I'm going with this.  Not to mention I dont want to have to make up the $40k that got shorted .gov.

Lets see...... I take a bag of tax papers to the tax company to have the pros do it right. I get a refund and am happy so I continue to go there each year, not knowing they screwed up. You go over my returns, find issues and turn me into the IRS. If your company didn't cover the mistakes, I'd find you. Turn my life upside down with the Feds and this wouldn't have a happy ending for you.

tag for outcome

This whole episode is reason to scrap the whole tax code.

Fair tax or Flat tax.

No credits, no exemptions, no corporate taxes, no subsidies.

Period.

OP you've invited the MAN into your life too.  Your employer will not be pleased with your efforts to show them that you're smarter and more honest than anyone else in the company.   Maybe you will be able to get a job with the IRS and be rewarded according to the amount of extra tax money you collect from tax frauds.

This thread was helpful in outing people with low moral standards.  Thanks OP!

Lots of people bitch about .gov waste but don't care about 40k worth of outright fraud.

I hope you advise and help him to file amended returns for the years involved BEFORE the IRS goes after him.

I would think this was one of those cases that client could get out in front and have it resolved for a few thousand.
That or have Mom file taxes so she received the credit from past filings.
If those kids would have been wards of the state without him the taxpayers are probably ahead.
Do they even get food stamps or any other benefit since it is cousins living with him.

That's ridiculous.

No way this makes twenty seven pages.  

This thread sure does remind me of why I stopped working as a tax preparer.  Got sick and tired of argueing with people over why they can't claim so and so as dependents, why their medical marijuana expenditures weren't deductible, etc...
 

I got out of it while I was still young enough to go back to school...was ready for the CPA...had several years of experience...I didn't/couldn't deal with the slime.  I didn't even do taxes, more corporate accounting/financial analysis.  I couldn't see finagling for 30 years, just wasn't for me.  I'll be an engineer soon(Dec hopefully)...with a bunch of finance/budget experience...

Me too.

+1

You did the right thing, OP.  Thanks for taking a stand for the taxpayers!  

So, let me make sure I understand the mindset here....

You receive forty thousand dollars in "tax refunds" over a period of time, which you, and the previous preparers, and anyone with two functioning brain cells should have known damn good and well that you weren't entitled to receive.

Now, when somebody finally does the right fucking thing, like any self respecting man should, it's that guy's fault if the IRS holds you accountable for the stolen money that YOU took possession of?

Yes, the tax preparation company should stand up and pay for the mistakes/fraud of their employees, but if they don't do that, it is NOT the fault of the OP, as he is the only one in this story who has a shred of fucking integrity about him.

So people in your compant gave him bad advice and fucked up his taxes so you dropped the dime on him.

Raising his 2 cousins in state orphange or foster homes for the next 10 years is going to cost way more than 40k

What you don't understand is that 40k wasn't his tax money.  It was transferred from someone else, or printed.  

 

I understand that, but I still don't care.

You don't get it do you.

THIS should have action #1.  Unless there are some additional details, there are ways to address issues (that your company admittedly screwed up) without involving the man.

That's just it, YOU don't know. Person took it to a company full of "experts" because he couldn't figure it out, the tax codes are a bit complicated for some people, and the "experts" did the return for him. They tell him it's his lucky day and he gets a return. It's all good to him, he has no idea and why should he go over all the paperwork the "experts" just did for him. He ca be informed of the the past problems, the company can be held at fault but the ensuing shitstorm from the IRS he's about to go through is the OPs fault. IF the guy has to pay he's going to be out a whole lot more than $40k between lawyer fees, penalties and interest........ All because the OP dropped the dime on an unknowing person.

I pay taxes and hate to see people play the system and steal money from us but in this case the guy probably thought the tax guys were doing their job correctly and was just happy about getting a return.

You gonna drop the dime on all your neighbors with guns when the Feds ban them too? C'mon doing the right thing is doing the right thing.

Same here--and my life worked out pretty good.



         





 

you did the right thing

My mistake, a refund. To me it's saying the same thing when they "return" some of your money. No biggie, sorry I misspoke.

OP, you seem to believe the client will not face any repercussions.  He will have to pay back all the money along with penalties and interest.  Your (possibly former) employer has some kind of feel good "guarantee" and you think all will be fine.

The client will  not be able to pay the 60 to $75,000 bill the IRS is preparing to send him (penalties, interest,  and  fees compound better than anything you have ever seen), Your employer might pay part of the interest, but your client will have to sue them to get it.  Plus he is still on the hook for the original amount of money with interest starting now that he has to pay.

