Getting tax information from a closed small-business account
Your Business Credit
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.
Ask Elaine a question
or read her prior answers in the 'Your Business Credit' archive
Dear Your Business Credit,
I lost a credit card
used for a business in which I am a partner. The bank closed the credit card
account, opened a new credit card account in my name, and issued a new card
with a new number.
The bank immediately
locked the closed account so my partner and I could not readily access
information on the account, nor obtain information needed to prepare our 2012
income tax return. The bank also allowed automated charges, for instance, for
phone service and Internet connection, to be charged to the closed and locked
account for several months.
Now, the bank has locked
us out of a currently open account. Is all this legal and is it customary for
business accounts at major banks? -- Kay
I am sorry to hear about
the hassles you are going through with your business credit card. I hope you've
been able to find another source of credit in the meantime.
I contacted you to find
out more details about your case, but did not hear back from you by my deadline.
Without knowing more about what led your bank to close the second account, I
can't say whether your bank acted improperly or broke with standard practices
at large banks.
Banks do regularly close
credit card accounts for any number of reasons, including nonpayment,
inactivity and a reassessment of your credit risk. It's best to check your
agreement or call the bank directly to find out why your account was closed.
You mention that you
need the information from the first account to file your 2012 tax return. I
asked Leslie Tayne, an attorney based in Melville, N.Y., if you are legally
entitled to obtain that information from the bank. Tayne works with many small-business clients on issues related to debt and credit.
She says you are
entitled to get the material you need for tax purposes. Her advice is to call
the bank and, if you do not receive the information by phone, send a certified
letter requesting it. "Depending on how old the information is and who is the
authorized account holder, it may be difficult to get certain information," she
added in an email.
If you're not satisfied
with how the bank handles your request, you have several options. You can file a
complaint with the Consumer Financial Protection Bureau by filling out a
form on the agency's website. The CFPB forwards complaints to banks and other companies, which are expected
to respond within 15 days and resolve "all but the most complicated complaints"
within 60 days, according to the CFPB website.
It may be helpful to
search the agency's Consumer Complaints Database to see if any previous grievances
have been lodged against your bank and how they have been resolved.
A CFPB representative says you may also be able to get some help by contacting the entity that issued the charter to your bank. Banks get to choose their regulators, and if it's a federal institution, your bank's charter could be from the Federal Deposit Insurance Corp., the Federal Reserve or the Office of the Comptroller of Currency. It could also come from your state's banking regulator. You should be able to find out who issued the charter by making a quick phone call to the bank, or looking thoroughly at its website (start by checking the fine print at the bottom of the home page).
Given that the complaint
process may take a fair amount of time and tax day is approaching, it's a good
idea to get started right away.
Although the bank is
obligated to provide you with the information you need for your taxes, you may
be out of luck when it comes to getting the bank to re-activate the second
account. "The bank does not have to reopen any account for them," Tayne said.
If you end up getting a
new credit card account with this or any other bank, make sure you keep copies of
statements or financial records you will need to do your taxes going forward.
That way, if another problem crops up with a credit card account, you'll have
the information you need at your fingertips.
See related: Use it or lose it: Issuers quick to close dormant accounts, Small-business credit card comparison chart, Paying small business taxes with plastic
Elaine Pofeldt is a journalist who specializes in entrepreneurship and careers, contributing to publications such as Fortune, Money, Working Mother and many others. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals.
Elaine answers a question about small business and credit from a CreditCards.com reader each week.
Send your question to Your Business Credit.
Published: February 25, 2013