illegal tax preparer

[POCAHONTAS]

client comes in to amend his tax return to get his first time home buyer's credit, he had already filed his tax return with another tax preparer for 2009. He says he didn't go back to the tax preparer because he is out of town and he came to me because he didn't want to wait for him to come back. His 2009 tax return has an income of $5 2000 from a W-2 and a schedule C showing a security service business with gross receipts of $2,575 and mileage expense of $22,000 and other expenses give him a loss of -21,130. Upon questioning his large mileage deduction, he admits that he had no idea of the mileage that was deducted, and he does not have any logs. The previous tax preparer did not sign the return.

so I told him I am not touching his return unless he hires me to fix the shady return, was I right in doing that or should I have just told him to go somewhere else. What are my liabilities for a return like this one.
thanks

[JohnH]

Forget fixing the shady return - this guy is toxic. I think you have so much potential liability for touching this return that you can't charge him enough to make up for the hassle. He needs to go somewhere else. Let HRB or JH take on this hornets nest - they have the deep pockets.

[anu31402]

Based on experience, I think your potential client may not be saying complete truth. Some with similar issue I have encountered always have their tax preparer disappear or travelled to a far away country...(even during a tax season as we are now) and they can't wait for them.

[geekgirldany]

Why would their accountant/tax preparer be out of town now? I can't even leave to eat much less go out of town. Something is going on. I guess if you want to take it on... then like you said you would have to get proof of everything that is being reported including all income and expenses on the Schedule C. After you go through all that then he might not want to pay your fee.

I might just send him somewhere else.... just tell him you don't have time to amend.

[taxea]

I don't really see a problem the return has to be amended to include the FTHBC.
I would do a thorough interview, as is done with any new client then I would do an original return, print it, write corrected return across the top in large letters and have him take it to the local IRS office.
If he paid to have the return done and the preparer didn't sign it I would also get as much information as possible on the preparer, as the client for a copy of his cancelled check or receipt from the preparer and I would turn the preparer in.
If he didn't pay for the original return that would be why it wasn't signed. I would let him know that he went to someone who doesn't know what he was doing and sometimes "You get what you pay for"

[David1980]

You can pretty much refuse anything you want to. I don't like the "shady" returns myself. I also don't want clients who "didn't know" there were huge bogus deductions on their return. I mean I don't want to spend hours explaining their tax return to them, but they should give it a glance over and question anything that jumps out at you. It doesn't take a genius to figure out positive numbers are income negative numbers loss and that the numbers are US dollars. If a $20,000 loss is showing on the tax return and total income is negative and they have no idea why they're not my customer.

[gkaiseril]

Why would their accountant/tax preparer be out of town now? I can't even leave to eat much less go out of town. Something is going on. I guess if you want to take it on... then like you said you would have to get proof of everything that is being reported including all income and expenses on the Schedule C. After you go through all that then he might not want to pay your fee.

I might just send him somewhere else.... just tell him you don't have time to amend.

Had a preparer like that in Chicago (except he signed his returns), he started at the refund and figured the Schedule C or E loss needed. The IRS picked him up and put him in a federal lockup until his trial.

Obiously the prepare of this return does not want to touch it. Maybe he is afraid of what his client will tell the IRS if pushed.

[luke]

sounds like a setup

Be very careful as this "client" may be a "plant" to see what YOU will do? (Gosh dont mean to sound so paranoid but you never know...)

[JohnH]

You know, that same thought crossed my mind yesterday.
Apparently I was too paranoid to post it.

[taxxcpa]

Amending fraudulent return

If you amend a fraudulent return, and correct it for excess mileage, etc., I see no problem.
If all you do is leave it as-is except for the homebuyer credit, then you are sticking your neck out and should not do his amended return.

[POCAHONTAS]

ok so this guy has decided to amend his returns for 2008 and 2009, because both returns had the same schedule C, he wants to amend the returns and does not want to include the schedule C. If he does that he would have to pay back the extra refund he had gotten plus interest, and he is willing to pay that amount back to the IRS, plus my fees. So do I go ahead with this since he does not wants to fix this or do I still send him to HRB, JH??
thanks

[BHoffman]

Pocahontas - I would run like the wind from this fellow

[POCAHONTAS]

thank you BHoffman

[JohnH]

Pocahontas - I would run like the wind from this fellow

Ditto.
This has potential to be a train wreck.
No, it's already a train wreck, but the boxcar loaded with dynamite is on fire.

[BHoffman]

http://www.youtube.com/watch?v=XcxKIJTb3Hg&feature=related