Eli Posted December 29, 2007 Report Share Posted December 29, 2007 About 18 months ago I reported a preparer in this area who was fudging Sch A & 2106 amounts. I just got word from several people that a large amount of her clients from 2005 have been receiving letters from the IRS requesting proof for the deductions on those forms. I've got calls from 3 requesting assistance with the letters. I've also driven by that office and it appears it has shut down completely, even the sign out front has been removed. 2 more big ones that I hear lots of stories about. Maybe soon... Quote Link to comment Share on other sites More sharing options...
cynthia@RV Posted December 29, 2007 Report Share Posted December 29, 2007 I am just curious, how did you know they were fudging on the returns? How did you turn them in? Cyn Quote Link to comment Share on other sites More sharing options...
Eli Posted December 29, 2007 Author Report Share Posted December 29, 2007 I am just curious, how did you know they were fudging on the returns? How did you turn them in? Cyn A friend's parents went to this lady to have their return prepared. They said she added on mortgage interest (they don't have a mortgage), unreimbursed employee expenses & medical expenses. The only thing they actually had was some medical expenses due to a surgery done on the wife. I had also been hearing from several other people about how it was possible for their friends to be getting such large refunds when they were working at the same place and pretty close to same salaries, etc.. A friend has 2 brothers working at the local IRS office, one I believe is a revenue agent the other is an investigator. I just gave them a heads up. I'm not sure if they acted on my tip or maybe had other info. The manager of the local HRB also mentioned this lady a couple of times. She had also been hearing stories coming from that place. Eli Quote Link to comment Share on other sites More sharing options...
MAMalody Posted December 29, 2007 Report Share Posted December 29, 2007 So it was a "what you know" to tell "who you know." That's the way that works best. Happy New Year! Quote Link to comment Share on other sites More sharing options...
Slappy Tax Posted December 30, 2007 Report Share Posted December 30, 2007 I typically see 2 or 3 of these every year. This is the scenario: A new client calls and wants to know if I'll efile his return that someone else has prepared. I say, sure, I'll perform as ERO and use the Other Paid Preparer procedures (which basically means someone else prepared and signed the return for a fee, and I'm simply transcribing it and efiling it). The client shows up with a prepared return. Sometimes the return has been signed and the paid-preparer's information is on the 1040, and sometimes it's marked as self-prepared. I'll review the return, and the Schedule A numbers (usually including 2106 expenses) will jump off the page at me. I've seen people who work as custodians (janitors and housekeepers) with $18,000 in unreimbursed employee business expenses, not to mention $10,000 in cash charitable contributions. I'll ask the client about those numbers, and the response is always, what expenses and what contributions? I'll show them the Schedule A and ask if they provided those inputs to the person who prepared their returns. They're always genuinely dumbfounded (or very good actors). They have no idea where those numbers came from or what they mean. They focus only on the refund, and how the refund got so high is of no concern to them. Until I explain to them why those numbers most certainly are a concern to them. That's always the point at which they go their way, and I go mine. I never see 2 from the same preparer because the word gets out in a flash--don't go to this guy--he asks way too many questions. The point of this saga is that crooked preparers seem to think they're all geniuses by stashing fake deductions on a Schedule A, especially in the Job Expenses and Certain Miscellaneous Deductions section. I guess in their feeble minds, they figure that the IRS will have no independent corroboration of those figures so it's safe to lie there. This is one of the "techniques" that the JH franchisee (Sohail) was shut down for, but he had plenty of others too. Good for you, Eli, for ridding the profession of one louse. Quote Link to comment Share on other sites More sharing options...
elfling Posted December 30, 2007 Report Share Posted December 30, 2007 That's always the point at which they go their way, and I go mine. I never see 2 from the same preparer because the word gets out in a flash--don't go to this guy--he asks way too many questions. Slappy, We encounter similar experiences to the one you describe but occassionally we DO see one again. The person shows up in the off-season because IRS has sent a letter questioning figures, requesting documents, and/or disallowing deductions and the "crooked" preparer can't be found or flat out refuses to help. Our first step is to set an appointment to listen the taxpayer, watching the body language very closely. At times it quicky becomes apparent (forelorn vs. beligerant) that the taxpayer was a player in the fraudulent numbers while others are victims of a crafty, ill-educated preparer. Sometimes we take the person on as a new client, sometimes we don't. It comes down to whether or not we "feel" the person is sincere in wanting to straighten out the mess no matter what the cost. However, we also lay it on the line that if they don't want to truly follow-through we will send them packing. And we are responsible in saying outright if a case is so complex that it reaches beyond the education we possess or will simply encompass more time that we can devote. In those cases we offer suggestions of who to speak to in our area. Elfling & Elven Princess Quote Link to comment Share on other sites More sharing options...
jainen Posted December 30, 2007 Report Share Posted December 30, 2007 >>the taxpayer was a player << This is why I cited TC Memo 2007-368 a few days ago. I confess that I play up my role as a guru, keeper of secret knowledge, a bit. It helps justify my astronomical fees. But I always hold the taxpayer responsible for the underlying facts, even from a K-1 or 1099 or something. I am pleased that the court highlighted the issue of "too good to be true." Nevertheless, I will accept a new client in such a fix. In fact, I prefer working on someone else's mess rather than cleaning up my own mistakes--it's easier to charge more, for one thing! Even if they insist on sticking to their story, I will help them frame their arguments and document their position. Usually we can save some of it with careful prioritizing about what to concede. Quote Link to comment Share on other sites More sharing options...
