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I would fire immediately based on the threat, then do nothing. No need to file a claim or take any action based on a childish threat. Any customer who leads with or starts with some sort of threat immediacy becomes an ex customer. In my case, threats are usually to cancel, to challenge a charge card payment, or to post bad reviews. These are almost allays the first sentence in the first message in a thread. It seems safe to believe these folks have Come to believe being unprofessional is the way to get things done.

Some people have the strategy of either purposefully trying to offload responsibility, believe responsibility cannot possibly be theirs, or have a plan to defer and deflect as long as possible.

Seems to me this client needs to be released into the wild. I'm very close to informing mine that they need to go elsewhere. I'm certainly not paying a penalty which will likely lead them away - hopefully. The wife is very nice, the husband thinks he's a VERY big deal. Previous years he made 2.5x more than she does and this year she's expecting to make about 50% more than him. I'm interested to see how that dynamic unfolds in our conversations.

I have one like that now. Retired teacher who neglected to give me her NY and CT 2021 Forms 1099-R. I knew she needed them (long-time client) but she claimed she gave them to me with her 2021 tax info in October 2022. She finally obtained duplicates from NY and CT in February 2023. Now she says her neighbor the CPA tells her that I should pay all her penalties and interest because I filed her returns so late!! She is threatening further action if I don't "do the ethical thing." I've contacted my E&O provider who wants me to file a claim. Very time-consuming. In the meantime, she dropped off her 2022 tax info; I filed 2022 extensions for her. And, of course, she did NOT pay my 2021 fee. (She said she was leaving me a check when she picked up her 2021 tax return folder, but she did not.) By the way, this woman has been communicating electronically and was one of my first to use CCH's eSign to sign her returns and receive her review copy a few years ago. But for some reason this year she said she cannot use FileShare that she's used for years nor eSign, not even email except when she chooses to email me. She has been mailing things like the missing Forms 1099-R and Form 8879, adding weeks to our 2021 preparation time.

"Things are getting better at the Internal Revenue Service, according to National Taxpayer Advocate Erin Collins but there's still some way to go: That's reflected in some of the statistics she shared on the tax returns and correspondence that are backlogged at the agency, including at last count: 3.7 million amended returns; 6.8 million other returns that are "in suspense" — they're missing a form or a signature or are what she described as "otherwise unpostable;" and, 5.3 million pieces of correspondence. One of the things the customer service reps do in their downtime is process paper — correspondence and amended returns. If you're answering the phones 80-90% of the time, guess what you're not doing? Processing paper. And we're now back to a backlog of paper correspondence and amended returns like a year ago." Sounds like the IRS is playing "Whack a Mole"

whack a mole gif

Likely the wisest steps. If the neighbor wanted to get involved, the client would already have given you the neighbors signed and backed by their license and e&o opinion letter. Instead, you likely have a no evidence based threat to get you to pay for their mistake A younger me would handle it differently, but age and experience has taught me not to waste time on folks who handle themselves in such a manner. And that paying for insurance is a reason to use the service one is paying for.

Personally. I would return all documents, keeping copies. Some sort of signed delivery. I would not ask for any back amount due, and I would send something like a note agreeing to forward copies to their next preparer if desired, or include a sealed set of copies intended for their next preparer. The idea is to make it clear you are done, but not to be closed off or showing emotion. It sounds like a catch-22. You cannot prove non receipt of something and they cannot prove you received something specific. BUT, consider there must be a reason the person is not using their “neighbor” already, so personally, I would not be surprised if that part of the statement is a toothless threat, if even true. Either way, once the letter is sent, no need to communicate with them directly again. If needed, you have your insurer to step in. Maybe your insurer has advice, or is willing to help with the firing?

I would fax a very short cover letter, the "agree in part," section, and the 1040-X to the fax number provided on the Notice CP2000. The one I'm looking at from December 2022 says at the bottom of first page to write "CP2000" on top of the 1040X and attach behind the rest. I would do exactly as they instruct on that one; it also happens to be the easiest thing for me, and I would think the most readily understood for everyone.

15 months is all that he got? That seems light for such blatant, intentional fraud.

I mentioned it a long time ago that one of my best friends is going to prison for Medicare Fraud. He's plead guilty finally and is scheduled to be sentenced in a few weeks. We are having lunch tomorrow and I'm interested to hear what he has to say. Our previous luncheons have been interesting. Per the sentencing guidelines I think he'll get 4 years (out in 2) and then 3 years of house arrest. The key will be how much money he has left and whether they'll be able to keep the house when it's over. One thing I've learned, when you withdraw money from your retirement account to pay a court order of restitution, that's taxable and he'll owe a penalty for early withdrawal. I'm wondering if his previous accountant isn't going to do a whistleblower case on him to get the IRS to come after his expenses claimed on an illegal kickback scheme. Not that he'll have any money most likely.

https://aicpa.qualtrics.com/jfe/form/SV_aa5EQzeg1YWQ8uy I gave ATX some bad scores for not adding all the forms we need.

Send in the "agree in part" and send in any specific schedule (such as C, with auto worksheet, overall tax calculation too maybe) that supports the disagreements. Nothing else; don't send a 1040X or even a full amended 1040. Because what Tom warns of is real. Give them enough information so that the only sensible action for them is to agree with you, but not enough that a new-hire ninny could make worse trouble.

In today's world, we are fortunate he received that sentence and not a week of probation.

Probably a lot or most of them. That seems to be the racket of choice these days. And to think that we beat ourselves up and worry over the little things; at least I do.

We have a big problem here with thieves crawling under cars with a saws all and removing catalytic converters. They will hit apartment complexes, college campuses, and other large parking lots, stealing the convertors. Wonder how many stolen convertors they purchased!

Ya know, I always wonder what people are thinking when they engage in the unscrupulous activities. Do they think they won't get caught? I guess living the good life isn't so good right now. Will the IRS ever get their money from this guy? Now I laugh, I alerted a CPA of a client of mine about miss classifying an account so there are no questions in the event of an audit. Seems really trivial compared to this. I hope this guy prepared his own tax returns and didn't take anyone else with him.

Always glad to see these cheaters get caught and made an example.

There have been several resellers of CCH Taxwise and Drake in the past as cbslee stated above. I did not switch to Sigma nor am I going to switch. This was an old post I made last year and I was updating it. I switched from CCH Taxwise to Ultimate Tax for TY 2022 and plan on renewing again with Ultimate as I am happy with the service and very happy with the price. The original reference to Sigma was when I was researching last year prior to deciding on Ultimate. Sorry for the confusion.

Client makes a ton of money ($400k) and does a Roth conversion which generates an additional tax bill. Sweet. They are in a high tax bracket and couldn't explain why they would do a Roth conversion except the Ed Jones rep suggested it so it's his fault. I give them the extension and which includes an estimated penalty for underpayment and they decide to not pay it and just pay the tax bill - deducting the penalty amount. Now the IRS sends a letter requesting the penalty and the client thinks I should have to pay it because somehow it's my fault and they pay too much in taxes.

"Kernersville, North Carolina: Business owner Brandon Michalak has been sentenced to 15 months in prison and ordered to pay restitution of $956,028 to the IRS. Michalak, who pleaded guilty in January, was part-owner of the metal recycling business Sarah's Recycling that specialized in the collection and bulk resale of used catalytic converters. From 2014 to 2018, he omitted $11,022,953 in sales generated by his business. Each year, Michalak reported minimal taxable income and claimed the EITC even as he led a lavish lifestyle that included home and property purchases without financing, home renovations, pool installation, jewelry purchases in cash, and at least 20 vehicle purchases for himself and family members."