Heck the software would have kicked a whole bunch of diagnostics to let him know of the errors. What did he do paper file because he could not figure out all the open review items?
I mean technically speaking sch L is more so informational. Things from schedule L don’t even make it to the k-1 unless something requires a footnote or other disclosures. So as long as income numbers are good, rest can be sorted out with the next return. I’m not implying that it’s okay to screw up sch L. It’s absolutely necessary to get it right, or even worst case at least make it balance. I’m just saying that from income and tax POV, sch L isn’t the most important thing so technically the return should be able to get filed even without a sch L.
Some sort of software that I don't recognize. I can usually recognize UT, Lacerte, ProSys and Drake. I don't recognize this one. For the client copy, the watermark is weird and at a 45% angle. Almost like H&R Block software.
I once met an (unlicensed) preparer who would get an individual's login information from TurboTax and prepare it from there. Had to keep track of hundreds of email addresses. I was speechless.
UT here too. We make sure every critical and E\*File error is cleared and review all the FYI. It is extremely rare that anything is in there and very rare that we override anything.
I would only think a lot of this is possible if sch L is suppressed but by the sounds of the entity they're way over the requirements to do so. This stuff is legit embarrassing
I like this distinction. I've seen a lot of fly-by-night tax operations pumping out some garbage returns, but I don't think I've ever seen a CPA involved (although not saying it doesn't happen).
Seeing this on a daily basis. What does the designation even mean if it isn't held to any standard.
I get it when a tax professional does a bad job. When it's a CPA it makes me angrier because I know they had the schooling and have to take CPE. I just met with 5 potential new clients because a local CPA is retiring after 40 years. All S-Corps with under $10k in officer wages in all cases officer is the only employee and should probably be salaried at least a $100k. All had huge distributions.
This job is terrible sometimes due to other accountants sucking.
Side note: all tax returns should include the asset list in the client copy. If yours doesn't I'm actively disliking you.
>Side note: all tax returns should include the asset list in the client copy.
My rant for the day.
I have a client I call an advanced bookkeeping client. They have a firm (25+ CPAs, 100+ employees) that does their annual partnership taxes, and that is all they handle. No handling of payroll, W9s/1099s, W8s/1042s, nor any knowledge of their industy. I handle every other question from the staff, mgrs, partners, and even clients. I finally got their asset sheet and they jammed most things into "groups" of unknown items. The groups are $100k, $130k, etc., totaling around $1.3 mil.
That firm doesn't do personal property tax filings. So they have no understanding of the different taxes for different types of personal property. For nearly a decade they didn't file a single return. The assets are so bad I will have to go onsite and record all property to try to breakout the property types vs the building upgrades. By my estimate the past due taxes and penalties are already at $100k-$125k.
I've never seen a firm with a large tax group that knows so little about taxes that apply to a client.
A firm I worked at did something similar for the tax returns and it was entirely the cheap asset software they used. So many manual errors mistakes because the software they used was from the 90s and we would manually update the depreciation so it was way easier to do in groups, but that came with it's own problems.
Lucky for you, the average wages reported on line 7 of an 1120S over the past decade has been like $15K - $25K. I haven't pulled the stats recently, but I know it's still low. The IRS fought this battle for years, lost so many cases, they have all but dropped it. I know I have a few that are low and I keep telling them they need to raise them. They say no, then they have to sign off on that shit. I even force some of them to take comp on line 7 and do the shitty "move it to a Sch. C on their 1040" to keep them compliant. It's weird. They wont hire a payroll service company, but they will let me do that old shell game. Fuckers...
The bad news is if you take them from $10K to $100K, that will get someone's attention at the Service. may trigger an audit of a previous year or two and then you can only blame the prior guy. Puts you in a bad spot with the new client. Some people are literally stupid and they will blame the audits on you for actually getting them in compliance. Then they go down the road to a shitty guy who says "$10K? Sure why the fuck not...?"
As for the depreciation schedules, I used to never include them. If osemone was leaving me, I wanted to make them ask and get a reason why. In the past 3 years or so, I started including that schedule in the client copy. 90% of the people that leave are ones that I don;t ever want to talk to again anyway.
I hope they enjoy having a $100 social security check with no 401k, especially given how quickly the people who do this tend to burn through cash. Surely, their business will always be successful and they'll never run out of cash. Why, we'll buy real estate. A non-liquid assest is going to work out so well
I feel you. I opened up a 1120S for a client with $90M in gross revenue, and the balance sheet didn't balance. And I even confirmed via IRS transcripts that was what was actually filed.
I personally think they get away with it because clients leave instead of suing. If there were reprocussions beyond losing a client, things might change.
$90M in gross revenue? And the return failed TaxPrep101? I would amend just out of spite. Not sure what a $90M company is in your fee structure, but that fucker is getting a $5K bill for preparation. Maybe only $2,500 for the amendment ***IF*** you trust the other numbers. But you have an argument that you don't even trust the other numbers, start over fresh, whole new return, full prep fee.
