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Thanks.

Being a former Army NCO, my integrity is worth a hell of a lot more than the $10 an hour I get paid to do taxes for ghetto goblins.

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No. But, if you can't understand the difference between reading something on the internet, posted by a random stranger, and signing your name to a tax document and then willfully trying to hide information from the IRS, I don't think we can discuss this on the same intellectual level.

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"through no real fault of his own"  

"So, I dropped a dime to the IRS"

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This thread could go a lot of different ways.  

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Good on you for reporting it.

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Thanks.

Being a former Army NCO, my integrity is worth a hell of a lot more than the $10 an hour I get paid to do taxes for ghetto goblins.

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And the OP better get his resume together.  Not saying he's wrong to stand on principle, but that whistleblowing is going to have consequences.

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I figure it this way, if you think he did a good thing, you are paying alot in taxes.

If you think its wrong, you probably aren't paying your fair share.

Personally, a sales tax would end this fucked up shit forever, and eliminate 99.9% of the IRS employees out there, and a huge bureaucracy that looms over 53% of our heads.

And, if the IRS didn't pay him back enough, how many of you would say let well enough alone?

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Thanks.

Being a former Army NCO, my integrity is worth a hell of a lot more than the $10 an hour I get paid to do taxes for ghetto goblins.

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If the IRS audits his return and compares it to last year's, they will discover the inconsistencies. When they look into it, they will find out that I know about it. If I don't say something, and allow it to be swept under the rug, I would be just as guilty of tax fraud and lack of due diligence as the prior year's preparers. That would result in a fine and loss of my right to practice before the IRS. Should I be convicted of tax fraud, I'd never work as an accountant.

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I graduated with a Bachelor's in Accounting last August, but haven't had any luck finding a job. So, I took a seasonal tax preparer / office manager position with a national tax prep service. This past week, while doing a client's taxes, I discovered a HUGE mistake where the taxpayer has wrongfully received about $40,000+ in refunds over the last seven years, through no real fault of his own, but because of inept tax preparers. He's been a client of ours for 7 years.

As part of the interview process, we have the clients fill out a data sheet, which includes their personal information and information about dependents. The dependent info includes the relationship of the dependent to the taxpayer. The client is in his late 20's, and is claiming his two cousins as dependents. The kids are about 8 and 9. Their parents are both incarcerated. In the past, the client had also claimed his mom, the children's aunt, due to her being unemployed. This year, however, he's not claiming her, as she moved out on her own. His mom has legal custody of her niece and nephew, but they live with her son, the client. The client was upfront about them being his cousins.

For those of you who aren't well-versed in tax law, there are some refundable credits (Child Tax Credit / Additional Child Tax Credit / Earned Income Tax Credit) for which nieces and nephews are qualifying relatives, but cousins are not. Cousins can be claimed as dependents for exemptions, though.

Our computer software allows us to keep notes, which are important for demonstrating due diligence, especially when EITC is involved. Our software also populates much of the information from returning client's prior year returns. As I started entering his dependent information, the fields populated as "nephew" and "niece" from last years return. I asked the client if he had told last year's preparer that they were his niece and nephew, without telling him why. He and his Mom, who was sitting there, assured me that they had always said they were his cousins. When I looked into the notes, I found that the preparers recorded them as niece and nephew. Apparently, the preparer the first year can't read a court order for custody and realize that the son of a person's aunt is the person's cousin, not their uncle. And, it appears the following year's preparers simply hit enter when the relationship field appeared without reading it, which caused them to be claimed as niece and nephew every year.

The client's refund this year was just over $700, which is what he'd had withheld, after his Head of Household Standard Deduction ($8,700) and 3 personal exemptions ($11,400) reduced his Adjusted Gross Income to zero. The previous seven years, he had gotten back in excess of $7,000 every year, due to ACTC and EITC.

When I discovered it, I let our Help Desk know. Their response was "Fortunately for us...unfortunately for the IRS they only catch 1 in 1000 of these." Later that evening, I spoke to my Team Leader, whose name was on the returns for two of the prior years, and let her know what I found, giving her a head's up that she could end up in a lot of trouble. She was genuinely worried. The following morning, I talked to one of the guys who works for me, whose name was also on at least one of the returns. He acted nonchalant about it at the time, but apparently bitched to my Regional Manager. I also spoke to my Operations Director (the Regional Manager's boss), who basically said it was no big deal, as the IRS would likely never catch it. When I talked to the Regional Manager a little later, she didn't seem to care, either.

So, since no one else in the company seems to think it's a big deal that incompetent, untrained, employees didn't do their due diligence and caused the IRS to throw away more than $40,000, I decided to blow the whistle and tell the IRS. I called the Inspector General's office on Thursday, who told me to send them an e-mail with the details. The next day, I got a reply from them with instructions on what IRS form to use for filing my complaint. That paperwork went out, via USPS Priority Mail, this morning.


TL;DR: I work as a tax preparer and found that fellow employees fucked up and a client got over $40,000 in refunds to which he wasn't entitled. When I told my bosses, they tried to sweep it under the rug. So, I dropped a dime to the IRS.

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'Ghetto Goblins'
That sounds racist.
Spoken by a man with 'integrity.'

