Leaderboard

The EIC should NOT be part of a tax return. The EIC should have been a function of welfare agencies.

That's what I always did, and it worked not only to educate the child, but also to make the parent/client appreciate the benefit they were getting bu not having to pay for the child's return. I always stressed to the parent the need to keep the kid from messing up THEIR return.

Don't always believe that, you'll soon figure the truth yourself.

I have a small clientele with complex returns. No two are alike. Getting new situations each year is fun and challenging. Researching the tax law is great, and I might hit one of these boards for clues. But, there comes a time when I understand how the return needs to flow but have never done that in my software. Usually in March or April when I don't have time to duplicate the return and try a couple of possibilities. Probably once or twice a year I end up calling support to find out how to do something new in my software, or in which order to do several things so it flows correctly and does not duplicate something already picked up from the K-1, for instance, or even to find out why something IS duplicating. A year or two ago I was sleep-deprived and preparing a partnership with a SEP, a partnership with a SIMPLE, an S-corp with s SEP and an S-corp with a SIMPLE, two also had HSAs, one had employees, both shareholders and non-shareholders, that contributed to SIMPLEs. (When I'm king of the world, I'm going to make partnership and s-corp returns more alike.) One of the returns was duplicating the SIMPLE or the HSA as the numbers were identical. Tech support came into my computer and fixed it in moments. I took notes and have them in those four folders. But, the time I saved late that night paid for itself. As a sole proprietor when I went out on my own, tech support was at or near the top of my list as I shopped for tax prep software. I called one support line re downloading Flash to run their demo. The techie fixed the issue (Norton) but asked what I was up to and offered to walk me through using their software. I chose trusts, as I was new to trusts but getting some, and he walked me through all the menus in a trust return, spending hours on the phone with me. When the salesman called, I was ready to buy and have never regretted my decision. I don't call but once or twice per year, but the time saved is huge. When tech support saves me enough time to prepare a couple more returns instead of struggling on one with a problem, it saves me enough money to afford my pricier software.

Tom, I know that the "mills" don't include HRB. When I worked there, we had to go through all kinds of training for EITC--and that was before the stricter due diligence requirements took effect. I imagine that their training is now even longer and more detailed. I was never, ever encouraged to inflate a refund. The mills are the ones you read about that IRS's CI unit shuts down. They operate independent storefronts and are pros at producing bogus W2s or at least inventing businesses with just the right amount of income and expenses. One was recently caught with lists of stolen CHILDREN's SS #s and birth dates, which they sold to childless individuals who needed a kid or two to claim maximum EITC. These people get a hold of a large local employer's EIN and produce W2s showing just the right amount of income for the "sweet spot" maximum EITC. For people who have real W2s, these places invent medical expenses, charitable contributions, F2106 expenses, whatever the client needs. In our area one was caught last year with stacks of blank Goodwill receipts (the ones you get at the attended donation centers that you have to fill out yourself). He gave the receipts to clients when they started getting audited. Problem was that Goodwill had stopped using that receipt a few years ago and had since used ones with a newer design. He's in jail. I thought that check-cashing joints were prohibited from preparing tax returns starting a few years ago. Anyone know for sure? I got a referral from an attorney for a young man who died in a car crash last year. The attorney gave me the 2012 return, which was marked "self-prepared" on the appropriate line. Yet there was a full instruction sheet about how to file, and the top of the page had the name of a check-cashing joint on it. Do these places now have computer stands where you can prepare your own return, or do they really do it for you and call it self-prepared? The guy did receive EITC, but I didn't see any funny business so the return appears to have been accurately prepared. I read that next tax season the IRS will limit refund deposits to three per account. I don't know how much that will help because crooks will just buy 100 debit cards to accept their 300 refunds instead of a handful. The IRS has tried to work with banking regulators to require ID when people buy prepaid debit cards, just like you need ID to open a bank account, but to my knowledge nothing has come of it so far. The only way to solve most of the problem is to get refundable credits out of the tax system.

