QuickBooks and the IRS

There has been a great deal of chatter on the QuickBooks LinkedIn groups I belong to about the IRS requesting QuickBooks files.  There has also been related discussions about who owns a QuickBooks file-the company or the preparer (accountant, tax preparer, bookkeeper).  Beth and I had lunch with a tax manager at a CPA firm today and she mentioned a client going through an audit and how the IRS agent was using the QuickBooks file.  It was very interesting the hear that the agent was reviewing all the items in the Meals & Entertainment expense account and disallowing any checks which didn't have a name and business purpose in the memo area.  Those which did include those details the agent accepted without asking for the receipt.  Further evidence of the benefits of detailed bookkeeping!  It also shows how far accounting software programs have come. We recommend using description and memo fields to provide the detail about who you are meeting with and the purpose which may save yourself the time and expense of digging out a receipt should you be audited.

  Beth and I feel that our clients own their QuickBooks file even if it is located on our computers rather than theirs.  The majority expressing an opinion on LinkedIn concurred although there were some practitioners who felt that files on their computers were their property.  Although I am sure a lot of work went into creating those files, the information belongs to the company creating the data, not the company or individual creating the QuickBooks file.  The difference in opinion does indicate that when interviewing, companies should ask a potential accountant or bookkeeper who would own the file when they are interviewing candidates.