Tax Preparer Not Returning Documents

[SensibleandHourly]

Hello, 

I've been helping a client get caught up with taxes because the preparer she trusted with her tax documents went silent, won't return calls, or answer the door. My client thought there had been extensions but of course, nope. I helped her file 2022, 2023, and 2024. She called the IRS hoping for an abatement on interest and/or to set up a payment plan only to find out that 2021 also was not completed. A fresh round of phone calls to the 'preparer'. No answers, no response. Does my client have legal recourse against this person? In my honest opinion, she has stolen her paperwork and put her in a significantly awful financial situation which has resulted in penalties and interest. 

As always, appreciate the feedback from the community, 

Thank you, Dawn 

[ljr]

When did the tax preparer go "silent"? after she received the 2021 stuff? the 2022 stuff? the 2023 stuff or did the client send all years at once? 

Either way, this will fall back on your client. If client was already late when they gave the stuff to the preparer it is their fault. If the client kept sending stuff to preparer year after year without acknowledgement, then that is also on them.

Do you even know if the preparer is alive? Maybe they died or had a major health issue - I'm not sure they "stole" her paperwork. Of course, if they were not going to do the returns they should have contacted your client and sent all the paperwork back. BUT - really IRS will just say she should have requested new or duplicate copies from the original issuers and filed on time.

[BobKamman]

What was she thinking?  That 2021 could be extended indefinitely?  She owed taxes, she didn't have money to pay them, now it's convenient to blame the preparer.  We at some time are masters of our fates: The fault is not in our stars, but in ourselves.

[jeffmcpa2010]

If the former preparer is a CPA in most states you can file a complaint with the State Board of Accountancy (or equivalent ) Lot's of boards are not just punitive for complaints, but try to help get the problem resolved.

I am thinking this is not likely but thought it worth mentioning.

[George4Tacks]

Order transcripts from IRS and contact the state for the same. Reconstruct. Assume the old preparer died or had a melt down. I sold my practice 15 years ago. It sold again. I stayed connected as landlord for a building that started housing a tax office in 1956. Some of the old clients stayed in touch and a few reached out when they had problems. At the end of 2023, the 2nd purchaser of my practice sent me a letter on 12/31 that the keys are in the mail and he will not be paying rent beginning in January 2024. He had a lease that was valid through 2026. He had a melt down. Last year was tough for me to clean out and sell a building and field calls from clients as to "where is my stuff". The preparer just did and ostrich and buried his head in the sand. I am sure that he has the records, as nothing confidential was left in the building. Calls to him from clients went unanswered. It took showing up at his doorstep to get his attention and get a resolution to the lease problem. 

Everything the client gave the preparer can be reconstructed. Start doing so. 

[TaxGuyBill]

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@SensibleandHourly wrote:

My client thought there had been extensions but of course, nope.

2021 also was not completed

 and put her in a significantly awful financial situation which has resulted in penalties and interest. 

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Except for 2024, extensions would not change anything.

Did she have indication from the prior preparer that 2021 was filed?  If so, why didn't she pay her tax?

How did the preparer put her in an awful financial situation?  She didn't pay her tax, which is what resulted in penalties and interest.  Except for the additional cost that you are charging her to get her transcripts and MAYBE 2021 failure to file penalties, I don't see how it is costing her anything.

It sounds like she is trying to put all of the blame on the prior preparer, rather than taking any responsibility for her own lack of actions.

[Skylane]

I wouldn't waste a lot of time on what shoulda coulda woulda.... get a wage & income statement for the periods with missing information and file the returns. The IRS will calculate P&I and she can pay or setup a payment plan.  

I estimate the preparation fees and take a 50% retainer, and require signed engagement letters first. 

I administer a rewards program for these clients and give them up to 1000 "frequent delinquent filers points" with each accepted return.

[SensibleandHourly]

Hi everyone, 

Great questions.

In essence, of course, my client should have taken steps sooner. Worth noting, she thought 2021 was completed. She thought there were extensions for 2022, 2023, and 2024. She didn't know that your extensions don't last that long - from year to year. We did recreate everything for the last three years. She was surprised again for 2021. 

I don't know if the preparer has passed on, however, she is local and client has been to her home several times knocking on the door to no avail; no one ever answers. Preparer has family that is local, and said family, specifically preparer's mother, has indicated that preparer will get back to people but that never happens.  

Frankly, she very well might be overwhelmed but at least return the documents!!! 

I can't help but think it is straight up theft to keep someone's paperwork with all of their ssn's, addresses, etc. 

Just not right! 

But, you betcha, that I will assist her in recreating and researching all that we can for 2021. 

Dawn

[Ronp187]

Anyone can request their income documents from irs for most recent tax years. A simple letter usually works; she can send her letter to the address of the irs that requested her tax return and tell them she needs all income documents for that prarrticular tax year: Dear IRS: I am requesting that you send me all the information to help me prepare my delinquent tax returns; all forms 1099, W2, interest, divident, etc.,

[qbteachmt]

"Frankly, she very well might be overwhelmed but at least return the documents!!!

I can't help but think it is straight up theft to keep someone's paperwork with all of their ssn's, addresses, etc."

When it was revealed my father was demented, I had to complete a few years of his tax returns via document requests and reconstruction. But he had prepared friends' tax returns as his side income gig. That means I found all sorts of client documents in his drawers and in his storage unit. I contacted as many clients as a could, and there was this one lady who did recordkeeping for her various family members (some of whom had won a State lottery), and she assured me (assured!) she kept copies of all those check registers, etc.

My sister and I hauled the shredder from his office to our hotel room and shredded every night for a week.

Later, that same family bookkeeper let me know she needed her files returned. Uh, that was weeks ago when I reached out to you and we talked more than once (since some of your family also is shown as AR in my father's books...).

In other words: Some people lose their own paperwork by their own actions. Some people take proper care when disposing of documents.

And we still get yelled at by clients.