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Explain that while you
Joint communications: Explain that all
communications will now be directed to all parties,
which may differ from the past if you dealt largely may provide options for
with one spouse or owner.
Confidentiality and document requests:
In a married filing joint return, neither spouse the clients’ consideration,
should have an expectation of privacy regarding
tax information used to prepare the return for they must mutually agree
current or previously filed joint years. For example,
each spouse has the right to see the other party’s to and make all decisions
Form W-2, Wage and Tax Statement, or Forms
1099. However, if a spouse has a business interest,
the other spouse would have the right to see the regarding their tax returns.
Schedule K-1 but not the underlying business
return. Additionally, either spouse may request
copies of prior joint tax returns and supporting
information. If faced with this request, send copies increased fees. Inform clients that if you do not
to both spouses to avoid the appearance of favorit- receive necessary information and instruction from
ism. Avoid sending information to third parties, all parties with sufficient time to prepare returns
including counsel, and provide information directly prior to the filing deadline, an extension may be
to the taxpayers, who may then forward it to their necessary, or if no extension is available, the client
counsel. If you receive a subpoena, consult your will be responsible for any late-filing and late-
professional liability carrier, who may have resources payment penalties.
to help you respond.
FEELING STUCK IN THE MIDDLE?
Obtain a new engagement letter When faced with a divorcing client who doesn’t
After you explain the rules of engagement, the want to play by the rules and consistently puts you
parties should confirm that they will be able to in a difficult and awkward position, it may be best
abide by these protocols. Assuming they do, obtain to step away from all parties until things settle
a new engagement letter signed by all sides before down and their breakup is finalized. If you deter-
performing services. A retainer is also beneficial. mine this is the best option, inform both parties of
your decision and send a written termination letter.
Obtain a conflict-of-interest waiver CPAs are subject to myriad professional obliga-
Treasury Circular 230, Regulations Governing Prac- tions. The most basic is “being the adult in the
tice Before the Internal Revenue Service (31 C.F.R. room.” Remaining neutral and acting professionally
Part 10), Section 10.29(b)(3), requires that the CPA is key to your success and a healthy relationship
obtain a conflict-of-interest waiver within 30 days with all parties.
of informed consent, confirmed in writing, and
maintain it for at least 36 months. In a conflict-of- Karen Nakamura, CPA, is a risk control consulting
interest waiver, the parties acknowledge that there is director at CNA. For more information about this
a significant risk that representation of one spouse article, contact specialtyriskcontrol@cna.com. ■
may be materially limited by the representation
of the other and that all parties waive the right to Continental Casualty Company, one of the CNA insurance companies, is
the underwriter of the AICPA Professional Liability Insurance Program.
independent representation.
Aon Insurance Services, the National Program Administrator for the
AICPA Professional Liability Program, is available at 800-221-3023 or
Carefully monitor and manage deadlines visit cpai.com.
and fees This article provides information, rather than advice or opinion. It
is accurate to the best of the author’s knowledge as of the article date. This ar-
Preparing a tax return for disputing clients will ticle should not be viewed as a substitute for recommendations of a retained
likely take more time than usual. Anticipate this professional. Such consultation is recommended in applying this material in
any particular factual situations.
by setting deadlines with a sufficient amount of
Examples are for illustrative purposes only and not intended to estab-
cushion for clients to provide documentation and lish any standards of care, serve as legal advice, or acknowledge any given
make decisions. Plan for follow-up questions and factual situation is covered under any CNA insurance policy. The relevant
insurance policy provides actual terms, coverages, amounts, conditions, and
additional time. Help your clients understand that
exclusions for an insured. All products and services may not be available in
this additional time and effort will also result in all states and may be subject to change without notice.
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