up a creek and dont know what a paddle even is

[oidualc415]

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

In the middle of 05 i started working for myself. I filed taxes that year as normal. The preparer i went to i trusted to aide me in filing as self employed. My return was filed and later that year i recieved a notice from the IRS that the preparer was facing criminal charges for cheating tax returns etc etc, i didnt read every detail as i was only concerned with what pertained to myself. The notice stated that nothing had been found wrong in my return but they were just notifying everyone who used the man. On to 06, i filed using someone else, and in the process of preparing i found that the man had fudged my numbers slightly on my mileage. The peparer i was using now told me to account for that in the return by subtracting what he shot me over from what i was listing for this year. Being gullable thinking these people were there to help someone like me who knows little about Taxes and depends on these people, the concept made sense to me ( it evened out in my head). I filed and was about my business. flash to today. ( yes i have filed every year since). I recieved a " notice of deficiency " for the year of 05. nothing about anything since. the best i can figure. the notice has taken all of my deductions and i mean all not some and just said " we dont recognize any of these business expenses " tools etc " and tossed them out, redone my taxes, and decided i owe them almost 5 grand. the return i filed fell inline refund wise with what i have gotten for the past 10 years, so we arent saying this guy tried to take them for the bank or something, therefore i was none the wiser. my question, Do i have legal rights because this guy cheated not only the irs but myself? and even if he did cheat them, where is the return money i would have gotten anyway, is that not subtracted from what they come up with and i owe the difference? im totally clueless about all of this and what to do next. but have learned one thing i should have done years ago, i need to better educate myself so i dont get in this situation again. Any advice from anyone who knows anything would be greatly appreciated

thank you,
The Idiot << i guessWhat is the name of your state (only U.S. law)?

[LdiJ]

Originally Posted by oidualc415

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

In the middle of 05 i started working for myself. I filed taxes that year as normal. The preparer i went to i trusted to aide me in filing as self employed. My return was filed and later that year i recieved a notice from the IRS that the preparer was facing criminal charges for cheating tax returns etc etc, i didnt read every detail as i was only concerned with what pertained to myself. The notice stated that nothing had been found wrong in my return but they were just notifying everyone who used the man. On to 06, i filed using someone else, and in the process of preparing i found that the man had fudged my numbers slightly on my mileage. The peparer i was using now told me to account for that in the return by subtracting what he shot me over from what i was listing for this year. Being gullable thinking these people were there to help someone like me who knows little about Taxes and depends on these people, the concept made sense to me ( it evened out in my head). I filed and was about my business. flash to today. ( yes i have filed every year since). I recieved a " notice of deficiency " for the year of 05. nothing about anything since. the best i can figure. the notice has taken all of my deductions and i mean all not some and just said " we dont recognize any of these business expenses " tools etc " and tossed them out, redone my taxes, and decided i owe them almost 5 grand. the return i filed fell inline refund wise with what i have gotten for the past 10 years, so we arent saying this guy tried to take them for the bank or something, therefore i was none the wiser. my question, Do i have legal rights because this guy cheated not only the irs but myself? and even if he did cheat them, where is the return money i would have gotten anyway, is that not subtracted from what they come up with and i owe the difference? im totally clueless about all of this and what to do next. but have learned one thing i should have done years ago, i need to better educate myself so i dont get in this situation again. Any advice from anyone who knows anything would be greatly appreciated

thank you,
The Idiot << i guessWhat is the name of your state (only U.S. law)?

You are going to need the assistance of a tax professional who is experienced in dealing with problems with the IRS. You don't need a high priced tax attorney or CPA, just a professional with experience. Call around to local tax offices to find ones that are open all year long. They tend to have the most experienced people. You will need to talk to someone face to face, with copies of your 2005 and 2006 returns, as well as copies of the letters that you have received from the IRS.

If you can prove your deductions, you should be able to get them reinstated in your return.

