Lender Letter for client

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#1
MilesR  
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Client wants a lender letter saying they were self-employed as a realtor for 5 years but I have only been preparing the client's returns for 2 years. Client offered to send the other 3 returns for me to look at and then say they were self-employed but since I did not prepare those returns it makes me feel a little off. I don't want any misrepresentation that I did any review or attestation type work for these returns that I did not file, in order to say client was self-employed for those years.

Does anyone have any guidance on how they would handle this and if it is within accounting standards to write such a letter for years that I did not prepare?
 

#2
Frankly  
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There is no point in becoming alarmed for these common requests. Reply thusly:
"The client's copies of filed tax returns show that a Schedule C was included. Schedule C is used to report income or loss from a business operated or a profession practiced as a sole proprietor. Client will be able to provide copies of his tax returns if requested. "
 

#3
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Check the AICPA. And, as there are plenty of posts about these issues -- check the yellow box. (above ^right-side)
 

#4
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Lots of discussion on this topic...
Search "comfort letter"
~Captcook
 

#5
MilesR  
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Thank you for the input. Luckily I just got an email that the lender approved them with only the first letter I sent pertaining only to the returns that I prepared. I guess they didn't really need anything for the other years that badly.
 

#6
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At a CPE seminar years ago the presenter (a lawyer) addressed these letters. He said they were a vehicle for the bank to sue you if the loan went awry and said never to write them. The bank has plenty of wherewithal to obtain the information it needs to make a loan determination.
 

#7
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A colleague recently shared a sample engagement letter from CNA AICPA Professional Liability Insurance Program. It included this entry:

Third party requests
We will not respond to any request from banks, mortgage brokers or others for verification of any information reported on these tax returns. We do not communicate with third parties or provide them with copies of tax returns.
 


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