jshtax Posted February 6, 2014 Report Share Posted February 6, 2014 New client this year parents have been long term clients. Last year they went to a CPA/JD b/c they got their roommate a large refund. She said the whole appointment was just odd. Never asked questions just took w2 and created return. She is an Admin assistant at a college made 29k preparer put 4800 of cash contributions and 8800 fmv non cash contributions with a 9000 cost basis. For misc deductions they put 1300 dry cleaning and 900 telephone. I knew something was up so I started doing her 2013 return and asked her about charity for this year and she said maybe a bag or 2 of clothes 100-200 max. At that point I asked her about the previous year and she said she had no clue this was on there just that the whole experience was odd. I am half tempted to turn the preparer in as I am sure he is doing this to multiple people. They also received the refund in their bank account and issued her a check. The prep fee was $190 but they tacked on $89 of Admin fees to process the check for her. Thought? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 6, 2014 Report Share Posted February 6, 2014 New client this year parents have been long term clients. Last year they went to a CPA/JD b/c they got their roommate a large refund. She said the whole appointment was just odd. Never asked questions just took w2 and created return. She is an Admin assistant at a college made 29k preparer put 4800 of cash contributions and 8800 fmv non cash contributions with a 9000 cost basis. For misc deductions they put 1300 dry cleaning and 900 telephone. I knew something was up so I started doing her 2013 return and asked her about charity for this year and she said maybe a bag or 2 of clothes 100-200 max. At that point I asked her about the previous year and she said she had no clue this was on there just that the whole experience was odd. I am half tempted to turn the preparer in as I am sure he is doing this to multiple people. They also received the refund in their bank account and issued her a check. The prep fee was $190 but they tacked on $89 of Admin fees to process the check for her. Thought? REPORT REPORT REPORT No questions. Just do it. Inform your new client that she must amend 2012 and repay the overpayment. You cannot force her to, but you should do it in writing and have her sign that you informed her. Do NOT do the return for 2013 unless she permits you to amend 2012. Karen Hawkins, Director Internal Revenue Service Office of Professional Responsibility SE:OPR, Room 7238/IR 1111 Constitution Avenue NW Washington, DC 20224 Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted February 6, 2014 Report Share Posted February 6, 2014 Might be hard to prove who said what if you are inclined to turn them in, BUT if they are negotiating refund checks for their clients they are in violation of Circular 230 and that should be easy enough for OPR to prove. I have never turned in another preparer although I know some preparers do report egregious violations like this. I don't think any of us want honest mistakes reported. 1 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted February 6, 2014 Report Share Posted February 6, 2014 I hate when that happens, but it is common practice and tax payer have no problem receiving an extra refund. I would not report it, prepare the return the correct way, the IRS should see a pattern with this preparer and take care of it. I seen this happen before. Quote Link to comment Share on other sites More sharing options...
jshtax Posted February 6, 2014 Author Report Share Posted February 6, 2014 I can tell she knew nothing about it because I asked her questions, leaving her to answer the way it was on the prior year and when given the opportunity she obviously knew nothing about a tax return. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 6, 2014 Report Share Posted February 6, 2014 I can tell she knew nothing about it because I asked her questions, leaving her to answer the way it was on the prior year and when given the opportunity she obviously knew nothing about a tax return. When/if the IRS asks for the money back with penalties and interest, her "...knew nothing about it..." defense will be as effective as unicorn farts. She signed the return. When dealing with the IRS, ignorance is NOT bliss. I am certain it was marked as "self prepared" so the weight is on her shoulders. I would think that an Admin Assistant at a college would have a bit more "street smarts" than to blindly go forward with this kind of thing. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted February 6, 2014 Report Share Posted February 6, 2014 Is she okay with returning the refund she was not entitled too in the first? I can picture her squeezing their butt checks when you tell them, they need to return part of refund and pay penalty and interest, but don't let them fool you, some TP know the game and play innocent when it comes to taxes. 3 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted February 6, 2014 Report Share Posted February 6, 2014 Jack I agree with you 100% 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 6, 2014 Report Share Posted February 6, 2014 I can tell she knew nothing about it because I asked her questions, leaving her to answer the way it was on the prior year and when given the opportunity she obviously knew nothing about a tax return. From the moment she left you and went to another preparer who is famous for getting a big refund for "roommate", she is not that innocent. Don't report any one. By the way, did she hire you to prepare her 2012? I guess not, as matter of fact, she didn't even call you or make an appointment for her 2012 taxes. She went to the other preparer. She has hired you to prepare 2013, so my suggestion is that you do the job she has hired you to do. Remember, every year is different and one year has NOTHING to do with the other. Don't you hate when people tell you, here is my previous year tax return, everything is the same. I always ask, I am surprise you made exactly the same donations and the same milieage was involved. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 6, 2014 Report Share Posted February 6, 2014 Unicorn farts are awesome Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 6, 2014 Report Share Posted February 6, 2014 Now that you are aware of the 2012 issues, are you not obligated to at least inform the client (in writing preferably) that she should amend 2012? 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 6, 2014 Report Share Posted February 6, 2014 Now that you are aware of the 2012 issues, are you not obligated to at least inform the client (in writing preferably) that she should amend 2012? Correct. Circular 230 states that you should let them know of the consequences of such actions. That's all. You can suggest to amend but you cannot refuse filing 2013 if they don't amend. Technically you can refuse anyone but you are not required to refuse doing 2013 if they don't amend. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 6, 2014 Report Share Posted February 6, 2014 Not reporting known blatant violations is being compliant with them. Circular 230 now requires that if you "have knowledge of" and do not act according to the regulations, you are an accessory to their actions. I work too hard, spend too much time and money to stay compliant to let some thieving low-life imitate my career and steal from me and the taxpayers. Looking the other way is just as bad as participating. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 6, 2014 Report Share Posted February 6, 2014 Correct. Circular 230 states that you should let them know of the consequences of such actions. That's all. You can suggest to amend but you cannot refuse filing 2013 if they don't amend. Technically you can refuse anyone but you are not required to refuse doing 2013 if they don't amend. I would choose to refuse unless the client came into compliance. I hold my professional standards MUCH HIGER than a few dollars for a tax preparation. Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 6, 2014 Report Share Posted February 6, 2014 This is what I do. I prepare the return extra careful for they year I have been hired to do. I make sure that every deduction is documented and I keep good records. Then I inform them that they should amend and I let them know the consequences if they don't. I let them know about all the issues with the old return and then I suggest to them to go back to the preparer and ask him/her to amend. If they insist on my services, I charge extra and then I tell them that I will amend and to leave the documentation and I will call them in a couple of weeks. Remember that I was not there with the other tax preparer during the interview so I don't know what this "innocent" client told the preparer last year. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 6, 2014 Report Share Posted February 6, 2014 I hear what you are saying Jack and I totally respect your position, but I don't think in this case, I would have enough evidence to report. One can "suspect" that the other preparer was fraudulent, but we really have no idea what went on between the client and that preparer. The client might be innocent...or maybe not 1 Quote Link to comment Share on other sites More sharing options...