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The two thing that stand out in this thread to me-

1 OP referred to client as getto gobbling inferring a racist bias

2 OP stands to make 15% of money's that the IRS recovers

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I graduated with a Bachelor's in Accounting last August, but haven't had any luck finding a job. So, I took a seasonal tax preparer / office manager position with a national tax prep service. This past week, while doing a client's taxes, I discovered a HUGE mistake where the taxpayer has wrongfully received about $40,000+ in refunds over the last seven years, through no real fault of his own, but because of inept tax preparers. He's been a client of ours for 7 years.

As part of the interview process, we have the clients fill out a data sheet, which includes their personal information and information about dependents. The dependent info includes the relationship of the dependent to the taxpayer. The client is in his late 20's, and is claiming his two cousins as dependents. The kids are about 8 and 9. Their parents are both incarcerated. In the past, the client had also claimed his mom, the children's aunt, due to her being unemployed. This year, however, he's not claiming her, as she moved out on her own. His mom has legal custody of her niece and nephew, but they live with her son, the client. The client was upfront about them being his cousins.

For those of you who aren't well-versed in tax law, there are some refundable credits (Child Tax Credit / Additional Child Tax Credit / Earned Income Tax Credit) for which nieces and nephews are qualifying relatives, but cousins are not. Cousins can be claimed as dependents for exemptions, though.

Our computer software allows us to keep notes, which are important for demonstrating due diligence, especially when EITC is involved. Our software also populates much of the information from returning client's prior year returns. As I started entering his dependent information, the fields populated as "nephew" and "niece" from last years return. I asked the client if he had told last year's preparer that they were his niece and nephew, without telling him why. He and his Mom, who was sitting there, assured me that they had always said they were his cousins. When I looked into the notes, I found that the preparers recorded them as niece and nephew. Apparently, the preparer the first year can't read a court order for custody and realize that the son of a person's aunt is the person's cousin, not their uncle. And, it appears the following year's preparers simply hit enter when the relationship field appeared without reading it, which caused them to be claimed as niece and nephew every year.

The client's refund this year was just over $700, which is what he'd had withheld, after his Head of Household Standard Deduction ($8,700) and 3 personal exemptions ($11,400) reduced his Adjusted Gross Income to zero. The previous seven years, he had gotten back in excess of $7,000 every year, due to ACTC and EITC.

When I discovered it, I let our Help Desk know. Their response was "Fortunately for us...unfortunately for the IRS they only catch 1 in 1000 of these." Later that evening, I spoke to my Team Leader, whose name was on the returns for two of the prior years, and let her know what I found, giving her a head's up that she could end up in a lot of trouble. She was genuinely worried. The following morning, I talked to one of the guys who works for me, whose name was also on at least one of the returns. He acted nonchalant about it at the time, but apparently bitched to my Regional Manager. I also spoke to my Operations Director (the Regional Manager's boss), who basically said it was no big deal, as the IRS would likely never catch it. When I talked to the Regional Manager a little later, she didn't seem to care, either.

So, since no one else in the company seems to think it's a big deal that incompetent, untrained, employees didn't do their due diligence and caused the IRS to throw away more than $40,000, I decided to blow the whistle and tell the IRS. I called the Inspector General's office on Thursday, who told me to send them an e-mail with the details. The next day, I got a reply from them with instructions on what IRS form to use for filing my complaint. That paperwork went out, via USPS Priority Mail, this morning.


TL;DR: I work as a tax preparer and found that fellow employees fucked up and a client got over $40,000 in refunds to which he wasn't entitled. When I told my bosses, they tried to sweep it under the rug. So, I dropped a dime to the IRS.

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I'm interested to know if you told the IRS details about the client, or just told the IRS the practices involving this tax preparation business.

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Only the bare minimum that they require to be able to look at the returns: name and SSN. Without those particulars, the IRS wouldn't be able to substantiate the claim. It would just appear to be an employee with sour grapes. The IRS isn't going to look at every return they've prepared over the last seven years; unless, of course, a pattern of misconduct warrants it.

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The only way you could more vigorously boarhog the client would be to bend him over your desk. Remind me not to do business with you.

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The only way you could more vigorously boarhog the client would be to bend him over your desk. Remind me not to do business with you.

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I was with you right up until the tattle-telling part.   Seriously, wtf dude?



Beyond that, I think CoC would frown on what I really want to say right now.

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Rights right, and wrongs wrong..I think you did the right thing. That said, I'd be pissed if I had to cough up $40k to Uncle Sugar if I thought I was in the clear after filing what I believed was an accurate return.

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Only the bare minimum that they require to be able to look at the returns: name and SSN. Without those particulars, the IRS wouldn't be able to substantiate the claim. It would just appear to be an employee with sour grapes. The IRS isn't going to look at every return they've prepared over the last seven years; unless, of course, a pattern of misconduct warrants it.

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OP made the right decision. That's the part few realize about being a professional, the fact that you have no choice in the matter besides to report. Sweeping anything under the rug will only make the consequences worse for the client down the road, and also makes you personally responsible under any applicable ethics or licensing standards.

The IRS would most likely have triggered an audit anyhow due to the drastic difference in returns. OP didn't rat anyone out, he just covered his own ass in good-faith and protected his future career by acting in the best interests of all taxpayers.

It's my understanding that certain tax-preparation businesses actively court clients with tax-situations like this. Fudging a few details drastically changes the return, which in turn boosts revenue for the business.

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'Ghetto Goblins'

That sounds racist.

Spoken by a man with 'integrity.'

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Do you believe the OP should tell the IRS about the actual taxpayer?   CPAs, EAs, and attorneys, plus registered tax preparers, are subject to circular 230.  Under that guidance, reporting your own client is an ethical violation.