Sheriff auditing

[veritas]

returns for illegal aliens.

http://www.latimes.com/business/investing/la-na-stolen-identity29-2008nov29,0,3619660.story

[erchess]

Excuse Me?

The way I read the article the sheriff is not auditing returns but looking for evidence of stolen identities and possibly of illegal immigrant status. If anyone thinks the authorities have broken the law or that a jury can be persuaded to nullify the law, the courts are available.

And yes, I did see where the sheriff expressed the opinion that illegal aliens should not be able to get tax refunds even if they otherwise qualify. I agree with that opinion but as he himself admitted, that question is outside of his jurisdiction and mine.

As to this preparer, she sought out a clientele that included many illegal aliens. She deserves what she got.

[veritas]

Think of me as the editor

Taking a little liberty to get readers.

[erchess]

I can't do that

You're not so low in character that you would take a position as a journalist or editor for any publication that would be commercially successful in the US Today. You normally stand for the truth but on this occasion, being human, you fell from your usual high standard. It happens to all humanity so don't obsess over it.

[taxea]

what the preparer did wrong was not to report the fake ssn's. As long as she required the client to obtain a tax number and used it to prepare the return she is okay.
The person the sheriff spoke with says he told the preparer that he was using a fake ssn.

If this is true then the sheriff had probable cause to obtain a search warrant of the preparers records.taxea

[DonPriebe]

As far as I can tell, the preparer did nothing wrong. The law requires that taxes be paid on all income, even if that income was obtained illegally. In fact the IRS has recently (within the past few years) established procedures whereby a return for a taxpayer with only a TIN (not a SSN) can be filed electronically even though it contains a W2 with a SSN that has not been issued to that taxpayer.

The confusing part of the story in the newspaper was the part that said the average return showed a worker paying $800 in taxes, claiming many exemptions and a child tax credit, and receiving a refund of more than $2,000. That refund could not have come from the Earned Income Credit, since the taxpayer did not have a SSN. If the taxpayer paid $800 in taxes, then he had no excess Child Tax Credit to apply to the refundable Additional Child Tax Credit. So his refund must have come from excess withholding.

I personally see nothing wrong with refunding excess withholding to a taxpayer who has been over-withheld. YMMV.

[erchess]

taxea

I would love to believe that you are correct that a tax professional can report to local law enforcement a client who states that he is using at work a stolen SSN. Do you have a cite on that?

[DTS]

I would love to believe that you are correct that a tax professional can report to local law enforcement a client who states that he is using at work a stolen SSN. Do you have a cite on that?

If you're inclined to report this bogus SS, I would think you could pick up the phone and report the fraud to the IRS. Also, isn't there a employer program, the name of this program escapes me right now, that should be tracking this?

D

[erchess]

Dts

I am not aware of a number at which I can report Tax Fraud, identity theft, murder, child sexual abuse or any other crime by a client or someone who came to me as a potential client. I claim I would get in trouble for reporting such. I do acknowledge that if the police somehow decide to question me about tax fraud or other crime committed by a client I can be compelled to testify. However I claim that to preserve my EA I must make them haul me in front of a judge and let the judge threaten me with sanctions before I start to sing. Do you or anyone else have a cite to put my mind at ease?

[taxea]

Sheriff Auditing

Erchess- I should have been more specific in my answer. You would report to IRS. Their site has a location for reporting fraud. I don't see any way you would get into trouble for reporting both the preparer or if you are the preparer...reporting the name, address, ssn and tin numbers of the violator.

Payroll divisions of companies are now able to verify ssn's online at the SS site. I only wish they (SS) would give certain preparers that option....sure would make it nice for us.

I doubt the preparer/client confidentially rule would be interpreted to include not reporting knowlege of a crime.taxea

[DTS]

No cite

and I don't think a local authority would investigate this for you, but I could be wrong. I believe it is done thorough the IRS fraud division.

As far as Circ. 230 goes, We can't prepare a return if we've been told the number was bogus. Aside from the number, if something else smelled fishy, I'd decline the work. I do not want to mess with this stuff, nor do I have time for it.

Maybe, check the regs in Circ. 230 for something more definitive on this.

[erchess]

. As far as Circ. 230 goes, We can't prepare a return if we've been told the number was bogus. Aside from the number, if something else smelled fishy, I'd decline the work. I do not want to mess with this stuff, nor do I have time for it. .

I would decline the work in question also but now you have surprised me on the other side of the coin. I know I can't prepare the return using what I know to be an SSN that is stolen. But that's not what happened in this case. The guy who claims he told the preparer that he had a bogus SSN on his W-2 also had a perfectly valid and correct ITIN and therefore I would argue that the return not only isn't wrong, it can be electronically filed.. I hear you say you wouldn't take that client and neither would I but I don't believe one would get in trouble for doing so under current law.

[DTS]

Er

First, don't be surprised by anything I would say. Second, I guess I did not understand what you are so worried about. Must have misunderstood that portion of a couple of your replies.

Can you tell me exactly what your concern about this situation in this thread is, as it relates to you and the need for cites? Was it having your files taken like this woman had? I thought you wanted cites for preparing a fraudulent return or dealing with aliens.

Sorry I'm so confused.

[erchess]

I'll try again

I am hearing people blame the preparer in the news article. Apparently clients would tell her that the ssns on their otherwise correct Forms W2 were stolen and her response would be to help them get ITINs and keep privileged the information that the clients in question were identity thieves and illegal aliens while filing their returns with the ITINs.

I admit that she could have done what I would do in such a situation which is turn down that tax return. However I would not dare turn the person in to the IRS or anyone else because I believe that doing so voluntarily would violate client confidentiality. I believe that the only time I could get away with voluntarily breaking client privilege would be if I reasonably believed that the person intended to commit violent crime in the future. If anyone thinks I am wrong I would like a cite to some authority or even to anything the IRS wrote.

Because I do not think she could have gotten away with turning the people in, I do not blame her for doing the returns the way the taxing agencies wanted them done. I believe we are all in agreement that the IRS wanted the returns done in the way she did them. I would agree that if she herself was not subject to punishment for reporting their identity theft and illegal alien status then ought to have reported them.

[taxea]

Sheriff auditing

I doubt the preparer/client confidentially rule would be interpreted to include not reporting knowlege of a crime. Especially considering that there is no confidentiality if the IRS comes to you with questions. You would not be able to "omit" information you know about the client.

I have no problem turning in cheaters; be they preparers or taxpayers. I believe the confidentiality applys to discussing client information with other than the IRS. taxea