Episode 301: Subpoena of Tax Records

Episode 301 Subpoena of Tax Records

Taxes can be a complex topic, but even more so when it comes to what happens when there is a subpoena of tax records of a taxpayer and/or their certified public accountant by the Internal Revenue Service or another federal government agency.

It is a mistake for an individual or financial to assume that they must automatically comply with a subpoena for tax documents. There could be instances in which the subpoena could be considered unlawful, in which case once that determination is official, it would not require that an individual or tax preparer comply with it.

In order to protect themselves and their rights, both individuals and CPAs must be aware of what happens once a subpoena for tax records or documents issued and what steps should be taken in response.

What Happens When a CPA Receives a Subpoena of Tax Records

The CPA must respond to a lawful subpoena. However, the question becomes if the subpoena is deemed lawful or not. A taxpayer who is subject to a subpoena has the right to challenge it. This can be a difficult position for financial planners as they must protect the confidentiality of documents they have produced for a taxpayer, as well as the documents provided to them by the individual. Yet, they are required by law to respond to a lawful subpoena, with lawful being the keyword.
If a CPA receives a tax subpoena, it generally requires several actions including:

  • The tax preparer should immediately enlist the help of a reputable lawyer who is familiar with tax law.
  • If the law allows transparency in this specific situation, the CPA should make their taxpayer client aware that the records have been subpoenaed. This, in turn, gives the client notice so they can hire an attorney for themselves. The lawyer can then challenge the validity of the subpoena in question.

What Happens When an Individual Taxpayer Receives a Subpoena of Tax Records

While it is possible that a person’s CPA could receive a subpoena, it is equally plausible that an individual themselves could receive one. If an individual taxpayer receives a subpoena, the following steps should be taken:

  • A taxpayer who receives a subpoena is required to respond to it.
  • The person should hire an attorney for representation and to defend their fifth and sixth amendment rights.
  • If a taxpayer does not already have a tax preparer, they should hire one to help analyze if the data being subpoenaed could be incriminating, contradict tax returns, or could pose other problems for the investigation itself or the individual. A professional financial planner can also better determine if the information being requested is something that is really needed, or if it is something the government would eventually receive anyway.
  • The individual should ask their CPA if they should be fighting the subpoena or just providing the information that has been requested. Ultimately the tax preparer, should be able to help the taxpayer understand if the order will have any real effect on them or not.

A Real World Example of a Subpoena of Tax Records

When a federal government agency subpoenaed the tax records of the Donald Trump organization, the appointed CPA did not immediately turn over those documents to the government without question. They first fought the presumption that the subpoena was lawful by taking it all the way to the Supreme Court. The taxpayer, Trump, and his organization also fought the validity of the subpoena.

Ultimately, federal law says that the court makes the final ruling. In this particular case, the court ruled that at least some of the tax documents in question should be turned over to the government. That is in the process of being done now and then it will be reviewed by designated government entities.

This was not a situation where just because the subpoena of tax records was issued, automatic compliance by Trump or the CPA took place. The subpoena did not mean that tax documents should be automatically turned over without any consideration to whether the subpoena is indeed lawful. That said, the attorney and tax preparer were not able to ignore the subpoenas either.

With this example in mind, to best resolve a situation that involves a subpoena of tax documents from a government agency it requires solid assurance from professional financial planners and attorneys. This advice can provide valuable and accurate guidance as to what the next step should be.


Should an individual taxpayer or their CPA receive a subpoena of tax records, it is essential that they reach out to a reputable and qualified attorney for representation as soon as possible. This is necessary to best protect their rights and the privacy of their tax records.

Episode 207: Real Estate Personal Experience

Episode 207: Real Estate Personal Experience

Straight from the files of real estate law, bankruptcy, and investment, we want to share an interesting personal story about a recent undertaking that blended all three of these areas. Our hope in sharing this story is that it will shed some light on the process for others aspiring to have similar endeavors. The process is not without risk, but if done right, the payoff can be big.

Finding the Property

Late last year, we were contacted by a bankruptcy lawyer who was representing a bank trying to foreclose on a specific piece of property where the borrower was in default. The borrower had gone through several bankruptcy tactics and was now delaying foreclosure. Our acquaintance was about to have the stay lifted so they could foreclose on behalf of her small out of town bank. The bank had asked the attorney to find someone who would buy the note and just take over the foreclosure and repossession process for the property.

