Fraudulent tax returns...

[taxtrio]

I have a new client. Young man 23 years old. His "Buddy" told him a couple of years ago: "You should come with me to my tax preparer to have your taxes done, she gets you a big refund". So He and his buddy and two other friends go to downtown Detroit and get their taxes done for 2010, and the next January he gets a postcard from the preparer with a new address and new phone #. All four of them go again and get their 2011 returns done(large refund again). Next January another postcard with another new phone # and new address. All four of them go yet again and get 2012 returns done (large refunds).

She w/h her fee from their returns each time. Charged them 100.00 extra for efiling each time.

Last Summer all four guys get the same 3 letters over the course of 3 days from the IRS... (and eventually Michigan also).

This guy calls the IRS and asks what's wrong? They say the college has not reported any tuition on a 1098T so the American Opp Credit of 2,500.00 each year has been disallowed and they want it back; plus int and penalty of course.

Funny, no postcard this January from the Preparer with new phone # and address!

Many of his family are clients of mine. His parents said "call the IRS and put yourself on a payment plan, and call Pam"

They learn the hard way! How stupid of this preparer! She had to know that they would get caught...

I am sure IRS has figured out what she has been doing. But I am going to report her to the IRS anyway. First time I have ever done it, but this time I have to. Oh, and I believe charge for efile is also not allowed. She signed return, with her PTIN and Efin # and Company name all on return.

I googled her name... came up in IRS PTIN data base with yet another address in Detroit Listed for her and her company...

Ugh!

[Pacun]

Let us know if the IRS contacts you after you report the preparer. It is my understanding that the IRS does little when people complain, specially when it comes from another preparer. Keep in mind that these people are not that innocent as you might think. They go to these places because they know they will get money that they don't reserve. I think you are also going to report the fact that the tax preparer did the same for a number of years on these people's return, correct?

[taxtrio]

I will only report what I know about the returns I saw and the information from my client. I had him sign a consent document to allow me to share this information with IRS. CYA

[ILLMAS]

Just wondering it your client ever asked why he received additional money?

[Pacun]

Just wondering it your client ever asked why he received additional money?

I also wonder if the client is willing to pay back the 3 years of refunds instead of the one year that was "audited"?

[Pacun]

Just wondering it your client ever asked why he received additional money?

Of course not, as a matter of fact they went to their friends and say that you or me didn't know about preparing taxes and that the other lady was able to get big refunds. Referrals were made to that lady because she got big refunds. It is very hard to compete against these preparers. I have one in the area and he has done fraudulent returns for years. Some people don't even speak English and they are claiming the American Opportunity Credit.

[FreedomTaxed]

It's sad to see how much of this business runs on fraud, and it's even sadder to see how little the IRS seems to do about it. What was the point, exactly, of requiring tax preparers to be registered? Outright regulation of tax preparers seems doomed to the same effective irrelevance.

I asked a certain somebody today about the consequences of "hoarding" tax returns. He said if the IRS ever even noticed, they might issue a "violation". No fear in his eyes, to be sure.

[JohnH]

This situation certainly justifies reporting the preparer to the IRS, but you might want to check with your E&O carrier before taking that action. You may be sticking your own neck out for no good reason.

If you feel compelled to do something, give this form to the client. If he is truly innocent of any complicity in this matter, he will file it.

http://www.irs.gov/pub/irs-pdf/f14157.pdf

[taxtrio]

Yes, he got letters for all three years. 2010, 2011, and 2012 and he is on a payment plan with IRS to pay it back.

taxtrio

[David1980]

Yes, he got letters for all three years. 2010, 2011, and 2012 and he is on a payment plan with IRS to pay it back.

taxtrio

Good. The taxpayer at least is getting what they deserve. Not only having to pay back the fraudulent refunds, but no doubt the crooked preparer took a sizeable chunk of the refunds in large preparation fees that they're out too. Maybe now they'll care more about legitimate tax preparation and not the size of the refund.

