Discussion:Client with past due tax returns, missing records
From TaxAlmanac
Discussion Forum Index --> Basic Tax Questions --> Client with past due tax returns, missing records
Discussion Forum Index --> Tax Questions --> Client with past due tax returns, missing records
| 28 July 2009 | |
| Maybe I shouldn't have accepted this client, but I didn't have the heart to turn him away. He didn't file since 2005 and didn't know or didn't care about record keeping. Now he wants to straighten things out and be legitimate, which is good. In 2006 and 2007 he was self-employed. IRS transcripts show no W2's or 1099's filed for him. We filed 2008 on time with a W2 and a schedule C. For 2006 and 2007 we asked the bank for statements and reconstructed income and expense records based on the statements, some records from vendors, and a few papers that he happened to keep. We estimated business mileage based on his memory of job locations and the number of times he drove there. We made sure it fit with the total miles and some repair records with mileage. I believe we did a good job at estimating his tax liability fairly.
My questions: Does a signed statement from the client protect me from penalties? Do I need to disclose with the tax return that the figures are estimated? Anything else I can or should do? Thanks for any advice. | |
| 28 July 2009 | |
| a great article on this subject was in the July 2009 NAEA monthly EA Journal publication. It recommended 8275 to state that certain figures were estimated based on (past years, reasonable estimates, etc.). That would protect you from preparer penalties. | |
| 28 July 2009 | |
| Do you know if there is a link to that article online somewhere? I'm not an EA and therefore not a member of that org, but I'd love to read that article. I run into that situation way too frequently, unfortunately. | |
| 28 July 2009 | |
| the online version is only available to members, via the NAEA website
I guess American Express is right: membership has it's priviledges | |
| 28 July 2009 | |
| Thanks for the answer, Kevin. I had found conflicting information about the 8275 and how it should be used.
Looks like the EA Journal is available as a subscription at $68 a year and includes 14 CPE hours. I'm an EA, but I didn't spend the $185 dues + $50 state + $28 application fee for NAEA membership (yet). | |
| 28 July 2009 | |
| I wish NAEA membership dues DID "include" 14 hours of CPE. They don't. You get a discount but it's a long way from free even for members.
I wouldn't lose a minute's sleep about preparer penalties. You are entitled to rely upon your client's representations to you so long as you don't possess contrary information and I can't imagine anyone faulting you for the manner in which you arrived at your estimates. Actually, it sounds like you did a good job. | |
| 28 July 2009 | |
| Oh, I missed the "minor" point of the test fee of $45 for every 2 cpe's, or $35 for members. Thanks for pointing that out. | |
| 28 July 2009 | |
| Andrew, NAEA is offering a special membership drive right now where the state dues (and maybe national dues) are available to new members at a reduced rate to first-time members. Call them. | |
Southparkcpa (talk|edits) said: | 28 July 2009 |
| I would join....but ANY group that would accept me, is not professional enough. | |
Death&Taxes (talk|edits) said: | 28 July 2009 |
| Matt is paraphrasing Groucho Marx..... | |
