One of my long-time monthly accounting clients called me this week and said he is fed up with Wall Street getting bailout money and he continues to get no tax breaks for his small business. He was very angry and informed me he was going to take matters into his own hands. He was considering deducting "non-existent" expenses and threatened to go to another CPA who could help him do so. As much as I need the work, I know it is in my best interests to just let him go. Has anyone else run across issues related to our general economy & the bailouts? And do you think we will be facing this more & more in the immediate future? I was totally unprepared on even how to respond to him.
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My Experience
The closest I have come to your situation came a couple of years ago when a potential new tax client told me on the phone that to avoid helping pay for the war in Iraq she and her husband had decided to file a return that showed no tax due. They had not decided on the details of how to do do this (under report income or claim false deductions or both) and had decided to seek professional assistance. I told them I couldn't help them.
I am guessing that people who are as blatant an open as these individuals will continue to be rare. However, it would not surprise me if we see more people trying to fool both us and the IRS. As long as we do our due diligence we should be fine. -
Originally posted by SKJCPA View Post
Any CPA, with all the new preparer penalties,would probably send him on his way. Don't be suprised if he goes nowhere. But now the question come up, do you want him to remain as a client. How much extra work, if you keep him, is he going to cause you. Since you have been put on notice of his of his intent, you need extreme "do dilegence" that he needs to pay you for.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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I lost a client to the tax protester movement several years ago. He read a book written by a tax protestor who supposedly knew how to get out of paying taxes. The tax protestor was eventually caught, convicted, and is currently serving time in federal prison for helping and aiding people to evade taxes.
Its not worth the time and effort to argue with someone who doesn’t want to pay taxes. Emotions take over and logic goes out the window. My response is to simply say I am not going to help you evade taxes. Please find someone else to do your bookkeeping, payroll, and tax returns.Comment
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I Learned A Long Time Ago
Many moons ago I attended a seminar on representing people with tax problems.
The presenter stated that even if the potential client joked about not reporting income or overstating expenses, let them go!
What is there to stop them when they are in a bind to say that they told you (the preparer) what they intended to do?
There is a cloud over any information they share with you.Comment
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I remember quite a few years ago before I really started in the tax field, my Dad attended an investment seminar, if my memory serves me correct the name was Charles Givens - but my memory could be wrong, in which he acquired some information he in turn gave to me.
One bit of advice was "how to choose a Tax Preparer". He suggested you ask the preparer how much they paid in taxes and if it was anything but zero find someone else. Made me laugh then, still does.
As others have said, if your client is serious, I'd let him go too.Comment
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Can't say I blame clients for being upset. This guy might have been angry and may cool off. Maybe he was just venting.
Perhaps you might share with him the fact that an important part of your job is to keep him out of trouble with the government so you can't cooperate. You might point out that any tax preparer who will assist him in tax evasion is dirty. If he runs with dogs, he will get fleas. Does he want that?
You might ask him how he would feel if he carried through with his plan, got audited, and then suffered the penalty insult after the bail-out injury. And if he isn't audited, how is he going to feel about having that hanging over his head? How is he going to feel when he hears the IRS is after his dirty preparer (and looking at all those returns he/she prepared)? How much $ in "imaginary" expenses does he intend to report? How much tax effect will that really have? Is that worth the peace of mind he's bound to lose? The gov't isn't going to suffer from the loss of his tax payment; they'll just print more money. He is the only person who will suffer.
The best revenge is to live well. Make lots of money, pay your taxes, live a good life.Comment
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well said...
ahhhh... well said... That is one more reason I work for myself. I practically hand pick my clients. I was cleaning out and archiving old files the other day and seeing the non-returning clients.Originally posted by BHoffman View Post
The ones I knew dropped me because I was over-priced or just plain ethical, I was glad to see leave.
I have a great client base after working on my own for 7 years. This is my 8th season with my own business. I flew through 3 audits, thanks to a clear conscience and my "extended office" here on the message board. No changes to the returns.
My ethics are paying off. This year a particular financial planning firm is using me exclusively instead of their former tax consultant. The former one? That was someone I worked for when I first started doing taxes. Unethical and overpriced.
That revenge statement is playing out in my life for certain. It works. I feel great.
Thanks for the assurance and assistance, everyone! You are my tax angels!
blessings,
donna aka possi"I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur GodfreyComment
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Well said.Originally posted by BHoffman View Post
I agree with the client and am also unhappy with bailouts. The ones that mismanaged and caused the alleged need are the ones getting the bailout and bonuses. But that does not make me want to be dishonest about things. I have no desire to intentionally get into the doghouse with the IRS either.
Also, I know when I am hurt or upset I am sometimes inclined to threaten things that I have no thoughts of actually doing, I'm just venting and getting it out of my system. (I couldn't find your dog to kick.) :-)
Now, if I can just figure out how to make the lots of money you mentioned, I'll be on my way.
Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".Comment
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Audit Me
When clients come to me with very questionable deductions, or proposals to do something illegal, or wanting to take only distributions from S-Corps and no salaries, etc., I pull out a red "AUDIT ME" form that I show the client and tell him we are required to attach to their return to avoid preparer penalties.
The subject always changes, for some reason, and I have never lost a client.
Fired a few that I was concerned with though!Jiggers, EAComment
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Jiggers - Can you tell me where to find a copy of this form? I would like to steal it for use with some of my people.
LTOnly in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".Comment
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Audit Me Form
I set it up myself on Word, very large bold print, on 8½" X 11" red paper!Originally posted by thomtax View PostJiggers, EAComment
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As much as the work is needed
The most advantageous outcome would be to quickly convince the client that it is extremely foolish to deduct "nonexistent" expenses AND to keep the client. With some of them, it can realistically be accomplished; and with some of the others, they'll come back to you later after they get burned elsewhere.Originally posted by SKJCPA View PostComment
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To me, this attitude is no different form robbing a bank because you don't like the fees they charge.Originally posted by SKJCPA View Post
Illegal is illegal. Would you help him plan the bank robbery? Of course not.You have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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identify needs
And that's exactly what you've gotta do. I've had to let a few people go over the years for this reason. It shocks them, but to me it feels wonderful! Who needs this nonsense?Originally posted by SKJCPA View Post
You might flip your above-quoted sentence around to: "As much as it's in my best interests to work, I know I need to just let him go." Puts the "need" part into better perspective.
Cheers!
BarbComment
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