When Disengaging, What To Say

I have decided to disengage from preparing a long time client's 2022 tax return. This is due to a $1 million+ deduction that involves a very complex area of tax in which I have no prior expertise. Signing the return, IMO, could be construed as my agreement with the appraisal of said donation. As I do not have the expertise or qualification to take such a position, I am concerned about accruing potential liability or IRS entanglement.

My question is whether I should give any reason to the client when I advise of my decision to disengage. The Engagement Letter we signed includes the provision that I may terminate the engagement at any time, for any reason. He is already aware of my reluctance to proceed with the return, which we agreed would be extended for this reason. I thought I would state something like "taking a position on the qualification of the appraisal is beyond the scope of my practice. I have no reason to think my client hasn't taken the right steps in accordance with the tax law for his deduction, I just don't want to be involved should IRS decide to question his professional appraisal, which it often does in this area.

Note I'm not looking to rehash the merits of my decision. Just looking for advice on the language for disengagement. I've heard that the less one states in these situations, the better.

If you've already discussed the issue, I see no reason to put it in writing.

"For reasons already discussed, this letter is to explicitly document my disengagement from preparing your tax return."

The purpose of the letter is to make the disengagement explicit, not document your reasoning (which need not be documented). I would even argue the "For reasons already discussed" could be omitted from the letter.
I'm a strong believer that less is better in these letters.

The more you put, the more you open yourself up to negative reviews, etc.

I try to keep my disengagement letters as short and simple as possible.

"Dear client,

This letter serves to confirm that we are ending our accountant-client relationship, effective immediately as of the date of this letter. As such we will not be handling any of your accounting and tax matters after the date of this letter. This includes, tax returns, 1099s, bookkeeping, etc. We recommend that you find an accountant that can be a better fit for your situation as soon as possible.

Very happily (sarcasm)

Me

Thanks for the good advice. There was no animosity at all between us - just factually I don't want the liability exposure. I'd like to be as benevolent as possible.

This is mine:

Dear ____________,

As businesses grow and evolve, there are times when difficult decisions must be made. Periodically, Cornerstone CPA Solutions performs a review of its objectives and service offerings against currently rendered services and client base.

As a result of a periodic review, it has been concluded that effective the date of this letter, Cornerstone CPA Solutions, LLC, will no longer be able to provide any future services to you or any related business entities. All prior engagements have been completed and no balance is due to or from either party.

We wish you the best.

With kind regards,



Greg Bennett, CPA

Every client that is disengaged receives the same exact language. No details. Very vague. Details just escalate and create worse situations.

"It's not you, it's me."

Agree with no details!

Here is ours (mostly):

Dear [[[]]],

As part of a periodic review of the firm's goals and objectives against currently rendered services and client base, it has been identified that ITDEPENDS, will no longer provide services to [[[[]]].

As a result, we will be unable to provide you with any professional services moving forward.

It would be prudent for you to reach out to a tax professional 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 and other unforeseen consequences.

This concludes our engagement for tax preparation [[[and other]]] services. We sincerely appreciate your consideration and wish you all the best,

IT DEPENDS

What I like about this is that it gives the reason in case the client wants to CALL us and argue.

Client: "Why won't you help me?"

Us: "We told you why, it's the firm's goals and objectives"

Client: "What are the firm's goals and objectives"?

Us: "Those are proprietary and private - we don't share them."

(All on the phone - none of that argument will be in writing).

I have a template from which I adapt the wording slightly for each disengagement.

I don't give a specific reason and am vague. I start by thanking the client for their past support and then segue into something like: "It's recently come to my attention that we're not a good fit..." or "After reflecting on our relationship I believe it's in my best interest to part ways and discontinue services..."

Disengagement notice isn't sent until their account is current. At that point I'm no longer incentivized to answer what I feel are unnecessary questions. I merely provide client copies of the last three years' returns, wish them well and notify them that I'm happy to respond to ordinary and reasonable requests from their new tax advisor to assist in a smooth transition. Ordinary and reasonable to be determined at my sole discretion. And if these questions come during either spring or fall tax season, my responses will be very delayed, if I'm able to respond at all.

