Late last summer I was approached by several members of the local law enforcement agencies with letters from the IRS. It seems that in 2009 one member of the force had a friend of a friend that was getting him back refunds in the mid 5 figure range every year. Of course, he wanted to share his largesse with his co-workers.
You know the rest of the story, I’m sure. The tax preparer had been taking large, fraudulent deductions on Schedule C forms against the officers off duty 1099MISC income, giving them losses that exceeded their W2 income. In many cases this made them eligible for EITC and other credits even though they married couples actually had income in excess of $100K. And all the returns were done on at home software indicating the return had been self-prepared.
Of course they all got audited for 2009-2011 and once I was done they all owed in excess of $30K plus penalties and interest. Well, I got mad! Did I mention I’m a retired law enforcement officer from this same department? I filed my first sets of complaints against another tax preparer and assisted the clients in doing the same. The clients had the information on the preparer as several had written him checks. A simple internet search gave me the rest of the details I needed.
So, we all filled out and mailed our IRS Form 14157 (for me) and 14157A (for the clients). My clients all got on installment plans and we were able to get the penalties for 2009 abated in most cases under the First Time Abatement program.
This all took place in November 2012 and none of us had heard anything else since then. Until last Saturday when I get a letter from the IRS Return Preparer Office as follows:
Dear Kathryn Morgan:
We’re sending you this letter to let you know we received your complaint regarding a tax professional or firm. We will carefully review the information you sent us.
We can’t share information with you about any inquiries we make on this matter due to privacy laws so you probably won’t hear from us on this complaint. However, a case specialist from the IRS Return Preparer Office might contact you if we find we need additional information.
Thank you for taking the time to refer this matter to us.
Carol A. Campbell
Director, Return Preparer Office
The moral of this story is: Don’t just get mad when you run across bad tax preparers, take action. The more complaints on the same preparer the more seriously the office takes the situation. If the courts (Loving vs IRS, etc) will not let the IRS police our profession then we must police ourselves. At least we know they are doing something with it. I guess I will have to follow the press releases on discipline for Enrolled Agents to see if and when his name ever pops up.