Did first Loom for tax review...

Since I am virtual, I decided to implement Loom videos to also add value to clients and help them understand their tax returns. I figure it also protects my butt if they say I did not review with them--not in person but I did present an overview, explained critical things, and it is up to them to watch and ask question...as just it is their job to actually review a return and ask questions (most never do).

It'll be interesting to see client response as I roll it out. I was hoping to keep at 10 minutes but this 1040 with Schedule C was 20 minutes because I needed to explain depreciation recapture, how QBI still applied despite business loss, and a gain they likely did not anticipate. This will be part of higher fees but I think the added value of explaining it will be well received.

I have a mortgage broker friend that uses a similar tool. I was really impressed with his ability to explain many things very efficiently in an on-demand format like this, but thought it was a proprietary tool of his company.

Definitely will be looking into this more. Thanks for sharing!

A lawyer I use/work with first presented a Loom video to me and I was quite impressed with it. I knew right then and there, especially with its low cost, that I had to implement it.

I've used Loom to create an explainer video on a new state program (yay WA Cares Fund /s), and it was an easy way to not say the same thing fifty times. I've also used it to document QBO processes for clients. I haven't used it for tax work, but I've thought about using it to provide tax return review notes to staff - I just have some data security concerns about recording screens that will contain the client's name/SSN. I know we can password protect the videos, but is that enough?

I know we can password protect the videos, but is that enough?

Maybe. Maybe not. My first thought is that if you send it to the client via Sharefile it is as secure as sending a PDF that way.

My second thought was that if you are using a website to create a video, that website must comply with 7216 if you are to share private information. I have browsed their website and I see nothing to that effect.

Here is my take:

Loom is GDPR and CCPA compliant, and their security controls comply with TSPs set forth by AICPA (that's a fun document to read). AICPA Confidentiality rules have become a bit broader, actually, than 7216 and 7216 has a number of exceptions per TR 301.7216-2. Given that, I am comfortable that I am not violating either 7216 or AICPA Confidentiality in not requesting consent when the TPSP is AICPA compliant (broader than 7216) as well as CCPA compliant, which has expanded to include confidential information tax preparers possess.

https://www.loom.com/security

https://www.aicpa.org/interestareas/frc/assuranceadvisoryservices/socforserviceorganizations.html

https://www.thetaxadviser.com/issues/2015/feb/tpr-feb15.html

These videos are only provided to the client. They're 256-bit encrypted at rest and utilize TLS 1.2+ while in-transit. You can restrict who can open them via e-mail address or a password if you keep them hosted on Loom's platform. That is as secure as any client portal we all freely utilize.

It is more so the AICPA that sets forth tax preparers potentially violating confidentiality standards by utilizing third-party services, including software, connected with the tax return preparation and filing. In that case, we should not be using any internet-connected service, such as Zoom, Teams, DocuSign, and could even go so far as to preclude us from utilizing tax preparation software in the first place since TPSPs are always involved.

Perform due diligence, do not be reckless, and keep it confined to client-use only and for the scope of the engagement. This is clearly for tax preparation and review with clients prior to filing, which falls within the scope of a tax engagement. 7216 and AICPA both express scope of coverage being disclosure of confidential information for purposes other than preparation and filing a tax return without client consent.

Keep in mind, also, that if you utilize any taxpayer information you collected for the sole purpose of tax preparation services for something as innocuous as a CPA firm newsletter or birthday card, for example, you can be in violation of 7216 in absence of consent. Same for marketing other firm services to tax-only clients. You can violate it by allowing staff not involved in tax preparation to have access to such information.

If I am missing something in my reviews of 7216 and AICPA Confidentiality requirements, I'm all ears but my interpretation is I am not doing anything in violation since it is only for the preparation and filing of tax returns, or only to fulfill the scope of any other engagement.

All that said, I am inclined to add another layer of protection by downloading the videos and uploading to the clients' portals, and then delete off Loom's site.