Client came in with copies of checks for business expenses.Check are written to companies and some to cash with supplies listed in the memo section on the check.Would you ask to see the receipts are would you take the client at face value and just be sure to have a letter of engagement signed.How far as a taxpreparer are your required to go.Take the client's word or give them the 3rd degree.This discussion came up at a meeting with several taxpreparer's and just wondering how some of you on the board feel
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Personally I will take the client at face value. Although you are preparing the return ,all info is provided by the client.If you are not sure of anything make a note of it.He is the one signing the return.Originally posted by Donanita
If you feel that he is making up numbers as you go just do what I did a few weeks ago.
Take your stuff and leave.
By doing this I know that definitely I will sleep tonight.
You call the shotsEverybody should pay his income tax with a smile. I tried it, but they wanted cash -
Face value
Donanita,
I'm with Brian. I take the client's word about the expenses. However, if he/she is making you go through each and every check to arrive at expense figures, you need to charge them by the hour for your work. I feel the expenses should be on some sort of printout or catagorized somehow. Then you can go over each one of the expense summaries, one by one.
Now for the third degree...
DennisComment
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Client Information
My engagement letters says "This work will be performed from information that is provided by you and without verification. If I have to classify and organize your information, it will be based on the description on your deposit slips, checks, or other information that you have furnished. I do not and I cannot audit or review this information."
My cover letter on each return says "I have prepared this return from information that you have furnished and have not verified any amount. Under the Internal Revenue Code, taxpayers are required to maintain records supporting this return. You are responsible for maintaining all necessary records and for the accuracy and completeness of the information submitted to me in connection with the preparation of this return. This includes travel and entertainment records as well as vehicle expenses and proof of business use if applicable. It is my understanding that all income for 2005 has been reported and that all information that you have furnished is accurate."Jiggers, EAComment
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organizer is your friend
You can rely on the client's representations as long as they are consistent and complete. If he gives you one W-2 and says all the rest of his work was under the table, that's a problem. Of course, as soon as he starts talking like that, I explain -- theoretically -- how I would report such income -- if there were any. Usually at that point his wife gives him a big kick under the table, and we continue the interview. In a case like that, the written organizer is your friend.Comment
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Client's Information
I would ask them to take their papers and leave. Few years back I prepared a return with a simpler situation. The Taxpayer (jewelry store) used the return to obtain loans and open accounts to buy jewelry. He then faulted on his loans and did not pay his vendors. Apparently the numbers will all false. I was questioned by federal and state agencies that I wish not to talk with again.Comment
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Ever heard of the term"CYA"Originally posted by FDTAX
Well that 's what you have to do .If the guy walks into my office and seems lost or cannot provide any info except those at the ceiling then I will make a notation of this; I will even let him know that I am donig it. In your situation I may be a little scared too. So it is up to the individual to make the call. Keep him or kick him out.
I am sur a lot of you guys have had similar experiences with this kind of situation.
SOUND OFFEverybody should pay his income tax with a smile. I tried it, but they wanted cashComment
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Client Information
I had a client that had a restaurant and when he brought me his information on the organizer that I had sent, all of the numbers were rounded off:
Gross Sales 75,000
Purchases 40,000
Utilities 5,000
Telephone 2,000
etc.
He swore up and down that those were correct. I had his signed engagement letter and the organizer with his numbers. I did the return that year, charged a high fee, and never saw him again.
The same with one running a convenience store. After I did his return, from his numbers on my organizer, he showed a loss. Fine, he said. He mailed the return and about a month later came back and said that he added up his sales again and to amend his return to report an additional $20,000 in sales. This generated income and EIC.
Always get an engagement letter with the statements that I have posted above.Jiggers, EAComment
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How does that saying go?
Numbers ending with one zero probably guessing.
Numbers ending with more than one zero lying throught their teeth.Comment
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Under The Table
Whenever I have a client that says he took in money "under the table", I explain that this is self-employment income. Either he files a schedule C or walks.
GaryComment
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Hey, that letter of yours is a GREAT idea. Thanks for the info on it. I will use it, if you don't mind. So smart of you. THANKSOriginally posted by JiggersSueBabyComment
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