired the other anyway. The ins co was concerned about conflict of interest and too much possibility of accidentally revealing personal information of one to the other. I did work for a guy who handled a lot of divorces. He said he would but only after getting both to sign letters waiving rights of confidentiality and acknowledging the conflict of interest.

Jdugancpa (talk\|edits) said:	2 October 2007
Circ 230 (at least the old version) allowed it if the conflict of interest is disclosed and acknowledged in writing by both parties.

Taxref (talk\|edits) said:	2 October 2007
I was in that situation once, and would advise against it. I wound up firing the ex-wife after she had me do a geat deal of work for her business and then refused to pay. She insisted I should bill the ex-husband instead, even though he no longer had anything to do with her company.

Death&Taxes (talk\|edits) said:	2 October 2007
I have done this but it can be like making love to a porcupine. At some point the interest will become more of a conflict.

Proptaxguy (talk\|edits) said:	2 October 2007
Porcupines need love too. I highly recommend the waiver route. At that time one of them may decide to go elsewhere anyways, once they get thinking about it, and relieve you of your worries.

BEGooding (talk\|edits) said:	October 2, 2007
It depends on how amicable the divorce is. If one feels like they are getting screwed by the other, there would probably be a problem serving them both. If both are completely honest with each other and willing to sign a statement authorizing you to freely discuss matters regarding the other, there should be no problem.

JR1 (talk\|edits) said:	October 2, 2007
I've never made love to a porcupine, but I have done this regularly. JDugan's got it...it's all about disclosure. I have both parties agree that we're going to be nice, that whatever I tell one, I tell the other, and if we get to a spot where there is disagreement...I'm out. Never had a problem.

Tptking (talk|edits) said:

3 October 2007

If you decide to prepare the joint return in the year of the divorce, one of the speakers at a NATP conference had a good suggestion. She suggested that practitioners only give tax advice to one spouse and that you recommend that the other spouse obtain separate tax advice from another practitioner. This way, since your advice helps the spouse you deal with but could cost the other spouse, it might help protect you if the "paying" spouse decides to come after you due to conflicts of interest.

Just a thought.

Uncle Sam (talk|edits) said:

3 October 2007

I had a case years ago where a married couple had been a client of mine when I first started preparing taxes.

Then I picked up 1 of their 3 children as a client. Their daughter (non-client) married a guy who got referred to me by her parents. He went into business, so he became both a business client and tax client. Daughter and son-in-law divorced - and I STILL had parents and the 1 child (now married with children) as clients in addition to the ex-son-in-law. This is EVEN AFTER I refused the daughter a copy of the son-in-law's corporation return because she was NOT a stockholder. Her parents gifted money so he could buy the business, shown as officer's loan - daughter thought she was a shareholder.

Years after the divorce, I still have ex-mother-in-law (now widowed), ex brother-in-law, and ex husband as clients.

This is one of the rare situations where I was lucky.

CrowJD (talk|edits) said:

3 October 2007

I've even become wary of representing all shareholders/partners as far as doing their personal returns as well as the business return. You can get into some real thorny issues if you find out information on someone's personal return that could impact the business.... Agreement of disclosure from the outset is the technical answer, but many are sensitive about the personal return and will never allow such joint disclosure.

DZCPA (talk\|edits) said:	3 October 2007
Do both client interviews at the same time. That way everything will be disclosed to all with no surprises.

Donniecastleman (talk\|edits) said:	3 October 2007
Yep, I have a few of those myself, as long as you disclose it there's no legal ramifications, and it usually works out best anyway to keep tax pros from doing phone tag during tax season.

Gruderman (talk\|edits) said:	10 January 2009
I have a client who has been divorced for many many years. She remains friendly with her ex and recently referred him to me, as he just moved back to the area. Do I have disclosure issues in this situation or can I simply do both of their taxes.

DZCPA (talk\|edits) said:	10 January 2009
Do both.

"Shoebox" (talk\|edits) said:	10 January 2009
Anybody care to share a disclosure that they use. 3 of my MFJs divorced but I would like to keep 5 out of the 6. After reading the above, I don't really need a can of worms.

Southparkcpa (talk\|edits) said:	10 January 2009
Where does one actually find a porcupine for this type of stuff???? I must be naive.

Jdugancpa (talk\|edits) said:	10 January 2009
Gruderman, in the situation you describe, with the couple having been divorced for years and still friendly, it would seem to me that if the two have no financial ties there would be no more conflict than if a client referred his friend for which he had no financial ties.