One of the first things a client must get in order to pursue an offshore voluntary disclosure are all of the client records from his former accountant. Sometimes, however, the clients are having difficulty obtaining their documents from their accountants. In this article, I would like to briefly describe an accountant’s obligations with respect to the return of client records to their clients.
Return of Client Records: General Obligation to Return All Client Documents
Subsection 10.28(a) of Circular 230 requires an accountant to promptly return, upon a client’s request, any and all of the records of the client that are necessary for the client to comply with his federal tax obligations. Hence, a failure of an accountant to return all clients records to his or her client is a violation of the accountant’s IRS obligations.
Return of Client Records: Documents Included
31 CFR §10.28(b) defines the documents that an accountant must return to his client:
- All documents or written or electronic materials provided to the practitioner, or obtained by the practitioner in the course of the practitioner’s representation of the client, that preexisted the retention of the practitioner by the client;
- All materials that were prepared by the client or a third party (not including an employee or agent of the practitioner) at any time and provided to the practitioner with respect to the subject matter of the representation; and
- Any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner, or his or her employee or agent, that was presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current federal tax obligations.
Return of Client Records: Documents Excluded
31 CFR §10.28(b) also expressly excludes from the definition of client records “any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner or the practitioner’s firm, employees or agents if the practitioner is withholding such document pending the client’s performance of its contractual obligation to pay fees with respect to such document”.
Hence, in most cases, it is important for a client to pay his outstanding fees to the accountant in order to make sure that he has all relevant documents. Later, if he wishes, the client may file a lawsuit against the accountant for negligence (if there are legal grounds for such a lawsuit) to recover the fees paid.
Contact Sherayzen Law Office to Help With the Voluntary Disclosure of Your Prior US Tax Noncompliance
If you have not disclosed your foreign income and/or foreign assets to the IRS in violation of your US tax obligations, you should contact Sherayzen Law Office as soon as possible for professional help. We have helped hundreds of US taxpayers to bring their tax affairs into compliance with US tax laws, including through a voluntary disclosure such as SDOP (Streamlined Domestic Offshore Procedures), SFOP (Streamlined Foreign Offshore Procedures), DFSP (Delinquent FBAR Submission Procedures), DIIRSP (Delinquent International Information Return Submission Procedures), IRS VDP (IRS Voluntary Disclosure Practice) and Reasonable Cause disclosures. We can help you!