new client prior year return fabricated

[Pacun]

He might not be a CPA. A lot of people ASSUME that anyone that has anything to do with tax or accounting is a CPA.

I was going to say the same thing. My friend runs errands for her attorney friend. The attorney would tell my friend "please take these envelope to my CPA". A couple years later, the attorney asked me to prepare an affidavit of support for immigration and we had to include 3 years of taxes. The so called CPA was just a tax preparer.

You are right, many people think we are CPAs.

[jshtax]

I looked on the company website and it appears the preparer was the son of the owner (as they both have the same name)

[Pacun]

I looked on the company website and it appears the preparer was the son of the owner (as they both have the same name)

So the CPA, the father, doesn't know that his son is doing that. That's exactly why I ask the taxpayer to take the papers back to the preparer and amend. Sometimes they have assistants and when the preparer is not there, assistants use their names.

Even if the right preparer prepared and signed the return, it is a good idea to let them know that there are some taxpayers that like what they do and maybe they will stop. How can that be accomplished, by sending the taxpayer back to them for amendments.

[joelgilb]

I don't see anything wrong with this engagement. Offer to amend the prior year and explain that you are required to tell her about potential consequences of the fraudulent return, which include criminal charges as well as additional tax, penalty and interest. Encourage her to report the preparer herself, with your help if she asks for it. Then give her an organizer and engagement letter in your professional way, and prepare the current return for your ordinary fee.

Totally agree!

You are under no responsibility to force them to turn themselves or their prior preparer in. You are also not required to FORCE them into amending the prior return, although you should of course recommend it. You should advise them of their rights and responsibilities. Advise them of the risks of audit etc and if you take on the engagement to prepare the 2013, do it correctly to the best of your ability.

Further you should not turn your client in to IRS.For licensed professionals turning your client in when you have a confidential relationship with them is malpractice!

You of course can refuse the engagement if you don't trust the client, but it sounds like they need competent and professional advice.

[jshtax]

Totally agree!

You are under no responsibility to force them to turn themselves or their prior preparer in. You are also not required to FORCE them into amending the prior return, although you should of course recommend it. You should advise them of their rights and responsibilities. Advise them of the risks of audit etc and if you take on the engagement to prepare the 2013, do it correctly to the best of your ability.

Further you should not turn your client in to IRS.For licensed professionals turning your client in when you have a confidential relationship with them is malpractice!

You of course can refuse the engagement if you don't trust the client, but it sounds like they need competent and professional advice.

I would never turn the client in I would just stop doing work for them.

[jshtax]

I basically told them here is your outcome and if you want results like last year then you need to go see the former preparer.

[joelgilb]

Here is a nice detailed article on accountant-client privilege/confidentiality.

http://www.aicpa.org/publications/newsletters/aicpacpainsider/2010/june7/pages/theaccountant-clientprivilegedoesitexist.aspx

Note that not all States have the same rules. Further, the privilege does not extend to tax preparation nor do they reach the level of an Attorney Client privilege and tax preparation is essentially not considered legal representation so not protected under Attorney Client Privilege.

Still I tend to feel it precludes you from turning your client in and possibly from turning in the prior preparer as this is probably not in the best interest of your client and essentially the same thing as turning your client in.

[BulldogTom]

I basically told them here is your outcome and if you want results like last year then you need to go see the former preparer.

What is on the bottom of page 2 of the 1040. I am dying to know if they put the firm name and PTIN number on the return?

I don't want to know the name, just if the preparer actually filled out the information.

Thanks

Tom

Hollister, CA

[Jack from Ohio]

What is on the bottom of page 2 of the 1040. I am dying to know if they put the firm name and PTIN number on the return?

I don't want to know the name, just if the preparer actually filled out the information.

Thanks

Tom

Hollister, CA

I got a banana split that says it was marked self-prepared...

[BulldogTom]

I got a banana split that says it was marked self-prepared...

I would think you are right. Which would be a circular 230 violation for a CPA/JD. The invoice is proof that the preparer was paid, and if they did not fill out the bottom of the 1040 as the paid preparer, they are subject to sanctions for failure to sign the return. In addition, if the return was e-filed, the PTIN could be revoked.

Why do preparers do this. The penalties are so harsh if you get caught. And for a few bucks. I don't understand it.

Tom

Hollister, CA

[kcjenkins]

And how did they have the refund deposited into the firm's account?

[MsTabbyKats]

I'd tell the client that her 2012 return was bs....and not to be surprised if she gets an audit.

Ask her if she wants to amend it,

Don't bother about turning the preparer in. It's the responsibility of the IRS to catch this stuff....not yours.

