Knowing when to refer is one of the most important skills a tax preparer can develop. It protects your client, protects you, and builds your professional reputation.
IRS Audits
If your client gets an examination notification, the response requires someone with representation authority and experience with the audit process. As a PTIN-only preparer, your representation rights are limited. An enrolled agent, CPA, or tax attorney should handle contested examinations.
Tax Debt and Collections
A client who owes back taxes, has a lien or levy filed against them, or is dealing with a Revenue Officer needs a resolution professional. This involves evaluating options (installment agreements, offers in compromise, currently-not-collectible status) and negotiating with the IRS. That’s legal and administrative work beyond return preparation.
Criminal Tax Exposure
If a client reveals facts suggesting tax fraud, evasion, or willful failure to file, stop the engagement. The client needs a tax attorney, specifically one who handles criminal tax matters, before taking any further action. Attorney-client privilege matters here, and a preparer cannot offer that protection.
Trust Fund Recovery Penalties
When the IRS asserts personal liability against a business owner for unpaid employment taxes under IRC Section 6672, the consequences are severe. This is a legal matter requiring attorney involvement.
Innocent Spouse Claims
A client seeking relief from joint liability under IRC Section 6015 is pursuing a legal claim with specific requirements and deadlines. Refer to a tax attorney or experienced EA.
How to Make a Good Referral
A good referral includes context. Don’t just say “call this lawyer.” Provide the receiving professional with background: “I’ve been preparing this client’s returns for two years. They received a CP2000 notice for unreported 1099-K income. I’m attaching copies of the notice, the return as filed, and the 1099-K in question. The client has authorized me to share this information.”
That kind of referral saves the receiving professional time, makes you look organized and competent, and gets your client help faster. It also makes it far more likely that the attorney will refer clients back to you.
MuseSpring graduates have a built-in referral pathway to The Law Office of Jason Carr for tax resolution, audit defense, and legal matters. Learn more at musespring.com.