I didn't sign 2 returns that I prepared

[jasdlm]

I am not having a good day. I e-mailed a client .pdfs of a 1041 for a trust for his deceased father and a 1040 for his deceased mother (who died end of 2007) for his review (per previous conversation). I left him a message to review the returns and let me know if he had any questions or comments before I put together the final. I called him this morning because I hadn't heard from him. He printed off the returns, signed them and sent them in. Aargh! I know there is a penalty when the preparer does not sign a return. Does anyone know how it works? Will I get the notice or will the client?

Following this phone call, a client called who owes $12,000 because of a land sale (capital gain) . . . she thinks the entire liability is my fault. She called in late December and we talked about her selling stock (at a loss) to offset the gain. In the same conversation, she asked me what the capital gain rate was and I told her 15%. Well, she only sold stock to generate $10,000 in losses (approx. 15% of the sales price of the asset . . . and she asked me what the capital gain rate was). I'm not even sure what to do. I guess it is my error, in some convoluted way. I should have figured out what she meant. So I'm supposed to pay her tax bill because I told her the capital gain rate was 15% and she assumed that was how much loss she needed? Her comment to me was 'you didnt' give me good instructions'. Probably not. I'm still in shock from this one.

I just got into the office because my 2 year old has strept throat (104 degree fever) and I had to take him to the Dr. and then find a sitter (yes, I left my sick child with a sitter . . . Mom of the year just goes with my unsigned returns and the cap gain I 'caused'.)

I don't know about this business.

Hope everyone else is having a better 14th. So . . . anyone familiar with the 'failure to sign' penalty?

Thanks for listening.

[JohnH]

I doubt you'll hear anything about the unsigned returns. I think the penalty is for anyone who blatantly disregards the rules. If there was any correspondence about it, I'll bet an explanatory letter would make the penalty go away.

As for your client who doesn't like paying tax on her gains, I'd tell her that unless she paid me for a pro forma return, anything I said to her just falls into the category of "conversation". If she wasn't willing to pay for some work to determine the actual liability, she needs to accept the consequences of her misunderstanding (or yours, as the case may be).

She's just mad because she wants to keep the money and not pay it to the government - remind her that her problem with the the politicians who make the tax laws, not you. You might also want to remind her to keep this in mind when she votes in November - I've found that to be an especially helpful reply to people who owe in this election year.

[Chrisbry]

Jasdlm, sounds like you are just having a rough day! When my clients call with a capital gains issue at any time during the year and want just a "rough guess-timate" -- I tell them -- Figure 30% for federal and state. Flat out. I don't care if it only ends up being 15% (+5% state) or not. If they want to gather up all their info for me for the current year and have me work up an ESTIMATE (not guesstimate), then I'm sure I could probably be more accurate.

For instance, I had a client this last year that sold some stock (to the tune of $250,000 LTCG). But they neglected to tell me that they had sold a rental house in April. Hmmm....more Gain. THEN -- they forgot about the $400K of other income they have (I didn't). So, in the end, 2007 they had an overpayment and they were happy!

Hope your day gets better. Mine will end up chit-chatting with the IRS over a clients Notice of Intent to Levy. {big sigh}

[Booger]

It's been my experience that when a client owes tax $$$ they try to find errors

in our work that would make it "go away" or try to put the blame on the preparer

and not themselves.

It's hard not to, but don't let it bother you. I believe it's only human nature.

Dr. Sigmund Booger

[GeneInAlabama]

As for the 1040, a signature is no longer requiered as long as your name is printed on the return and the software automatically does that for you. I imagine the 1041 is the same way. I have never done a 1041.

And as far as the capital gains problem. Don't let her use that as an excuse not to pay you for the work you have done. She OWES you for that.

[PapaJoe]

And next time you send a return for the client to look over before you finalize it, be sure to stamp DRAFT all over it, expecially at the top of page one and over the client signature line so maybe they won't try to print it out and mail it in.

[joanmcq]

If I send a PDF of one that isn't finalized, I make sure to send the client copy with the big watermark printed all over it. Good use for the watermark!

[michaelmars]

the client copy watermark in atx is a great feature too

[jasdlm]

Wow. I've been using this software since the 2002 tax season, and I'm such a luddite (sp?) that I don't even know about these features. (I don't usually e-mail returns to clients.) You can bet I'll be all over figuring it out once tomorrow is over.

Thanks for all the help.