Client's Lacerate software Tax documents requested

Hi All,

I have a client that left me for another CPA. I give him all the tax returns and depreciation schedules in PDF form. Hi Is not asking for my Lacerate client software file. Do I need to give him this? My firm is in California. If not, is there anything I can send him that shows that I don't need to give him my lacerate client software file.

thanks

Ron

No, you don't have to give him your Lacerte digital file. Your software licensing agreement may even have restrictions that prevent you from sharing software components with third parties.

Most of the existing rules concern the records that you are required to provide to a departing client as opposed to what you can hold back. Here is an article from the Tax Advisor that may help....Its old, but still valid.

https://www.thetaxadviser.com/issues/20 ... aug14.html

Thanks for the reply,

I will use the licensing issue and also my E&O issue.

Ron

Just a general question. Would you give your client the lacerate software file? Does any tax firm give out the tax software file to clients?

I did receive one lacerate software file from another CPA firm.

Long story short. This client had all his 2018 tax return prepared by another CPA but his CPA did not know anything about QBID deduction. He came to me with a thumb drive of the lacerate software exported by his CPA. I made the election and filed for him for 2018. Then he went back to his CPA for 2019 tax return and future. I did not export the lacerate file to him.

The CPA firm I use to work for never gave out the software file. I just know went to say no without making sure I don't have a legal obligation to give it to him. I had a client once that I fixed his tax return that the other tax firm did wrong but the client went back to them because their fees were less then mine. That the problem with our profession, if it was not for the crazy clients, our job would be great.

Only pdf of my work product, schedules, and forms. I have been asked by other tax preparers to e-mail them the actual file from my software and they will convert it and I have refused and told them that it would be a violation of licensing agreement.

but the client went back to them because their fees were less then mine.

I don't fault anyone for shopping around! It happens to me and I am sure I got many clients because they were paying way more than what i may be charging. That is how this world is

In the early 90's, I lost a retail client after 25 years. Principal retired and son thought that I charged too much!

That said new CPA requested GL in media format, I provided it as a .pfd file. Client insisted that I provide in media.

The data was processed through proprietary software, Excel personified! So I offered to sell it to them for $2,500, guess what I never heard from them again.

Moral to the story is that someone who worked for them opened a similar type business and engaged me for almost twice the fee.

The data file is effectively YOUR working paper. You fulfill your obligation by providing a printed or electronic copy of the tax returns you file. I doubt providing a data file would violate a license agreement since you must still have a license to even access the data file, but I would simply use the license agreement as excuse.

Similar rules apply for electronic accounting records you create and maintain that were never originally in possession of the client. At one time, we had a client demand a Peachtree data file while also attempting to break a $75k/year contract, which contained a clause that the contract had to be paid off if breached without justifiable cause and the data file would only be provided if the client paid an additional $50k or whatever the assigned value was (been too long, circumstances were terrible). They hired a lawyer to see if we had a leg to stand on concerning our position and the lawyer basically told them to stop being so cocky since we were fully within our legal rights. Client still broke contract but they never received the data file or anything beyond the financials to move forward with their internal accounting. I think we provided their general ledger, which was thousands of pages, at a hefty added fee they had to pay in advance.