Procedures for CPAs That Process Clients' Payroll Checks and Make Tax DepositsĬPAs processing payroll checks and making tax deposits online should consider access and security issues and be careful if they have access to a financially troubled client's bank account. In Erwin, if the accountants had promptly resigned in writing, they may have avoided such hard scrutiny. Two- party, signed engagement letters can minimize confusion and clarify responsibilities between the client and the CPA, outline fee and payment terms, and emphasize the importance of filing deadlines, logistics, and other key aspects of the client arrangement, such as how the CPA can resign from the engagement. Follow an Engagement LetterĬPAs who perform payroll and sales tax return preparation-which might not be within the purview of the Statements on Standards for Accounting and Review Services (SSARS)-should use engagement letters for those services. This item reviews the relevant requirements, procedures, or other issues for CPAs who offer payroll services. That is a time- consuming and expensive lesson.
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Nevertheless, the two accountants were each found jointly and severally liable for $325,000 plus penalties and interest. Of course, the owner of the business was held to be a responsible person as well. In it, the court concluded that accountants had significant authority over the finances of the client, so they were "responsible persons" under Sec. The Erwin case is an important reminder that an accountant can be held liable for a client's unpaid employment taxes. They are even scarier if they are assessed against a CPA who provides payroll services to the client. Payroll tax penalties are scary when they are assessed against a client.