Comfort Letter Policy

---

NEXT TAX understands that client applications for loans, health and life insurance, government subsidy programs and even child adoptions are predicated on verifying certain critical information. To gain some assurances that the information you provide is accurate, lenders, providers, regulators and various others will often request third-party verification letters from our firm. These letters might ask our firm to verify certain information that you have previously provided or that you are simultaneously providing. The verification letters are typically asked to be signed by us before they commit to providing a loan, a government benefit, or insurance, to name a few examples.

If we receive a request from a lender or another third-party seeking verification of your information, you should understand that we cannot provide any confidential client information without your signed, written consent. Likewise, obtaining our clients consent to share tax return information creates an added complication because using a standard client consent form is not sufficient. In fact, it’s a crime. Internal Revenue Code Section 7216 dictates that tax preparers use a specific format to obtain consent to disclose client information to a third party. Please be aware that NEXT TAX follows the Code when asked to provide copies of tax information, tax returns, or other information used in the preparation of your tax returns. 

Additionally, both CPAs and non-CPAs alike are precluded from responding to a requestor seeking any assurance on matters relating to solvency – or the ability for an individual or business to service its debt and meet its other long-term financial obligations. Matters relating to solvency are subject to legal interpretation under the Federal Bankruptcy Code and various state statutes. Because these matters are not clearly defined in an accounting sense are subject to various interpretations, accountants don’t have suitable criteria to evaluate your information or to make assurances.

In most states, including in the State of Texas, the practice of Accounting is highly regulated and licensed. As a result, non-CPA firms are prohibited from making Attestation statements as it related to financial matters. CPA firms can provide limited Attestation services, usually for a separate fee, however, these services are usually very limited in scope. 

A lender or entity may request verification of:

· Income

· Number of employees

· Business profitability

· Business Ownership

· Business sustainability

· Impact on a business of the purchase of real estate

· Impact on a business of a loan 

For these types of requests, there are limited ways in which Next Tax can respond: We can provide a response that states factual information that we have access to. We are unable to provide ANY OPINIONS in our response. We can provide a verbal or written response.

Commonly, a lender will request verification that our firm had prepared a specific tax return. We are happy to provide this verification without any qualifications. 

We cannot provide any opinion of financial condition because this requires services such as an audit, review, or compilation of financial statements, all of which NEXT TAX is not licensed to provide. 

If your lender or other third-party requestor makes an inquiry and you’re not clear on the type of information they are requesting, please contact RANDAL KLEIN, EA at NEXT TAX and we will help you determine the best response or course of action to take.