Know a Bad Tax Preparer? File a Complaint!

Pen and Paper_HiResLate 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.

Anything and everything taxes. I also write the Louisiana State book to go to our new Income Tax Course learners and the state-wide training for upper level Tax Professionals. I am an Instructor of all levels of tax related classes. I love to teach and write as well as taking the absolute best care of my clients all year round.

26 years in Law Enforcement (13 in the Air Force and 13 at the Bossier City PD), 20 years doing income taxes professionally.
My goals now are to spend many years being my 3 grandchildren’s MeeMaw, taking the absolute best care of my clients, and continually learning new things.
Taxes! I specialize in military, states, small business, and rentals.
The postings made on this site are my own and do not necessarily represent HR Block’s positions, strategies or opinions.

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  1. Kathryn,
    Isn’t the fraud committed by the law enforcement officers themselves even worse?

  2. kathmorgan says:

    They have been “punished” in the same manner as any other taxpayer that is in the same situation. Just because they are officers doesn’t mean they know anything about taxes or they can’t get swindled like the next person. They also will get the embarrassment of having to testify in federal court to their stupidity and it may very well effect there promotions. But my job is to represent my clients, which I did. After I gave them all a good chewing out.

  3. Shirley Callahan, EA says:

    I remember David Williams, former RPO chief, saying at the NATP Convention that IRS is not getting enough of these complaints. With new clients, we often see overly generous (perhaps larcenous) former preparers. Turning in such bad preparers will cause trouble with your tax client unless you convince them to come clean and do it right, which is not always possible.

    • kathmorgan says:

      In this case they came to me with audit letters in hand so the jig was up. The first three sent the others before they all got letters as well but by the time most of them got there they had the first set of letters. I’m thinking the fact that 6 of them all got audited within a few months of each other means the IRS had someone on their radar already and were just waiting for someone to put a name to the preparer.

  4. Zaher Fallahi, Tax Attorney, CPA (California). says:

    My hat off to you most valuable colleagues. Taking such actions will help enhance the image of our profession and benefit the consumer.

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