Fishy Clients

[veritas]

Somebody mentioned this in another post.

What do you do when your at church and talking with friends and in passing they mention so and so did a landscaping-painting thing for somebody, and you do the tax return for so and so who did not claim it on their tax return?

[Jesse]

Pretend you didn't hear it?

[Kong]

Fishy clients or is it nosey nieghbors?

Unless you want to confront the client and tell him/her how you recieved information on side job, I would just ask tax client if they had any unreported income to report. I would mention that there are penaltys and interest due on unreported income. Do you really believe everything (gossip) you hear at church?

[veritas]

Well Kong

I might if I heard it from more than one source.

[erchess]

A Neighbor of mine

for a while operated a small junkyard out of his home. He would keep wrecked cars in the yard and periodically I would see him take an engine or body part off of one and give it to someone for cash. In my neighborhood people do not usually report these cash transactions for tax purposes. I could not have done his return without a believable report of his junkyard activity because I personally had knowledge of it. As far as what I hear others tell me, I ignore all such. I do ask every client to tell me about all their income including any "side job" and remind them of the consequences of unreported income. I concentrate my hunt for clients outside my neighborhood so that my sources of information about my clients other than the clients themselves are more limited.

[sea-tax]

Veritas , this is a true dilemma. I personally would not confront the taxpayer specifically. I would simply explain to them at my tax appointment of the various penalties and issues with unreported income. If the client insists that they are reporting everything then I would have them sign some kind of statement saying that I explained to them the issues and that they attest to the numbers that they have provided me. After that I don't think you have any problems.

With the new MLNT standard penalites I am starting to make my iffy clients sign there name to the figures that they present with a statement that this information they are providing me is true and correct.

[Jiggers]

You need engagement letter

I have all my clients read and sign an engagement letter.

It specifically says that they are reporting all their income.

I also ask them to complete an organizer that I send to them at the end of the year, to bring to their interview. It specifically asks if any income was received that wasn't reported elsewhere, such as tips, prizes, awards, lottering winnings, gambling. And that all income must be reported even if no W-2, 1099, K-1, or other reporting document is received.

[ChEAr$]

Similar case here

A client was in office shooting the breeze, and he mentioned that S.... was his computer
guy, and who said he "uses me" to do his tax return, too. Seems that after his (S....) day job he keeps people's computers up and running.

So I ask client if he paid S... more than 600$. Answer was, no, probably not. I just nodded my head.

Later that day I took out a schedule C worksheet and mailed it to S..... to "help' him get
his information needed for tax return together.

If S.... doesn't call for an appointment, will I worry about it?
(grin

[JohnH]

Overheard in church?

I don't believe anything I hear someone say about someone else in church. The only exception is if they are whispering when they say it.

[SueBaby]

I don't believe anything I hear someone say about someone else in church. The only exception is if they are whispering when they say it.

So funny!! Whenever any one is listening to me either I am shouting FIRE or whisper:
this is very confidential.