A client has skipped out on paying his bill and has abandoned all his old records at my office. How often do I need to attempt contact before I am ok to shred everything. It has been 2 years since I had any response from him.
I have sent emails and texts.
I had a client like that. I saved my many emails to him and his responses or non-responses. I even got a letter once from another accountant who said he would pickup his papers. I finally sent him an email saying that I would hold the information for 2 more months (and provided the date), at which time I would have his information shredded. I never heard from him but had it shredded. I’ve never heard from him since. Giving the “client” a reasonable period to reply and saving all emails/texts is the key. I think in total I stored this guy’s stuff for about three or four years.
Depends on the nature of the records, I’d think…personal tax stuff? Minimal time and out it goes. Business records? Longer, but only because there’s a higher liability to you for tossing 'em. But if you’ve made reasonable efforts (and can prove it) to contact or return them - even without being paid - you should be fine I’d think. Don’t believe there’s a hard-and-fast rule on this.
I have a retired family law lawyer as a client. When she retired, she contacted the Law Society of Upper Canada and asked how long she needs to keep client records. Her answer, obviously from a bunch of lawyers, was “as long as you think you’ll need them”. Proof that there is no real answer.
I assume there is a Statute of Limitations…think of a landlord whose tenant abandons the premises and leaves goods…and there are, of course, tax limitations. But gven that this instant case is “records”…who knows? (Probably a relief for the client to have not to deal with them ha ha!!)
The example she gave was of separated parents when the children were young. When older, one parent may go to court to have support changed. She said that the parent must supply an agreement with original signatures. That’s why she has to keep the documents.
Makes sense! Original wet signatures are still the Standard.
There’s no statute of limitations because tax preparation is not a regulated industry. CPAs have rules of professional conduct which would inform this, but non-CPAs don’t. My advice would be that no one should be giving advice on this question unless they have direct experience. Speaking to a lawyer is what I would do if it were a significant issue for me.
LOL. I think that ANYBODY who thinks that commentary on a public forum on a question posed is professional and legally binding advice…
It’s a public forum. Comments are open for opinion and thoughts. Due Diligence is require for anyone. But it often isn’t a bad idea to seek “thoughts”.
When I ask a question and receive an answer I “may” act on it…and I “may not”. But I’m not suing you for your thoughts…
Just one person’s approach.
Edit: clarity
I had a similar situation years ago, and asked a tax lawyer about it.
In this case, CRA had denied some business expenses (on the client’s T2125) because he didn’t respond to their review letter. He dropped off several boxes of records, so I had my staff review the bookkeeping and make corrections and scan the relevant support documents for CRA. I prepared a cover letter to CRA (didn’t send it), and sent the client an invoice. Didn’t hear from him for several months, and then he asked for more time to pay. Over the next couple years, I kept contacting him without much success. Occasionally he would reply or even come see me and want me to do more work - latest year T1 prep, etc.
In the meantime, CRA sent his debt to collections, and contacted me because they couldn’t get a hold of him either. That’s when I asked the tax lawyer - he said, very emphatically, “Get those boxes out of your office…NOW!”
If CRA is looking for documentation from your client, and you have those records, CRA can hold you responsible for not providing it to them. But, if your client hasn’t given you permission to release those documents, it puts you in a bad legal position - particularly if you’re holding back on it because you’re waiting for payment.
So, I paid the $20 to get the boxes couriered to the client’s last known address, with instruction to “leave at front door” (i.e. don’t bring them back here if nobody is home)
Hmm…if CRA wanted the docs badly enough, they’d issue a demand…and it wouldn’t matter if the client said yay or nay…?
But I like your solution, although it may become someone else’s problem then (if the client has moved eg).
I agree it’s more likely that CRA would issue a demand to the taxpayer, and make it the taxpayer’s problem to provide the documents - no matter where they currently are. But, if it eventually ended up in court, the taxpayer could state that the accountant had been holding the documents, which prevented him from responding to CRA by a particular deadline.
And I think there was more to it than that - the tax lawyer was quite emphatic that you (the accountant) don’t want to be “in possession” of the documents (as we always hear about “possession” and its legal implications…). I just don’t remember all the details.