Even the easiest client engagement can turn difficult when family gets involved.
“Any preparer who hasn’t had to deal with family disagreements probably hasn't been in business very long,” said Oklahoma-based CPA and EA Peggy Johnson.
Complications may arise from any of the billion possible complexities of people’s feelings and relationships: divorce, parenthood, love, hate, protectiveness and meddling, to name a few.
Kathy Morgan, an EA in Shreveport, La., agreed that such troubles are common, especially in two situations. First, “the elderly client whose adult child comes in to ‘help’ them with the return or brings the return in without the client. Under IRC 7216, we aren’t allowed to discuss the return with anyone else without written consent from the taxpayer, unless the adult child has a durable power of attorney.”
Laurie Ziegler, an EA at Sass Accounting in Saukville, Wis., reported “several” client family troubles over the years. “Except in the case of spouses, the answer is always that the matter is between the client and me,” she said.
“The worst case I had: The daughter refused to believe that the mother had to file a return because she hadn’t had the need for years due to minimum filing requirements,” Morgan added. “But in the year in question, the mom had received a large royalty payment for oil rights and it put her over the limit. I had to actually, with mom’s permission, have the daughter come in and show her the return and why [mom] had to file.”
‘He’s my baby!’
Morgan’s second example: “It’s the parents wanting me to file their adult children’s returns while I’m doing theirs, usually when the kids are still dependents. The parents don’t understand why I’m happy to do the return – but junior has to come in and sign everything and review it. I’m not allowed to discuss it with the parents anymore then I am allowed to discuss their return with him. The usual response is, ‘But he’s my baby! Besides, I do all his financial stuff.’”
Ziegler’s trickiest situations “are where the couples are going through [a divorce], or are divorced but have chosen to file jointly for the prior year,” Ziegler said. “In those cases, especially if it isn’t amicable, I get the information from each spouse and put the return together. They each get a chance to see it, agree to it and sign it before it’s filed.”
How to respond
Steady, professional advice, evenly delivered, seems the best first course. “A daughter wanted information about her parents’ tax return because mom was beginning to lose capacity and dad did not handle the finances,” recalled Arlene Rheinfelder, an EA at Prescott Tax & Paralegal, Prescott, Ariz. “I requested that the parents sign a disclosure authorization so that I could discuss the taxes with the daughter, and suggested that the parents might want to sign a durable financial power of attorney while mom still had capacity to do so.”
“It’s a case of having to be empathetic but firm,” Morgan said. “If the parent is there, it’s easy to get the [consent] form signed, but if not it can get sticky. I have lost clients because of my refusal to break [7216].”
Added Johnson, “Depending on the client and the nature of the disagreement, I review the advantages and disadvantages of each option and suggest an agreeable compromise, send them home to think about it and give me an answer later, either choose one of the parties to keep as a client and fire the other, or fire them both.”
Sometimes picking which relative goes is easy. “Recently had a couple divorcing,” recalled EA Bill Stewart of San Juan Financial Ltd. in San Juan Capistrano, Calif. “I chose to terminate the female client. Just a pompous, rude person and a slow and complaining payer.”
The best advice: Remember what you’re there to do. “I’m not qualified as a family counselor,” Johnson added, “and I refuse to be pulled into a family fight.”
