Client Fraud

[Christian]

After doing a woman's and her children's returns for some five years I received her info sometime back. I asked a question on the forum about Form 8962 which info I expected to use for her benefit. On preparing her return I was astonished to discover that her income and that of her dependent daughter far exceeded 400% of the poverty level and so elimanted any premium tax credit. Feeling I might not be up on every aspect of the ACA I advised her I would return their info and to seek help from someone who might have a better grasp of the ACA. The combined tax credit exceeded $13,000  and I felt a CPA might know some way to help reduce or eliminate it that I might not. In talking to her about this I was astonished to hear that she knew very well she had made a mistake. Accordingly I then offered to go ahead and prepare the returns filing her daughter as single which would likely eliminate any premium tax credit she would owe back. She advised no that she and daughter would file their on taxes Turbotax and she would not report the Premium Tax Credit. I told her this was required if she used help from the exchange and further that they would come back on her for the overpayment. I asked what income she used to figure her premium tax credit for 2020 fearing she likely did the same for this year and was told she didn't remember. It finally dawned on me an old client had knowingly defrauded the health exchange by providing a low ball figure on her 2019 income. She also used me to confirm what she knew had occurred and proceeded to what  she was going to do anyway file a false return and also avoid any fee on my part knowing I would contact her about such a glaring error. Needless to say she offered me no payment for my time spent on their info. I am sitting here mad as h--- and considering sending off a form to the IRS fraud unit.

[Pacun]

Don't worry, the IRS checks the Premium Tax Credit all the time.  There is no way they will get away with it.

Please don't send a letter to the IRS for two reasons:

1.- The IRS will not do anything
2.-  Tax preparers are already doing the auditing process for the IRS and we don't need to be the enforcers too.

Just my two cents.

 

[Lion EA]

Confidentiality. Circular 230. Your license.

[Pacun]

9 minutes ago, Lion EA said:

Confidentiality. Circular 230. Your license.

To me or to Christian?

Let's analyze the situation... the fact that she said it, it doesn't mean that she did it or that she will do it.

When that happens in my case, I just take it easy and think about the glorious times when they were my clients and I filed properly for them.

[Lion EA]

Christian. We can't do much with information we gather with the purpose of preparing a tax return. So do vent here. We understand. But, then take a deep breath and move on to a better client. And, a Friday night cocktail.

[Christian]

Well you are probably correct. I ought to bill her a diagnostic fee or such but will likely just cool off and chalk it up to experience. I was really concerned she had made an error and was really surprised to discover she had acted purposefully. This after cautioning her repeatedly about using counseling from the exchange.

[Christian]

Advice taken Lion except I needed an excuse to go to our state liquor store and get me a bottle of Kentucky bourbon. Hey this is Virginia guys.  Or gals. 

[Pacun]

We all need a good excuse to visit the liquor store... and who said the liquor store are not essential???

 

[Lion EA]

Liquor stores and pot dispensaries are essential businesses and can stay open.

[Terry D EA]

I agree chalk it up to experience. I have had clients like these in the past and realized how glad I was to be rid of them. Too much at stake today to take any form of risk. In my 24 years of preparing taxes, it seems for every client I lose, deadbeat or not, I gain three clients in their place. I don't know why this works this way but it does. There are three clients I have not seen yet this year. I have already taken on enough new clients to replace them. So, go ahead and vent as you have. Now go have a relaxing weekend.

[WITAXLADY]

Refunds get held up with a letter from the IRS stating you had  1095-A marketplace insurance and must file Form 8962 before we can release your refund. Please return the 8962 and the 1095-A

Just did 2 of them..

 

[JohnH]

Just imagine the scenario if you turned them in and some sort of investigation ensues.  They would likely tell IRS that you had been advising them on how to game the system and then turned them in out of spite when they refused to pay you an exorbitant fee.  Or something along those lines.  

[Max W]

The IRS has a fairly high bar to get over for a fraud claim and there  needs to be solid evidence to back  it up. For individual fraud cases, gross income has to exceed $200,000.  For businesses, $2 Million.  The whistle blower remains anonymous, but that doesn't mean the accused can't figure out who it is.

[Christian]

Well I got teed off trying to do what I considered best for the woman and then when confronted by the facts I lost it briefly. I would never have sent anything in. It's very frustrating (as you all know) when you give sound advice which is ignored and try your best and sota get the finger from an old client. I am comforted by the thought she will likely be doing the Futterwagen with the IRS for quite a while once she submits that form with no 8962.   

[Catherine]

4 hours ago, Christian said:

I would never have sent anything in.

Ah but you can get 90% or more of the joy by just *thinking* about it.  Indulge those fantasies for a couple of minutes, then shelve it and move on.

[Sara EA]

Did you tell your (now former) client how many IRS letters each of see every year because people never bothered to give us their 1095A?  She'll find out soon enough.  We all have clients who try to cheat in broad daylight.  This one hurt because you didn't see it, but of course you couldn't.  The forgone fee will be worth the entertainment value when she comes running in with that letter.

[Jack from Ohio]

What makes this kind of situation even more distasteful, is the fact that there is a limit on the penalty for the following year.