E-File authorization forms executed but no preparation fee payment

Forum|Forum|6 years ago
May 14, 2020
1 reply
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TP already reviewed the return and wanted to e-file by passing to us the signed e-file authorizations forms (federal form 8879 and CA form 8879) but TP did not settle our preparation fee. We did not collect any upfront fee.

We already sent emails (3 times) for the settlement of the payment of the return preparation fee. The return (2018 return with no extension) had a balance due and subject to late filing, payment penalties and interest.

Are we obligated to e-file when TP does not want to settle our fee? How do you handle this type of situation?

Thank you for your time and comment.

ProConnect Tax Online

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Best answer by itonewbie

It was communicated via email.

We asked for a payment before f 8879 were signed and told TP to email payment confirmation along with executed f8879. Only signed f8879 were emailed but we did not receive payment nor its confirmation. We sent a chaser via email. Only at the third email we informed TP that we need the payment to be settled in order to proceed with the e-file.

It seems likely that the payment is not forthcoming as 3 emails were already sent out and no response received whatsoever. Furthermore, the 2018 return was very late with penalties and interest.

You should probably send an ultimatum before formal disengagement, referring to both your original communication about the requirement to receive full payment before e-filing the return and subsequent follow-up for payment.

Unfortunately, your client already has a copy of the full return, which he/she could easily replicate with a bit of work.

itonewbie

Level 15

Read Pub 1345 for stockpiling in conjunction with Circular 230, §10.28.

---------------------------------------------------------------------------------Still an AllStar

T

The Real HalloweenAuthor

Level 6

@itonewbie Thanks for your comments and the references.

Circular 230 Section 10.28 - Return of client’s records: This is the first year we are preparing the return for this client and all the information were provided by email. There was no physical document ever provided. It seems that we are ok with this section. If client requests the e-materials provided, we will email back those materials. Is this ok?

Stockpiling Pub 1345: The e-file authorization forms were signed and dated on May 13, 2020 by TP. Based on the stockpiling rule, it seems that we must e-file on or before May 16, 2020 even though we are not paid. Are we stuck (ie obligated to e-file)? Is this correct? Can we therefore terminate our engagement on or before May 16,2020.

Pub 1345: “ The IRS does not consider current filing year returns held prior to the date it accepts transmission of electronic returns stockpiled.” What does this mean?

itonewbie

Level 15

Circular 230, Section 10.28 deals primarily with physical docs, not electronic docs, which are only copies of the originals your client never relinquished possession of. On that basis, there should be nothing to return. Your focus should be the last paragraph, which deals with the tax return and your client's contractual obligations.

Going strictly by Pub 1345, you would have already breached the requirement for stockpiling. But that's why I suggested reading that in conjunction with Section 10.28 of Circular 230.

Your last question in not relevant to your case as that pertains only to current year returns that were prepared prior to the IRS accepting returns by e-filing. For TY2019, that was Jan 27, 2020. That is because you can't possibly e-file a 2019 F.1040 signed on Jan 3, 2020, for example, by Jan 6, 2020 before the IRS started accepting e-filed returns.

---------------------------------------------------------------------------------Still an AllStar

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