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Income Tax Return Prep - Disclosure Agreement

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Income Tax Return Prep - Disclosure Agreement

Old 12-13-2008, 12:00 PM
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Default Income Tax Return Prep - Disclosure Agreement

Maybe someone here, perhaps one of the resident CPA's that hangs out on THT, or anyone else that knows, will have an idea on what is going on.

Never in my life have I had to sign a disclosure agreement to get my taxes done. Been with the same guy for a lot of years, maybe things changed and he just didn't feel the need to get an agreement with me since we already know each other?!?

Now I am being asked to sign one (from a diff tax prep outfit). The disclosure agreement is unacceptable, goes well beyond just disclosing information. I'm not signing it as it is. This is not going to go over well with the boss since the company is on the hook for the cost of preparing my tax returns. The outfit doing the return was selected by the company; they are the company's agent, not mine, tho they are retained to provide the tax service to me.

Is it normal, std business practice, to require acceptance of a disclosure agreement before preparing/releasing a tax return to a client?

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Old 12-13-2008, 12:19 PM
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Default Re: Income Tax Return Prep - Disclosure Agreement

When you say disclosure agreement, are you referring to an Engagement Letter that states the CPA's responsibilities and your's, along with payment terms, etc.? If so, this is becoming fairly standard as a CYA. I'd be interested to know what it contains that you do not agree with.
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Old 12-13-2008, 01:53 PM
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Default Re: Income Tax Return Prep - Disclosure Agreement

The disclosure agreement says stuff like:

-the data they provide (my tax returns) are "informational only".
-I agree to indemnify the preparers, their company, their agents, their families, Barak Obama, and others from any damages as a result of me using the "information" (my tax returns) they provide me.
-I agree they have no liability for anything, ever, even if they are "negligent" in their tax return prep efforts.
-the folks that prepare the return are not liable for any errors in the returns they provide.
-I agree not to sue.
-establishes NY as jurisdiction for any lawsuits if I sue, even tho I agreed not to sue. Maybe they are going to sue me?!?
-payment schedule and penalties (my company is responsible for paying this)
-if they sell the company or the tax prep part of the company they can transfer my personal tax data to the new owners and I have no say over how that data is used and cannot limit the new owners from sharing it with other parties.

A lot of it impressed me as stuff one corp agrees to with another corp, e.g. the payment and fee schedule, stuff about suing, liability, indemnity...

I don't understand why they need me to agree to that stuff so that I can have access to MY own tax return. I don't agree that whoever prepares my tax return is not responsible for their own errors in preparing that return. Hell, even H&R Block steps up to the plate if they make a mistake.

Like I said, I have never before had to sign anything to get my taxes done. Does that look like a std disclosure agreement to get one's taxes done?

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Old 12-13-2008, 03:04 PM
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Default Re: Income Tax Return Prep - Disclosure Agreement

did you slip in" Barak Obama," for giggles

Or did you or your company represent him in some way ,shape or form?
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Old 12-13-2008, 03:10 PM
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Default Re: Income Tax Return Prep - Disclosure Agreement

Eyeball,

The only part I don't agree with is where their negligence is involved. Here is what they are trying to prevent - Let's say you provided the return to a lender and defaulted on the loan. Later, it turns out you overstated income in order to qualify for the loan. The CPA Firm would most likely be named in any lawsuit. They are only trying to protect themselves from unknown third parties. That is what they are referring to as you "using" the information. Even if there are no misstatements in the return, CPA's are commonly named as defendents in suits such as this.
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Old 12-13-2008, 04:28 PM
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Default RE: Income Tax Return Prep - Disclosure Agreement

Eyeball,

Be particulary wary of signing any agreement with "hold harmless" or indemnity clauses. These are often floated by providers and companies and are particularly disadvantageous to the client. I'm no lawyer, so please consult proper legal advice regarding any agreement where you are to indemnify any party.

I've been lead to believe indemnify means you agree to pay for all damages that would occur to your CPA if information they provided for you caused THEM economic damages. You pay out of your pocket for any damages they cause???? Sounds great!!!! For them. They could allege pretty much anything, and force you to obtain a lawyer to defend yourself against even spurrious claims. ($$$$$$ in legal bills???)

I would not do business with any CPA that makes this requirement. What they are asking you to sign is a legal contract. It is enforceable. Don't cede willingly your rights via contract without consulting a lawyer.

Refuse and see if they will drop the worrisome clauses. If they won't start looking for someone that isn't willing to line you up to pay for their mistakes.
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Old 12-13-2008, 05:38 PM
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Default Re: Income Tax Return Prep - Disclosure Agreement

I would not sign anything like that. My cpa has never asked me to sign any such document. Plenty of cpa's out there.
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Old 12-13-2008, 05:41 PM
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Default RE: Income Tax Return Prep - Disclosure Agreement

This is becoming more and more common due to due diligance for those of us that prepare tax returns for a living.

It basicaly just states that we are preparing an unaudited return and we are taking your word for all the information you are providing.

As a buddy of mine in the insurance business says "it all comes down to a lawyer some where and you have to cover your ass"


The Internal Revenue Service is now looking for us to be their "front line" examiners so to speak, we hear it all the time in our seminars (in fact I sat through 18 hours this week ).


Some engagement letters I am sure are more detailed than others, we have always requried them for our bookkeeping customers but will be using them this year on ALL tax clients, nature of the business
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