It's Amazing

[Brian EA]

I received a referral last evening from a new client.The referred couple brought copies of their 2009 return as I requested. The two spouses filed HOH using the same address. They have been married and living together for quite a few years.The wife claimed their daughter and receive over $2000 in EIC.The husband claimed his wife's brother as a dependent The relationship is 'BROTHER".He received a decent refund. Had they filed jointly they would have owed UNCLE SAM.
This couple, together with their 26 year old son bought a house where the family resides.The son is single and he itemized his deduction. There is no MTG on the property. The RE tax is reported on line 10 of Sch A -mtg interest. He claimed $945 as Charitable contribution. He commutes to work, however form 2106 shows mileage deduction of $2475.
TO TOP IT OFF; LINE 28 OF SCH A, EXPENSES NOT SUBJECTED TO THE 2% OF AGI, LISTS HOME IMPROVEMENT OF $5090.
They all received their refunds using the RAL program.
My suggestion to them is to amend their 2009 returns. They said that they will think about it.
Your views are appreciated

[JohnH]

My view is you're going to lose a client. (and for that you should be grateful)

[BOB W]

Had a new client, was separated from current spouse but living with X spouse where their children live. X Husband claims HOH for the children. New client needs to file MFS. If she does file MFS, she owes. She wants to file HOH also. Sent her on her way to find someone else....Not interested in this type of return filing...............

[RitaB]

This Just In

Grandma (about 40) just came in all distraught cause son missed EIC. Son claimed all these expenses on Sch C, even Office in Home. Had a $22 loss. W-2 income was about $500. Friend did the return.

Wants me to amend and take off the expenses.

Don't hold your breath on that one, Granny. Looks like the friend did a fine job.

But, you know somebody will amend it. And it'll sail right thru.

[ChEAr$]

Grandma (about 40) just came in all distraught cause son missed EIC. Son claimed all these expenses on Sch C, even Office in Home. Had a $22 loss. W-2 income was about $500. Friend did the return.

Wants me to amend and take off the expenses.

Don't hold your breath on that one, Granny. Looks like the friend did a fine job.

But, you know somebody will amend it. And it'll sail right thru.

I would hope that IRS has a little subroutine built into their software to identify any such
improper amendment and an exception report will cause a real human (?) to look at the
whole return.

[BHoffman]

I received a referral last evening from a new client.The referred couple brought copies of their 2009 return as I requested. The two spouses filed HOH using the same address. They have been married and living together for quite a few years.The wife claimed their daughter and receive over $2000 in EIC.The husband claimed his wife's brother as a dependent The relationship is 'BROTHER".He received a decent refund. Had they filed jointly they would have owed UNCLE SAM.
This couple, together with their 26 year old son bought a house where the family resides.The son is single and he itemized his deduction. There is no MTG on the property. The RE tax is reported on line 10 of Sch A -mtg interest. He claimed $945 as Charitable contribution. He commutes to work, however form 2106 shows mileage deduction of $2475.
TO TOP IT OFF; LINE 28 OF SCH A, EXPENSES NOT SUBJECTED TO THE 2% OF AGI, LISTS HOME IMPROVEMENT OF $5090.
They all received their refunds using the RAL program.
My suggestion to them is to amend their 2009 returns. They said that they will think about it.
Your views are appreciated

Wow! Were these self-prepared returns or did a paid preparer actually sign them?

If you decide to have them as clients, you might want to look at Cir 230 10.21:

"§ 10.21 Knowledge of client’s omission.
A practitioner who, having been retained by a client
with respect to a matter administered by the Internal
Revenue Service, knows that the client has not complied
with the revenue laws of the United States or
has made an error in or omission from any return,
document, affidavit, or other paper which the client
submitted or executed under the revenue laws of the
United States, must advise the client promptly of
the fact of such noncompliance, error, or omission.
The practitioner must advise the client of the consequences
as provided under the Code and regulations
of such noncompliance, error, or omission."

Since you've seen their 2009 returns, I think this applies if you decide to prepare 2010 for them. I don't know if complying with 10.21 (and I'd do that in writing and get their signatures) gets you off the hook for their messed up 2009 returns or not and would like to hear from others. Better get paid up front, and I'd tack on a few bucks for the time it takes to prepare that letter.

I'd put a disclaimer in the letter, something like:
"Pursuant to U.S. Treasury Department Circular 230 any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties."

Very sticky mess.

[Brian EA]

[QUOTE=BHoffman;115623]Wow! Were these self-prepared returns or did a paid preparer actually sign them?


Returns were prepared by a paid preparer who is an employee of an LLC. He also has a PTIN.I tried calling to set up an appointment and there is no answer.I will probably be in that area tomorrow and I will stop in to check it out. Maybe I will have him prepare my return and see what happens.Of course my return will kick back because it was already filed.
brian

[Brian EA]

[QUOTE=BHoffman;

The practitioner must advise the client of the consequences
as provided under the Code and regulations
of such noncompliance, error, or omission."


I have advised the clients of the consequences.They cannot be forced to amend their returns.

brian

[JohnH]

Now that they're a client, and now that you've advised them, if and when the 2009 return comes back to haunt them you're going to be caught up in it. If that happens, maybe you can charge them enough to make it worth your while, but more than likely it will be an unending hassle with a client with an attitude.

I still think you'd be better off losing them as a client at the outset. But maybe I'm just too eager to throw in the towel.

[ChEAr$]

[QUOTE=Brian EA;115626]

Wow! Were these self-prepared returns or did a paid preparer actually sign them?


Returns were prepared by a paid preparer who is an employee of an LLC. He also has a PTIN.I tried calling to set up an appointment and there is no answer.I will probably be in that area tomorrow and I will stop in to check it out. Maybe I will have him prepare my return and see what happens.Of course my return will kick back because it was already filed.
brian

May I suggest you don't even trouble yourself with this matter any further. Certainly not make contact with previous preparer. It will do no good.

You have advised client and thats that.

[BHoffman]

Hi Brian - you might want to get the fact that you advised them in writing and ask for their signatures to prove you advised and complied on 2009 if it ever comes up. I think we've probably all seen lousy prior year returns. The one you saw was truly amazingly screwed up.

[JohnH]

[QUOTE=ChEAr$;115631]

May I suggest you don't even trouble yourself with this matter any further. Certainly not make contact with previous preparer. It will do no good.

You have advised client and thats that.

I agree with Harlan.
Just how many problems do you want to buy?

[Bees Knees]

If everything is true, this goes beyond a mistake or two. It is fraud, and I have a feeling the previous paid preparer knows it, and I have a feeling the client suspects it. Why else is the client switching preparers?

I would put down in writing each and every error that I had noticed on the 2009 return and inform the client that I do not have the time to amend their returns. They have to have the previous preparer do the amendments for free. If and when they come in with amended returns, then and only then would I consider taking them on as a 2010 client.

I would sternly say in my written analysis of the 2009 return that I believe it to be fraudulently prepared. That is the reason why I refuse to take on any work until the errors are fixed.

Again, I am saying this only because I believe fraud is involved and the client isn't 100% innocent. Nobody is that naïve.

[luke]

Dont

hold your breath on that one Harlan.....

[ChEAr$]

hold your breath on that one Harlan.....

AGree, however, I might be tempted to tell someone that IRS PROBABLY has something in place to detect it.
After all, IRS did have a routine in place to flag returns for people who had taken the 7500$ home buyers credit back in2008.