[Jack from Ohio]

Good. The taxpayer at least is getting what they deserve. Not only having to pay back the fraudulent refunds, but no doubt the crooked preparer took a sizeable chunk of the refunds in large preparation fees that they're out too. Maybe now they'll care more about legitimate tax preparation and not the size of the refund.

Only people with IQ's higher than their body temperature..... I am not sure how much of the American public meet that threshold anymore....

[kcjenkins]

And clearly, IRS already knows about this preparer, no need to do a thing about it.

[taxtrio]

Young people are very uniformed about taxes. They can be very gullible... which is what I believe is the case here. He just gave her his W-2's and he said she did not ask him any questions... she just did the return and withheld the fee from his refund (and he did not sign the consent forms for that either). The direct deposit account information on the return is not his... maybe it is her bank.... or her's .... we don't know.

[ILLMAS]

Every other year I encounter a tax return that was setup in a way to qualify for EIC via Sch C losses, TP respect that I tell them their tax return was done incorrect but they don't respect me when I tell them they need to correct and most likely return the money, this year I had person pick up their information because is was asking too many question about how they qualified for EIC with someone else's kids.

[David1980]

she just did the return and withheld the fee from his refund (and he did not sign the consent forms for that either). The direct deposit account information on the return is not his... maybe it is her bank.... or her's .... we don't know.

The only way to have tax prep fees withheld from a refund is by using a bank product. In which case a temporary account is created at whatever bank they are working with for the taxpayer and that bank account is where the direct deposit from the IRS goes. Then the bank product bank takes the prep fees and sends them to the preparer and sends the remainder after fees to the taxpayer. So the direct deposit account information on the return will be the temporary bank account created and used for the bank product.

[Pacun]

The only way to have tax prep fees withheld from a refund is by using a bank product. In which case a temporary account is created at whatever bank they are working with for the taxpayer and that bank account is where the direct deposit from the IRS goes. Then the bank product bank takes the prep fees and sends them to the preparer and sends the remainder after fees to the taxpayer. So the direct deposit account information on the return will be the temporary bank account created and used for the bank product.

If the IRS already got this guy, there is no need to amend and I think 2013 needs to be prepared properly and move on.

[David1980]

If the IRS already got this guy, there is no need to amend and I think 2013 needs to be prepared properly and move on.

That right there was the first mention of amending in this thread. I think everyone realizes the original returns were wrong and caught on audit. I was just answering the question as to why the original return had direct deposit information that didn't belong to the taxpayer.

[Pacun]

That right there was the first mention of amending in this thread. I think everyone realizes the original returns were wrong and caught on audit. I was just answering the question as to why the original return had direct deposit information that didn't belong to the taxpayer.

I quoted you by mistake on the previous post.

[HV Ken]

If they know this particular preparer is generating fraudulent returns, how are they still able to have an active and valid PTIN?

[Jack from Ohio]

If they know this particular preparer is generating fraudulent returns, how are they still able to have an active and valid PTIN?

They probably paper filed the returns as self prepared.

[David1980]

If they know this particular preparer is generating fraudulent returns, how are they still able to have an active and valid PTIN?

That pisses me off too. I know the IRS doesn't have the resources to go after criminal charges for all of the fraudulent preparers, but couldn't they at least shut down the PTINs and EFINs? No doubt some will revert to self-prepared filing using Turbotax or whatever, but maybe at least some will realize they've been noticed by the IRS and stop?

[HV Ken]

@Jack - initial post said:

"She signed return, with her PTIN and Efin # and Company name all on return.

I googled her name... came up in IRS PTIN data base with yet another address in Detroit Listed for her and her company..."

[joanmcq]

Your new client should still report her. They may not be auditing all of her clients, and just have caught tuition since it's on a form that is matched. If she's doing fraudulent returns with tuition credits, god only knows what she may be doing with the rest of her clients. This type of crap isn't easily caught if no one complains!

[taxtrio]

Wow! This has become a lively discussion...