prospect gave me tax returns to review

Hi,

A prospective client gave me her 2017 and 2018 returns to review, back in August of 2019. After she declined to work with me she didn't ask me to send back her returns and I may have lost them. Tonight she email'd me, looking for them. I have no idea where they are... Do I have any liability here?

Debbie

It's an inconvenience for sure. Liability? Hard to believe unless something currently is time sensitive and can't be addressed without it.

Even so, why can't she get a copy from the original preparer? If they were self-prepared, she ought to be able to log into whatever software she used and print out a copy. At the least, a copy of the tax returns can be requested from the IRS along with a transcript for those two years.

A year and a half ago? You probably should have returned them when she declined, but it would have been reasonable for you to presume you were just provided copies and not originals if she didn't ask for them back.
As Taxalmanacer noted, she has other methods of getting copies. I'd tell her you shredded them assuming they were copies.

That is valid, or you can explain that they were mailed back after your services were declined (theoretically).

Dear Ms Jones, when I conducted a complimentary review of your tax returns almost two years ago, you decided not to engage my services, which I fully respect. However, I then shred the copies given to me so to ensure the security of your tax information, as I do not maintain office files for nonclients. Please reach out to your original tax preparer.

("What! You gave me your original returns and didn't make any copies? Seriously?! What were you thinking!)

Loved your postscript. Seriously, people need to keep copies of anything they send out. I probably would have made my own copies.

No Good Deed goes Unpunished.

Every self respecting tax preparer should have a policy dealing with prospects that don't go anywhere.

I had one for two years now. This fellow e-mailed me his tax transcripts from 2018 and dropped off his 2019 W2 and 1099 last year and then disappeared from the face of earth. Phone would ring with a full mailbox. I thought he had died of COVID. I sent a letter to the address on the W2 to come pick up his paperwork ASAP. No response so I destroyed the papers.

He e-mails me this year in March that he wants me to look at his last 2 yeasr and this year's taxes again. I politely declined and told him I had sent a letter last year and I could not get in touch with him so I am done! I do NOT have any of his paperwork anymore.

I am NOT going to be the junk yard of tax paperwork for non clients

Every self respecting tax preparer should have a policy dealing with prospects that don't go anywhere.

I retain the source documents provided to me for one year, give or take, then I purge those files from my system. However -- I do retain the prospects "perm" word doc file, which does not contain anything other than my notes regarding the prospect's tax situation, contact information, and my notes regarding our interactions.

If a prospect's name seems familiar, I can check to see if there's an old prospect perm file (if we've interacted before), then pull up the old perm file and see if they were a butthole or went radio silent and disappeared into the ether when we last spoke. Jesus forgives...MvT does not.

If a prospect was either unable or unwilling to provide digital copies to me view a portal link, I think I would pass. That's a sign of things to come IMO. The exception might be if the prospect is elderly.