Where is IRS??

[RitaB]

New client with five rentals.  NOT a real estate professional.  Came to me because HER LENDER told her that her 2013 and 2014 tax returns were not prepared correctly.  Boy, that is the understatement of my short, illustrious career.  Preparer put the rentals on Sch C, charitable donations on Sch C, made up 14,685 business miles, completely omitted depreciation (but the mileage made up for it).  Lo and behold, we have EIC!  The rentals are in a trailer park.  Taxpayer lives in the last trailer in the row.  There is NO travel.  WTH?

I also looked at what the preparer before this inept person did in 2012.  She used Sch E.  Good call there.  However, two rentals, that had been depreciated for 16 years, were sold.  Not a peep about accumulated depreciation on Form 4797.  Taxpayer had gains of 32,000.  Tax return comes out that she made 1,200.

Where is IRS?  These errors are GLARING.  Stuff like this kills good tax preparers.  In general, people here are not well off.  They go to the preparer they can best afford.  They either think all preparers know what they're doing, or they don't care if it's correct.  This 2013 and 2014 preparer charged $150.  It's worth nothing.  She is making twice as much as me per hour and producing crap. How is a good preparer going to compete with these bad preparers if nobody is minding the store?

I realize that many of you have all the business you want and/or have clients that will never leave you, no matter what.  It's not like that in Rural, TN.  C'mon, IRS, help a girl out.

[Abby Normal]

The IRS has to triage this things with limited funds, and their computers are ancient, but still I have to agree. It makes our job a joke when crap like this is allowed to go on.

 

[rfassett]

Raise your fees Rita.  Your community and mine are not all that different.  I do not worry about competition.  I charge enough to make a decent living with the clients I have and they respect me.  The first thing I would tell this client is write me a check for $1,000 and I will work off of that to correct the prior year returns.  (Note - prior year corrections take my highest billing rate.)  The client will balk at the $1,000 but the fact is, you have three $300 returns to mess with.  No guarantees that the $1,000 is going to cover my time so that is just a retainer to get me started.  Client will say "I do not have $1,000".  I then say, give me $500 now and the other $500 in 30 days.  When I receive the other $500 I will begin work on your project.  If the client bites, you have now set the stage for higher billings in the future.   My 2015 tax return prep for this client would be between $375 and $400 depending upon what messy stuff went on in 2015.

I repeat, your community is not all that different from mine.  Yes there is plenty of competition.  But I do not worry about that al all.  I am not going to have all of the business here - and never wanted it all.  If the prospects do not like my fee structure, they are welcome to go somewhere and get inferior work for their inferior pay. 

[RitaB]

Thank you, I know I undercharge.  You are not telling me anything new.  I am ok with what I charge. 

I am NOT ok with is IRS letting outrageous stuff like this go.  It undermines our standing as professionals when preparers like this are not caught.  I also know I can blow the whistle on both of them.  More work for me that I'm not getting paid for.  Do your job, IRS.

[David1980]

Congress decides the funding, IRS has to decide what to do with the funding that they receive.

[RitaB]

1 hour ago, rfassett said:

If the prospects do not like my fee structure, they are welcome to go somewhere and get inferior work for their inferior pay. 

And how will they know the work is inferior?  And how will they know that I am not overcharging?  They don't know.   That is my point.

[RitaB]

I got this lady because her lender pointed out that her return was incorrect.  She would have stayed with the preparer forever and not known the difference.  I can't increase fees on a client that I don't have. 

[Jack from Ohio]

Over the past 3 seasons, I have raised by base fees by 33%.  I have lost 6 customers, kept 225 and make a lot more money for the same work.

[rfassett]

IRS attempted to put controls on preparers to, theoretically, weed out some of these non-professional preparers.  Remember?  And there was an uproar.  Remember?  So that all got washed away.  Remember?  So I am guessing it is up to us to educate the public when we see that they are being treated badly.  The IRS is hand cuffed.  We need to let the world know that we do not share in the same hand cuffing that the IRS has.  I believe we need to do some self-policing and turn these inferior folks on their ear. 

And don't think for a moment that your clients and/or prospects are stupid.  It was pointed out that the rentals were on E in 2012 (?) and moved to C later and now we have an EIC refund?  That did not raise the eyebrows of the prospect?  I would not believe that for a second.

[RitaB]

24 minutes ago, rfassett said:

It was pointed out that the rentals were on E in 2012 (?) and moved to C later and now we have an EIC refund?  That did not raise the eyebrows of the prospect? 

Well, yes, it did raise her eyebrows.  That's why she came to me.  She shared with her boss what the lender told her.  Her boss is my client. 

No, she is not savvy enough to compare 2012 and 2013 and discern which one was correct.  Or if either was correct.  And neither was.

[Pacun]

Do this year correctly since s/he hired you for that. Let the client know that you can amend but s/he will have to return money to the IRS.

Do you really think the client will pay you $1000 so you can help him/her to return money to the IRS?

According to the user, 2014 and 2013 are a done deal and maybe he/she is right. I have had clients going for 12 years to those preparers and they have never being audited. I just let them know the consequences of their actions and I prepare the current year correctly. 99% of my clients don't want me to amend and return money.

[rfassett]

Different cultures in all of our practices, I guess.

[Pacun]

That's correct.

Ironically, that person has stronger chances that Rita's return be audited than 2012, 2013, 2014. This is the main problem, decent preparer's return have the same chances of being audited than crook preparers'.

