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Providing Tax Software Data to former clients

Technical topics regarding tax preparation.
#1
Posts:
22
Joined:
2-Jul-2015 12:25pm
Location:
Simi Valley, California
If a former client requests Lacerte data (backup) of their tax return/s is the tax professional required to give this to them? I assume this will be used by the successor tax professional to prepare their tax returns using the same software.

All clients, prior and current, have been provided hard copies of tax returns and electronically filed the same to the federal and state tax authorities.
 

#2
Posts:
2668
Joined:
22-Apr-2014 3:06pm
Location:
WA State
No requirement
I've provided a copy of my depreciation software backup file before, but I'd never consider a copy of the data file from my tax software. That's a cost of changing providers.
~Captcook
 

#3
JAD  
Posts:
1730
Joined:
21-Apr-2014 8:58am
Location:
California
I had this discussion on another forum, a lot of people responded. I also had been asked for the Lacerte data file.

Most said that they do not provide the backup. Another professional who specializes in accounting malpractice issues and the regulations applicable to us said that we are not required to provide the data file.

I told my client that it was not a normal request in this situation - that I had never made that request and had never before been asked for the file. I explained that I would not provide it and had been advised not to provide it. It is too much exposure for the replaced tax preparer. I discussed the process of setting up a new client file. I said that yes, it took some time, but it was not onerous, and it is part of getting to know a new relationship. Calm and professional tone, no attitude. I did not receive any pushback.

I agree - depreciation should be provided electronically, if requested. You can export depreciation to Excel. No need to provide the data file.
 

#4
CrowCPA  
Posts:
249
Joined:
25-Apr-2014 3:27pm
Location:
New England
I have done this twice during my 40 years in business and see it as more of a question of maintaining your goodwill in the community. If the new accountant is someone with whom you want to maintain cordial relations, that argues for sending it. He may do the same for you next year. If the client is an important local business, that argues for the same thing. You don't want the reputation of being uncooperative. Both cases where I did this involved lengthy depreciation schedules. If there isn't much to depreciate, I would question why they want the file.
 

#5
Posts:
3
Joined:
14-May-2019 3:57pm
Location:
Idaho
I've had it happen only once for my parents return. When I graduated college and began in public accounting, the CPA my parents had been using was nice enough to send the Lacerte backup of their return. Somewhat of a unique situation. Outside of that it's never happened or been requested.

What does everyone here do about carryovers from year to year (capital loss, credits, suspended losses, etc) on returns that they did not prepare the prior year? Seems like this is something easy to overlook especially since client likely doesn't even know about it. Often I've noticed that the client copy of the return doesn't have the nice summary page of carryovers available in most softwares.
 

#6
JAD  
Posts:
1730
Joined:
21-Apr-2014 8:58am
Location:
California
I just ask the question - it winds up being one of many questions. I say, "I saw these carryforwards on the prior year's return. Are there any other carryovers?"

My last question is always, "Is there anything else that I need to know?" One time the answer was that the client had not received her $50k refund from the prior year....client was not aware!
 

#7
Posts:
206
Joined:
30-May-2014 1:43pm
Location:
MA
I am sure a lot of loss carryovers get lost, especially by people who jump around or self prepare. I always use the example of Senator Warren being cheap and costing herself money. She was making $800k + and using turbo tax. She had about $234k in capital loss carryovers in Massachusetts at the end of 2008.

I am not sure how turbo tax works at the state level, but on her 2009 returns the federal loss carryover showed up but the Massachusetts loss disappeared. Couple of years later she had some large gains and needlessly paid state taxes on those gains.

I tell that story to people in explaining why nobody should do your own return unless you are a pro.
 


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