Sep

[veritas]

Sandy,

If they are not in compliance they would lose the tax benefits from the plan. Also I would suspect the contributions made would be excess contributions subject to an excise tax. The IRS is aware that many small retiremnet plans are not in compliance and have been specifically auditing them for compliance. The IRS will be aware there is a plan because the W2(s) will have the pension box checked. They will also receive information from the financial institution that a SEP IRA contribution has been made for whoever gets to participate.

That being said the chances are they would not be caught. But on the other hand you know they are not in compliance and could not sign the corporate tax return.

I hope this client is not a big one because you need to do what you know is right. Also not only is the client trying to pull a fast one with tax laws he\she is trying to cheat his\her employees. I would not like to work with this type of individual.

[Bees Knees]

I lost a big client several years ago because he made his SEP contribution for all employees after the extended due date of the return. I said I could not prepare his return knowing the contribution was for the wrong year.

It is not worth the risk of preparer negligence penalties just because a client insists on doing it wrong. Sometimes you have to make a stand, even if it means risking losing the client.

[S T]

Veritas Thanks

Veritas,

Thanks for being here and helping to cover my back. I know that what is being proposed is not correct. The client is a relative large and potentially larger client, but that will not sway what I know or feel to be correct. Besides, I have spent hours in researching these issues justifying my convictions.

The client has a longer term relationship with the Investment Broker than he does with me, so there are many challenges, including the write off of vehicles, and other expenses, the retirement plan, compensation as a shareholder, a lot of which have been corrected. The SEP and auto seem to be some of the final "big" issues! My responses have been what the regulations say, and every response has a retort with a new plan of action by the investment broker and client.

So if the client is listening so much to the investment advisor, then maybe the investment advisor should take over this clients accounting and tax preparation!! So if it does not get resolved pretty soon, the client will be looking for another accountant and tax preparer to replace me. Right now I am trying to feed the information and have compliance with the regulations, to the client, and seems like I am saying "NO, NO, NO," alot!

Thanks so much for your support!

Sandy

[OldJack]

Sandy,

This client will be nothing but a continual problem. Unless you are charging him several thousand dollars just tell him to go somewhere else that you are too busy to argue with his broker. You really can't charge enough to put up with this type client. The best thing I every did was to tell several clients that I did not want to do their work anymore. Life has been a lot simpler since. Get rid of him.

[veritas]

Greed

There was an investment advisor in my neck of the woods who made the newspapers. He was taking money in and telling his clients all kinds of things. Turns out he converted over a million dollars to his own personal use. He actually created phony 1099divs' so the clients thought they were making big bucks. Unfortunately one of my clients got taken in by him. I had a bad feeling when he gave me glowing reports about this advisor and how much money he was going to make. But my client did not want to hear anything from me. It is worse than I am revelaing but I would give away to much detail.

Sounds like your client might get an education also.

[S T]

Agreed

Bees,

I totally agree! I just have this inner need to make sure the client understands, and know myself that I did the best I could to provide the client with the correct information.

But then sometimes Clients will not always listen because we are not providing the answer they want to hear!!

Thank you also, for always being present and providing clear answers to our questions!

Sandy

[rosieea]

There seems to be no reporting to IRS, only the deductions, and what the financial institutions might supply for the accounts. So how does IRS determine whether or not a business has met all of the regulations. This is another area that the investment advisor eluded to that there was no tracking mechanism, so if the Employer did not follow the rules, would probably not be caught. What would the repurcussions be for the Investment Advisor for not following the regulations?? For Employer???

Sandy

It's fraud, pure and simple. I'd tell the client that, and if he persisted along those lines, I'd tell him to take a hike.