JohnH

Lots of things in childhood turn out not to be what we thought. Just last week I finally apologized to my daughter for having told her all those years that when the ice cream truck was playing music, that meant it was out of ice cream.

In this situation, I'd probably call IRS with the client conferenced in on the call. There's a 50-50 chance the IRS person will handle it on the phone, and probably a 75-25 chance they will at least stop it from going into ACS for 69-90 days to afford you a chance to send a fresh letter (via Express Mail) summarizing all prior correspondence.

Here's one that Consumer Reports provides. They also have lots of very helpful printed info on the whole subject. http://www.consumerreports.org/content/news/wheeling/worksheets/documenting_the_deal.html

I think Michael is referring to the state Professional Corporation (PC) rules, rather than the IRS Personal Service Corporation (PSC) rules. In most states, all shareholders of a PC must be licensed in that profession. I think that would automatically cause it to be a PSC subject to the 35% rate. The only way for a PC to bypass the PSC would be to make the S-corp election. But if a non-professional can be a minority shareholder of a PC under the rules of the state, or if the corp is a regular C-corp rather than a PC, then having the requisite amount of stock owned by the non-professional would avoid the PSC rules. I've also read that only a CPA comes under the PSC rules and an EA doesn't, but I don't remember what the reasoning behind that was. Perhaps it had something to do with the fact that the EA designation applies to tax preparation, not accounting, and tax preparation is not one of the professions listed under the PSC rules.

As already stated, S-corps are not affected by the PSC rules. But even the PSC rules for a C-corp can be side-stepped by having a spouse as a shareholder (provided the spouse isn't working in the business).

Until 2020 you say? That's probably long enough for me

That's so true. In the early years I had one set of custom spreadsheets (which I bought, rather than design myself), which required me to choose a different spreadsheet for each filing status (S, MFS, HOH, MFJ). There wasn't any error trapping either - if I discovered at the end that I had chosen the wrong spreadsheet, there was nothing to do but enter everything again on the correct one. I was thrilled when a lookup table made it possible to combine all the tax calculations on a single spreadsheet that made the calculation based on a "Filing Status" code entry.

Only dual? I vote for the capability for 3 or 4 monitors

I remember formatting spreadsheets in Appleworks running on an Apple II Gs computer, which I then printed on a dot matrix printer and then photocopied using an overlay. Even made my own overlays on special acetate paper.

In addition to the tax subject matter, I've always enjoyed reading anything Julian wrote. Where else would you find "ecdysiasts" and "vituperative" in a tax article? The man has a way with words. Made me get out my personally signed copy of one of his books from a past decade.

It is a case which has been hanging around for a long time. But just the same, thanks for the mammaries.

This year it has become even easier. There's no paper form to file (unless they have to attach the 8938 to the return) Just give them the link to file it online and remind them of the penalties. You're done...

Yes. But then, Señoritas have always been meaningful to me.

Eric: Do you have any words of wisdom to offer on choosing passwords? I've always tended to use foreign language words which are meaningful to me, but I' wondering if there is a good system that is fairly easy to remember and increases the difficulty of someone figuring them out.

I can say one thing for certain about every client I ever lost over fees -> . . . . . they needed to go.

I understand your point, Michael, but this is an extreme situation, IMO. And it requires extreme measures because I'm in 100% CYA mode at that point. This isn't about notifying a client of an error - it's about a lying cheat dragging me into his scheme. If a client told me he had deliberately cheated on his taxes for 5 years, and had made me a part of the pattern, I want to send a clear signal. I want him to know that I'm washing my hands of him and that I'm giving him the means to correct the problem. I'm not even sure I WANT to be paid for this. I'm certainly not going to waste time talking with him about retainers, what he ought to do, or anything else requiring thought or action on his part. Chances are he won't send in the amended returns and he will keep lying to his next preparer. But my name is always going to be on those returns in question. If he gets caught and the IRS comes knocking on my door, I want air-tight proof that I gave him everything he needed to get it right.

Yes, KC. Thank you. I just could not recall which thread it had appeared on and I had been randomly searching. http://m.youtube.com/watch?v=pdkucf6wxU4

I was giving this situation some thought as I was driving home, wondering exactly what I would do if a client told me he had been deliberately giving me bogus IRA deductions for 5 years running. I decided the only thing I'd know to do is give him 5 years of amended returns, all at no charge, and a goodbye letter. The only other thing I might do is ask him if he has any of my business cards in his possession - and if so, I'd ask him to give them back to me.

I'm pretty sure this differs from state to state, but a lawyer friend told me years ago to be very careful with interest charge assessments on past due invoices for personal tax returns. This comes under consumer protection laws and the penalties for even the slightest deviation from what's allowed can be huge.

This client will have a major problem if this comes to light, maybe even after the SOL has expired. And anyone who has knowledge of it, even after-the-fact, could find themselves in a sticky situation if the client decided to throw them under the bus.

OK, well maybe I mis-spoke. It won't work legally, but that doesn't stop some people. In this case, I assumed the client has not made the SEP contribution, and they intended to make it during the extensions period, thus no deduction was taken on the original return as filed. Maybe I read the OP incorrectly.

I meant to save a link to that video about the "Visit From the IT Department" in the past few days, but now I can't remember where it was. Can someone point me to it or paste the link on this thread? I thought it was hilarious and I want to send it to my daughter. Thanks.

Won't work. The return has already been filed, so there's no way to avail themselves of the tax benefits of the deduction for the 2013 year.

I think you have to level with the client, and put everything in perspective: 1) Their opportunity to fund the SEP ended when no extension was filed. That door is closed. 2) They are not in anybody's cross-hairs. They will simply need to navigate the payment process now, just like they would have done it with an October filing. They can get 90 days to pay by making a phone call after they receive their notice around mid-May. Or, if they need longer than 90 days, they will need to file an installment agreement request, which has a fee associated with it. Either way, their FTP penalty and interest will be the same regardless of whether the return was filed Apr 15 or an exension was filed. The FTP penalty and interest began Apr 15 and will run until it's paid. Aside from the lost opportunity to fund the SEP, they are in the same position with or without the extension. Was the intended SEP contribution a meaningful amount, or just a token payment to shave a little off the tax liability? In this situation, I MIGHT be wiling to refund them the FTP P&I for 3 or 4 months, but only for the portion which applies to the tax savings resulting from the SEP contribution had they been able to make it. And only if they are otherwise a good client. And only if they go ahead and make the SEP contribution for the current year. If they are a PITA, then I'd most likely just apologize for the error and move on .If they are as furious as you say, they probably aren't coming back next year unless they are otherwise reasonable people who will appreciate a token concession on your part. Also, unless they are making the full allowable SEP contribution each every year, they are only getting a marginal tax benefit by making last year's contribution now vs going ahead and making a contribution now for the current year. The analysis is a little more complicated, but for nominal SEP contributions, you can demonstrate that they get only a slight P&I benefit by holding the contribution window open via the extension.

Yes, if you do things correctly on your end, then what he does with the 1099-INT forms is entirely up to him.