Here's a first.

[BOB W]

Just had a new client come in with photo copies of his W-2s. He said his accountant died and the accountant's family could not get to his info that was dropped off weeks ago. But the walk in had made copies before he gave the info to the old accountant. I said no problem and started to work on his return.

As I'm entering his W-2s (2) his SS withholding did not match his SS wages. The SS w/h matched a gross of $10,000 higher then shown on the W2. So I told him that the employer owed him some $700 of over withheld SS& Med. Then I go onto the second W-2 from Home Depot and it has the same problem, too much SS & Med withholding.

Now I'm saying to myself> photocopies?, same problem on two W-2s, something is not right. At that point I told him I can't do his return without the original W-2. I sent him on his way.

The W2s photocopies looked good and I could not see any doctoring. I just felt very uncomfortable proceeding with the return. What do you think??????

[winnie]

You were right to send him on his way. The last thing you need is that kind of a news coverage.

[erchess]

What about bringing in the IRS?

I recall hearing on the news some years ago about a Jackson Hewett Office that realized they were getting a significant number of fraudulent returns and had prepared some, so the manager contacted the IRS and got some good publicity. I believe the fraud in that case concerned the EIC.

Are there any situations in which preparers are expected to contact the taxing agencies about potential fraud? This guy almost surely went to another preparer and more than likely got a return done.

I personally do returns with original W2s or with substitute W2s I prepare from pay stubs or IRS Records. You can always replace a W2 by going to the company or get the info from the IRS - or at least I have always been able to do so. But then I avoid a lot of trouble by not offering checks or loans. More than half of my clients have balances due and most of the rest get IRS Direct Deposit. I can go through SBBT and give the client a debit card that will be funded after the IRS makes a deposit but no one has actually wanted to do that.

[Luis Mopeo]

Just had a new client come in with photo copies of his W-2s. He said his accountant died and the accountant's family could not get to his info that was dropped off weeks ago. But the walk in had made copies before he gave the info to the old accountant. I said no problem and started to work on his return.

As I'm entering his W-2s (2) his SS withholding did not match his SS wages. The SS w/h matched a gross of $10,000 higher then shown on the W2. So I told him that the employer owed him some $700 of over withheld SS& Med. Then I go onto the second W-2 from Home Depot and it has the same problem, too much SS & Med withholding.

Now I'm saying to myself> photocopies?, same problem on two W-2s, something is not right. At that point I told him I can't do his return without the original W-2. I sent him on his way.

The W2s photocopies looked good and I could not see any doctoring. I just felt very uncomfortable proceeding with the return. What do you think??????

I think a three-strikes rule is reasonable. Photocopies, Strike One! First bad W2, Strike Two! Second bad W2, Strike Three, Yer Out!

[Luis Mopeo]

I recall hearing on the news some years ago about a Jackson Hewett Office that realized they were getting a significant number of fraudulent returns and had prepared some, so the manager contacted the IRS and got some good publicity. I believe the fraud in that case concerned the EIC.

Are there any situations in which preparers are expected to contact the taxing agencies about potential fraud? This guy almost surely went to another preparer and more than likely got a return done.

I personally do returns with original W2s or with substitute W2s I prepare from pay stubs or IRS Records. You can always replace a W2 by going to the company or get the info from the IRS - or at least I have always been able to do so. But then I avoid a lot of trouble by not offering checks or loans. More than half of my clients have balances due and most of the rest get IRS Direct Deposit. I can go through SBBT and give the client a debit card that will be funded after the IRS makes a deposit but no one has actually wanted to do that.

I can't imagine contacting the IRS about taxpayer fraud as being "good" publicity. It might have avoided worse publicity if they were in the crosshairs of a fraud investigation, but even the most honest of clients will wary of a tax professional who sees their job as that of a whistleblower.

I don't believe there are any rules of professional conduct that require a preparer to contact the IRS about alleged fraud by a taxpayer. I'm like everybody else and see people who I hope will get nailed, but I think it's a bad idea for a tax professional to do the reporting.

[ChEAr$]

w2'S

vERRRRY interesting, Bob.

Question. Where did this fellow come from? You said new client. Was he recommended
or did he just pop up out of the blue?

Reason I ask is because years ago IRS used to "shop' tax returns around to see what
would happen, esp with "some" preparers; not saying you might BE one of course.

But still... could IRS be up to their old tricks?

[gkaiseril]

Old Prison Scam

Very old prison scam. File false W-2's and get tax refund, EIC just mad the payoff higher.

The IRS does want you to report this, see their web site. If you do not catch these filers and have enough come through your office, you could find yourself in trouble.

Reporting Fraud and Abuse Within the IRS E-File Program

http://www.irs.gov/compliance/enforcement/article/0,,id=106773,00.html

There are many taxpayers that would rather go to an honest tax preparer than have to deal with the IRS over a poorly prepared return by a scam preparer.

Remember the EIC is coming out of the tax dollars that you pay to the IRS.

A number of years ago I had a return subpoenaed by the IRS by an individual filing false returns for the refund. Each W-2 was perfect down to a valid EIN and tax amounts. I met the IRS agent that caught the man, and he said the perpetrator had done 70 returns before getting caught.

[BOB W]

You.......

......... could be right.....

I have done returns with Home Depot w2s and when I put the ID # into my CS program it did not pull up Home depot name and address and I had to type in the name and address. At that point I started to get a curious feeling.

My sign out front says appointment only> this person called to make an appointment> no referral.

[GIMoe]

W-2s

Good call on sending him packing. I personally avoid ones that seem shady or questionable. If it seems like they are really trying to hide something or are obviously lying, I won't do it. I understand that most folks are just normally nervous in general when it comes to doing their taxes, not everyone knows what info is needed, etc.. but after you have been doing this for a few years, you start to get a decent feel for when someone is trying to "pull the wool over your eyes" -- so to speak.

As for whether or not tax preparers should be "whistle blowers", (I believe is how someone put it), it would depend on the situation. Anything that would seem questionable, maybe a little off, makes you feel uncomfortable enough that you do not want to prepare their taxes, does not necessarily have to be reported. However, if you see something that is outright fraud, then I believe it is our responsibilty to report it to the authorities. --Am I the only one who feels that way?

[ChEAr$]

Right on, GIMoe

While there are no absolute requirements for any of us, those subject to circular 230 or
not, to report fraud or any suspicious behavior, sometimes we may see really egregious
examples that just stick in our collective craws. If I had possession of an obviously
fraudulent W2 like first described, I would make excuses not to finish return that day, ask
client to return to pick up finished work and after he was gone, call IRS fraud unit.
Assuming of course that I had kept my cool and not let on that I even suspected anything.

But for me this is probably all moot. Any new client has to be a referral from existing
client, AND I require a copy his last year's return.

[DTS]

Bob

I have had fake W-2s that showed a high amount of w/h, but not ss. I wonder why they did not up the Fed w/h, instead?

Dennis

[BOB W]

Yup......

... the whole situation was weird.

I have a client that is a tax examiner for IRS that came in 3 hours after this client and I spoke at length with her about this. She said it didn't make sense because there was no real gain from the w2s. I then asked her if IRS is testing preparers to her knowledge and she said no.

Examiners generally are not privy to such [goings on] but she is up in the ranks at Holtsville and carries some weight there and inside info. Such as, there is a big problem with the telephone tax credit. The scam is HUGE, in her words. I wasn't about to get into EIC which I think is a HUGE scam and probably make Tel Tax Cr look like ants from a second story window.

Anyway, I'm as confused over this client's w2s as many on this board> it doesn't make sense.