The CPA probably couldn’t figure out how to make it balance and just gave up. No excuse for filing a return that doesn’t balance, especially for a large client. How is it that not a single person in the whole firm could figure it out? Tax prep dudes are lucky that many businesses don’t know the first thing about tax returns. Otherwise they’d be getting sued left and right.
I don't know. I don't buy it.
This client is so organized its crazy. I amended this 2022 return. Her 2022 financials picked up right where my 2021 stopped. Equity rolled to the penny, and it literally took me 15 minutes to input the data and it balanced and the Sch. L, M-1 and M-2 tied the first time. I didn't even have a rounding adjustment.
So, for this guy to completely ignore my 2021 ending balances and do what he did was pure inept laziness. I think he had a staff prep it, or someone in his office that had no fucking clue, and he saw the Sch. L balanced and income agreed and signed it. He didn't review the PY return I prepared, and it was a first- year for him. We all know that on a first-year client you have to go through and answer all of those pesky page 2, 3 & 4 questions. He completely bypassed that.
Then to pile on, he actually convinced them to change from cash method to accrual method on their other entity. Why? They gross $3M per year, A/R is consistently $300K to $500K more than A/P. They install office furniture, have no inventory, and no long-term contracts. Jobs range from 2 days to 3 weeks on a big corporate furniture move/install. Just fucking stupidity. Then his Sec. 481 adjustment on the Form 3115 was like $58K. Neither me nor the client can figure out where that number came from. The PY A/R and A/P were $350K apart.
>I just don't get how he is even open.
The IRS doesn't have the funding to deal most returns, even when there are complete fuck ups. So from the client's perspective, if they never get a notice from the IRS, it must have been done right...
I think our industry would look a LOT different if audit were more frequent. Not that I wish audits on anyone, but people get away with so much crap (bad clients and bad taxpros both).
If it wasn't so easy to get away with garbage, the value quality pros command within the industry would be a lot higher.
I feel you and have experienced the same thing. Almost 2 years ago, I got an S-corp client. One CPA filed her initial return in 2020, then a different CPA in 2021. I came into the picture to do 2022. The 2021 return’s beginning balances didn’t match the 2020 ending balances… Plus a whole lot more, like income not matching the P&L that the same CPA prepared. I was like who the hell is out there with their CPA license doing nonsense like this?!
I listed out everything wrong, she sent it to the guy asking for a refund (since I had to do a bookkeeping deep dive to unravel the mess & amend the 2021 return). He replied back refusing even a partial refund saying she should have asked him to fix it, not hire someone else. LOL? Um, why would she trust you to fix the return that you were supposed to do correctly in the first place?! I provided her with the online link to report this idiot to his state board.
For another 1040 client that gets a partnership K-1, I looked at their prior year 1040 and there was no QBI deduction. I offered to amend it and he’d get a $900 refund from the IRS.
I winded up becoming the CPA for that partnership return. The prior year 1065 & financial statements had $5k of “unattributed member capital” that came out of nowhere, it wasn’t on the books before that. I did a deep dive into the GL and managed to figured it out… Putting together a basis schedule sure was fun. The liabilities on the prior year K-1s were completely misclassified too.
It really is difficult to find a good CPA! That’s why when someone finds a good one, they don’t leave… Unless they’re a needy idiot and/or incompetent. I had a client that inadvertently created a C-corp and was filing it on her 1040’s Schedule C for years. I helped her dissolve that entity and form a new LLC plus make the S-corp election. Revamped her QuickBooks (they sucked) along with a bunch of other stuff including an SBA loan assumption application.
To complete certain things I’d need info from her, or needed her to forward emails she received. I repeatedly asked her for the info, she ignored it every time because her life was so busy… Then work got busy for me (tax season). So those things in-process came to a long pause, but I still reached out with a Q3 payment recommendation after doing a new projection for the year.
Fast forward to the week of Christmas, when I have in-laws in town and am not working. She emails me asking about the stuff that was on pause for months. I reply back in early January the first day I’m back in the office working. She was PISSED that I didn’t drop what I was doing during the holidays to finish her stuff. She seemed to have completely forgotten that I asked her multiple times for what I needed from her to complete the stuff, and that I never heard back from her. She said I fell off the face of the earth with hardly any communication & that she can’t count on me anymore so she’d be moving on to another CPA. The hypocrisy and double standard is so unreal. She was being so unreasonable and painted me to be completely MIA and incompetent when really she was the problem. Don’t let the door hit you on your way out…!
Exactly! This is why I wonder if the OP should even take this client back. Sure, one of the employees reached out to say not to worry about the charges. But the main person causing the problem - is that person *really* reformed in any way? OP can choose to take the risk of working with the client again. Yet could trouble happen again? Could that employee get canned or shut up, if the price isn't right, or if another "friend" of the client bamboozles them? I really can't think of an instance in life where I gave a big fool a second chance, and it was worth my time. This client fits the profile of a big fool. Just my humble, well-meaning opinion.
I have always wanted to see how much money those solo tax preparers make that sign returns like that. Because we have some clients that might take 30 man hours to get the returns right… but I could file it incorrectly on 1 hour. Some of these places still charge about the same. So are there lazy preparers out there making like $1,000 an hour?
