Responsibilty of Paid Preparer

[artbuc]

What is the name of your state (only U.S. law)? DE

If a paid preparer makes an improper filing based on incorrect information from the taxpayer and then becomes aware of the mistake, does the preparer have any responsibility to amend the return or advise the IRS? I was once told by a paid preparer that if/once they became aware of a wrongful filing, they have to report it to the IRS, whether or not the taxpayer wants them to. In this particular case, the preparer deducted a portion of mortgage interest on a married -separate return for the spouse A because she was told that the mortgage loan was in the name of both spouses. However, the loan was only in the name of spouse B. According to IRS rules, spouse A can not deduct any mortgage interest even if spouse B gives permission. When the preparer found out that spouse A was not on the loan, she immediately notified the IRS to "protect her license". I thought the taxpayer was the only one responsible for the return, period.

 

[tranquility]

While a preparer cannot submit or prepare a return they know is in error, after discovered facts are not relevant. When you say "tax preparer" what do you mean?

 

[artbuc]

While a preparer cannot submit or prepare a return they know is in error, after discovered facts are not relevant. When you say "tax preparer" what do you mean?

I am talking about someone in the business of preparing taxes such as H&R Block or a self-employed CPA. I am not talking about a friend or relative who is doing your taxes for free.

 

[tranquility]

H&R Block and a self-employed CPA are entirely different things and got to the core of why I asked the question.

Good luck with your hypothetical. Get back to us when you have a real issue.

 

[artbuc]

H&R Block and a self-employed CPA are entirely different things and got to the core of why I asked the question.

Good luck with your hypothetical. Get back to us when you have a real issue.

This is a real issue. It is related to a recent post on this forum about my nephew and his ex who both claimed the same child exemption in 2009 for a child who lived with nephew starting June 19, 2009. Perhaps I should have asked the question in that thread, but I wanted to ask a more general question.

At some point the IRS will contact my nephew and his ex and ask them to prove their claim. I was wondering if I could head-off that process by providing residency evidence to the paid tax preparer who might then contact the IRS and amend my nephew's ex's return.

The story I told about the mortage interest is exactly what happened to my nephew 5 years ago. He was still married at the time but filed separately in an attempt to insulate himself from his ex-wife's fraud. The same person (self-employed CPA) who used to do their joint returns did ex-wife's separate return which was presented in the original child support hearing. I called (I had many discussions with her previously as she wanted to keep nephew's business and I had started doing his taxes for him) the tax preparer to ask why she had deducted mortage interest on ex's return. She was upset when she found out ex was not on the loan and she told me she would have to immediately contact the IRS to "protect" her license. I was wondering if that is ageneral legal requirement or just something she felt personally obligated to do.

The name of the tax preparer company who did ex's 2009 return is National Income Tax Service. I don't know how many employees they have. www.nationaltax.us

 

[tranquility]

I was wondering if I could head-off that process by providing residency evidence to the paid tax preparer who might then contact the IRS and amend my nephew's ex's return.

Leave it. Talk to your nephew if you have a problem and have him deal with it if needed.

She was upset when she found out ex was not on the loan and she told me she would have to immediately contact the IRS to "protect" her license.

She was probably wrong and broke the ethical duty of confidentiality. If she did, in fact, "contact" the IRS and was not a power of attorney for the nephew and/or the return was not currently under audit, or turned in, she shouldn't be talking to them at all. (I could suppose some other scenarios as well.) Or, to you.

As to a non-professional, all that holds them back is the law. It is a crime to tell the personal financial information to a third party, I don't believe the IRS is considered a third party. And, since they have no ethical compunction, they could tell if they wanted. When they are "licensed" in the coming years, I don't think they will have a duty to tell, but I haven't read their guidelines.

Butt out. It's not your deal. Let the grown-ups who's responsibility it is deal with things appropriately. Tell your nephew your concerns if you want. I don't think I'd appreciate it, but your mileage may vary.

 

[artbuc]

Leave it. Talk to your nephew if you have a problem and have him deal with it if needed.

She was probably wrong and broke the ethical duty of confidentiality. If she did, in fact, "contact" the IRS and was not a power of attorney for the nephew and/or the return was not currently under audit, or turned in, she shouldn't be talking to them at all. (I could suppose some other scenarios as well.) Or, to you.

As to a non-professional, all that holds them back is the law. It is a crime to tell the personal financial information to a third party, I don't believe the IRS is considered a third party. And, since they have no ethical compunction, they could tell if they wanted. When they are "licensed" in the coming years, I don't think they will have a duty to tell, but I haven't read their guidelines.

Butt out. It's not your deal. Let the grown-ups who's responsibility it is deal with things appropriately. Tell your nephew your concerns if you want. I don't think I'd appreciate it, but your mileage may vary.

Thanks for your advice. I have durable Power of Attorney for my nephew and he relies on me to do his taxes and help him handle Family Court matters. He can not afford an attorney and does not understand legal issues very well. His ability to read and comprehend are quite limited. He is a high school drop-out who works as a construction laborer. His ex-wife is a professional con artist who has a lawyer with less integrity than she has. My nephew needs all of the help he can get. I also have limited financial resources and depend heavily on this forum for guidance.

 

[tranquility]

If you think his return was wrong, file an amended return. I am not understanding why you are going about this in a big circle and what you're goal is.

 

[Antigone*]

If you think his return was wrong, file an amended return. I am not understanding why you are going about this in a big circle and what you're goal is.

oops. wrong one.

The handling of family law matters for your nephew is a problem law unless you are a licensed attorney

I have durable Power of Attorney for my nephew and he relies on me to do his taxes and help him handle Family Court matters.

 

[tranquility]

How does one get the "Originally posted by..." in the quotes? For as long as I've been here I don't know. I could write it, but am lazy.

 

[LdiJ]

If you think his return was wrong, file an amended return. I am not understanding why you are going about this in a big circle and what you're goal is.

She doesn't want his return amended, she want's his ex's return amended, and that is simply not going to happen without the ex's agreement. An amended return would have to be signed by his ex. (as you know, of course, but as the OP apparently does NOT know)

 

[davew128]

H&R Block and a self-employed CPA are entirely different things and got to the core of why I asked the question.

Good luck with your hypothetical. Get back to us when you have a real issue.

Disagree that the result is any different under the new paid preparer penalty rules for an unenrolled H&R Block employee paid preparer versus a self employed CPA.

 

[tranquility]

I could guess things along those lines. The whiff of manipulation is clear when people ask round about questions without specific facts.

Loopholes is what they're looking for, loopholes. Like the law is filled with loopholes to trick your way to succeeding at your goals.

 

[tranquility]

There is no way the licensed-to-be preparers at H&R will fall under the same ethical duties of a CPA. (Or, an attorney. Or an EA.) The code of ethics will be different in each. A CPA or attorney (probably an EA, but I don't know) would be prevented by the ethical duty of confidentiality (and others) to disclose the information to the IRS without permission and/or a power of attorney. They could lose their license if they DID disclose. Would that be the same with the licensed-to-be?

 

[ShyCat]

How does one get the "Originally posted by..." in the quotes? For as long as I've been here I don't know. I could write it, but am lazy.

Click the QUOTE button on the post you want to quote. That opens the 'Reply to Thread' entry form with the quoted post bracketed by the 'quote' tags along with the poster's name. You then simply edit as needed (e.g., remove extraneous quoted text) and enter your reply as usual.