When the client contacts a lawyer, he WILL find out what you did, and will definitely name you in a suit for a huge amount of money.  Hiring a lawyer to defend that suit comes out of YOUR pocket.  What you did also implicates your "co-workers" as they did some of the earlier returns.

Hopefully, Mr. Goblin is a nice, easy going guy, but do not bet your life on it. His lawyer will quickly tell him that that "tax guy" dropped a dime to collect 6 of 7 grand at your expense.  Mr. Goblin will no longer be your biggest fan after that.

Imagine heading out one morning a year from now and a bunch of black Suburbans block you in.  They are DEA and got an anonymous tip you were making a drug deal that day.  When they search your car, surprise they find  A dozen bags of various drugs.  Bye, bye freedom.  This scenario is a best case scenario for you, he may just get a buddy to stick a knife in your back.

$40,000 plus interest from a guy with no assets buys a truck load of hate.


You keep mentioning your mil career. Were you never taught about the Chain of Command?  There is such a thing in the civilian world as well, and you shit all over it.  The business license for your company was not in your name.  Your responsibility was to report any issues to your boss, and or owner, and let HIM handle it.  If you want to cover your ass, just CC all emails to him to yourself and keep copies.

As mentioned above, apply now to the IRS for one of those cushy gov-tit jobs, as no one in accounting or tax business will touch you for employment.

If I'm not mistaken, those "guarantees" that the store-front preparers offer cover "penalties and interest".  Customer with the cousins will still be liable to pay the IRS the $40K.  The preparing company will have to come up with the other $40K in P/I.  So they are both fucked.  Sounds like the OP is screwed too on the ethics violation.  I can tell he thought he was "doing the right thing" (which I agree that he was in reporting the company), but his lack of experience screwed him, and now he'll be on the hook to the client.  Sad, everyone except the IRS loses in this one.

In terms of the ethics discussion going on here and attorneys... my understanding was that, as an officer of the court, an attorney cannot, legally OR ethically, lie to the court.  If you were tell your lawyer "I stabbed that bitch and hid the knife in the chimney" - he is not obligated to call up the police and help them out, that would violate your privilege.  He has no duty to go retrieve the knife either.  But he also cannot go into court now and say "my client did not stab this woman".  He could be disbarred.  He can say you stabbed her for cause (like maybe self defense, you were temporarily insane) or you stabbed her on accident, and try and get you off that way.

You did good.  Tough if it was the client's fault or the company's.   These things are why we are paying so much to the gimme crowd.  Hopefully, if the guy wasn't purposefully frauding, the company will have to pay back.  I have a feeling the chain tax preps turn a blind eye because the more they can "sell," the more they can charge.  All preparing taxes for profit should be so diligent, especially dealing with the FSA.

Assuming the tax business only pays penalties and interest, there's a hood rat out there that's about to be hit with a 40K+ tax bill from the IRS, AND they're going to have to tell him exactly who ratted him out and explain that it was an ethical violation. OP will be lucky if a lawsuit is the only thing he has to worry about.  

I hope OP doesn't mind the fact the 40K bill will effectively be coming out of his pocket, once the attorneys get done with him.


I love it when someone decides to play 'little helper' for the .gov, and it blows up in their face.

So, by adding together the following info...guys mom lives with him and is a dependent, the cousins parents are incarcerated, he can't do his own taxes, his net income ends up at zero, his dependent mom shows up with him to do taxes.

I am going to guess this is not just a regular middle class, hard working, home owning, upstanding, constitution loving fella?

How can the client sue him?  He did what he was supposed to do.  With all the bitching that goes on here re tax fraud, I can't believe 100% aren't behind him.  If the client was truly innocent, well the company should have to pay all of it.  This stuff has to stop .  I can guarantee if you omit any earnings or tried to claim something not valid, as a working tax payer, you would be penalized.

Are you required under penalty of law to report the prior years mistakes?  

As much as most of us dislike the IRS, people have to pay their taxes.

I'm surprised to hear that.  It's one thing to commit fraud, but I'm surprised that they make you report other people's mistakes/fraud.

Because a paid tax preparer has the same professional, privileged relationship as an attorney or doctor.

Let me explain it this way. You go hire a legal firm to consult with your startup small business, because you want to know if what you plan to do violates federal law. The attorney you are assigned decided that what you plan is kosher and tells you to proceed. A few years down the road you are assigned a new attorney, who decides that what you're doing is in violation of federal law and calls the feds on you, using information you've shared while acting in the attorney-client role.