"The tax returns to be examined are selected using an effective risk-based audit selection model, resulting in a change rate of more than 90 percent." - probably less to do with their "effective risk-based audit selection model" and more "high fraud rate". Like shooting fish in a barrel. "Last year there were more than 67,000 two-year bans and 45 10-year bans in effect." - wow those are disappointingly low. 45 total 10-year bans in effect? I'd consider anyone who has repeatedly reported fake income to obtain EIC filing fraudulent returns and there's way more than 45 of those. It looks to me like the IRS is doing ... almost nothing ... with the information they have available to cut down on the EIC fraud. Instead, they want paid preparers to do the work. But this won't work because probably a significant portion of the EIC claimed on returns prepared by paid preparers are done by fraudulent preparers that file bogus returns with inflated refunds. They're not filing bad EIC claims because they didn't know better but rather because their intend is to file bad EIC claims. The IRS has to do more than send letters. Even the $500/return penalty doesn't matter when you make more than $500 a tax return. They need to put those preparers in a jail cell or deport them.

I don't think you will need to walk away from this. Once you explain what will be involved in straightening it out, both in terms of accounting costs & tax liabilities, they are probably going to decide to make "other arrangements".

$360 for the return, if you've done all the monthly accounting so it's not a train wreck, sounds reasonable. I agree with MAS's observation that the previous accountant may not be the problem. If a business hasn't filed sales tax returns for 15 months the owners aren't without blame. In TN, they would have received a LOT of notices and assessments. Oh, and they might notice that sales tax payments weren't deducted from their bank account. Who lets that go on for 15 months?? I'm not saying you don't want them. I'm not saying get a retainer. I'm saying give them the benefit of the doubt, but if it starts to feel like a flat tire, it may be because it's a flat tire. Best wishes - I hope it's a great job for you.

The old ATX company used to have great support. I would need to call them 1-2 times per year for functionality issues. Normally, it was just not knowing how the software handles an issue. Two years ago, I stopped calling tech support. It got so bad that you had to sit on hold for more than 1 hour to get someone to answer the call, then they did not know anything about the software. They were KB readers and I had already read the KB looking for my issue. There were also issues with the integration of the bank products, and then there were issues all over the place last year with the simple task of loading the software. There are a few people at ATX that know what is going on, but they don't answer the phone. You have to find a way to "get" to them. It is too much brain damage for me. I get my support here. Tom Hollister, CA

I know that I can count on one hand the times that I have called tech support for anything. My support is "here" or I figure it out for myself. I called William Tasker once, years ago, and he was awesome. Since then, the only times I have called were for the issues I had with Beta testing 2013 and I got way more help from Jack than I did from ATX.

My wife worked at HRB for 6 years. She came home all the time upset that she would sit down with a client, and when the return was done, they would compalin that the EIC was not high enough. After my wife explained why the return came out the way it did, the client would pick up their papers and walk. They would go to another preparer and tell them a different story until they got a big enough refund. One time, the clients even came back to the same HRB office and had their return prepared by a different preparer, the very next day! She came to work early and the clients were back and they miraculously ended up with 2 more children living in their home! From my wife's experiences, MOST of the preparers at the office she worked for only cared about the commissions they were getting from preparing taxes, upselling Piece of Mind, selling IRA's and selling RAL's. That may not be typical, but it was for 6 years at the office she worked at. Tom Hollister, CA

Yup, that's exactly what I'm talking about with preparer EIC fraud. Apparently that one in jail failed to have a fall guy (or was he the fall guy)? One way I've seen these done is someone hires employees/sells franchises/whatever to "tax preparers" (often immigrants in their early 20's, people looking to start a new business, and so on) and trains them on how to create large refunds through refundable credit fraud. That way if caught the blame is put on the preparer. As for HRB, Liberty, and so on the national chains have some bad preparers but I'd be shocked if they were doing anything like that. It's more likely a few bad apples at the national chains rather than the entire company being corrupt. Those aren't the ones I think of when I talk about preparers intentionally claiming fraudulent EIC. I think of the office that does 2,000 returns and every single one is a "hair braider" or "baby sitter" or whatever generic business type they use with similar income and dependents with different last names. I'd love to see the statistics on the percentage of EIC claims made by preparers excluding those ones.

