Terry D EA Posted January 2, 2015 Report Share Posted January 2, 2015 A potential client has inquired of my services to prepare their annual 1120S Federal & State returns along with each shareholders individual returns. During our interview several statements were made about the previous CPA who in the client's opinion offered incorrect information and was deemed incompetent. However, the statements made by the CPA were spot on and not understanding the difference between cash and annual tax payers and why losses cannot be deducted I determined were clearly on the shareholders part. Also, during the interview I was informed they would not longer be paying payroll taxes and each "employee" would be given a 1099 which I was asked to prepare in the future. These folks are definitely "employees" and I cautioned them about miss-classifying employees and the consequences and the statement of they didn't care was clearly made. I have not provided them with an engagement letter or contract yet because the statements made and potential fraudulent activity concerns me. First gut instinct is to refuse the engagement. But if I am only engaged to prepare the year end financial statements to prepare the returns and do not identify any other services or fees for any other services am I in the clear here? Under circular 230, and because I have knowledge of potential fraud with miss-classifying the employees, I really think I should run. Opinions please. Quote Link to comment Share on other sites More sharing options...
HV Ken Posted January 2, 2015 Report Share Posted January 2, 2015 I would say your gut is telling you something for a reason. 2 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 2, 2015 Report Share Posted January 2, 2015 ... I really think I should run. Opinions please. RUN FORREST RUN!!! 1 Quote Link to comment Share on other sites More sharing options...
JohnH Posted January 2, 2015 Report Share Posted January 2, 2015 They're already telling you they like to take chances and they don't listen to advice. Any guesses on who they will throw under the bus if IRS comes calling? 5 Quote Link to comment Share on other sites More sharing options...
Catherine Posted January 2, 2015 Report Share Posted January 2, 2015 They have already proven they will NOT listen to your advice. They have already proven they don't care about disregarding laws. And you might want these cretins for clients WHY?? There are plenty of honest and honorable folks who need help. Don't put YOUR reputation on the line for these people; when they are caught they will blame you and drag your good name through the mud. 6 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 2, 2015 Report Share Posted January 2, 2015 They're already telling you they like to take chances and they don't listen to advice. Any guesses on who they will throw under the bus if IRS comes calling? They have already proven they will NOT listen to your advice. They have already proven they don't care about disregarding laws. And you might want these cretins for clients WHY?? There are plenty of honest and honorable folks who need help. Don't put YOUR reputation on the line for these people; when they are caught they will blame you and drag your good name through the mud. I agree 100% with both. 2 Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted January 2, 2015 Author Report Share Posted January 2, 2015 Me too! I will not get involved with these guys. Catherine you, Jack and the others are correct. My reputation and good name is not worth anything they have to offer me. I wanted to walk out during the interview session but wanted to try to find a professional way of saying no. Would you guys send a letter stating your position or just call and tell them you can't do it. What is the best professional way to do this without sounding like I am blowing them off or being a jerk. 1 Quote Link to comment Share on other sites More sharing options...
easytax Posted January 2, 2015 Report Share Posted January 2, 2015 Be straight forward and stay away from "flowery" niceness. A simple, commnet about after meeting with you and our discussions, I find we would not be suitable for each other. The more you say, the more (if they wanted to) would leave room for them to challenge you and make YOU LIABLE for "whatever". There is a reason police take statements --- so they can tear apart the statement giver -- if they deem it "needful" to pursue the case. Short, concise and be done. 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted January 2, 2015 Report Share Posted January 2, 2015 Me too! I will not get involved with these guys. Catherine you, Jack and the others are correct. My reputation and good name is not worth anything they have to offer me. I wanted to walk out during the interview session but wanted to try to find a professional way of saying no. Would you guys send a letter stating your position or just call and tell them you can't do it. What is the best professional way to do this without sounding like I am blowing them off or being a jerk. "After further review of your situation in light of our recent discussions, we have determined that this office is not positioned to fulfill your requirements. We wish you the best in finding a firm with whom to work. Best Regards, " Nothing more. 12 Quote Link to comment Share on other sites More sharing options...
JohnH Posted January 3, 2015 Report Share Posted January 3, 2015 Look at it this way. You are doing them a favor. They will know a little bit better what to hide from the next CPA they talk with. And you re not charging them for that service. 3 Quote Link to comment Share on other sites More sharing options...
SaraEA Posted January 3, 2015 Report Share Posted January 3, 2015 Terry, I am impressed that you recognized and gave credit to the accuracy of the prior CPA's work. It seems that in this business when we get a new client, our approach is to look for what the prior jerk did wrong and then post all over the place about how many returns we've had to correct that were done by CPAs, EAs, chains, everybody but us. You gave credit where due, which attests to your professionalism. We had a client who left a year or so ago and came back because he was disgruntled with his new CPA. From what I could tell, their work was impeccable. I was really impressed that their notes and computations made it possible for me to determine where they had come up with different numbers. The guy has an amazingly complex return--big Sch C business, several rentals in an LLC, etc., yet I could follow their workpapers with ease. They even corrected something we had done wrong in a prior year (guess we didn't ask if one was a commercial or residential rental), and they knew some odd things that I first thought were mistakes but looked up the code and found they were right. They never did compare his QB with bank deposits, though, giving him a couple hundred grand more income than he really had. Also missed the domestic production credit, but I'm not sure they were done when he defected. So yes, we were able to add some value. We are always reluctant to take on a new client who is disgruntled with their old preparer. Like you, I don't automatically jump the gun and conclude the prior was incompetent. One of the first things I look for in their books and records is to see if the old person got paid. Some jump ship just because they have an outstanding bill they don't want to pay. Like the other posters, I say DO NOT take on this client. He doesn't listen to good advice and is determined to cheat his employees. Who's to say his accountant won't be next? 8 Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted January 3, 2015 Report Share Posted January 3, 2015 Run. You don't want to prepare returns that you know are incorrect. It looks like I'm going to be firing a long term client, because his insurance agent knows more than me and says that he can deduct his health insurance and the agent will write up a plan. (Based on the old rules. They don't have to listen to the new ones, because they will be taken away.) I'm hoping that maybe his agent will prepare his taxes. 3 Quote Link to comment Share on other sites More sharing options...
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