How many times have you gotten a new client that walks away when you tell him/her that this year he/she is not getting a refund and that they should amend the previous year and return that money? In my case it is about 99.99%.

[RitaB]

38 minutes ago, rfassett said:

Different cultures in all of our practices, I guess.

Yes, and I really want this client. She has been a jewel getting me information, extremely cooperative.  I'm not giving her ultimatums or asking for retainers.  I've prepared the 2015 correctly, and yes, it was torture getting the depreciation right.  Next year will be very smooth.  I will tell her the other three years need to be amended, and I will spend a lot of time showing her the errors.  It will be up to her. 

[Terry D EA]

Rita,

I do like your response here and do agree you did the right thing. Yes, there are crooked preparers everywhere. The taxpayer, while ultimately responsible for every line on the tax return, will usually place trust in the person who is preparing their return. In your situation it appears your client was confused and became concerned about the situation and sought your services. I also agree different areas bring different pricing. Penalizing the crap out of this client for another preparer's inadequacy by raising fees on them would likely chase them away. The approach you took will guarantee a repeat client in the future. Frustrating and a lot of work I know, but good call on this one.

[RitaB]

18 minutes ago, Terry D said:

Rita,

I do like your response here and do agree you did the right thing. Yes, there are crooked preparers everywhere. The taxpayer, while ultimately responsible for every line on the tax return, will usually place trust in the person who is preparing their return. In your situation it appears your client was confused and became concerned about the situation and sought your services. I also agree different areas bring different pricing. Penalizing the crap out of this client for another preparer's inadequacy by raising fees on them would likely chase them away. The approach you took will guarantee a repeat client in the future. Frustrating and a lot of work I know, but good call on this one.

Marry me.

[rfassett]

1 hour ago, Pacun said:

That's correct.

Ironically, that person has stronger chances that Rita's return be audited than 2012, 2013, 2014. This is the main problem, decent preparer's return have the same chances of being audited than crook preparers'.

How many times have you gotten a new client that walks away when you tell him/her that this year he/she is not getting a refund and that they should amend the previous year and return that money? In my case it is about 99.99%.

Once in over 30 years of practicing.  And that one paid me the initial $500 and I never heard from them again.  I school all of my clients about paying their fair share.  It is not about increasing refunds in my office.  It is all about preparing a return that is in line with the law.  If the present prospect had no interest in coming to the party, which I truly suspect would not be the case, I can still sleep well at night.

[RitaB]

Oh, and I'm charging her $275 for a correct return.  Five rentals, plus I figured the non-taxable part of her new husband's retirement that the same preparer missed on his return last year.  Next year I'll feel great about it.  The return.  Not the sloppy, corrupt competition.

[RitaB]

I would just add that I am not even sure what taxpayer owes IRS for 2013 and 2014.  I suspect it's not a tremendous amount.  The EIC was $181.  The SE tax exceeded that.  Preparer ignored depreciation completely, but made up vehicle expense that pretty well neutralized that.  Oh, and we don't need no Sch A if we put donations on the back of Sch C.  And even label them "donations".  The point of the original post was to convince you that I was not nitpicking, that there are LOTS of errors for IRS to pick up on, and to bitch about IRS letting this go through.  The 2013 and 2014 preparer completed a Sch C and ignored depreciation for five rentals. It was easy for her because the taxpayer puts her crap on Quicken (why God why) and it's all tallied up.  Preparer is doing crap like this, setting world land speed records churning out incorrect returns, while the rest of us keep our heads down and plow.  It does not sit well with me, when a lender can see a problem and IRS ignores it. That's what I was trying to say. I had already called her to pick up when I posted.

 

[Don in Upstate NY]

20 minutes ago, RitaB said:

...  Oh, and we don't need no Sch A if we put donations on the back of Sch C.  And even label them "donations".  The point of the original post was to convince you that I was not nitpicking, that there are LOTS of errors for IRS to pick up on, and to bitch about IRS letting this go through. ...

It may have changed with MeF, but the old e-file protocols did NOT transmit any of the details on "Other Expenses" on the back of the C, only the total.  So the IRS never saw the word "donations".

[RitaB]

13 minutes ago, Don in Upstate NY said:

It may have changed with MeF, but the old e-file protocols did NOT transmit any of the details on "Other Expenses" on the back of the C, only the total.  So the IRS never saw the word "donations".

Yes, I know.  But when the examiner pulls it because she went from Sch A,  two pages of Sch E,  and five Forms 4562 to Sch C without selling anything, they will see it.  Oh wait, they're not trying to do anything logical.

[mcb39]

Not really logical.  The audit that is being conducted in my office is a case in point.  The auditor claims it was a random pick.  However, the client had major medical bills that would raise a question.  They were legit.  This auditor has already spent two full days in my office; traveling 30 miles one way from her home and who knows when it will end.  In the meantime, we sit here watching our tax dollars going up in smoke.  Once they start, they look at EVERYTHING and she is waiting for the subpoena of his banking records to be revealed to her.  This fellow is phasing out of his small carpentry business as he is already receiving SS.  Wouldn't you think that they would stop beating a dead horse.  At best, they could never collect as much as this is costing.  This is a 2013 tax return.  Bah Humbug!!!

[RitaB]

So, they are in Wisconsin with Marilyn, a gold medal preparer.  That's all I wanted to know.  Heehee.  Lord, have mercy.

[Richcpaman]

You could report them to the IRS.

Rich

 

[RitaB]

12 minutes ago, Richcpaman said:

You could report them to the IRS.

Rich

 

Yep, I sure can.