New Customer this year and not from the area where I live. Regular customer of mine for years had her mother and sister mail their tax documents from out of state so I could do their taxes this year. I asked for a copy of last year's tax returns and was in total shock when I took a look at them. Cover sheets, etc with preparer's name, address, etc. But then I looked at 1040 and it had no information to indicate a paid preparer not signature for person who prepared the return. Looking through the tax return I understood why he didn't want his name anywhere on it. Schedule C in both returns with no income and thousands of expenses. Also a Sch A with lots of contributions which allowed them to itemize and get a much larger refund than they should have. When I spoke with the taxpayers about contributions and a business they did not have either and had no idea what was in the tax return. So they ended up with much larger refunds but will probably get audited. The person who prepared these gave them a paper return and they mailed it in so there is no evidence that he prepared their returns. My question is should I report this and if so how??? So not right and hard to tell how many others this so called tax preparer has done this too. As he is giving them paperwork that makes it look like he really is a preparer. I was told he works out of his home.
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Shadiness is an understatement
This type of stuff is rampant. I call them "feel good" returns.
No professional skills, no signatures, no PTIN, (no training?), etc. But the client always gets a big refund.
Enter the professional preparer (that would be us) with skills, training, and a knowledge of ethical questions involved and professional responsibilities expected.
If the client is open-minded, you might be able to explain what happened and either repair the (costly) damages or at least explain to the client the risks faced as a result of the former shoddy work. BTW: If you don't remember the Circular 230 stuff, you are REQUIRED to explain to the client the potential problems you noted. For such a client, the best you can hope for is a willingness to move forward with a properly prepared return.
But on the other side, the client will brand you for life: "Joe" always got me big refunds, but this year I went to "Bob" and I owed money. "Bob" obviously doesn't know anything about taxes. Try to find "Joe" and I'm sure you will get a bigger refund.
This approach especially works with the EIC crowd. One preparer in the general area had many, many happy clients. (I even saw one of his tax returns after the fact.) Each and every one of his clients was eventually audited by the state (not sure of IRS), and the "professional" actually ended up doing hard time for a year or two.
There is something to be said about certification, but there will always be people out there who buy TurboTax at Staples and crank out unsigned "self-prepared" returns for their very happy customers.
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And the client is another issue
And if the client has no idea what is going on, well, how do they survive on planet earth? I mean, really, they have to share in the blame. I don't buy that story that they didn't know. I know very few people that are really that helpless. (And I know some real losers in the brains department.)
My question for the client is: "Why DIDN'T you know? Then: "Are you kiddin me? You didn't know that you didn't have a business with no income and a ton of expenses? Really???"
"You trusted the preparer, and didn't look? Well, wha-pissssh, hope that stung, cause you are an idiot."
Seriously, that client would be sitting in a wooden chair with a utility light swinging in their eyes until I knew if he was a fool or a crook. Cause those are the two options I am coming up with here.Last edited by RitaB; 03-12-2013, 10:28 AM.If you loan someone $20 and never see them again, it was probably worth it.Comment
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I have talked with the taxpayer and explained what happened last year. I asked some questions first about the business and contributions first before explaining what had happened, even though I knew what the answers were going to be. I honestly don't think these people have a clue. I did ask if they had looked over the paperwork and they said No. They didn't even meet with the person who prepared their taxes. Gave W-2s to someone else to take to him. That person brought back tax return, told them to sign and mail in and gave them their copies. It's hard for me to comprehend but lots of people out their like this who just want to know how much they are getting and how soon. Don't care at all what's on the return. I explain every return to every customer. I've had lots of new customers this year who I can see the light bulb going off as I explain their tax return to them. They tell me no one had ever explained anything to them. Most preparers don't take the time, I've found. And some preparers don't understand themselves so would have no clue how to begin to explain. I feel I owe it to every customer to educate them. I can tell some are more interested than others, but they all get my tax talk.Comment
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Well, I was wrong
There ARE people that don't know ANYTHING, and I just talked to a couple of them. Going to sell their business, can we open another business and use that against the tax we will owe from selling the (first) business?
Me: Well, yes, if you lose money. But, you don't want to lose money, do you?
Them: Oh, we will make money. And, I've got to pay into SS, so I can retire.
Me: Well, if you MAKE money, that won't help defray the other tax. And you do realize, that having an S-Corporation, you have avoided paying SS and MC on a lot of money? Did you not do that on purpose?
Them: Oh, yeah. That's why we did that.Last edited by RitaB; 03-12-2013, 01:21 PM.If you loan someone $20 and never see them again, it was probably worth it.Comment
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