Understating expenses and an amended return

[Jiggers]

Agree

I agree with you.

I agree that you need to C*Y*A with an engagement letter for the preparation of the tax return and disclaimers all over the place on a letter to the bank/mortgage company.

And, be sure that you have written authorization from your client to write this letter and give it to the bank/mortgage company and that he has signed off on a copy of the letter, just to C*Y*A if he is turned down and tries to go against you for what you said in the letter!

[David1980]

Personally I don't have an issue with going over the form with them, explaining how the form works, showing them turbotax online, showing them how that works, and telling them that if they choose to play games they'll need to use those tools because I won't prepare the return.

I see it as basic tax training/program training. I don't flat out say "Here's how you cheat" but they know what they want to do before they come see me so I just point out how those forms work where "expenses" get entered or don't get entered. These end up being clients I'd rather not have anyway so after I charge them for my basic crash course in preparing a tax return I axe them as a customer.

[veritas]

Show your client this

next time they want a little fudging for the bank.

http://www.usdoj.gov/criminal/pr/press_releases/2008/06/06-11-08sandlin-convicted.pdf

I wouldn't worry about the IRS.

[taxtime]

engagement letters

I always try to make sure, just like all of you, that my clients are in compliance with applicable tax law. We always have that conversation about ACCURATELY reporting income and expense. Sometimes you make the best honest judgments you can. I don’t use engagement letters, but I wonder if I should. At least the client will be signing that they have not withheld any information from me. My E & O carrier would probably like me to use them. How many of you folks use them?

[myerstaxes]

I use

Engagement letters for most all my clients, especially new ones, audit representations, collection matters and delinquent returns...As for not worrying about the IRS, I would worry about them...They do have Special Agents who work fraud cases. and some banks get your permission to get the tax returns from the IRS to see that you have reported the same income and expenses to the IRS (some folks have two returns one for the bank and one for the IRS) as you are reporting to them...Maybe your chances of the IRS tagging your client for investigation is slim, but I would hate to be the one who did get tagged...

[veritas]

Years ago when I belonged to the Jaycees

We had a speaker from a large bank who spoke about commiting fraud with loan applications. What he said has always stuck with me. That is when you lie to the bank you can be convicted of a crime EVEN if you have paid the loan off in a timely manner.

[taxtime]

I just

don't like when people want us as tax preparers to make certain assurance about the returns. We are not performing attest functions. This what in my case seems the bank wants me to do, and I won't.

[David1980]

don't like when people want us as tax preparers to make certain assurance about the returns. We are not performing attest functions. This what in my case seems the bank wants me to do, and I won't.

It doesn't help with the marketing the big box stores do about their return "guarantees" (full of holes you could drive a humvee through, but it sounds good in the commercials!). Interest & penalties is as far as I'll go, and then case by case. That 1099-MISC they swear they gave me isn't likely to get much sympathy, but if I did something stupid then I'll pay for it. I don't pay the tax liability because they woulda been out that money anyway. Had the return been correct they would have paid it.Not a lot of customers get that though... but I'm happy to pass them on to the nearest liberty doll or whatever. I don't need people like that anyway.