jshtax Posted February 6, 2014 Author Report Share Posted February 6, 2014 From the moment she left you and went to another preparer who is famous for getting a big refund for "roommate", she is not that innocent. Don't report any one. By the way, did she hire you to prepare her 2012? I guess not, as matter of fact, she didn't even call you or make an appointment for her 2012 taxes. She went to the other preparer. She has hired you to prepare 2013, so my suggestion is that you do the job she has hired you to do. Remember, every year is different and one year has NOTHING to do with the other. Don't you hate when people tell you, here is my previous year tax return, everything is the same. I always ask, I am surprise you made exactly the same donations and the same milieage was involved. She graduated college in 2012 and went to the other preparer. After the appointment spoke with her parents and they told her if she did not feel comfortable and they suggested she come see me for 2013 return. 1 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted February 6, 2014 Report Share Posted February 6, 2014 Please let us know what your client is going to do about 2012 amend or keep the refund? And if you feel the prior tax preparer needs to be reported, let her do it, like most of us you have hundreds of important things to do and don't have time for that, let her get the brownie points or be the hero. Even better yet, send her back to the prior preparer to correct it. Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted February 6, 2014 Report Share Posted February 6, 2014 New client this year parents have been long term clients. I don't see anything wrong with this engagement. Offer to amend the prior year and explain that you are required to tell her about potential consequences of the fraudulent return, which include criminal charges as well as additional tax, penalty and interest. Encourage her to report the preparer herself, with your help if she asks for it. Then give her an organizer and engagement letter in your professional way, and prepare the current return for your ordinary fee. 2 Quote Link to comment Share on other sites More sharing options...
RitaB Posted February 6, 2014 Report Share Posted February 6, 2014 When/if the IRS asks for the money back with penalties and interest, her "...knew nothing about it..." defense will be as effective as unicorn farts. Unicorn farts are awesome They can be awesome when a rainbow is present. Quote Link to comment Share on other sites More sharing options...
jshtax Posted February 6, 2014 Author Report Share Posted February 6, 2014 Please let us know what your client is going to do about 2012 amend or keep the refund? And if you feel the prior tax preparer needs to be reported, let her do it, like most of us you have hundreds of important things to do and don't have time for that, let her get the brownie points or be the hero. Even better yet, send her back to the prior preparer to correct it. Last I heard she was informing her roommate of the issues and what the consequences are if the returns were ever examined. I honestly feel she was innocent to the actions of the preparer she kept asking what was in it for the preparer to prepare false documents. She assumed it was to keep her coming back only thing I can guess is that they might have been paid based on refund. Along with their fee there were 6-8 separate charges ranging from 10-30 dollars for processing the refund in house and issuing her one of their checks. Quote Link to comment Share on other sites More sharing options...
KINGCHUCK1971 Posted February 6, 2014 Report Share Posted February 6, 2014 I would advise the client of the suspicious 2012 tax return and give her information on reporting the previous tax preparer. I would prepare her 2013 tax return the right way. You'll be surprised from some of the tax returns you come across that's prepared by other EA's, CPA's, and tax preparer's. I've seen them all. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 7, 2014 Report Share Posted February 7, 2014 And in her defense, I'd just add that many people just ASSUME if the preparer is a CPA it must be right, and if the refund is larger it's because, as a CPA, he knows things others don't. We all know the majority of t/p's do not actually look at their returns. What I find really strange is the handling of the check. Hard to believe a CPA would commit such a clear violation of the Cir 230 rules. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 7, 2014 Report Share Posted February 7, 2014 And in her defense, I'd just add that many people just ASSUME if the preparer is a CPA it must be right, and if the refund is larger it's because, as a CPA, he knows things others don't. We all know the majority of t/p's do not actually look at their returns. What I find really strange is the handling of the check. Hard to believe a CPA would commit such a clear violation of the Cir 230 rules. I still say the return was marked as self-prepared. Another CLEAR violation of the Cir 230 rules. I have my doubts about the preparer. Quote Link to comment Share on other sites More sharing options...
GeneInAlabama Posted February 7, 2014 Report Share Posted February 7, 2014 He might not be a CPA. A lot of people ASSUME that anyone that has anything to do with tax or accounting is a CPA. Quote Link to comment Share on other sites More sharing options...
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