A Printing Question

Since my start I have always printed a complete copy of my client's tax return for my files. I am questioning if this is still necessary. I feel that a complete printed copy is probably still good to have as a back-up and reference for my more complex returns. Of course I save a computer copy, but it is not outside the realm of possibility for information / dates to print differently after the original printing. Yet, I'm thinking just the signature pages should be sufficient for the run of the mill tax returns. It's hard to break old habits, just wondering what the rest of you do.

Why on earth are you printing a hard copy of the complete return?

Save the entire return as a pdf. What Tax software are you using?

Print only those pages that are necessary when needed.

Not necessary. Just print a PDF copy and save lots of $

Agree to it not being necessary. Just an old habit that stuck. Prior to being on my own worked for a CPA firm that kept a client file and I followed suit.

>> Prior to being on my own worked for a CPA firm that kept a client file and I followed suit.

CPA was paying for the paper, and toner before, now you are so working smarter helps reduce expenses

I make it a point to try to scan in everything. I haven't purchased a new file cabinet in years.

Bought a Fujitsu scansanp scanner in 2008 and never looked back. I upgraded to newer model last year.
Every tax practitioner needs to invest in a good scanner.

>> Every tax practitioner needs to invest in a good scanner.

AMEN!

I take the opposite approach; retain the bare minimum. Maybe I'm missing something but why would I want to retain client documents or work product (other than the tax software files, in the case of needing an amendment later) ?

I take the opposite approach; retain the bare minimum. Maybe I'm missing something but why would I want to retain client documents or work product (other than the tax software files, in the case of needing an amendment later) ?

I retain scanned copies of the documents in case client received a notice. If they didn't give me the information or reported it to me incorrectly then I am with in my right to charge for responding to the notice and possible amendment.

I retain scanned copies of the documents in case client received a notice. If they didn't give me the information or reported it to me incorrectly then I am with in my right to charge for responding to the notice and possible amendment.

+1. My previous employer started a pilot program to scan documents after he got sued in small claims court for an error on a tax return, and we basically moved to paperless after the success of the pilot program. (Set aside the question of why it couldn't have been resolved outside of the court system; it was a weird former client...)

In addition, I have found it helpful in my practice, and especially for the practice I per diem for, to be able to look at the inputs vs outputs to a previous tax return. From time to time I've wondered if there was a major error made, and being able to look at the source documents can resolve that.

I retain scanned copies of the documents in case client received a notice. If they didn't give me the information or reported it to me incorrectly then I am with in my right to charge for responding to the notice and possible amendment.

+1. My previous employer started a pilot program to scan documents after he got sued in small claims court for an error on a tax return, and we basically moved to paperless after the success of the pilot program. (Set aside the question of why it couldn't have been resolved outside of the court system; it was a weird former client...)

In addition, I have found it helpful in my practice, and especially for the practice I per diem for, to be able to look at the inputs vs outputs to a previous tax return. From time to time I've wondered if there was a major error made, and being able to look at the source documents can resolve that.

I can't tell you how many times I've called the client and said last year you gave me a brokerage for this institution but nothing this year.

That's why I have two monitors, one with last year's tax software/data and another with this year's. I can easily see the set of 1099s, W2s, etc. and how they bridge from year-to-year. Drake also does a pretty good job of giving visual clues for last year's data, on many of the input screens.

I still don't get why I'd keep copies of all their paperwork (either hardcopy or scanned). If someone hands me a document and they tell me I didn't use it in the tax return because I missed it, I'm not sure how having a scanned-in file of all the original documents would help me refute that. All they'd say is "see you missed it, you didn't even scan it in".

If they come back with the original document (with my special check mark in the corner using my favorite green highlighter) and it shows data that is different from what I entered into the tax return for that year - then I made a mistake and I own it. Why would I make it easier for them to prove that point, by retaining copies of all their source documents?

If they hand me a corrected/different document, with a fake version of my special green check mark -- and try to convince me it was the original then yeah I guess I'm stuck, but that is such a low risk I can't see spending all that time scanning in source documents to be worth it.

I still don't get why I'd keep copies of all their paperwork (either hardcopy or scanned).

I don't keep copies of all that flotsam and jetsam either, nor do I make copies of most of it. I make my red pencil checkmark on those papers that are relevant and everything goes back to the client. I do keep a copy of very few papers like W-2 that are significant or required.

IRS requires only that you keep a copy of a W-2 and 1099-R, (but not 1099-B or 1099-Misc), and anything sent with a 8453.
https://www.irs.gov/e-file-providers/ero-duties-after-submitting-the-return-to-the-irs

I still don't get why I'd keep copies of all their paperwork (either hardcopy or scanned). If someone hands me a document and they tell me I didn't use it in the tax return because I missed it, I'm not sure how having a scanned-in file of all the original documents would help me refute that. All they'd say is "see you missed it, you didn't even scan it in".

You don't need proof beyond a reasonable doubt here. If you have a system consistently followed for your clients, then if something isn't scanned in you have some indicia of what happened -- some evidence is better than no evidence. I guarantee that if my boss could have testified that he had a system of retaining documents, even with only 95% certainty that the client did not produce the document to him, he would not have been found liable for 100% of the damages. Or he could have verified everything and, if he was in the wrong, taken care of it outside of court.

A client of mine sent me a copy of the CP2000 she received. I looked back at my scanned documents before the meeting, saw my error almost immediately, and was able to be prepared for the meeting (including a check written to the client for penalties and interest on top of the pile). It was a powerful statement that I could make because my document retention allowed for it. The client is still a client, in part because of how I owned up for it -- and she told me that, too!

The other reason to do this is one of systems. It's a lot easier to have one system than two, because in having two separate systems you add additional potential points of error (i.e. using the wrong system). My EITC clientele happens by accident at this point, but now I have to retain documents for clients who claim CTC and AOTC which affects a lot more of my clients, and now the phaseout range of the CTC is being raised significantly for 2018. It's just easier to create a system where I retain documents for all clients rather than picking and choosing which ones I scan.

I only print if I'm having a meeting. Then I get rid of the paper asap. If I make notes on the return, I'll scan it and call it "Meeting Copy"

+1 on the fujitsu scanshaps. They are amazing. Still running after years of heavy use.

I scan a PBC copy exactly as it was given to me. We extract what we need and put the forms in order via PDF. So we have an organized set in the order of the return, and a "control" PBC copy exactly as it was handed to us.

End of tax season, everything is mailed back USPS with tracking so we have record of forms being returned.

I've never been sued over a tax return thank God, but I have had claims of I didn't get my documents back. So the record of mailing is nice.

For 12 years, I worked for a firm that did just as Chris describes and I can't tell you the times I wish I could have gone back and looked at what the client had given in a prior year. When I bought a firm out later, the prior CPA kept signed preparer copies of all returns and retained paper copies of everything the client gave her. The volume of paper was insane! I went with pdf'ing the preparer copy straight out of the software and scanning all client provided documents. I have never regretted keeping copies of what clients provided and never ran out of cabinet space either.

Another thumbs up for the Fujitsu Scansnap here. I converted an old Canon Imagerunner copier to a scanner when I first started out but after some research on scanners, ended up getting the Fujitsu. I've since sold my practice and started working with an investment firm. I've convinced both advisors to purchase one and have one of my coworkers looking at one for his home. Nothing short of amazing that machine is.

I'm with Michelle. Scan source documents and retain the PDF, print PDF of preparer copy of return - archive both into our DMS after tax season. Also, Fujitsu scanners are the way to go.