Howard Posted December 30, 2007 Report Share Posted December 30, 2007 I too have come across all too many (any is too many) crooked preparers in my 17 years of being in business. It makes me both mad and sick, especially when these prospective new clients then have the nerve to ask me right to my face why I can't (won't) do the same as their last preparer (even though, in many of thse cases, their preparer can no longer be 'found')!! Just 2 months ago one of my co-workers came to me to look over her 2006 tax return prepared by a firm 50 miles away. She was concerned that she was unable to apply for her college student loans, because she was filed as Head of Household, yet the college had records that said that she was indeed married. Keep in mind that while I find that many or most clients DO know what is going on...this one did not. She is 23 years old, and works as one of my Teacher's Aids, as I am also a Middle School educator. Any who, her wonderfully honest preparer, in a WRITTEN letter to her (which I possess a copy of), stated that she and her husband would owe if they filed MFJ, and would receive a refund, EIC, etc if she filed as HOH, and her husband then, of course (?) would file as single!! Looking over her papework, I informed her that not only was this illegal, and that there would have been no way her husband could have filed as single even if they lived apart the last 6 months of the year and even though under those conditions she could have filed HOH; he still would have had to file as MFS. By the way, when I recomputed the original tax preparers work, this couple would NOT have owed if they had filed as MFJ! She was so worried about these new findings, that she had me amend her 2006 return, even though she now owed over $2,000 back to the IRS. She was hoodwinked. I immediately contcted the IRS Fraud Division and never heard back. I immediately contacted CTEC, who referred me to the FTB (California Franchise Tax Board), whom I can only hope is taking action on this firm. OOOOOOHHHHHHH, it just makes me so angry when they cheat not only the IRS/State Tax Boards, but also their own clients!! Howard Owens Quote Link to comment Share on other sites More sharing options...
joanmcq Posted December 30, 2007 Report Share Posted December 30, 2007 At the firm I work for (we represent mostly TurboTax users under audit) I'm seeing lots of EBE and charitable audits. And usually, even if the EBE are really what triggered the audit, they'll throw in a request for charitable and medical backup as well, just for the heck of it, even if those amounts don't seem out of line. These audits are not fun...sometimes the people really didn't know the law, some of them are really stupid as to tax law, and some are just cheats. When I started there doing TT reviews, I was convinced that all of the country's debt woes would be solved if just all of the EBE and no-income Schedule C returns were audited. From what I'm seeing the last year, maybe the IRS figured this out too! Quote Link to comment Share on other sites More sharing options...
jainen Posted December 31, 2007 Report Share Posted December 31, 2007 >>all of the country's debt woes would be solved if just all of the EBE and no-income Schedule C returns were audited<< I can tell you, personally, that my own debt woes would NOT be solved if my no-income Schedule C were audited! Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted December 31, 2007 Report Share Posted December 31, 2007 Just 2 months ago one of my co-workers came to me to look over her 2007 tax return prepared by a firm 50 miles away. She was so worried about these new findings, that she had me amend her 2007 return, even though she now owed over $2,000 back to the IRS. She was hoodwinked. I immediately contcted the IRS Fraud Division and never heard back. I immediately contacted CTEC, who referred me to the FTB (California Franchise Tax Board), whom I can only hope is taking action on this firm. Howard Owens Howard, I think you must mean 2006 returns, since we are not going to start filing 2007 returns for a couple of weeks, at the best. KC Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 1, 2008 Report Share Posted January 1, 2008 jainen, somehow I don't think you file a zero income schedule C! Quote Link to comment Share on other sites More sharing options...
Howard Posted January 1, 2008 Report Share Posted January 1, 2008 jainen, somehow I don't think you file a zero income schedule C! I don't know about you, but I've had several self-employed clients, who, upon entering their Schedule C income and deductions, have ended up in a no or negative income status on their Schedule C; and of course it is filed Howard Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 1, 2008 Report Share Posted January 1, 2008 I'm not talking about no NET income; I'm talking about zero GROSS income and thousands upon thousands of expenses. Usually for 'home-based businesses', ie multi-level marketing schemes. Self prepared returns can be a real piece of work. Quote Link to comment Share on other sites More sharing options...
1040PRO Posted January 3, 2008 Report Share Posted January 3, 2008 I am working on amendments for two people that had a prepaper who was just indicted for tax fraud by the state of arizona. one taxpayer is going to owe about $100,000 in taxes for the four years of fruadulent returns. the preparer contacted these clients by mail and told them they had nothing to worry about but all of the taxpayers are being audited by the state. this is the link to the article of the indictment. http://www.azcentral.com/arizonarepublic/l...xfraud0929.html CLIFF the 1040PRO arizona Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 3, 2008 Report Share Posted January 3, 2008 And that's just the state. Wait til the IRS gets ahold of them. Quote Link to comment Share on other sites More sharing options...
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