New client, questioning improvements costs

[ILLMAS]

I have new client, he brought in prior year copies and I notice his Sch E had some wild expenses in the past, I question him and he said honestly he didn't know about them, now that I started working on inputting the fixed assets, I notice mostly all improvements appear to be outrageous and I am afraid they were also over stated. He has been going to the same lady for the past 11 years and I could tell she been using Turbo Tax, because the returns are self-prepared and some supporting statements are computerized. I really don't want to touch it now, but I did tell him that I would not allow any expenses he didn't have to be deducted and he was okay with doing them correctly, I would hate having to amend returns to remove expenses and correct fixed assets.

[SFA]

Argh! I had a new couple come in years ago with outrageous deductions on the schedule A, most of if just fabricated. No supporting docs, just all listed out on a piece of paper and a copy of their prior year return. The odd thing is that they were older, he had a small job. Even with the standard deduction they wouldn't have had a penny in tax.

I told them we just were gonna stop the nonsense if they were having us work for them. Turns out they were afraid to stop the wild stuff for fear of it throwing a red flag when they put the truth on their returns!

Anyway, years later, they are still coming to my office, and I am the only one they trust with their VERY simple return. Actually, I look forward to their visit. They are kinda fun.

Good for you to put your foot down. This client will be yours forever.

[RitaB]

A return I worked on Saturday was for a couple I got about 10 years ago when a really popular preparer got shut down. Saturday, I looked at the return they brought in back then: 37,345 miles @ 37.5 cents (or something like that) and "Contri" of $8,000. Contri = contributions, and BOTH OF THESE DEDUCTIONS WERE ON THE BACK OF SCHEDULE C. Handwritten return. These taxpayers said they had no idea, not sure I buy that, but their business mileage was 1,090 miles this year.

Hey, SFA, if you look at the upper right at the little envelope, you have had a message for a couple days. ;)

[SFA]

Cool. Found the little envelope! Thanks.

[Pacun]

I normally just tell them about the consequenses of their actions from the past. I suggest to amend but I don't amend returns from other preparers. I ask them to go back to the previous preparer if they want to do the right thing. I tell them up front that the return I will prepare will look different than that of the last year because I will do it right. If they want to stay, fine. If not, I give them back their documents and they don't owe me anything.

[Terry D EA]

It never ceases to amaze me the number of people who have no idea what is on their tax return. Also, why the statement " I don't know where that figure came from" when they are responsible for each and every line on the tax return. I have a client who several years ago gave me a 1099 for jury duty in the amount of 1200.00. I asked him what kind of jury he had been serving on and his reply was IRS tax court. He stated the biggest defense attempted was " I didn't know or I trusted my accountant"; etc and the IRS response was simply why? I make absolutely sure my clients know what is on each and every line of their return. I review the return with them when they have an appointment as well as when they drop off the return. Drop offs get a review when they pick up the return. Maybe this is a bit extreme but it avoids the obvious "I didn't know". I questioned a new client this year as to the amount of charitable deductions of the previous year and she said without taking a breath, "I don't know where he got that figure from and I trusted he knew what he was doing" It was obvious to me that he took the limit within 50.00 of the 5,000 to avoid having appraisals. A CPA non the less which proves to me that no matter what designation you put behind your name, it doesn't mean you are automatically ethical.

[Kea]

I go over the entire return with my clients, too. But I'm still not sure how much sinks in. I get a lot of glassy eye looks.