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>>they are of the trusting sort<< Sorry, I don't buy it. Maybe the preparer didn't sign it, but the taxpayers sure did. I agree with Pacun here. "They go to these type of preparers because they know they will get bigger refunds. They come to you ONLY when the IRS gets them." Trusting sort, indeed! They knew perfectly well they weren't paying into the IRA or incurring those employee expenses. The only trust they had was believing the preparer when he promised they could get away with these kind of deductions in these amounts. Nevertheless, I believe you should accept them as clients and serve them professionally. That would include requesting penalty abatement based on bad preparer advice--sometimes the IRS will allow it if you can show they have changed preparers and taken other SPECIFIC action to ensure future compliance. You can also suggest they file a small claims suit, but don't don't get involved in that yourself.

If you know the wife in this case, why didn't she trust you and came to you to prepare their taxes? They go to these type of preparers because they know they will get bigger refunds!!! They come to you ONLY when the IRS gets them. Believe me, they would not be calling you if they were not in the "hot seat". They would never be your clients because the other preparer gets bigger refunds than you. For years we have had a preparer who is very famous in my area. People come to my office and after I talk to them, they go back to that preparer. They go to him and the explanation that some of them tell me is "He knows more than you about taxes because he knows how to deduct my hair cut, food, cell phone, etc." I wish them a nice day and call the next client. One question that the IRS will ask your question is: "Did the preparer gave you a copy of the return when it was presented for signature?" The answer will be yes. If she claims that she left her documents with preparer and the preparer says "no", what proof she has? Were there any witness, is there a document signed by the preparer. She might be better off taking him to regular court. Good luck with that. I have been efiling almost 100% for about 4 years and I NEVER checked the third party box. I take back the NEVER, I do it on my OWN return, I check the box to contact my preparer.

I don't have catalog handy, but I use uni-forms and print the 1099's on them and use the same envelope that I use for the W2's