[jshtax]

What is on the bottom of page 2 of the 1040. I am dying to know if they put the firm name and PTIN number on the return?

I don't want to know the name, just if the preparer actually filled out the information.

Thanks

Tom

Hollister, CA

It had the preparers name, ptin, and address on the preparer section. Along with their bank account information for the direct deposit. I had no idea you could or would want to get a refund that way.

[kcjenkins]

It is actually illegal to handle a refund that way.

Cie 230

§ 10.31 Negotiation of taxpayer checks.

A practitioner who prepares tax returns may not
endorse or otherwise negotiate any check issued to a
client by the government in respect of a Federal tax
liability.

[Mr. Pencil]

Which would be a circular 230 violation for a CPA/JD.

Yes, but I don't think we should respond with professional malpractice ourselves. We are only allowed to use client information for tax prep, and that does not include ratting out the competition. Even more, I think it would be unethical on a personal level. Except for hearsay, we do not know and can not know how the return was prepared. The lady has an interesting story, but who can say why she is telling it? Even if it's true, being dishonest is not the same as being stupid so I wouldn't be surprised if the preparer can back up his work with an unaudited organizer or worksheets he claims were provided by the client.

[jshtax]

Yes, but I don't think we should respond with professional malpractice ourselves. We are only allowed to use client information for tax prep, and that does not include ratting out the competition. Even more, I think it would be unethical on a personal level. Except for hearsay, we do not know and can not know how the return was prepared. The lady has an interesting story, but who can say why she is telling it? Even if it's true, being dishonest is not the same as being stupid so I wouldn't be surprised if the preparer can back up his work with an unaudited organizer or worksheets he claims were provided by the client.

My money is on stupid and dishonest.

[kcjenkins]

Yes, but I don't think we should respond with professional malpractice ourselves. We are only allowed to use client information for tax prep, and that does not include ratting out the competition. Even more, I think it would be unethical on a personal level. Except for hearsay, we do not know and can not know how the return was prepared. The lady has an interesting story, but who can say why she is telling it? Even if it's true, being dishonest is not the same as being stupid so I wouldn't be surprised if the preparer can back up his work with an unaudited organizer or worksheets he claims were provided by the client.

I agree that we can't know what she gave the preparer, but the rule on the check is absolutely clear "A practitioner who prepares tax returns may not endorse or otherwise negotiate any check issued to a client by the government in respect of a Federal tax liability."

[jshtax]

How does it was work where preparer gets paid their fee out of the refund amount?

[Jack from Ohio]

How does it was work where preparer gets paid their fee out of the refund amount?

The money goes to a bank and the bank distributes the money. Only the fees go to the preparer.

[jshtax]

The money goes to a bank and the bank distributes the money. Only the fees go to the preparer.

Interesting. This person received a check from the preparer as all funds went into their account. Preparers can charge $89 to cut someone a check?

[ILLMAS]

Interesting. This person received a check from the preparer as all funds went into their account. Preparers can charge $89 to cut someone a check?

Of course they can, if you agree, actually you don't have to agree once they finishing preparing your return you have no option. And because preparer like this one, our city requires for us to give an estimate of the total cost of the preparing including processing, miscellaneous fees etc... before any works begins. If I quote someone $100 and I end up charging them $200, if they report me, I should have a good reason why. And if you don't comply the fine is very hefty, there are other reason why this ordinance passed but the main one was to prevent tax preparer from charging fees based on your refund.

[Mr. Pencil]

I agree that we can't know what she gave the preparer, but the rule on the check is absolutely clear "A practitioner who prepares tax returns may not endorse or otherwise negotiate any check issued to a client by the government in respect of a Federal tax liability."

Again, we only know one side of the story and it doesn't take much imagination to think she's got it wrong. For more than 20 years tax preparers have been charging high fees to receive and reissue refunds in various ways. Apparently the rule has some loopholes.

[kcjenkins]

Just because it is done does not make it legal. The rule is very clear and absolute, so it's a clear violation of Cir 230. I am amazed that a CPA firm would open themselves to losing their licence over a fee like that. The rule does not have a single loophole, even if some choose to ignore it.

[Mr. Pencil]

The rule is very clear and absolute, so it's a clear violation of Cir 230.

In the original post, there was never any suggestion that the firm cashed a refund check. It just sounds like the common fee collect bank product offered by ATX and everyone else. The client may not have understood it correctly, but that's exactly my point--her story is not necessarily correct.

[MsTabbyKats]

I'm confused or misunderstanding....but doesn't the name and SS number of the refund have to match the banking information?