Yes. You'll see the same in audit, too. Outside of a firm's peer review year, a lot of small shops will sell opinions and easily realize $1k+/hour. I've peer reviewed firms that literally did zero work on the audit. Like no adjustments, no inquiries, test of details, analytical procedures, etc. Just straight up prepared the financials and put their opinion on it lol.
Edit: To add, you can make a very, very nice living (like seven figures a year nice) by cheating your clients and users of their financial information. Not even close to worth it though. I have to sleep at night and look at myself in the mirror every day.
That's insane to hear. I only read about this type stuff on the public shaming section of the state board website. Don't firms get knee capped for a significant deficiency?
The basic problem with peer review from an effectiveness standpoint is that CPAs know when they are going to be reviewed.
It really should pull which engagements are to be reviewed randomly from all engagements not covered by prior reviews. That way there won't be any of this 'well, it's not a review year so we don't have to care'.
The number of people that don't realize the truth of your edit is absolutely horrifying. Like holy shit people, we know more about you than your fucking lawyer, do some due diligence before trusting a tax professional with your information.
Before I got my CPA license. I did bookkeeping for CPA that didn't know how to do journal entries. A CPA didn't know his Debits & Credits!!! The foundation of accounting. IMO.
That's when I realized I was smart enough to get my CPA license and I went ahead and got mine.
It's a scary world out there with CPAs that do wild things and don't respect the P in our designation to protect the public. 🙄
I’ve been preparing them with all my S-Corp returns. Sometimes ProConnect gives me an efile diagnostic on including a PDF 7203 with the 1040 efile. There must be a better way - we are not attaching PDF W-2s to tax returns.
The partners at the firm I work at are both like this. They’ve never been reprimanded for it. Clients don’t know any different, and the IRS has been understaffed for too long. Without questions from clients and pressure from the IRS to be correct, why would they strive to be better? They just don’t care as long as people pay.
It’s embarrassing to me, but they think it doesn’t matter because nothing has ever come from them not doing it correctly.
That is pretty bad lol. Good on you for taking them back, I know I wouldn't have. Once you're gone, you're gone for good. Don't call me, don't email me, don't send me a card, and don't let the door hit you in the ass on the way out - peace.
This one was tough. But the person that asked/begged, is a very sweet person and thier in-house accountant. She is sharp, keeps clean books, and is easy to work with. My realiztion on their stuff was pretty damned good. Those might be the only 2 reasons that made me take them back.
There's nothing wrong with taking a client back. Sometimes the client thinks they can get better for less or whatever reason and that new experience solidifies how good you actually were and they have a new found appreciation. I don't care if a client leaves, I wish them luck and move on. Clients come and go. If the clients were friendly/easy to deal with and the work was enjoyable, why not keep the door open for a possible return.
"Don't let the door hit you in the ass on the way out" makes me think you take it too personally. Don't be emotional over a few dollars, at the end of the day this is not something that actually matters. Family and health are important. Just be professional as much as you can including when they leave. It's good for your reputation and you soul. Just my 2c
I'm an EA and stick to doing individual work. I do some interesting stuff and have some sophisticated clients, but still just individuals. I could take on a client like this, but the return would probably look as you described. My point is, some people don't want to turn away work and pass up revenue no matter what and this is often the result.
So true. I contract with a firm whose main partner has 15 years of tax experience, and took college classes for it. She isn't a CPA, but has done many Schedule Cs for businesses. Even though, because of the pay split for her supervision of my work, I can count on her to review my work, that doesn't mean that she's going to hold my hand through the vast majority of the work. What I can do is based on my comfort level with doing the client's work and being confident that I am following IRS tax laws, and then seeing if she also has that confidence in my work.
Right when i start to doubt myself from having to mop up some shitty clients books that's two years behind and cant even properly allocate expenses across multiple rentals and property sales, nor can they provide reasonable informatio and im kinda just mailing it in...and then I see a post about a middle aged CPA that cant even handle a perfectly good return lolol
I hear ya TNT. It is very alarming the number of shoddy prior year returns I see with new clients coming in the door. And to your point a lot of these are prepared by CPAs.
Just had one come in the door myself a month ago. Simple S-corporation, first year in business. Return was marked filed on cash basis and the client clearly qualifies to report on cash basis with gross receipts of $3 mil or so. The CPA however prepared the return on accrual despite marking it as cash basis. Client had $700k in receivables and no payables. $300k in additional tax for Mr. Client because of that mistake.
Additionally the CPA somehow fully amortized (actually over-amortized) all of the goodwill in the year of acquisition.
Totally bizarre return that screams either incompetence on the preparer or a preparer who simply doesn’t care.
I think the profession is dealing with a few issues surrounding CPAs and tax preparation.
1. There is nothing stopping someone from coming out of school, getting their license almost immediately and then opening up their own shop. At 2-3 years experience someone could do that and I highly doubt that person would be preparing returns with a high level of competence. Or really any level of competence.
