Paid preparer issuing Self-Prepared Returns

[ILLMAS]

One client that I work with is getting audited by the IRS, the IRS requested copies of the shareholder's tax return and for one of the shareholder went to get his return done at a real estate company that does taxes during the season. I notice that there is no info on the business that prepared the return, it just reads "Self-Prepared" and but there is a cover letter that has the business information. Should I let the IRS auditor pick this up or should I tell him that the shareholder did pay to get his return done by this business? In my years of tax prepation, I have seen a couple of these situitions where clients go to a photo studio, hair salon, insurance co. etc..., they pay and there tax return are "Self-Prepared".

[GeneInAlabama]

I don't know about now, but years ago, the auditor ALWAYS asked information about the preparer. I assume they still do.

[jainen]

>>Should I let the IRS auditor pick this up or should I tell him that the shareholder did pay to get his return done<<

Is your audit strategy to blame whatever on the tax preparer? That is a weak position at best, typically only used to abate penalties, and only applies if it was reasonable to rely on the advice. Since your client signed right above that "self-prepared" designation, you are going to look pretty foolish. And next time the client is in trouble, you will have taught him to blame the tax preparer. That would be yourself now, right?

By the way, why are you working with both the corporation and the individual shareholder at the same time? Depending on what the auditor is looking for, you could easily paint yourself into a very tight corner.

[ILLMAS]

In no way we want to blame the tax preparer, that is not main issue or focus of the IRS audit in the first place, it just make me wonder if the real estate co. is reporting the fees for tax preparation? LOL it seem you already know this client, he loves blaming the accountants, his employees and even his customer for not bringing in business. I am glad I am not the person in charge of the account, I work under the CPA and I was contracted to gather the IRS auditor requests. The audit is focused on solely the corporation, and one of the request was copies of the shareholder income tax return (wanted to compare wages and interest paid to the shareholder by the corporation), there are 3 shareholder and the CPA prepares the tax return for 2 only because 3rd one doesn't cooperate and the CPA gives up.

[jainen]

>>it just make me wonder if the real estate co. is reporting the fees for tax preparation? <<

That is indeed a mysterious thing that we could never figure out.

Well, since it's not your client just turn in what was requested without any additional commentary. Maybe the CPA plans to blame THAT guy.

[ed_accountant]

What is the focus of the IRS audit on the Corporation? Is this a S-Corp with small wages or no wages?

I am curious since the IRS audits very few small corporations.. From my experience they focus on larger coporations..