Getting the Property

In the end, there was an arrangement put in place for a company we owned to buy the note from the bank and take over the bankruptcy process. Although the process was complicated and at times drawn out, we got the automatic stay in bankruptcy which then prevents foreclosures from occurring while someone is in bankruptcy. The automatic stay prevents foreclosures until such a time as the judge allows it. We went through the process, got the judge to approve it, and then received the right to foreclose.
Although the debtor did try to do several things to stop the foreclosure, they were unable to do so. We then got the order to lift the stay and then posted the property for foreclosure. We then conducted a foreclosure sale, where as the holder of the note, we were allowed to credit bids. This enabled us to bid up to the amount of the debt including:

  • Unpaid interest
  • Attorney’s fees
  • Related costs

By that time, with the attorney’s fees, because of the bankruptcy and interest running at a default rate, the balance owed was enough that nobody else bid and we were able to bid and eventually became owners of the property.

Property Evictions

As new owners of the property, we had to go through the process of evicting the occupant. The next step was to hire eviction counsel, file the papers and serve them on the property. By having a process server tape the papers to the wall and also send letters to the debtor and the property, it then triggered a thirty-day clock where the occupant had thirty days to leave the property. Fortunately, the occupant called us on the thirtieth day and said they were turning over the property.
Had the occupants not turned over the property within the thirty-day time period, we would have had to go to court and either have them evicted or get a judgement saying the occupant had no right to be on the property. Then, if necessary, a constable would have gone out to the property and physically removed the occupant. Luckily it did not come to that.

Renovating and Selling the Property for Profit

The property was not horrible, but it was definitely not clean either, so we spent several days hauling out trash and then began painting and cleaning and getting ready to put in new floors so the property could go on the market soon.

The project became a family affair as my wife is a real estate agent and helped take on many of the responsibilities of improving the property and staging it in a way that makes it more marketable.

The property is now awaiting a few final touches and inspections before it goes on the market. The endeavor has been a mixture of bankruptcy, real estate law, real estate investment, and real estate marketing. It is an adventure that we are glad we signed on for because although we have helped with legalities of situations like this before, going through it personally has given us a firsthand perspective that will only add to us successfully representing similar cases in the future.

Episode 206: Estate and Financial Planning

Estate and Financial Planning

While estate and financial planning matters can be textbook situations much of the time, there are unique circumstances such as the incarceration of oneself or a loved one that can make the process more challenging, yet still critically important. For situations like these, the soon to be incarcerated need the help of a reputable and experienced estate planning attorney.

Why the Incarcerated Need Estate and Financial Planning

Even those individuals who are about to be incarcerated need estate, personal, and financial planning to protect themselves and/or the family they leave behind. Leaving behind regular daily life for that of one behind bars provides a fair amount of disruption to normal practices, and that requires being proactive in getting things in order before incarceration takes effect.

4 Types of Estate Planning That Should Take Place Before Incarceration

When living in a prison, it provides substantial challenges in protecting one’s own life as well as that of their loved ones, which is why estate planning practices such as the following are key:

  1. Drawing up a will. If the individual that is soon to be incarcerated does not yet have a will in place, it is essential to do. This is particularly important should the individual or their spouse pass away while the convicted is in prison.
  2. Giving consideration to the passing of a spouse outside the prison. Just as getting one’s own affairs in order protects them, it is equally crucial to consider what would happen if the spouse taking care of things at home passes away while the individual is serving their sentence. It requires carful thought before incarceration officially begins because without it, a person’s intended wishes may not be able to be honored.
  3. Preparing healthcare documents. Also on the list should be healthcare planning such as a power of attorney for healthcare. This legal document typically allows another person (in this case probably the spouse, mother, father, brother, sister, or child of the incarcerated) to make a decision regarding the convicted person’s healthcare. This may look like the ability for them to decide whether or not to do a surgery, what hospital to go to, or whether or not to have a medical procedure should the incarcerated suffer an accident, heart attack, or similar condition. Having a power of attorney for healthcare in place allows the individual’s wife, mother, son, or whomever they appoint to make those medical decisions for them. Without this document in place, a warden or the medical staff of the prison may be the ones to make these decisions for the individual.
  4. Protecting the spouse of the incarcerated with estate planning. It is important to note that if a husband and wife have an arrangement in which the wife designates the husband to make medical decisions for her, but he then goes to prison, matters can become muddled quickly. For this reason, most legal counsel recommends that a document be drawn up and put in place ahead of time that stipulates that while the husband is incarcerated, the wife’s mother or sister or whomever can take over those decisions in his place.

If you or someone you love could possibly be incarcerated, it is vital to begin getting their affairs in order as soon as possible. Equally as important is giving this task to an attorney who intimately understands how to rethink run of the mill estate and financial planning and apply them to more unique circumstances such as incarceration. Look for a lawyer that has experience in this particular area of estate planning for higher confidence in the process.

When an individual is set to go to prison, one of the best gifts they can give the loved ones they leave behind is to have their own and their spouse’s affairs in order before serving their sentence. This helps all parties feel less encumbered by what are already highly emotional and distressful circumstances.