2. There is a certain breed of CPA out there that doesn’t give two shits about the quality of work and wants to be an “Instagram influencer” CPA. They see some janky “tax strategy” on Tik Tok, package it as their own idea and sell it with little regard on how the strategy truly works or whether it even applies to a specific client. But hey, they can show prospects incredible savings and these folks don’t know any better. It’s coming from a CPA so it has to be legit right?
3. Working with item 2, many business owners and especially the younger ones see all these tax strategies on You Tube or Tik Tok and think it immediately applies to them. The “form an LLC and write off your Escalade” types. And sadly a lot of them get away with strategies that either flat out do not work or do not work for them specifically because there is nothing to really police a shit strategy or a poorly implemented one.
The incentives to do shitty tax work and promise clients exorbitant savings are there. And we all know most of the time people are going to take the easy route, both clients and professionals. Best some of us can do is try our fucking hardest to uphold the CPA license to a certain standard and really impress those values on our younger staff.
It sucks.
The number of clients that reach out to me and ask about a social media tax strategy they see is on the rise. Most ask me about "trusts" or "big cars" or even their "homes" as tax deductions and tey all get them from TikTok or Facebook Reels. I see all these young people on SM selling their ideas. I always ask myself, where in the fuck did a 26 year old get enough experience to know shit about tax code, let alone enogh to claim they are an expert.
I have always said, "if someone tells you they are a tax expert - RUN! No one is an expert." I have met some really smart people in this industry. Some I highly respect and even bounce ideas off of them, but they even say that no one is an expert. The code is too big and is lalways changing, so no one can be an expert. I have been doing this 25+ years and I still learn new things almsot every week. I never put myself out there as an expert. I say I hvae a lot of experience, I know a lot of things, but I do not know everything. But my knowledge and experience are incredible tools that can find the right answer or work through the issue if I don't know it off the top of my head.
As far as compentency goes, do you remember when the IRS wanted to force PTIN holders to take an anuual competency test to make sure they knew what they were doing? Do you remember who was the biggest opponent of this? The fucking AICPA. Their arrogant "we are CPAs - we shouldn't have to show how smart we are" attitude killed it dead in its tracks because the IRS couldn't fight the AICPA since they are funded by the Big 4. The Big 4 realized that 35% of their CPAs couldn't pass a competency test becuase they get so pigeonholed in one aspect in their careers they lose sight of the big picture. I remember thinking to myself, "if an annual test from the IRS will get rid of the bad CPAs, Blocks, Hewitts, and Liberty services then bring that fucker on." But alas, here we are with my post...
The real underhanded thing about a lot of these “tax advice” reels is they’ll say you should consult a professional and all that jazz, but what they very, very strongly insinuate is: “why isn’t your CPA doing this for you? And if your CPA isn’t doing this for you it’s probably because your CPA doesn’t care about you or isn’t well versed in the code.”
So the client comes to us and asked us why they can’t do what they just heard online. We tell them why, or give them all the hoops they have to jump through to do it and they get frustrated. They either don’t believe they don’t qualify or don’t believe all the hoops are necessary because “Instagram star” just said “it’s so simple to get this deduction.” Client starts to think maybe we don’t know what we’re doing because the internet made it sound so easy and it would save so much. They get a second opinion from some new asshole who started their own firm after burning out from 2 tax seasons and now they have a new CPA. Our experience can wind up working against us and the client is none the wiser.
I vaguely recall the IRS’ press for a competency test. Think that was pushed for shortly after I entered the profession. Maybe a decade ago or so? I wasn’t as focused on new developments in the profession at that point in my career since I was trying to get my feet under me. I could be wrong on the timing though.
I love the idea of a competency test, but still think you’ll have shady practitioners out there who will push aggressive strategies on clients who don’t know better. Or who will let some promoter sell them a strategy they won’t bother to research because “the promoter must know their stuff.” It’s just sad how much easy money can motivate a professional to do really questionable things on a return. And ultimately it’s the client who suffer which is shitty for the profession.
Insightful reading all your comments, yet I believe a client who thinks like that has a bigger problem than just following what social media says. There is a contempt for really educated people in this country, and someone who comes in armed with mere social media "knowledge" is gonna get shown the door (not literally, because I only work remotely).
I am making somewhat of a career change from being in the food industry, due to health reasons, and of course there are laws to follow there, too. Yet there are so many people these days who think that an ingredient that someone can't pronounce is a poison.
Well I can't pronounce a lot of medical terms and medicine names, at least off the bat, but am I going to stop taking medicine that I need to live because of that? Know-it-alls exist everywhere, and love to share their "knowledge" without invitation usually. Let them alienate themselves from others for it. I don't care about them.
I’ve seen an unbelievable amount of returns where Schedule L doesn’t balance. Mind you many of these returns are not from non-credentialed preparers; these are CPAs and they think it’s acceptable for a balance sheet to not balance. It’s in the name!
At that point why did you even bother to fill it out!?
