WHAT ARE THE OBLIGATIONS OF A TAX CLIENT?

Obviously, tax preparers have ethical obligations.  But what about the obligations of a tax preparation client?  A client also has obligations, responsibilities, and requirements regarding their return.  

In the letter that I give to clients with their finished returns I state –

“There returns are subject to review and examination by the IRS and appropriate state tax agencies. We accept responsibility for the clerical and mathematical accuracy of all returns I have prepared. However, the burden of proving the facts reported on your tax return rests with you. You are responsible for keeping all of the necessary documentation of the income and deductions claimed on these returns for at least three (3) years.”

This letter also says –

“Please examine these returns carefully to be sure all items of income and deductions have been accounted for properly. You are responsible for all the information reported on the returns. If you find anything that is not in order, or that you do not understand, contact us immediately. It is extremely important that you verify the accuracy of all Social Security numbers on the returns before mailing.”

As the National Association of Tax Professional’s Standards of Professional Conduct says – “The client is responsible for any decisions made when the tax return is prepared. When the client signs the tax return, it has the force of an affidavit.”

A client should not take the finished returns from his/her tax professional and just sign and mail, or approve for electronic filing, without actually looking at them.  The client should carefully review all the forms and schedules that make up the returns before signing the return.  Hey, it is the taxpayer who will be hit with penalties and interest if there is an error.

And, just as important, as I explained to clients in this year’s January letter, a client has a responsibility to provide a tax preparer with all income and deductible expense information.  If you receive additional information after your tax pro begins working on your return contact him or her immediately to ensure your completed tax returns contain all relevant information.  And a responsibility to be sure that all income and deduction amounts you provide your tax pro are accurate and that you have all required supporting written records.

Included in my instructions to clients is the following statement –

“When I say ‘I only need numbers’ I mean specific numbers for deductions you are claiming.  ‘Claim the maximum’ or ‘Whatever I am allowed’ or ‘Same as last year’ don’t cut it!  The maximum is what you actually paid – and you are allowed what you actually paid!  I will not make up numbers for you – I need you to tell me ‘$1023.50’ or ‘$20.00 per week for 50 weeks’ or ‘4638 miles’!” 

A Form 1040 is only as correct and accurate as the information provided by the taxpayer client.

TTFN