Choosing the right game plan: responding to requests for information.

AuthorPerkins, Stephanie Sessions

CPAs can face a tricky situation when they receive a request for certain types of information from clients and third parties. How CPAs should handle such requests--which may or may not be valid--depends on several factors.

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Rule 301 of the AICPA Professional Standards has long recognized that a member CPA "shall not disclose any confidential client information without the specific consent of the client ..." The main exception to that rule occurs when the CPA is responding to a "validly issued and enforceable subpoena or summons" or complying "with applicable laws and government regulations."

The Internal Revenue Code (IRC) is even more specific in prohibiting disclosure. IRC Section 7216 makes it a misdemeanor for any tax return preparer to release any tax information obtained or generated in the course of a preparer-client relationship, unless the preparer has express client consent, or a court order has been issued. Violation of this rule is subject to a fine and/or imprisonment.

The main distinction between these rules is that AICPA members will be judged by AICPA standards in a professional context, while the IRC is law--and failure to comply can create serious legal implications for the CPA.

CPAs are often justifiably confused about what rules apply when trying to determine whether appropriate taxpayer consent has been given, or whether they have been served with valid legal process (e.g., a subpoena) to release records and/or to submit to a deposition or interview regarding tax matters. This can occur in both civil and criminal cases involving the CPA's client, and it is far from simple to navigate.

Because of state and local regulations that may impose other requirements, whenever CPAs are asked to respond to either a formal or informal request for information regarding a client, they should seek the advice of a legal adviser to help ensure proper compliance with such regulations.

Although CPAs should indicate their interest in cooperating, it is appropriate to defer any comments or release of records until legal advice is received.

Civil Subpoenas

Civil subpoenas are used by a party in litigation to request information from a third party. In many cases, that third party is you, the CPA, for the adversary of the requesting party. Subpoenas come in various forms: some seek documents only. Some also seek testimony (e.g., depositions). Keep in mind that although they may appear formal, not all subpoenas are valid...

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