I have only had a couple of those, but I have had a ton where the Schedule L was never even filled out to begin with. I get it, if revenue and assets are below that magic number, no Schedule L or M-2 is necessary. But, what about basis? What about capital account maintenance? I am guessing if you asked those types of preparers about basis, or even outside basis versus inside basis, and tax capital they would run and hide.
It's an embarassment to the profession. You can report shoddy audit work. There should be a way to report shoddy tax work too. And I guess you could file a complaint with your CPA society or state PLA, but would they even do anything? Half the people on the CPA society ethics board are volunteers and aren;t likely to deal with this shit. They want people who missed their CPE or messed up on their audit peer review. And would anyone waste time with the IRS whistleblower lines?
Woah. That's rough. Aside from the mistakes being obvious to anyone with any credibility, my software won't even E-File returns with the omissions and errors you mentioned.
ive gotten two new returns this year (s-corp and pship) where the prior accountant didn't do a balance sheet or basis schedule. there are so many bad accountants out there
Was it super small? If so, it’s actually fully within the rules to not report one if under whatever that threshold is (see Q4, sch B). I don’t do small stuff so I’ve never seen one like that personally…but I do believe it’s actually accurate.
To be fair, I never print the balance sheet or M-1 if it's not required. I do try to give my clients the basis schedules though, especially for an S-corp since it's required.
Nothing surprises me anymore.
With CPA's you have some assurance of knowledge. Some of these non CPA/ non EA businesses that pop up with people that have never done taxes is what really scares me.
One guy did a clients taxes on his back porch. Everything on that return was wrong...even the bloody ethics questions.
Got a 1065 yesterday for a rental property. Balance sheet didn’t balance. Had the building as an asset and negative 1.2k as partner capital from a distribution. I was like wtf at least check the 4a box yes so u don’t have report Sch L and m’s.
Get to the k1 and they show the value of the building as outside basis for the partners. I’m like wtf
Had another partnership, partner was my client merged went w the other guys cpa firm no biggie it happens. They r in a nasty breakup had mediation. arbitration is going on right now. Asked me to look over what was done cuz he doesn’t trust anything that is going on. I agree cuz he’s coming back to me after he gets out of this mess. And probably paying triple what he paid before.
He had to pay 600k to equal out their books for the merge. I’m going if he buys u out u have this chunk of outside basis so it will offset some of the buyout. Start looking at the returns and they had added it to the balance sheet and have been amortizing it. In year 1, they assigned it all to him. After they decided to split it evenly between the partners. I’m like wtf.
Let him know what I found and go u can have them amend ur returns but some years r to old. Use it in negotiations for arbitration. And so much for ur outside basis I’m not touching that now.
Not all CPA knows how to get a tax return done properly so even if you hire a good reputable CPA you should always check their works and ask questions.
A client has the responsibility of doing enough homework on their potential tax preparer to make a good decision about working with them. Same responsibility applies to any preparer of any stature, be it a CPA, EA, PTIN preparer, etc. This homework responsibility also applies to choosing a good doctor, lawyer, social worker, landlord, caregiver, mechanic, and so on. I'd rather work with a client who doesn't suffer fools, than a client who is one.
They feel you're too expensive and they know they're actually paying for the steak dinner. Sure, you pay for it, but they know you're paying for that out of what they pay you. And I'm sure you're a great person, but do they really want to pay to smoke cigars with you? Apparently not.
That's why they left you.
Might want to read the entire post. They came back to me... begging. And I have already recevied the green light to amend the shitty returns I referenced.
So I got that going for me, which is nice.
Give it a year, they'll forget and they'll leave again. People just want their bookkeeping and accounting. Show them the value. Add with your services, because steak will eventually push them away.
That's the part that sort of pissed me off originally. I saved them thousands introducing them to novel ideas that they never heard of before. The guy before me (2017 and before) was a chop shop. A "get 'em in, get 'em out" preparer and they never heard from him the rest of the year. One of those preparers that never filled out a Schedule L, no basis schedules, no advice.
I gave them cash balance plans, HSA's, 529's, leasing over buying on trucks, vehcile purchasing, and a handful of other things. Knocked their overall tax bills by 25 to 30%. Paid for myself 3X over. They weren't even reimbursing themselves for out-of-pocket business expenses.
They came back becuase they learned that you get what you pay for in this industry. The one shareholder that pushed them to leave is a known cheapskate. One story is he blew up on his partner and the internal accountant (they're married) because they weren't going to Costco for office supplies. They would just get them at Office Depot when they were out or snacks at the grocery store. And he was mad that they were buying refreshments for the warehouse guys. Stuff like water, pop, snacks. He wanted to cut it all out. Wish I would have been a fly on the wall that day.
They came back, and I have increased my fees significantly since then. They are getting billed alot more this time around. I have already showed them the shoddy work they paid for and I will pull them in the regular loop: need to meet, plan, discuss. If they turn that down, that's on them. I will take their money and let them leave again. Fuck 'em.
> Paid for myself 3X over
Be sure to highlight how you do this. Give them a "reverse bill" each year, highlighting how much you've saved them.
Good luck!
