itonewbie
Level 15

I seriously doubt many educated clients will view that as a real threat because outstanding payment of professional fees due on a return does not render the return incorrect.

Furthermore, you are still technically a paid preparer for that return because you would have gotten paid had it not been for your client defaulting on you, which is a commercial matter.

Circular 230 provides that you can withhold the return along with your workpapers from an unpaid client.  If you did not take advantage of that and e-filed the return, because your billing process does not require a full payment before, the client's check bounced, or otherwise, you will still be held accountable for the completeness and accuracy of that return.  Just imagine what the IRS will need to deal with if tax preparers can disavow returns they prepare but have collection problems with.

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Still an AllStar