Friend's bookkeeper disappeared with all physical tax records. What now?
August 9, 2013 5:01 PM   Subscribe

What's the next step? The person doing the books, preparing the taxes and processing payroll for my friends small business has disappeared, taking all of the physical records with him. This person had teamed up with some other financial services people (insurance, investments, etc.), and they were all offering their services out of the same office. The bookkeeper has left that arrangement, taking all of his clients' physical records with him. He is neither answering his phone nor returning phone calls. The IRS has requested information from my friend and the employees still need their weekly paychecks.

The primary issue is with the IRS. What does my friend need to do, right now, knowing that the IRS has made a request for information, and all of my friend's records have gone missing with the bookkeeper?

My friend is about to have a meltdown. The Bookkeeper has been incognito for more than a week. His ex-partners will only confirm that he has no longer working with them, and has taken all physical records with him. I have no idea how to counsel my friend to proceed in such a case.
posted by syzygy to Work & Money (13 answers total) 2 users marked this as a favorite
I am not an attorney, and I think your friend should speak to one who specializes in tax law, but I would call the IRS and ask for an extension on getting them the information. Depending on how the call was going, I would tell the why.

If the bookkeeper had no access to the businesses funds, I would simply get another bookkeeper to do the payroll. Until records are retrieved or recreated, have your friend issue checks to his employees that relfect a standard work week (40 hours?) or whatever their average or typical week would be. Let them know that they could be do more or less, but he does not want anyone to go without pay so this is the best course of action in the short run.

The bottom line is that your friend has to face all these issues one at a time, methodically, yet determinedly. NOW.
posted by JohnnyGunn at 5:12 PM on August 9, 2013

My first priority would be ensuring that any accounts that the bookkeeper may have had access to still contain all their assets and change immediately any access codes, passwords and credit account numbers that he knew. Its difficult to answer your IRS question because "request for information" covers a whole lot of ground -- some of it is "get a lawyer, stat" and some of it is "no big deal, just call them up and tell them you need more time." Do you know what kind of request it is, specifically?
posted by Lame_username at 5:14 PM on August 9, 2013 [4 favorites]

I'd lawyer up stat- this is a big deal, and your friend will want an expert advising them on how to talk with the IRS, etc. It's amazing what a scary letter from a lawyer can do to get someone's attention.
posted by jenkinsEar at 5:23 PM on August 9, 2013

Was the bookkeeper bonded or enrolled?
posted by spitbull at 5:23 PM on August 9, 2013

I have a friend who works for the IRS help line that JohnnyGunn is advising and I think he'd be just tickled to get a "Hi, I through no fault of my own have found myself in a strange situations, what do I do?" call as opposed to the endless stream of "Hi, I've spent four or so years making really poor decisions and I want you to make it all better for me. NOW!" calls that compose much of his day. Your fiend is almost certainly not the first person to have this problem and it's certainly not in the IRS' best interest to lean really hard on people making good faith efforts.

Getting people paid is probably and securing all the accounts are probably the bigger emergency.

After that - I'd look into some forensic accounting.
posted by Kid Charlemagne at 5:25 PM on August 9, 2013 [6 favorites]

Yeah, if this person was state licensed, I would find the appropriate oversight office, and perhaps the privately operated licensing board as well. The disappearance with records raises all my hackles and your friend may well have worse news to look forward to. It's pretty spooky that this person's colleagues seem to be circling the wagons; they may be scared shitless themselves.

I would suggest that an IRS enrolled agent might be the minimum necessary to engage here, with the possibility of a tax lawyer. The fact that the IRS knocking at the door is happening at the same time as the bookkeeper vamoosing has almost got to be more than coincidental.

What sort of general business mentoring/advisory help is your friend getting at this point? I feel like this would be a good time to seek out someone who's been through a comparable disaster.
posted by dhartung at 6:21 PM on August 9, 2013 [2 favorites]

I'd suspect this person took a lot more than physical records. I'd do several things immediately.

1. As lame_username says, change all account info at once and I'd also call all the banks the business uses for replacement records, to notify them, and to find out what's left.

