Management Strategy

Management Strategy

Responding to Subpoenas
Although CPAs should indicate their interest in cooperating with subpoenas and other requests for information, it is appropriate to defer any comments or release of records und! receiving advice from an attorney or professional liabOity insurance risk advisor. Following are some reasons why: • Some subpoenas require documents, some require testimony, and some require both. Here are some proactive guidelines: • Do not volunteer information. Providing more than what is requested in the subpoena violates IRC and AICPA rules. • Under no circumstances give interviews to an agent when the subpoena requests documents only. Never give an interview without first seeking legal guidance. • Be sure that the documents being produced fit the description of the documents requested in the subpoena.

• Never volunteer documents or other information before the due date stated on the subpoena without first consulting a qualified attorney or professional Uability insurance risk advisor. • Not all subpoenas or requests for information are valid and enforceable, and it can be difficult to determine this from their face. • Do not assume that the subpoena is proper just because it appears to be legal. Improperly responding to an invalid subpoena is a mistake. • At the same time, do not ignore a subpoena. Failing to respond can result in difficulties, including court-imposed penalties or fees. • Even if the subpoena is valid, it might not meet IRC requirements for the release of client tax information. Simply complying with a subpoena could result in fines

or penalties and may expose a CPA to liability from the client. These are practical guidelines only and not a substitute for seeking legal advice. It is also important for CPAs to notify their professional liability insurance company to assure their coverage in the event of a claim. The public trusts CPAs to do everything possible to detect and report fraud. Violating such trust can be very...