[davew128]

Originally Posted by oidualc415

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

In the middle of 05 i started working for myself. I filed taxes that year as normal. The preparer i went to i trusted to aide me in filing as self employed. My return was filed and later that year i recieved a notice from the IRS that the preparer was facing criminal charges for cheating tax returns etc etc, i didnt read every detail as i was only concerned with what pertained to myself. The notice stated that nothing had been found wrong in my return but they were just notifying everyone who used the man. On to 06, i filed using someone else, and in the process of preparing i found that the man had fudged my numbers slightly on my mileage. The peparer i was using now told me to account for that in the return by subtracting what he shot me over from what i was listing for this year. Being gullable thinking these people were there to help someone like me who knows little about Taxes and depends on these people, the concept made sense to me ( it evened out in my head). I filed and was about my business. flash to today. ( yes i have filed every year since). I recieved a " notice of deficiency " for the year of 05. nothing about anything since. the best i can figure. the notice has taken all of my deductions and i mean all not some and just said " we dont recognize any of these business expenses " tools etc " and tossed them out, redone my taxes, and decided i owe them almost 5 grand. the return i filed fell inline refund wise with what i have gotten for the past 10 years, so we arent saying this guy tried to take them for the bank or something, therefore i was none the wiser. my question, Do i have legal rights because this guy cheated not only the irs but myself? and even if he did cheat them, where is the return money i would have gotten anyway, is that not subtracted from what they come up with and i owe the difference? im totally clueless about all of this and what to do next. but have learned one thing i should have done years ago, i need to better educate myself so i dont get in this situation again. Any advice from anyone who knows anything would be greatly appreciated

thank you,
The Idiot << i guessWhat is the name of your state (only U.S. law)?

Let's take a step back here.

1) Unlike my colleague, I think you probably need two people: A competent EA or CPA for the audited return and a tax attorney who has dealt with criminal matters. You need the attorney as insurance because you had a return prepared by someone who engaged in preparing fraudulent returns. That's not an indictment of you but it does leave you out in the cold in case things go south, particularly if they decide (and your post confirms) that you knowingly took improper deductions.
2) Your rights in the matter with regard to the fraudulent preparer are a matter of state law in terms of what he cost you because of his actions, likely penalty and interest on any amount you now owe and possibly the cost of representing you in the matter. He certainly wouldn't be responsible for any actual tax because that was always your responsibility. If he ended up in the clink, it might not be worth the effort.
3) In the future, at the very least review your return and ask questions about numbers you're not sure about. If you don't drive your vehicle on the job and you see an auto deduction of $15,000 there might be a problem......

Example: A couple years back I was unavailable during tax season due to a physical ailment. My best friend had his mothers professional do his return. Needless to say I was more than a bit surprised when reviewing it the following year when all of a sudden he had thousands in charitable donations (he's cheap) and thousands in employee auto expenses (he works behind the counter at a retail store). When I asked him why, he said the other guy told him it was ok and that it wouldn't get questioned.

[LdiJ]

Originally Posted by davew128

Let's take a step back here.

1) Unlike my colleague, I think you probably need two people: A competent EA or CPA for the audited return and a tax attorney who has dealt with criminal matters. You need the attorney as insurance because you had a return prepared by someone who engaged in preparing fraudulent returns. That's not an indictment of you but it does leave you out in the cold in case things go south, particularly if they decide (and your post confirms) that you knowingly took improper deductions.
2) Your rights in the matter with regard to the fraudulent preparer are a matter of state law in terms of what he cost you because of his actions, likely penalty and interest on any amount you now owe and possibly the cost of representing you in the matter. He certainly wouldn't be responsible for any actual tax because that was always your responsibility. If he ended up in the clink, it might not be worth the effort.
3) In the future, at the very least review your return and ask questions about numbers you're not sure about. If you don't drive your vehicle on the job and you see an auto deduction of $15,000 there might be a problem......

Example: A couple years back I was unavailable during tax season due to a physical ailment. My best friend had his mothers professional do his return. Needless to say I was more than a bit surprised when reviewing it the following year when all of a sudden he had thousands in charitable donations (he's cheap) and thousands in employee auto expenses (he works behind the counter at a retail store). When I asked him why, he said the other guy told him it was ok and that it wouldn't get questioned.

I disagree about the tax attorney. They have disallowed ALL of his deductions and say that he owes only about 5k. That includes interest and penalty. There is not enough money involved in the situation to warrant the cost of a tax attorney. Nor is there enough money involved to make it likely that the IRS is going to attempt any kind of criminal charges.

Basically, what we are looking at is a situation where any of his deductions that can be proven, with hard evidence, need to be reinstated on his return, and then if he owes something, he owes something. There is no need to turn this into something more than it is. I would be echoing your advice if we were talking about 50k or maybe even 20k...but we are not, we are talking about 5k.

[tranquility]

While I love an abundance of caution when your tax preparer is in deep for preparing fraudulent returns, I agree with LdiJ it is probably a bit of overkill in this instance. The OP can gauge his own level of comfort, but it would probably be fine to first have the tax pro review everything and then recommend or not an attorney.