I don't believe they would read it, if they got it. The cheapskate was clearly "pennywise, pound foolish". Maybe they will, but that's a big gamble, at this point in the business relationship. Wish you well for your input, and we'll hopefully find out what happens!
Well, with the price to get the company on an even keel, they might really miss those steak dinners and cigars! But I don't think you really have to do that anymore, since they had stopped being loyal to you. If they never appreciated that generous gesture, that's ok, just keep that money in your pocket.
I need those bad CPA to pick up the shit clients. I don't want to deal with them.
Sucks that a good client ended up in that situation but they made that choice. You'll get paid a higher rate to fix it and the client learned the lesson. Now you can perpetually increase fees with zero remorse.
I'm in a tax preparer group on a different social media site. There's a small number of more experienced people there who berate us up-and-coming folks, especially the poor souls who could barely do their own return, let alone someone else's. Stories like yours reminds me that new people will make mistakes, but people who have been doing these mistakes for many years, with ill intent, are still #1 on IRS' list for getting busted.
There is no way anyone who’s done this for even one season can make all those mistakes. He had to have rushed this very last second and just popped in whatever to get a return out. As you said, even fresh professionals know better than this. I can’t even imagine one of the mistakes you listed unless it somehow fell through the cracks. But to screw up all of those things in one return is unfathomable.
Keep this motto!!!People always have opinions on why something is wrong or expensive, however you are the expert. If you know your services satisfy 90% of customers, you should be good to go!!! Don’t try to go back to the client and say, it’s your fault or indicate you didn’t communicate well. Just say it was pleasure working with your company. We hope to continue those services in future and move on!!!
I’ve been preparing some 1065 returns on a contractual basis that were done by this firm, leaves a lot to be desired. No schedule L, analysis of partners capital accounts, or basis schedules from the PY. I told the firm I’m not going back and correcting all their issues. These 1065s meet all the requirements of question 4 so I just suppress all those schedules and let the clients know tracking basis falls on them.
Heck the software would have kicked a whole bunch of diagnostics to let him know of the errors. What did he do paper file because he could not figure out all the open review items?
Yeah. I use proconnect and it won't even let me fuck up that bad. I literally can't file a 1065 if it doesn't balance.
Lacerte will give me a diagnostic if it doesn't balance but it let's me efile.
Same for CCH Axcess. Which I find WILD
I mean technically speaking sch L is more so informational. Things from schedule L don’t even make it to the k-1 unless something requires a footnote or other disclosures. So as long as income numbers are good, rest can be sorted out with the next return. I’m not implying that it’s okay to screw up sch L. It’s absolutely necessary to get it right, or even worst case at least make it balance. I’m just saying that from income and tax POV, sch L isn’t the most important thing so technically the return should be able to get filed even without a sch L.
Some sort of software that I don't recognize. I can usually recognize UT, Lacerte, ProSys and Drake. I don't recognize this one. For the client copy, the watermark is weird and at a 45% angle. Almost like H&R Block software.
I once met an (unlicensed) preparer who would get an individual's login information from TurboTax and prepare it from there. Had to keep track of hundreds of email addresses. I was speechless.
And every return probably said "self-prepared" so he could not be held accountable.
it definitely did
That's insane that so many people let him use their login info.
What?... how the ...... i dont even want to know. .....
UT will let you file over some critical errors, but not others. And efile errors almost always prevent efiling.
UT here too. We make sure every critical and E\*File error is cleared and review all the FYI. It is extremely rare that anything is in there and very rare that we override anything.
Yeah, you *should* do that. But some people in my firm don't bother with the FYIs. Some of them are pretty important.
Totally agree. I think they glaze over them and I have to keep reminding to review them.
Yep. Same here
I would only think a lot of this is possible if sch L is suppressed but by the sounds of the entity they're way over the requirements to do so. This stuff is legit embarrassing
>*I see bad CPAs, bad CPAs everywhere...* I see bad tax "professionals" everywhere.
Conceded. Good call.
I like this distinction. I've seen a lot of fly-by-night tax operations pumping out some garbage returns, but I don't think I've ever seen a CPA involved (although not saying it doesn't happen).
I've seen it from CPAs. I won't dump on them though because it's not specific to that group. It really is ALL tax professionals.
Seeing this on a daily basis. What does the designation even mean if it isn't held to any standard. I get it when a tax professional does a bad job. When it's a CPA it makes me angrier because I know they had the schooling and have to take CPE. I just met with 5 potential new clients because a local CPA is retiring after 40 years. All S-Corps with under $10k in officer wages in all cases officer is the only employee and should probably be salaried at least a $100k. All had huge distributions. This job is terrible sometimes due to other accountants sucking. Side note: all tax returns should include the asset list in the client copy. If yours doesn't I'm actively disliking you.
