Shady question about receiving cash

[Brad Imsdahl]

Now if that client tells me he earned money and refuses to report it I have two choices....do the return and tell him what consequences he can face or fire the client. I have gotten GOOD at firing clients...sometimes shooting myself in the foot, but I sleep at night....GO AMBIEN...hehehehe

I hate to disagree, but if you prepare the return and merely tell the client what consequences he can face because he doesn't want to report it and you refuse to report it without his permission, you, knowing he has unreported income, yet you prepare the return anyway, are guilty of conspiracy to commit tax evasion under Section 7206, punishable by up to a $100,000 fine and or up to three years in prison.

[ChEAr$]

Check and double check

>>You need to do a schedule C if its over 400 dollars<<

$400 is the threshhold for Schedule SE. For Schedule C it's $1.

So far, after about 5 posts on the subject, I can't believe what I'm seeing.
Things like "showing income", and 200$ threshhold amounts.....

Come on now, ALL income is subject to tax unless specifically excluded.

Now I'll read the rest of the posts.

[RLymanC]

Under the Table Inc.

When they find out that all this under the table income generates $1500.00 MORE EIC,
I don't believe there would be any trouble from the taxpayer including this in their tax return.

Had a couple come in a few years back, married with 2 children. Wife has a W-2 for 4200.00, entered all the info and the W-2,,,,EIC not enough I guess, Husband says, "what about my carpenrty income,? I made 8,000.00 for the year doing cash work.

OK, what are your expenses? He insisted absolutely ZERO expenses, explaining to me that he could not document any expenses, so they are not allowable. OK

Can you document your income????NO .......BY, good luck.

[Black Bart]

Dear tacks86,

Now that we've collectively and properly scared the daylights out of you about this, let me add that the chances anything will come of the guy leaving off his $2K are remote. Since all he's got is a pension and SS, there's not really any reason for IRS to look at him. The same applies for a guy with W-2 income only.

As you know, sometimes a 1099 gets turned in to IRS and they don't know anything about it until the CP-somenumber turns up a year later. I've seen notices to construction guys on up to $10-15K of unreported 1099s -- the penalites included substantial underpayment but no civil fraud, which surprised me, since I thought those amounts would trigger something. I got a small one in yesterday that left $1,800 gambling and a $2,400 cashed-in 401 off '05 -- the bill was $793 with an agree/disagree affadavit and installment agreement form enclosed.

Only thing I can figure, IRS hasn't (at least in the past) had the manpower to do anything else with the "bigger" money offenders.

Still, we shouldn't ethically be involved and, too, there's that long shot out of left field that you never saw coming. I've read that many lawsuits (and their source) are a complete surprise to those sued and a lawyer once told me that "informal agreements" remain informal only until someone takes them to court and makes them formal. That thinking also probably applies to anything "off the record" -- it's only "off" until one or the other wants it "on."

[Joe Btfsplk]

Firing clients

I had prepared a return once showing low income, then later they wanted a return to show some bank for a loan with inflated figures. I refused to do it. The low income return may have been understated, but without my knowledge. If I had prepared both a high and low version then I would obviously be guilty of preparing at least one incorrect return knowingly.

I dropped the client after that episode.

[tacks86]

thanks again guys

Thanks again to everyone who's responding. After reading these posts I had an idea.

I can offer to do a legitimate schedule C for this guy. Advise him to put X amount in to a traditional IRA by 4-15. Thus I will have not increased his 2006 tax burden one cent more than 'Jiffy Tax' would have. But at the same time he'd also be 101% safe in the very remote chance of an audit.

[tacks86]

A retired guy is living off his pension.... I am very inexperienced at bidding on my own jobs and haven't been very profitable.

This has already turned out to be a great example of not profitable. I went out of my way to try to find this guy -- wasted time. While looking for him i learn a few things.

He's not actually a retired electrician. He's actually a chronic liar that owes everyone money. He wasn't doing electrical work for the pizza shop. He was delivering flyers. (That's why the pizza guy said he didn't know any electrician) He does not own a second home. He probably does not own a single home, etc. He's been banned from several neighborhood bars.

All the same, those tax isses have come up before and will come up again. So thanks for eveyone's advice. At least i found this out now before i wasted any more time.

And i hope one of you at least gets a laugh out of this. (i feel like smacking this guy)

[Brad Imsdahl]

If it looks like a duck, walks like a duck, and quacks like a duck, don’t bend over and try to give it a kiss.

[jainen]

On the plus side

On the plus side, how often can you claim a round of the neighborhood bars as a business expense?

[tacks86]

Good point, Janien.

(But actually I often claim beer. Being as that I'be gotten two clients from the bar and almost everyone else in the bar is a potential client. And i don't forget to deduct the bottle i received as a legitimate business gift.)

[Snaggletooth]

The leopard

The leopard doesn't change his spots.

A notorious gossiper told me once, "Don't tell anyone but...."
"By the way, tell me how much your office assistant makes....
I promise I won't tell anyone."

Consistent treatment of other people and other situations by a person
will dictate how he treats YOU and YOUR situations. This never fails.
NEVER.

A man lying and cheating on his taxes is confronted with fraud or other
criminal prosecution. All he has to do is convince the US Treasury that
he was ignorant of what he was doing because the "accountant made
him do it."

This means the difference between jail and freedom for this guy. Do
you really think he will not try to implicate YOU?

Be especially cautious of those who extend their deceptive character to
paltry sums. He who won't return $5 won't return $50,000 either.

[tacks86]

Thanks, Snaggle, I agree

It's now abundantly clear to me that

1) this guy has no need for a skilled preparer

2) I have no need to build a relationship with this guy because he has absolutely no integrity. (I'm rather bewildered as to what would posess this guy to talk so much garbage. I can't see a shred of a reason.)