Discussion:Preparing minutes for clients
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Discussion Forum Index --> Advanced Tax Questions --> Preparing minutes for clients
Discussion Forum Index --> Tax Questions --> Preparing minutes for clients
| 10 January 2008 | |
| I know we've touched on this, but just to get opinions all in one place -
Corporate minutes seem to be advised over and over again for many reasons. We'll be meeting with one or two person owned corporate clients often over the next few months. How do you all feel about writing up corporate minutes for the clients at the tax meeting? With the advice I'm hearing that the IRS will give more credence to S corp wage levels and other transactions documented by minutes, and thinking the minutes just won't be written up otherwise, plus thinking that the increase in IRS audits that's been threatened for the last few years is actually happening, I would sure like to just get the minutes done once and for all in my office. Would this be practicing law without a license? | |
Phil Moody (talk|edits) said: | 10 January 2008 |
| I prepare the minutes on a couple of corporations, in which I am an officer.
For all others, we always refer client to attorney. We do tell client that the minutes may be prepared by a corporate officer (them), and that they have the format and areas to cover in prior minutes, or discuss new areas that need to be covered in current minutes. I know that if the attorneys we work with, or others in our area found out we were preparing minutes, referrals from them would cease, and it would not be long before the state attorney general would be talking to us for practicing law without a license. This is sometimes brought up on CPE courses that I attend. Also, it seems that more and more there are minority stockholders or former wives or husbands (stockholder) of some family member. We try to be aware of any liability we are taking in our work, and we believe there is some liability in this also. | |
| 10 January 2008 | |
| I've been told that actually preparing minutes for clients would be practicing law. A good way around that is to make a list of potential items the clients attorney should consider or be aware of to update the minutes. I mail them to the client & their attorney. Most attorneys really appreciate the work handed to them & the client is covered and up to date. | |
Death&Taxes (talk|edits) said: | 10 January 2008 |
| No matter who is preparing them, I believe the accountant should attend the Board of Director's meeting where salaries for the year are set and give input which can be memorialized in the minutes; I believe too that the accountant can help answer the C Corp problem of accumulated earnings. | |
| 10 January 2008 | |
| Preparing minutes is considered the practice of law and your Malpractice insurance will not cover any losses arising from claims pursuant to them. | |
| 10 January 2008 | |
| You mean all those corporate compliance companies that send letters to my corporate clients to sell them minutes services are all attorneys? | |
| 10 January 2008 | |
| Greg,
No. They usually have a single attorney on staff who "prepares" the documents. It's a joke and everyone knows it's a joke, but it's held up so far. | |
| January 10, 2008 | |
| Like buying Rx's over the net, 'prescribed' by a doc somewhere.
Crow should be checking in on this. | |
| 11 January 2008 | |
| I don't know too many lawyers that would turn someone in for doing minutes. Wills and Trusts, real estate, I have my strong reservations about. On the other hand, a lot of lawyers can't draft a Will or Trust properly, or counsel a client about them. But there are a lot of traps besides just the tax angle in those areas. You are not required to take any trusts & estates in law school, but most students take at least one class to pass the Bar. I took all they offered, plus a class on the estate tax. But, there was a trade-off, because I took no classes on corporations and partnerships... Which I wish I had, but was still able to pass somehow by studying bar review materials. | |
| 11 January 2008 | |
| It seems to me the "real world" potential liability here comes not from some state criminal statute, but from the fact that it's outside the purview of the malpractice policy you have. | |
| January 11, 2008 | |
| I wonder where the line is drawn between practicing law and the clerical function of recording the discussions & decisions made by your client at the annual meeting that you attended? | |
| January 11, 2008 | |
| Minutes are required to be signed by an officer (or authorized representative?) of the corporation. Discussions and memos regarding what transpired during a meeting are for your own documentation. I would suspect that the two are easily separated, but let's see if Crow concurs. | |
| 11 January 2008 | |
| The last person I can remember that was prosecuted in my state was some non-laywer that was practicing law out of his house with a speciality in divorce. That was an actual criminal prosecution, instead of a warning letter (or I think they can also issue a "cease and desist" somehow).
The case of the divorce "lawyer" was pretty comical. He had actually made 60k in the past year, he was outfront with the clients about his status, and his clients raved about him. Frankly, I don't think the guy was extra cheap, and the clients could have gotten the same service from an attorney for the same price. Anyway, one particular judge felt something was not quite right, and he was snared. There is always a slight possibility that some state law will slip through, and perhaps an accountant would not catch it, and it perhaps could be argued that some corporate action should have been taken, or something amended, and reflected in the minutes etc. So, I really see this as more of a malpratice issue for the accountant: a coverage issue. Other attorneys here need to pitch in too with their opinions. | |
| January 11, 2008 | |
| I think the same can be said for a lot of stuff us tax people do. For example, how do we really know that we dotted all the legal "i"s when we did our last Corporate Dissolution. Did we consider all the asset assignments? Did we properly limit the stockholder's post-liquidation liability? Was all that pre-dissolution stockholder debt handled correctly?
What about promissory notes? Those need to be signed by corporate officer's. I guess that's a legal document, too. Are you just as nervous cranking one of those out of Word? | |
| January 11, 2008 | |
| First, I missed an important word in Paul's post: "annual" meeting. Sorry about that.
| |
| 11 January 2008 | |
| I think Crow is correct here. Although preparation of corporate minutes for a client most likely qualifies as the practice of law, I doubt the state attorney general is going to take any action. The risk here is that a client is sued and the plaintiff successfully pierces the corporate veil by virtue of a failure to respect the corporate form (ie insufficient recordkeeping). So the pissed off client comes after the accountant who prepared the minutes and whom is now totally naked because the EO carrier will not provide coverage.
Long and short is the risk of state prosecution is very small and for that matter so is civil liability, however the fees it generates are so small that it's not worth the risk anyway. And PVVCPA, I would be very concerned if I were giving my clients promissory notes and I was not an attorney | |
| January 21, 2008 | |
| Hawaii's Supreme Court is in the process of defining the practice of law. The proposed rule is quite vague and may include giving advice about taxes or even advice to seek the advice of an attorney regarding a certain issue. Yikes. I need to do a little more research on this, but I recommend if you are unsure about where your services fall, you seek the advice of an attorney in your state. | |
| January 22, 2008 | |
| It turns out this proposed ruling is a really big issue. Five days before the comment period ends there was a big article about it in the paper. If this goes through, they say insurance carriers and other professionals will be affected. One lady will have to go out of business because she will no longer be allowed to "fill in the forms." She charges about $350 to do some standard documents whereas an attorney would charge about $1,000. The Hawaii State Bar is the one promoting this change. I think attorneys have just sunk to a new low, at least in Hawaii. (No offense Crow.) | |
| January 22, 2008 | |
| Crow shouldn't take offense. He represents the 1% in that old joke. | |