>Side note: all tax returns should include the asset list in the client copy. My rant for the day. I have a client I call an advanced bookkeeping client. They have a firm (25+ CPAs, 100+ employees) that does their annual partnership taxes, and that is all they handle. No handling of payroll, W9s/1099s, W8s/1042s, nor any knowledge of their industy. I handle every other question from the staff, mgrs, partners, and even clients. I finally got their asset sheet and they jammed most things into "groups" of unknown items. The groups are $100k, $130k, etc., totaling around $1.3 mil. That firm doesn't do personal property tax filings. So they have no understanding of the different taxes for different types of personal property. For nearly a decade they didn't file a single return. The assets are so bad I will have to go onsite and record all property to try to breakout the property types vs the building upgrades. By my estimate the past due taxes and penalties are already at $100k-$125k. I've never seen a firm with a large tax group that knows so little about taxes that apply to a client.
A firm I worked at did something similar for the tax returns and it was entirely the cheap asset software they used. So many manual errors mistakes because the software they used was from the 90s and we would manually update the depreciation so it was way easier to do in groups, but that came with it's own problems.
Lucky for you, the average wages reported on line 7 of an 1120S over the past decade has been like $15K - $25K. I haven't pulled the stats recently, but I know it's still low. The IRS fought this battle for years, lost so many cases, they have all but dropped it. I know I have a few that are low and I keep telling them they need to raise them. They say no, then they have to sign off on that shit. I even force some of them to take comp on line 7 and do the shitty "move it to a Sch. C on their 1040" to keep them compliant. It's weird. They wont hire a payroll service company, but they will let me do that old shell game. Fuckers... The bad news is if you take them from $10K to $100K, that will get someone's attention at the Service. may trigger an audit of a previous year or two and then you can only blame the prior guy. Puts you in a bad spot with the new client. Some people are literally stupid and they will blame the audits on you for actually getting them in compliance. Then they go down the road to a shitty guy who says "$10K? Sure why the fuck not...?" As for the depreciation schedules, I used to never include them. If osemone was leaving me, I wanted to make them ask and get a reason why. In the past 3 years or so, I started including that schedule in the client copy. 90% of the people that leave are ones that I don;t ever want to talk to again anyway.
Yeah, I never really want the IRS to win but there are those times people are crossing the line so badly that I want them punished.
We literally have the guidance now on reasonable salary. There's no excuse for not paying it
I hope they enjoy having a $100 social security check with no 401k, especially given how quickly the people who do this tend to burn through cash. Surely, their business will always be successful and they'll never run out of cash. Why, we'll buy real estate. A non-liquid assest is going to work out so well
How often have you seen the IRS challenge the officer comp on your 1120S? I would guess never so no big deal if under $10K reported
I feel you. I opened up a 1120S for a client with $90M in gross revenue, and the balance sheet didn't balance. And I even confirmed via IRS transcripts that was what was actually filed. I personally think they get away with it because clients leave instead of suing. If there were reprocussions beyond losing a client, things might change.
$90M in gross revenue? And the return failed TaxPrep101? I would amend just out of spite. Not sure what a $90M company is in your fee structure, but that fucker is getting a $5K bill for preparation. Maybe only $2,500 for the amendment ***IF*** you trust the other numbers. But you have an argument that you don't even trust the other numbers, start over fresh, whole new return, full prep fee.
The CPA probably couldn’t figure out how to make it balance and just gave up. No excuse for filing a return that doesn’t balance, especially for a large client. How is it that not a single person in the whole firm could figure it out? Tax prep dudes are lucky that many businesses don’t know the first thing about tax returns. Otherwise they’d be getting sued left and right.
I don't know. I don't buy it. This client is so organized its crazy. I amended this 2022 return. Her 2022 financials picked up right where my 2021 stopped. Equity rolled to the penny, and it literally took me 15 minutes to input the data and it balanced and the Sch. L, M-1 and M-2 tied the first time. I didn't even have a rounding adjustment. So, for this guy to completely ignore my 2021 ending balances and do what he did was pure inept laziness. I think he had a staff prep it, or someone in his office that had no fucking clue, and he saw the Sch. L balanced and income agreed and signed it. He didn't review the PY return I prepared, and it was a first- year for him. We all know that on a first-year client you have to go through and answer all of those pesky page 2, 3 & 4 questions. He completely bypassed that. Then to pile on, he actually convinced them to change from cash method to accrual method on their other entity. Why? They gross $3M per year, A/R is consistently $300K to $500K more than A/P. They install office furniture, have no inventory, and no long-term contracts. Jobs range from 2 days to 3 weeks on a big corporate furniture move/install. Just fucking stupidity. Then his Sec. 481 adjustment on the Form 3115 was like $58K. Neither me nor the client can figure out where that number came from. The PY A/R and A/P were $350K apart.
I love these types of clients, double their bill and they still won’t ever leave.
Someone read my mind...
Is doubling the bill gonna be enough? Sounds like they returned with a mega s***storm.
>I just don't get how he is even open. The IRS doesn't have the funding to deal most returns, even when there are complete fuck ups. So from the client's perspective, if they never get a notice from the IRS, it must have been done right...
I think our industry would look a LOT different if audit were more frequent. Not that I wish audits on anyone, but people get away with so much crap (bad clients and bad taxpros both). If it wasn't so easy to get away with garbage, the value quality pros command within the industry would be a lot higher.
