JH and rental WHAT??

[Terry D EA]

Just finished with a new client that has had their return completed by Jackson Hewitt in the past. Client has rental property and when I asked about the expenses, depreciation; etc, they responded "We were told since there rent was less than the expenses, there wasn't any sense of reporting it" I thought Really? I advised the client that they had a responsibility to report all income and file an accurate return. Their refund was higher than expected because of the loss on the property. Already have a new client for next year and will be reviewing and amending last years return.

Client's final commnet " We thought by going into their offices, they knew what they were doing just because of who they are" Me- That is usually the mis-conception. One would think so but in reality as you can see, NOT.

[Guest Taxed]

Though completely wrong but that view is taken by many preparers who can't convince the taxpayer to pay more fees to do a schedule E. If the taxpayer is not willing to pay extra for a sch E, the taxpreparer is not going to waste any time on that issue.

How many times i have heard from a duplex owner, that they have a tenent but the rent does not cover all the expenses so they don't have to report right? WRONG!!

[Terry D EA]

I would think that a professional would indeed insist on the client preparing an accurate return and if the client refuses, then refuse to do the return. I think the preparer can be generous on the fees if they want to. in this case, it only took 10 minutes to complete the Sch E with the depreciation. So, to gain a client, I kept the fee down.

[Gail in Virginia]

Many times when they tell me the rent doesn't cover the expenses, they are including payments on principal for the loan. They may or may not be right. If depreciation is less than the principal payment the client may be surprised to find they have a profit after all.

[Terry D EA]

That was true in my client's case and after the interest and other expenses were entered they still had a loss and didn't fully understand how that benefited them.

[jainen]

>>a professional would indeed insist on the client preparing an accurate return<<

I would advise the client to amend the prior year return reporting at least the gross revenue, which is my professional responsibility under Circular 230. But unless I were asked to prepare that year, I would not second-guess the professional who actually interviewed the client and treated the activity as not-for-profit. Yes, it should have been reported anyway, but the return may well have been accurate as to tax liability.

I always ask why a new client isn't going back to the previous preparer. Many times the real reason is because the taxpayer learned the rules, and changed their story. This year I have noticed quite a bit of preparer-bashing. That surprises me in a forum that generally objected to IRS calls for education and testing.

[Pacun]

I also limit myself to amend or to let the TP know the consequences of his actions and go back to the job I was hired for, which was to prepare current year's tax return. I don't talk bad about the previous tax preparer and I expect other preparers don't talk bad about me because they were not present when I interviewed my client.

In short, I agree with Jainin that unless you were a fly and you were present during the visit, you don't know the whole story.

[Terry D EA]

<<<I also limit myself to amend or to let the TP know the consequences of his actions and go back to the job I was hired for, which was to prepare current year's tax return.>>>

This I agree with, but I will not proceed if I know the client has income to report regardles of the source for the tax year that I am preparing.

<<<That surprises me in a forum that generally objected to IRS calls for education and testing.>>>>

I for one have been part of this forum for a long time and never complained about the testing and extra education requirements. I think the IRS should do this as each and every person that sits on the other side of my desk has the right to know the person they are in front of is qualified. I also feel that CPAs, EA's and Attorney's should not be expempt from the testing requirements. They make as many errors as others. No matter what designation is behind your name, none of them mean you are ethical or a person of integrity.

[jainen]

>>No matter what designation is behind your name, none of them mean you are ethical or a person of integrity. <<

Well, E.A. at least means that I file all my required tax returns!

[jklcpa]

Testing and initials after one's name are no guarantee that the person always acts in a professional and ethical manner. At least the IRS testing tried to weed out the preparers with too little knowledge of tax law that simply bought a tax prep program and hung out a shingle. If only IRS would do more about some of the returns from the big box chains that have those obvious errors that we all see from time to time. I get a little tired of the CPA bashing from the RTRPs and EAs. We are all human beings that make mistakes once in a while, CPAs included, and we all have clients that are less than truthful or simply don't tell us things because they don't know how it impacts their returns.

There is a local EA that owes and runs a high volume tax preparation office. He was repeatedly warned by our state bar assn to cease and desist from the practice of law, his actions made the paper on more than a couple of occasions, and he was assessed some hefty penalties too. The fines were a % of the revenues from those services. He was writing up trusts, wills, other legal documents, and giving legal advice. He also tried to circumvent the testing and education requirements and tried to become a CPA by trying to use an influential state congressperson to intervene with the State Board of Accountancy on his behalf. His actions were so unethical that one of the national CPE providers now uses him as an example in their Ethics courses required for CPAs and actually names him in their text. His office is still open for business.

[jklcpa]

To add to my post above, the online yellow pages still has him listed for bookkeeping services with the EA after his name. Maybe he has some RTRPs working for him. I'm not sure at this point. He has a variety of businesses in his name, not just the accounting practice, and a few of them are run out of the same building. At one point I think he or someone was also acting as a mortgage broker from that location too.

If anyone would like to read about this one unethical EA, here is a nice summary of his actions from his appeal of the charges from 2011. Part of the fines were almost $600,000. Here's the link: http://courts.delawa....aspx?ID=180390

[Terry D EA]

I agree we all have those clients who don't tell everything and in doing so, it does reflect on us. Had one call today and inform me that they forgot to tell me about the repayment of the first time homebuyer credit. You can't over come this. I am not attempting to bash CPA's or any other type of preparer. CPA's are put into a group that simply by the CPA designation are the ones that know and by the very nature of the CPA designation are held to a high standard. That does not make the infailable. I personally know CPA's that won't touch taxes and want nothing to do with them. I couldn't agree with you more regarding the big box tax chain companies. They always seem to find a loop hole to get around the requifrements. Look at all the privacy requirements. How is setting in one room with 7 cubicles private?

[jklcpa]

Terry, I didn't think you were, but over the years, each time a preparer here picks up a new client that was prepared in a prior year by a CPA, if a mistake is made, there has been some bashing like we CPAs think we are better than EAs and RTRPs. I don't think like that. I like to think I received a good education and took a test that proved my competency in a variety of areas. I do my best to keep up with the ever changing tax laws and to pick CPE that will keep me up to date and will benefit the clients in my practice. Believe me, I am human and I make my share of mistakes. I know from hindsight that I've had clients lie to me only to find out later. Those that I find out about I tell them to amend, but I can't force them to file it. Those clients that lie are asked to move on. I try my best to produce excellent work at a reasonable price. There are many people on this forum that are not CPAs that I hold in high regard and I know are much more knowledgeable than I am. Sorry that's a little rambling and disjointed.

One thing that really frosts me is when I sit in a group-live CPE seminar with my peers only to see them working through a self-study course, working on their laptop, repeatedly answering text messages, reading for pleasure, or disappearing completely (yes, a few years ago one young person bragged about the golf he'd just played and made it back for the mid-afternoon head count!). I pay for those courses and really want to maximize the learning, but then there are these others.... Totally frustrating to me. The staff of the state society of CPAs now stays in attendance to "babysit" the group so some of this is being curtailed. Sorry for the rant. It's a pet peeve of mine.

[SCL]

>>No matter what designation is behind your name, none of them mean you are ethical or a person of integrity. <<

Well, E.A. at least means that I file all my required tax returns!

any ero/tax preparer(?) who can e-file tax returns needs to satisfy his own filed tax return requirement.