2. Respond to the IRS right away, through an attorney if the IRS is saying anything scary.

3. If money is missing, via accounts or credit cards, contact the police and make a report.

4. If there are funds left, cut checks to employees. Document amounts paid, for what hours worked. And start documenting hours worked again moving forward. A replacement bookkeeper would be nice, but right now I'd try to keep costs down by using a system that is less costly, like Quickbooks. And your friend will want care and more safeguards before hiring the next person with financial access.

The real problem here isn't the loss of paper, which these days can be replaced or reconstructed. Rather, it is that there is likely money missing, and commonly that's accompanied by plenty of fraudulent credit card use. The sooner your friend can find out what's what with his accounts and credit cards, the better.
posted by bearwife at 6:24 PM on August 9, 2013

The line that got me was "His ex-partners will only confirm that he has no longer working with them" It's not clear from your question if you're using the word "partners" in the usual sense (perhaps they were just sharing office space?). But, if it was ever put forth that they were, in fact, "partners" in the usual sense, I would have an attorney contact them and put a little fear out there...they have some liability and it sounds like they know more then they are telling you....
posted by HuronBob at 6:40 PM on August 9, 2013

Could your friend re-request new copies of said records? It's not like no one's tax return never gets lost in the mail. I'm sure your friend could get a copy to deal with the immediate issue of the IRS' request. Maybe you friend can ask for an extension from the IRS. The first step is probably calling the IRS if it's urgent.

As for the bookkeeper, you say he's been gone "more than a week." I'm not sure at what point you freak out. Do you know anything about why he left the accountants office or under what circumstances? 1) I would definitely keep an eye on the accounts and maybe change information where reasonable to protect against the bookkeeper doing something with your friend's information. But I might call an attorney or even police and ask what you can do to a) get all your records back b) protect against anything happening to them in the future. 2) I would also call the office he left -- if your friend's records were given to him in that accountant office's care, I feel like that office still has a responsibility to take care of your friends stuff. It strikes me as very odd that one guy leaves and he takes the stuff with him, instead of leaving it in the hands of the others there, like you would at any other job you left.
posted by AppleTurnover at 6:56 PM on August 9, 2013

The primary issue is with the IRS.

the employees still need their weekly paychecks

This implies the bookkeeper had access to the money that would cover those paychecks.

Your friend will have trouble paying the IRS or paying for legal advice if they don't have any money.

Your friend should close any accounts the bookkeeper had access to, or had copies of checks from, or had any knowledge at all of the the account numbers. Your friend should call their bank and credit card companies right now about this. Yes, now, even at night on the weekend.

It's Friday night, the IRS can wait until Monday morning. Get local recommendations for a tax lawyer over the weekend.
posted by yohko at 8:25 PM on August 9, 2013

Call your banks and make sure bookkeeper's name is not/no longer on any of the accounts.

Talk to IRS.

Hire a new bookkeeper.

Complain to the state licensing board about your old bookkeeper making off with the records.
posted by zippy at 10:34 PM on August 9, 2013 [1 favorite]

Tell your friend not to panic. The IRS is super cool with situations like this if you call them, IME. Really. The best thing to do is notify the IRS and give them daily updates, or whatever they recommend.

Nthing calling all banks IMMEDIATELY and alerting them to the fraud.

This is solvable. Relax a bit. It sucks, but it is solvable.
posted by jbenben at 10:47 PM on August 9, 2013

Response by poster: Thanks, folks. I'm passing this info along to my friend, and will answer whatever questions I can when I have the answers.

dhartung: It's pretty spooky that this person's colleagues seem to be circling the wagons; they may be scared shitless themselves.

I believe you may be correct. My friend showed me an email from one of the bookkeeper's colleagues about the 'unexpected departure,' in which the colleagues are clearly trying to distance themselves from the bookkeeper. Looks real weaselly/fishy to me.

HuronBob It's not clear from your question if you're using the word "partners" in the usual sense (perhaps they were just sharing office space?).

It's unclear what the nature of the business relationship was, whether these guys were all truly separate entities just sharing office space, a website and a receptionist, or what. Will see what we can find out, there.
posted by syzygy at 1:40 AM on August 10, 2013

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