I Think its out of guilt, but as soon as ihear the plows on my block, I run out with a shovel, after they push all the street snow back onto the driveway our local guys will back plow it out. seems to only happen if I am out their and looking at their eyes as they pass. it also might help that my neighbor works for the town and is in charge of hiring all the contract plowers.

Are you using ATX? Wouldn't this deduction all have taken place on the Corporate return and with a W-2? Nothing different on the 1040? Rich

It must be based on W2 wages. Deduction comes on the 1120S in form of gross wages. Employer contribution deducted on 1120S as pension expense. So the lower amount is reported on 1040 passed thru K-1 schedule. W2 will show lesser amount in wages subject to income tax, so lower amount is reported on 1040. Nothing to do with SE income on 1040.

Agree, when a huge number of the fraudulent EITC returns come from a small number of 'mills' that churn out many hundreds of returns using just a handful of addresses, and most of those get processed and paid, and only a handful of preparers go to prison, something is rotten at the IRS. And the fact that politicians are encouraging them to process the refunds fast is a real part of the problem.

I have implemented the same process. I don't charge for students of my clients as an incentive for the kid to stay in school. Starting with 2013, each return for a student showed my full charge price, then a "Student of a Client" discount for the full amount. I want them to know what they are receiving so they won't be able to say... "Why is your fee so high?" when they are no longer students.

HUGE retainer (cash only) upfront!! Tell the owners that the "straightening out" will be expensive due to your fees and the IRS penalties and interest involved. Stick to that!! Since you are aware of what has and has not been happening, if you prepare any returns that are not following the rules, you put your head on the chopping block. If they balk at your pricing, hand them their documentation and wish them a good day. If they try to convince you to do other than the correct steps... RUN FORREST RUN!!! Note: Incompetence or total disregard for the tax laws on their part, does NOT constitute ANY responsibility on your part to "fix" the mess or continue the deceptive practices.

And another thing, if we leave a glass of water on an end table, Annie will always drink from the glass rather than her bowl. I could add that pretty soon she will be telling us what to do, but she already is.

Lots of things in childhood turn out not to be what we thought. Just last week I finally apologized to my daughter for having told her all those years that when the ice cream truck was playing music, that meant it was out of ice cream.

I guess if you hang up, it is a successful completed call in their eyes. Tom Hollister, CA

Each person that is insured will receive a 1095-B from the insurer, regardless of where they get the coverage or who pays for it. It will show the dates of coverage and other information. Very similar to the MA 1099-HC. It will also include information about the amounts of any subsidy the taxpayer receives. Employers that provide health coverage for their employees will send a 1095-C form to each employee showing how much is paid by the employer and how much is paid by the employee. There will be 2 additional forms needed for every Federal return. One will be used to calculate any subsidy to see if the correct amount was received. This could cause an additional refund amount or additional tax, depending upon the numbers entered when the person signed up through the exchange compared to the actual numbers on the tax return. The second will be to calculate any penalty for not having insurance for the adequate amount of months and to calculate if employer provided insurance is "affordable" by the ACA standards. I am instituting another increase in my fees. I have spent 16 hours of training time on the ACA alone in the last 12 months and expect at least that much this coming summer and fall. As preparers, we are also be held accountable for the accuracy of information on these two forms. My increase will be totally "blamed" on the ACA and the requirements I must meet to properly document and report this information on the 2014 tax return. I am expecting a good year for 2014 because there is no way the "DIY" tax programs or "Freefile" can ask the proper questions nor vette out the answers given. Much confusion means greater demand for my knowledge and services.