Wednesday, January 30, 2013
Tax advice is sought and rendered regularly is an unprofessional setting. This can be problem for professionals who give that advice because it could lead to liability. To avoid this problem, CPAs and other professionals should take it upon themselves to inform the person that they are talking to that they should not rely on anything that they say to the person. In addition, they might want to consider informing the person that they are not a client of the professional. This can also apply when the client-relationship is just beginning. The most important consideration of all of this is that the CPA should probably just remain from giving tax advice to someone who is not the client.
This problem can also arise within the scope of a current existing client relationship. This is more likely to happen because the client would be more likely to rely upon the advice of their CPA. Therefore, it is important for a professional to let their client know the limitation of their expertise. Professionals might want to document all the correspondence between the professional and the client. Furthermore, professionals might want to consider declining to respond to requests for a second opinion after another CPA gives his opinion. The reason for this is because the second professional might not have the information that he needs to make a good determination.
See Deborah K. Rood, Avoiding Allegations of Improper Tax Advice, Journal of Accountancy, Jan. 2013.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.