If this is anything to do with viewtopic.php?f=8&t=28524 I think it requires a different approach to most disengagements. For that reason, I'd be inclined to go with CaptCook's suggestion in post #2 and perhaps throw in a paragraph, rather than just a line, about how much you have enjoyed working with them over the years etc.

Camico just published an article about this: https://www.camico.com/blog/dos-donts-of-disengaging/

I came across this link which might be beneficial, and I believe is not behind a paywall.

https://www.cpai.com/Education-Resource ... on-Letters

If you carry insurance, this is something you can ask them about, and I believe your premiums do not go up unless they actually pay on a claim, and this helps prevent them from having to pay on a claim.
If you don't carry insurance, I recommend that you do asap.

Camico just published an article about this: https://www.camico.com/blog/dos-donts-of-disengaging/

This article says:

Start with verbal communication
Don’t surprise clients you terminate with a letter informing them of your decision. Get personal and talk to them. Recognize that it may be painful and difficult, but the good-natured touch will typically smooth the transition.

Explain your reasoning, listen, and be empathetic.

You do excellent work, you have been a constant in their lives, and the change will likely not be welcomed as they won’t want to lose you. So, expect an emotional appeal. Know it is coming and stick to your guns.

I am guilty of surprising clients out of nowhere and TOTALLY blindsiding them with a disengagement letter that (in line with the CPIA article) does not give them a reason. I feel like this is bad business.

I still wish to protect myself and not give a reason with the disengagement, but how do you "warn a client" that it is coming?

Surprising a client, in my opinion, is just begging for bad reviews, of which my firm partially depends on.

The disadvantage is that you are giving reasons, even if in advance of the actual disengagement, which could increase your risk, correct?

I have a client right now who I do not get along with and I plan to disengage once his 1040 (w sole prop) is filed. His ineffectiveness combined with his constant demanding requests are so egregious that I will not be willing to work with him further. This is also the client who filed 3 incorrect 2553 forms, wouldn't pay me $150 to prepare and file the elections, but insisted that I stay on the phone while he did it and tell him what to indicate in each line (which I wouldn't do), and then demanded guidance on how to fix it with the IRS.

He's "out".

If I email the following "now" as we work on his taxes, do you think that this would be a reasonably safe way to not blindside him when I send the disengagement letter (which will be void of any reasons) a few weeks from now?

(note: our prior communication and our engagement agreement are very clear that we will not do his personal bookkeeping and that he would have to fill out our simple organizers - which he refuses to do. His answer to "how much qualified charity did you donate in 2022 was "I have NO idea!, You figure it out").

Dear client:

I just don't have the availability to go through the 73 documents and 177 emails (actual numbers) to try and figure out the total of your qualified charitable cash and noncash donations.

Perhaps there is a misunderstanding in the expectation and availability of services that I am able to provide in addition to tax preparation. This excessive correspondence along with other items have me questioning whether we are a good fit for you as your tax preparers.

The number I have so far from an email somewhere is $2275 cash and $500 non cash. Please let me know if this is correct or, if not, what is the correct amount.

I don't usually complain in client emails. But should I send this in a response?

Or should I just move on and blindside him later - potential bad reviews be darned?

We do the vague, generic disengagement letter.

Wanting to get into the details will never give you the closure that you're seeking. They will never see it your way. So why invite the discussion?

If you are going go down that road of providing reasons, then don't disengage. Instead, send them a letter explaining what your terms are for them to remain a client. Force them to decide, for themselves, if they are going to disengage you.

Today, I agree. I dont know what I was thinking when I wrote all of that. Well, it was the article that had me thinking about it.

I'll just blind side them. It's not my fault they are unreasonable.

I think it comes down to your working relationship with the client and what you're doing for the client. If its an annual you only see them once a year client, I think that relationship ending process looks a whole lot different than someone who you've worked for after five years.

I've given detailed explanations a couple of times. Big mistake.

If you want to avoid a bad review, I agree with above re setting out expectations and costs and letting client decide. If you just want to be done, I agree with Wiles, be vague.