Amending Returns, Preparer Responsibity

[geekgirldany]

I have a customer that overstated a deduction on Schedule A for a prior year. State sent a letter soon after filing wanting proof. After researching what he brought in the way of receipts I found that he had made a mistake in his calculation. He admitted his mistake and paid the state. I told him that Federal should be amended. He said to let it go if anything came of it he would take care of it. I told him that he would have to penalities and interest if found later it was best to take care of it now. He said no. So I did not prepare the federal amended return.

My question is was it my responsibility to prepare the amended federal return and mail to the customer, even though he said not to prepare it? I feel like now I should have.

[Zee]

It's the taxpayer's responsibility to file an amended return, not yours. You advised him, and he chose not to. I would simply document the conversation, and let it go.

[Gretel]

I agree with Zee in cases where it is the taxpayer's mistake. If it was my mistake I would do the amended returns and give them to the client and then let go.

[AZ-Tax]

Get a sign document releasing you...

I would get a signed document stating you notified the taxpayer that you suggested he/her amend his/her Fed return. Have the taxpayers signed it, make a copy for the taxpayer to retain and retain the original in a file. I have a case currently where I amended his Fed return but did not want to amend his state. I emailed him informing him I encourage him to amend his state return and that he may face penalties, interest and late fees and those fees may increase as time goes by. I included in the document that I not responsible for any penalties, interest and late fees.

In a issue of Tax Pro or Tax Pro Journal, there was the results of a case in which the Taxpayer sued the tax preparer and the court ruled in favor of tax preparer but I don’t think anyone on the board desires to go through what that tax preparer had to go through to defend him or herself. I am a believer in signed documents. Something about taxpayers when you ask them to sign a document.

[geekgirldany]

Thank you all for responding.

AZ that is a good practice with the letter. I will have to start that. I've got a conversation note pad where I write down telephone or other conversations with customers. I found my note for this customer. I also found the paper where he added up the receipts for the deduction. The difference in tax is going to be quite a bit $3,500. So with interest and penalties added it will probably be close to $5,000. I just remember thinking why they would not amend the return and take a chance. Maybe people just don't understand.

[ChEAr$]

You did tell him

I trust that Georgia shares information with federal.

[geekgirldany]

I believe the States are communicating more with the Federal on these type of things. I was sure it would come up just a matter of when.