Client requests letter to be sent to his lawyer

Client said his lawyer has made an mistake or something which caused him additional tax to pay in his 2016 tax return. Therefore, he is asking me to write a letter to certify his 2016 tax bracket, with my company letterhead and my signature. My impression is that he will be using it to ask for compensation from the lawyer.

Just writing a letter to certify tax bracket seems to be simple and straight-forward enough to me. It may just cost me five minutes to do it. But the fact that it is going to be used in his attempt to ask for compensation from a lawyer might have legal implication.

So, would you do it facing the situation? Refusing to provide such a simple and straight-forward letter might cause you to lose a long-term client. But I am just quite uncomfortable since the issue involves a lawyer.

Opinion or advice please.

Engagement letter would take us about an hour itself.

What bracket? If self employed, does this include SE tax? SE tax is not really an "income tax" or is it? What about AMT and state taxes? What if the unknown amount crosses more than one bracket? Will the settlement with the attorney even be taxable? Is the attorney in the same state, or will other state income taxes be involved?

The year 2016 is still open, and may be amended. Will this change the computation?

Just a few questions to think about.

I was in a similar situation before. Prior tax preparer made some mistakes that caused additional tax being assessed. My client's attorney asked me to write a letter on my firm's letterhead showing all the mistakes and the effect of that.

I simply attached a copy of a corrected return (this was beyond 3 years) as an example and compared the line #s impacted in a spreadsheet. I stayed away from assigning any culpability or blame etc. Just pointed to the facts in the return. I called my client up and told them that I am not prepared to testify as to how and why it happened or assign any blame because I was not involved, I can simply point to the tax treatment given the facts and based on my understanding of the law.

About a year letter, I got a thank you letter from his prior preparer for my professionalism!They settled with a refund of prep fees and the additional tax paid but no interest or attorney fees.

Just coming up with an adequate definition of "tax bracket" in this context would take more than five minutes, where I come from.
And I wouldn't step into this client's muddy water without further understanding of what happened and how and why.

Why not write a letter to the clients and state "feel free to share this letter with your attorney?"

The request itself seems flawed. Which tax bracket is he talking about...the marginal tax rate applicable to ordinary income, qualified dividends, unrecaptured 1250 gains, ordinary losses, Social Security income, tax-exempt bond interest from AMT bonds? And how much income differential is it to be applied to - enough to straddle from one rate to another?

Client said his lawyer has made an mistake or something which caused him additional tax to pay in his 2016 tax return. Therefore, he is asking me to write a letter to certify his 2016 tax bracket

Why don't you explain to your client that "tax bracket" has nothing to do with it? He probably doesn't understand, and as the discussion in this thread shows, it's a red herring to the whole issue.

If his goal is to ask for a specific dollar amount (and it would have to be, wouldn't it?), it makes more sense for all involved to do along the lines of what Atsman described, which is to identify the actual dollar amounts that would change if the mistake was corrected (if possible) or never made (if not possible to correct).

I would counter-propose to the client that I prepare a pro forma amended return to calculate the dollar difference, and charge the regular fee for that. Maybe the client is simply trying to avoid paying you by taking a short-cut using mythical "tax bracket" instead of having you perform the actual calculation necessary.

I definitely would not write a letter based on the vagueness of the request and what appears to be a phone call from your client . You are leaving yourself wide open for future problems .

Why not have a 3 way conversation between you , your client ,and his attorney to get an understanding of what is really needed. After that's resolved, instruct your client to send you an E-mail or letter authorizing you to send whats agreed upon . Be sure to provide a copy of E-mail ?letter to client

What exactly is 'certify his tax bracket for 2016? This could mean anything. You'd have to prepare a return to get his tax bracket for the year.

In case you really have to prepare a letter like that, would you put a disclaimer at the end of the letter?

And is there a standard disclaimer that can be used for such a situation? Or is there a standard comfort letter that can be used for this situation? If yes, please point me to it. I will really appreciate.

Thank you in advance.

My risk/reward ratio would be to have a third party review the facts and express an opinion.

In case you really have to prepare a letter like that

Other than something like a court order, there is no case were you "really have to" prepare a letter like that.

As Cathy asked, what is "certify"? Sounds like an attestation function, which tend to be very expensive services. You seem hellbent on ignoring all the sound advice above to get clarification and explain to the client and lawyer that their request is meaningless.

And no, a disclaimer doesn't go at the end. Search this site or do a google search for "comfort letter". The whole damn letter is disclaimer after disclaimer stating the third party needs to do their own due diligence and that you verify nothing.

If this were my client, I would offer instead to prepare a "hypothetical" tax return based on the facts as they would have existed without the lawyer's alleged mistake. Depending on my relationship with the client, I might charge regular price for tax preparation or offer a discount.

If this were my client, I would offer instead to prepare a "hypothetical" tax return based on the facts as they would have existed without the lawyer's alleged mistake. Depending on my relationship with the client, I might charge regular price for tax preparation or offer a discount.

So basically repeating the same thing I said in post #7.

If this were my client, I would offer instead to prepare a "hypothetical" tax return based on the facts as they would have existed without the lawyer's alleged mistake. Depending on my relationship with the client, I might charge regular price for tax preparation or offer a discount.

So basically repeating the same thing I said in post #7.

Yes, and you were 100% correct, so it deserved to be repeated.

Honestly, it was so many posts ago I forgot that you already said that.

[quote=]Yes, and you were 100% correct, so it deserved to be repeated.[/quote]
Plus the OP doesn't seem to be heeding the advice many have given not to write the letter, so repeating it is probably a good idea.