Client Records Return (§10.28) — What Must Be Returned, When, and How (2025)
One of the most overlooked ethics issues for EAs and CPAs is the return of client records. When a fee dispute arises, or when a client leaves mid-season, many practitioners hesitate — “Can I hold their documents until payment?”
Under IRS Circular 230 §10.28, the answer is clear: taxpayers must receive all records needed to comply with federal tax obligations — promptly and without condition.
- 1️⃣ Overview of the Rule
- 2️⃣ What Counts as “Client Records”
- 3️⃣ Handling Fee Disputes and Work Products
- 4️⃣ Comparison with State Accountancy Rules
- 5️⃣ Practical Example for EAs
- 6️⃣ Compliance Tips & OPR Risks
1️⃣ Overview of the Rule
Circular 230 §10.28 requires every practitioner to return a client’s tax-related records immediately upon request.
The rule aims to ensure that taxpayers are never prevented from filing or amending returns because of practitioner disputes.
While practitioners may retain copies for their own files, withholding essential documents is a direct ethics violation.
2️⃣ What Counts as “Client Records”
The term is broadly defined in §10.28(b). Client records include:
- All written or electronic materials provided by the client or a third party,
- Documents prepared by the practitioner and previously given to the client, and
- Any prior-year returns or schedules necessary for the current filing.
Suppose an EA maintains cloud folders for each client.
When a client requests copies before paying, the EA should immediately provide access to W-2s, 1099s, and the prior-year Form 1040 that are required for the client’s filing.
The EA may keep workpapers and internal notes until the engagement fee is settled.
3️⃣ Handling Fee Disputes and Work Products
§10.28 allows a narrow exception: if state law explicitly permits retention of records during a fee dispute, the practitioner may withhold only those items not required for federal compliance.
However, clients must still be given reasonable access to review or copy the retained items.
This means practitioners should document which files were released and which were withheld, citing the specific basis under state law.
Transparency protects both the client and the practitioner.
4️⃣ Comparison with State Accountancy Rules
Most state accountancy boards and the AICPA’s Statements on Standards for Tax Services No. 6 are stricter than Circular 230.
They generally require the prompt return of all client-provided records, regardless of payment status.
To stay compliant across jurisdictions, EAs should always follow the stricter rule.
If your office serves clients in several states, apply the most restrictive record-return rule firm-wide — it’s the safest policy for OPR review.
5️⃣ Practical Example for EAs
During an IRS audit, a former client requests copies of prior-year depreciation schedules.
Even though the client owes an unpaid balance, the EA must provide the requested schedules because they are necessary to support the return under examination.
Failing to do so could be deemed interference with the client’s tax compliance.
6️⃣ Compliance Tips & OPR Risks
Retaining necessary records may lead to disciplinary action under §10.50 and §10.51 (disreputable conduct).
The Office of Professional Responsibility (OPR) has previously sanctioned practitioners for refusing to release documents or delaying responses to record requests.
- IRS Circular 230 §10.28 — Return of Client’s Records
- IRS Circular 230 §10.51 — Incompetence and Disreputable Conduct
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