What's the point of hiring someone for professional advice and sharing privileged information, if they're only going to turn around and act as an unpaid agent of the state?

I asked the same question you just did from the OP and he avoided it.

It's false, as I was finally able to get from a more knowledgeable tax professional in this thread.   He's not liable for his clients' previous wrongdoing.

So  

-Guy trusted your company to prepare his returns

-Your company fucked up

-You ruin guys life.  

You want a cookie?

I read all five pages.


OP may be able to sleep good at night now, but the "ghetto goblin" will surely find out about who snitched and his lawyer will go after the OP.

I wouldn't want to be OP, the company, the preparer, or the client right now... nothing good will come of this.

Best of luck, you're going to need it.

I'm sure the national tax prep company gave the taxpayer a refund anticipation loan and his tax prep fees were high (over $300 for a return which would have cost less than $100 using standard e-file, no refund anticipation loan).  The larger the refund, the more they charge.    Thus, how many other returns do these national tax prep companies push through without doing their due diligence?

I just wonder what will happen when they ask him to report any hidden guns he knows of.

You did the right thing.
I asked my CPA wife about this, she said oh shit $40,000.

I find it interesting that the OP simply took the word of the customer that he "absolutely" informed prior tax preparers of the proper relatoinship and used that to start his own little investigation and ratted out to the IRS.  People who depend on the EIC know pretty well who qualifies as a dependent for EIC purposes and who doesn't, so who is to say the customer told the truth in prior years?  

Did the OP get any of the prior preparers to admit that they knew these dependents were cousins, and not qualifying EIC dependents, or did he just make that assumption?

The OP had good intentions but he screwed up.  He will likely lose his job and probably get sued by the customer.  It's going to be a harsh lesson for a fresh out-of-school tax "expert."

No. You are REQUIRED to tell the client what was done wrong and encourage them to fix it. If they don't you sever the business relationship.



In this case he told his supervisors and mgt in the tax firm about it and they showed they did not care they were breaking the law. OP decided to let the IRS know and did the right thing IMO. He might get fired, but he could sue. Anyway, he said he doesn't really care about the job because it ends in a couple of months.  The client could sue him, but he didn't have any part of the previous returns, so I bet the client would go after the firm instead.  Not to mention the deep pockets aspect.



One thing in question is did he do something wrong by giving the IRS the client name and SSN after he told the IRS about the firm's actions.





IRS rules say that a tax preparer MUST give the IRS information unless it is 'privileged'.

§ 10.20 Information to be furnished.

(a)

(1) A practitioner must, on a proper and lawful request by a duly authorized officer or employee of the Internal Revenue Service, promptly submit records or information in any matter before the Internal Revenue Service unless the practitioner believes in good faith and on reasonable grounds that the records or information are privileged.

Is the clients name and SSN privileged? I don't think so. However, I suppose he could have bumped the request to his supervisor. It is a question I'm definately going to ask my future employers.

We are allowed to use undocumented information from the client 'in good faith', unless we have a reason to believe otherwise.





But my 'cop' gut feeling is yeah, the dude (client) knew exactly what he was doing.  Hell, the tax firm might have even told him to play dumb if it ever came up.





There are a bunch of shady tax preparering companies out there.

Yes, that is true.  I had a client tell me he bought a chair for his business as we were reviewing his paperwork for the year, so I asked for the purchase date and amount.  Got it written down in my notes, then the client had to keep talking - "Yeah, I bought a recliner to sit in front of my TV and "think" about the business every night."  

I sighed, and scratched out what I had just written and told him it wasn't deductible.

Many years ago I had a chick who was an illegal (since she had an ITIN and not a SSN) and her kids had ITINs.  I did the return and she was pretty unhappy with the result.  She wanted to know where her big refund was. I explained that because she was illegal, as were her kids and they all had ITINs, they didn't get the EIC as they didn't qualify.  She got upset and demanded her paperwork back, saying she would take it somewhere else that would get her a big refund.  I have to wonder how the IRS would even allow the EIC for someone using ITINs, regardless of what the preparer put into the system.

I have not read the entire post so this might have already come up:  I thought if you found tax fraud and reported it and filed the right form with the IRS you could get 15% finders fee.  so 15% of $40k is a few a bunch of loans paid.

15% minus self-respect

Regardless of what you post in GD its going to turn into a shit storm.

Dont these places charge a % of what the tax payer gets back?  So, the more he got back the more the tax business got, right?  Thats why they dont care, they probably get bonuses.  What if that person doesnt work there anymore, can the IRS go after them?