Do I make an Issue out of this?

Much of my practice is 1040 "retail" tax preparation services.

One client of a couple of years - kind of a creepy couple (but not bad clients) - engaged with me in early March.

We completed their taxes and presented them securely online (PDFs etc) - but they never signed.

The was a moderate federal balance and a very small state balance.

Once the COVID extension was announced they dropped of the map, even with several reminders.

A couple of days ago, they e-signed the returns and settled our invoice.

OK, standard situation. No problems.

Then, when I went to file, the state was rejected because of it being already filed. I asked them about it and they said they already filed (mailed) the state, "based on what I prepared for them", because the balance was small.

I'm wondering if I should ask them if they filed the return with my name on it as the preparer - unsigned or even signed(!)?

I didn't sign it, of course - if they signed it, they forged my name.

Do I drop it? I mean, they paid for it and didn't change it (I guess).

But then what about next year?

Do I flat out ask them if they signed my name without my permission?

I wouldn't approach the conversation in any way, shape or form to be the least bit accusatory.

This is the first year they're working with you. There are some expectations to be set. There's at least one, I would want to clarify with them.

If they want you to prepare a return, they need to trust you and work with you to complete the process. There is value in efiling regarding having positive evidence of filing and that evidence be maintained in your records, which helps you to advise them if any issues arise.

I would approach it also with the "I billed you for all of these services. You should let me complete the work you paid be to do for you."

Help me, help you...to some extent.

ItDepends did the pdf that you e-mailed have a Client Copy or Do NOT File watermark? If no then you left yourself wide open unfortunately.
I agree with CaptCook. Especially if your pdf did not have the watermark. You have to set the working relationship, not the other way around.

Just stopping in to say thanks for the morning laugh. I was looking down the list of posts and saw

Do I make an issue out of this?
ItDepends

ItDepends did the pdf that you e-mailed have a Client Copy or Do NOT File watermark? If no then you left yourself wide open unfortunately.

I left myself open for someone to forge my signature?

There are pros and cons of watermarks. Operating without them saves time.

I wouldn't think I would have to defend myself from forgery from the average retail 1040 client.

Besides, if something went wrong and I didn't sign as the preparer, couldn't I defend myself with "I didn't sign that".

I wouldn't approach the conversation in any way, shape or form to be the least bit accusatory.

This is the first year they're working with you. There are some expectations to be set. There's at least one, I would want to clarify with them.

If they want you to prepare a return, they need to trust you and work with you to complete the process. There is value in efiling regarding having positive evidence of filing and that evidence be maintained in your records, which helps you to advise them if any issues arise.

I would approach it also with the "I billed you for all of these services. You should let me complete the work you paid be to do for you."

Help me, help you...to some extent.

So you wouldn't make any mention asking how they got around the preparer signature? There are no qualms about keeping them as clients knowing that they are possibly willing to do such a thing?

They probably just mailed it.

There are pros and cons of watermarks. Operating without them saves time.

On my software adding a watermark to the client copy can be checked in the setup and there is no wastage of time. Also the pdf of the client copy is password protected by default.

I think these days when pdf can be edited, it is critical to password protect so that no alterations can be made by someone else.

Not sure what option the Hawaii Dept of Revenue offers online but here in Massachusetts they are mandating everyone to pay electronically including all corporate entities. On a number of occasions we have presented clients with a completed copy of a state 1120S for their records and the instruction sheet tells them to go the Mass Dept of Revenue site to pay online.

The site is not user friendly and the taxpayer is supposed to go to the Make a Payment Section but many of them end up going to the File a Return section. At that point the website tells them to start entering info. So they follow along and end up manually inputting the return. Then they mail back the efile signature page, we submit return and sure enough it bounces saying return already filed.

Could this be what happened in your case?

The site is not user friendly and the taxpayer is supposed to go to the Make a Payment Section but many of them end up going to the File a Return section.

I have found most Tax Websites to be confusing to the average taxpayer. I encourage ACH Debit on the tax return and if they refuse, just mail a check or money order.

The time cost is when they need a copy for a lender, etc and ask for it with no watermarks. We have to deliver the same return twice. Do you find that clients ask for another copy without watermarks?

The tax return was delivered with the instructions that we would e-file upon receipt of their electronic signature and that they do not need to mail a copy of the returns to the IRS and the state.

I agree that they probably mailed it and left the preparer signature section unsigned (perhaps didn't see it).

But if they took the liberty of signing my name, I'm not comfortable with having them as clients and I feel like I should know if that''s what happened or not. Also, if they do that with the federal that is required ot be e-filed or an explanation must be attached - that could create problems too.

And what if it gets kicked back due to no preparer signature? Or needs to be amended, we send an amendment, but it was kicked back and now we have a mess? All of these things just lead to trouble, in my opinion, and I might have clients who are OK with forging my signature.

But no one else seems to be so bothered so I'll probably just drop it and explain to them next year that we will be efileing and they cant submit the return by paper without my signature as that is required.

Also, if they do that with the federal that is required ot be e-filed or an explanation must be attached - that could create problems too.

And what if it gets kicked back due to no preparer signature? Or needs to be amended, we send an amendment, but it was kicked back and now we have a mess? All of these things just lead to trouble, in my opinion, and I might have clients who are OK with forging my signature.

All of this can be explained with a light hand in a phone call. Agree with Captain Cook here. Not allowing you to follow your firm's protocol can and does create issues that take time for you to resolve, thereby increasing fees for the client.

After the phone call with the client send a recap email. File the recap email away in case you have to refer to it in the future.

I think the likeliest scenario is that the clients left the preparer signature blank. If they were dishonest enough to forge it, do you think they're going to tell you the truth if you ask them directly? I'd move on and give them the benefit of the doubt. Trust, but verify going forward.

There are pros and cons of watermarks. Operating without them saves time.

Every draft return I send the client has a big ole "DRAFT" watermark in bold across every page.

I don't upload the final, non-watermarked client copy until (1) all federal and state/local returns have been efiled and accepted or (2) the returns have been processed for paper filing and are in the mail.

The time it adds is negligible IMO, and I consider it a best practice.

The time cost is when they need a copy for a lender, etc and ask for it with no watermarks. We have to deliver the same return twice. Do you find that clients ask for another copy without watermarks?

N/A. My final, as-filed client copies have no watermarks.

My clients have never asked me for another copy without the watermark "Client Copy". If the lender wants a copy, why would the lender care? A lender should know it is never going to get the original.

The time cost is when they need a copy for a lender, etc and ask for it with no watermarks. We have to deliver the same return twice. Do you find that clients ask for another copy without watermarks?

I have been dealing with mortgage brokers and lenders for many years. I have a standard operating procedure.

1) Lender or Broker does NOT get a copy from me directly. I will provide one free copy to the taxpayer they can do what they want. The copy is clearly marked Client Copy and that will NOT change.

2) I tell my client that if the lender is throwing a fuss, get an account transcript. Most lenders get that anyways.