Demanding FEIN Confirmation letter From Clients?

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#1
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Once, in their first year with us, we asked a client for their articles of organization, FEIN letter, OA, etc. and they didn't have them.

So we went by the prior year tax return.

It turns out that the company had 2 FEINs and we were filing under the incorrect one for many years (the prior preparer was using the "incorrect" FEIN).

This led to payroll mismatches and all sort of serious, high dollar problems. It took a tax attorney to straighten it out.

The client more or less blamed us for not demanding the letter from them or disclaiming why we needed it.

Now-a-days of course, we demand it.

A new client, who is a successful and professional contractor - doesn't have it.

I wrote:

Allow me to disclaim that if there is an error in some way, I won't be able to catch that and this can lead to problems. We have seen clients who have filed incorrectly for years and have needed tax attorneys to fix things, etc.

Sorry for the hassle, but officially, I suggest that you track down the original letter.

But I can proceed without it based on the previous preparer's filings if you wish.


He came back with "I have been filing correctly I don't know what you are talking about" - and he was annoyed.


Am I being too careful? Could I have handled this better in hindsight?
 

#2
Frankly  
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Client just proved he has lousy recordkeeping and lousy organizational skills. You can look forward to more of the same.
 

#3
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The first client seems like a one-off and extreme case. You asked him for the EIN notice. He didn't provide it so you used the next best thing -- the most recently filed return.

As far as whose fault it is, I would have asked him why he signed the jurat stating that he reviewed the return and everything is correct if the EIN listed on the return was wrong.

I also don't see how the problem would have been prevented if he would have supplied you with the EIN notice. If there are two EINs floating around, presumably there are two EIN notices, and it's completely possible he could provide the wrong EIN notice that matches the wrong EIN listed on the return. So you're stuck in the same situation. You can't read minds. It's his responsibility to provide the correct tax ID.

I wouldn't take such a strong stance with clients. I can tell that interaction is heavily influencing how you interact with clients now regarding this potential issue. But I think the pendulum has swung too far...you've overcorrected.

I'd just ask for the EIN notice, and tell them that if they no longer have it you'll use what's listed on the return. AND, if they have reason to believe the EIN listed on the return is incorrect, please let us know.
 

#4
Joan TB  
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To request a 147c letter (EIN verification letter) from the IRS, contact the IRS Business and Specialty Tax line at 1-800-829-4933. They are open Monday through Friday from 7:00 AM to 7:00 PM, taxpayer local time (Alaska and Hawaii follow Pacific Time). You will be asked identifying information.
 

#5
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I agree with MvT.
I've heard of a situation like you've described happening in one other case out of thousands of taxpayers I've interacted with over my career. It's something many professionals may never experience. Not something, IMO, to drive a hard line policy as you've described.
~Captcook
 

#6
NYCCPA  
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NY
If it is a new client filing for the first time, I request it. If it is a new client who has a history of filing, I use the prior year return. At some point the idea of anything and everything to "Cover Your Ass" reaches a point of diminishing returns...
 


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