Client Responsibilities

A business tax return is built from a complete, reconciled set of books for the tax year -- not from a pile of bank statements or receipts handed to a preparer. Under IRC §6001 and Treas. Reg. §1.6001-1, the obligation to maintain adequate records belongs to the taxpayer, and those records must be ready before preparation can begin. This article describes what every business should expect to provide, which records apply only to certain business types, and what happens when books are not in order when an engagement starts. Understanding this division of labor, what you supply versus what the CPA produces from it, is what makes the finished return accurate and defensible.

Lenders, landlords, and other third parties sometimes ask clients to obtain a comfort letter or income verification letter from their tax preparer. These documents are assurance services, a distinct professional category that goes well beyond the scope of tax return preparation. Tax returns are prepared based on information the taxpayer provides, and no assurance over that information is implied or given in the preparation process. Before a CPA can issue any letter that provides assurance to a third party, additional engagement procedures, documentation, and professional standards must be satisfied. Clients should understand that their preparer has a due diligence obligation to ask questions, but asking questions is not the same as verifying or certifying the accuracy of the underlying figures. Requests for comfort or verification letters should be discussed with your CPA before promising anything to a lender or landlord, as additional fees and engagement terms will apply.

A federal tax return is the taxpayer's legal document, signed under penalty of perjury. The CPA prepares it - applying the law to the facts provided - but does not take on legal responsibility for the accuracy of those underlying facts. Both parties sign, but the risk is not shared equally: when facts turn out to be wrong, the taxpayer is exposed first and most severely. Understanding where each party's responsibility begins and ends is not a technicality; it is the actual legal framework governing the relationship.