URGENT....never ever saw this before.."The Tax Club"?

[AZ-Tax]

New client walks in with tax documents and begins to tell me about a program they got into called "The Tax Club" and told me it was a piece of crap and closed the business down in 2010. So I am thinking Sch C, wrong especially when I saw the $895 tax prep fee I was thinking wooow, that is quite a bit of money then looking more at her documents I see a cover letter about her S-Corp yet no 2009 S-Corp return. When I asked her about it, she didnt have a clue she had filed an S-Corp nor was she aware she Inc.and lastly, she does not have a clue where her 2009 S-Corp tax return is at. So we called this Tax Club place and she did not file a final S-Corp for 2010 thankfully the cover letter hopefully will give me a enough info: Name of Corp, Fed ID, Officer name, addres and I can get the date of Inc from the AZ - Corp Commission.

Can you believe these Tax Club people sold these 2 people age 77 & 76 some kind of ecommerce with this Tax Club program.... I just received a copy of their 2009 S-Corp tax return and 0 income and 0 exp for 2009 and nothing on their 2009 K-1. I asked her if they ever sold anything and she said no in 2009 and no for 2010. Why didnt the CPA who prepared the S-Corp write off her exps to at least get the loss to flow to her form 1040. Man this Tax Club is pathetic. Do I need to file an extension for her S-Corp?

[taxea]

Have you considered discussing this company with the IRS investigators?

[AZ-Tax]

After tax season I plan on turning them in but

Have you considered discussing this company with the IRS investigators?

Have it on my calendar to contact the IRS about this but in the meantime, it seems to me that most if not all the exps my client had launching their business, should be deductible yet not one deduction was taken within their 2009 (the year virtually all exps were made) S-Corp tax return.

[JohnH]

I thought The Tax Club was the thing the IRS uses to make people pay up when they owe and can't come up with the money...

[Jiggers]

No clue?

These clients that always say they don't have a clue or have no information about some of these tax evasion ideas are lying.

They receive lots of paper stuff, but all they hear is that they are going to save taxes.........Nothing else is retained in their brain.

I have seen clients show up with life estate trusts because their attorney told them to do that so they can avoid probate and pay any legal fees when one dies.

But what about the legal fees to set the trust up?

And there was no need to do such as their estates are usually under $500,000, combined!

[JohnH]

Great point. I've NEVER seen a client with a trust who had any clue about what they had done. (Maybe my clients are just uninformed)

[Burke]

I have dealt with a lot of these. You are right, the majority of them do not have a clue what the trusts do. Had one just yesterday, when I inquired why they had put everything into a RLT, say it was because they wanted to avoid estate taxes. And she did not mean probate taxes, she really meant Federal Estate taxes -- because a relative got hammered years ago when she died. (I think the exemption then was $600K or less.)

[AZ-Tax]

I also have experience many "I didnt know and/or its not my fault"

And its possible this new client could be one and this new client should have sought help immediately from a local tax preparer so yes quite a bit of its is her own fault but not all and this Tax Club outfit plus the CPA who signed the return need to be closed down. It makes me sick that every so often I loose a propect because I am not a CPA.....

[JohnH]

Yes, but don't you sometimes gain a client because you're not a CPA?
That happens to me from time-to-time...

[outwest]

I just received a copy of their 2009 S-Corp tax return and 0 income and 0 exp for 2009 and nothing on their 2009 K-1. I asked her if they ever sold anything and she said no in 2009 and no for 2010. Why didnt the CPA who prepared the S-Corp write off her exps to at least get the loss to flow to her form 1040.

Maybe because the CPA thought it was a sham and a hoax; maybe the expenses are not deductible as no business had started; maybe the CPA thought the organization and startup costs should nondeductible capital expenses written off when the business closed. maybe thought a zero return ought to be filed to stop the $189 per month per shareholder failure to file penalty. Maybe the CPA looked at that mess smugly dumped on his desk cooked up via that seminar they just attended and thought "all this is bogus but we've got the IRS expecting a S Corp"

In other words, maybe the prior preparer thought like you and but thought the only valid return was a zero return. Without knowing what the "expenses" were, I wonder if you wish to write off nondeductible items?

[oceanlovin'ea]

"The Tax People"

About 8 years ago there was a company called "The Tax People" , It was MLM and they sold programs to help people save on their taxes. They were located in Kansas City and got into a lot of trouble and were closed down.

This one I have not ever heard of. Though strategies sound similar.

People have to be careful about what they are spending money for. It is crazy to sell something like that to someone in their 70's. They are going to work a business like that.

Linda EA