Discussion:Questionnaire & Engagment letters

Be happy to share if anyone's interested - would love some feedback too.

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Most of my clients have been understanding and I made them aware of circ 230, but the ones who are balking think they are "too busy". Well I guess if they are too busy to maintain the documents required, they will have to lie in writing to me & make me believe it. That way I satisfy my documnetation requirements.

They can always buy turbo tax if they think they can do it themselves - and of course the irs will fill your forms out for you if you ask.

Maybe I have hit a point where I am sufficiently busy & tired of the PIA clients.

new Paragraph: "I may encounter instances where the tax law is unclear, or where there may be conflicts between the taxing authorities' interpretations of the law and other supportable positions. In those instances, I will outline in a written communication each of the reasonable alternative courses of action, including the risks and consequences of each such alternative. In the end, I will adopt, on your behalf the alternative which you select after having considered the information provided by me. Pursuant to new standards prescribed in IRS Circular 230 and IRC 6694, I am forbidden from signing a tax return unless I have a reasonable belief that a tax position taken on the return will have a more likely than not probability of being sustained on its merits unless we disclose this tax position on a separate attachment to the tax return. However, under no circumstances may we sign a tax return with a tax position that has no reasonable basis."

note: there is a separate paragraph regarding taxpayer responsibility to provide the info.....

for comparison...old paragraph "I will use my judgment in resolving questions where the tax law is unclear, or where there are conflicts between the interpretation of the law by taxing authorities and other supportable positions. Unless otherwise instructed by you, I will resolve such questions in your favor whenever possible. You are responsible for the substantial accuracy of the financial records, and the full and accurate disclosure of all relevant facts affecting the return(s) to me". You also have final responsibility for the tax return(s) and therefore, you should review the return(s) carefully before signing and filing."

Some of my clients won't sign anything, or let's say I'd have to make a big issue about it. Frankly, my missing some (multi) state filing requirement concerns me more than the preparer penalties, as I don't feel I'm ever out on the edge anyway (if I though I was, I'd disclose it with gritted teeth). The engagement letter I use addresses the state filing issue.

I fired one client who, I did tell to "do it yourself" I felt he wanted to include in the return unreimbursed expenses for which he had no documentation & he refused to obtain the records (claimed they were with ex-wife, & the situation was significantly more complicatied than that).

What do you do for the "shoe box clients" I have several small business clients for whom I organize the info provided for the return including entry to QB & bank reconciliations. I then make sure they sign off on the GL detail via email or fax.

The shoebox? What more could you do? True, it's a management function you're getting into, but if they sign off on it... it's reality.