Very Sensitive Disengagement

While working on 2020 taxes, the returning clients mentioned "this is the first that we've heard about this FBAR thing".

So we showed them an email from our 2019 engagement, where we asked them a slew of non-US interest questions (they live overseas) and they wrote "we purposely keep all non-US bank activity below $10,000".

When we called them on it, they said, "yeah - we were in denial, now we need advice for several years."

They are also ducking our questions about 8938 and other years.

This is an OBVIOUS disengagement - no question there, but the problem we now face is that the taxpayers are in "not one, but two" sensitive protected classes.

Normally, our disengagement reads:

"It has been identified that [we] will not longer be providing services to [you] of any kind. [and you should get with a tax pro right away, etc]"

We don't give a reason, and then, we don't answer any questions.

This time, I'm tempted to put in a reason to make it clear. This is to put it out of their minds that the reason has anything to do with the protected classes.

I fee like the adverse risk of telling them why is worth saving the expense of hiring lawyers to tell them why when the law suit comes because "they don't know why and they suspect that I'm being discriminatory".

I feel like it is a good way to divert any initial suit - and it's the truth.

Do you think that putting in a simple reason come back to haunt me MORE SO than not in this case?

I've disengaged from "protected classes" and I never give a reason. Insurance risk management seminars state to never provide a reason for disengagement. Lawyers routinely advise to keep things as vague as possible and say as little as possible, unless you need to intentionally muddy up the waters.

Is this a client that is quick to throw out the discrimination card?

Personally, I do not want to get into FBAR crap. If a client ever indicates they are subject to such reporting, I will disengage and WOULD provide a reason of "this firm does not perform FBAR related engagements."

Something like this maybe?

Hello Client,

As discussed, given that information requested on multiple occasions (tax organizer sent on 1/14/2021, email sent on 1/20/2021, and phone conversations conducted on 1/22/2021 and 1/25/2021) was not provided as needed to address foreign income tax and/or asset reporting requirements, we will unfortunately be unable to provide any additional professional services to Taxpayer Client and/or Spouse Client.

As a result, it would be prudent for you to reach out to a tax professional as soon as possible to facilitate the filing of all of your personal and/or business income tax returns by the applicable deadlines. Failure to file the respective returns by the pertinent deadlines may result in the assessment of penalties and/or interest.

To be clear, no personal and/or business income tax returns and/or extensions have been or will be filed by this office on your behalf for tax years 2020 or 2021.

=====

I am not an attorney and this is not legal advice -- you may want to consult with an attorney on this!

If a client lied to me about foreign financial accounts and I had substantiation -- either completed and e-signed past years' organizers...or emails, I wouldn't have any problem firing the client, protected class or not.

I think the bigger risk is proximity to the deadline. If they have 3/15 returns, firing right now might be an issue.

Don't deviate from your standard wording. Keep it vague. Giving a reason can only hurt you, not help.

I think they know why you're firing them, given recent events. If they make a fuss out of it, they're looking to get paid, not to right an injustice, and I'd lawyer up at that point.

In your situation, I'd consider writing off WIP and clearly stating in the email & certified letter that, as a show of good faith, you're not billing them for work completed on their behalf.

This might be a good one to talk to your insurance carrier about.
They have resources, and will help with this.

I'd just use the flat out disengagement with no qualifiers.

Tell them - they must be "available and responsive to all inquires" and provide "full disclosure",
any failure to do so, is cause to end the engagement.