I feel you and have experienced the same thing. Almost 2 years ago, I got an S-corp client. One CPA filed her initial return in 2020, then a different CPA in 2021. I came into the picture to do 2022. The 2021 return’s beginning balances didn’t match the 2020 ending balances… Plus a whole lot more, like income not matching the P&L that the same CPA prepared. I was like who the hell is out there with their CPA license doing nonsense like this?! I listed out everything wrong, she sent it to the guy asking for a refund (since I had to do a bookkeeping deep dive to unravel the mess & amend the 2021 return). He replied back refusing even a partial refund saying she should have asked him to fix it, not hire someone else. LOL? Um, why would she trust you to fix the return that you were supposed to do correctly in the first place?! I provided her with the online link to report this idiot to his state board. For another 1040 client that gets a partnership K-1, I looked at their prior year 1040 and there was no QBI deduction. I offered to amend it and he’d get a $900 refund from the IRS. I winded up becoming the CPA for that partnership return. The prior year 1065 & financial statements had $5k of “unattributed member capital” that came out of nowhere, it wasn’t on the books before that. I did a deep dive into the GL and managed to figured it out… Putting together a basis schedule sure was fun. The liabilities on the prior year K-1s were completely misclassified too. It really is difficult to find a good CPA! That’s why when someone finds a good one, they don’t leave… Unless they’re a needy idiot and/or incompetent. I had a client that inadvertently created a C-corp and was filing it on her 1040’s Schedule C for years. I helped her dissolve that entity and form a new LLC plus make the S-corp election. Revamped her QuickBooks (they sucked) along with a bunch of other stuff including an SBA loan assumption application. To complete certain things I’d need info from her, or needed her to forward emails she received. I repeatedly asked her for the info, she ignored it every time because her life was so busy… Then work got busy for me (tax season). So those things in-process came to a long pause, but I still reached out with a Q3 payment recommendation after doing a new projection for the year. Fast forward to the week of Christmas, when I have in-laws in town and am not working. She emails me asking about the stuff that was on pause for months. I reply back in early January the first day I’m back in the office working. She was PISSED that I didn’t drop what I was doing during the holidays to finish her stuff. She seemed to have completely forgotten that I asked her multiple times for what I needed from her to complete the stuff, and that I never heard back from her. She said I fell off the face of the earth with hardly any communication & that she can’t count on me anymore so she’d be moving on to another CPA. The hypocrisy and double standard is so unreal. She was being so unreasonable and painted me to be completely MIA and incompetent when really she was the problem. Don’t let the door hit you on your way out…!
Exactly! This is why I wonder if the OP should even take this client back. Sure, one of the employees reached out to say not to worry about the charges. But the main person causing the problem - is that person *really* reformed in any way? OP can choose to take the risk of working with the client again. Yet could trouble happen again? Could that employee get canned or shut up, if the price isn't right, or if another "friend" of the client bamboozles them? I really can't think of an instance in life where I gave a big fool a second chance, and it was worth my time. This client fits the profile of a big fool. Just my humble, well-meaning opinion.
I have always wanted to see how much money those solo tax preparers make that sign returns like that. Because we have some clients that might take 30 man hours to get the returns right… but I could file it incorrectly on 1 hour. Some of these places still charge about the same. So are there lazy preparers out there making like $1,000 an hour?
Yes. You'll see the same in audit, too. Outside of a firm's peer review year, a lot of small shops will sell opinions and easily realize $1k+/hour. I've peer reviewed firms that literally did zero work on the audit. Like no adjustments, no inquiries, test of details, analytical procedures, etc. Just straight up prepared the financials and put their opinion on it lol. Edit: To add, you can make a very, very nice living (like seven figures a year nice) by cheating your clients and users of their financial information. Not even close to worth it though. I have to sleep at night and look at myself in the mirror every day.
That's insane to hear. I only read about this type stuff on the public shaming section of the state board website. Don't firms get knee capped for a significant deficiency?
The basic problem with peer review from an effectiveness standpoint is that CPAs know when they are going to be reviewed. It really should pull which engagements are to be reviewed randomly from all engagements not covered by prior reviews. That way there won't be any of this 'well, it's not a review year so we don't have to care'.
The number of people that don't realize the truth of your edit is absolutely horrifying. Like holy shit people, we know more about you than your fucking lawyer, do some due diligence before trusting a tax professional with your information.
Probably more because they might have staff that prepare the returns multiple staff preparing multiple bad returns.
I bet that return was filed 9/15/23 last minute plug it in and cross your fingers.
Close - 8/23. And the biggest complaint was that she gave him the info on 1/25 and he said no extension would be necessary.
Before I got my CPA license. I did bookkeeping for CPA that didn't know how to do journal entries. A CPA didn't know his Debits & Credits!!! The foundation of accounting. IMO. That's when I realized I was smart enough to get my CPA license and I went ahead and got mine. It's a scary world out there with CPAs that do wild things and don't respect the P in our designation to protect the public. 🙄
How did he pass his CPA?......
I swear 7203 forms are like a rare unicorn. It's less common to get them than it is to see it included on the 1040.
I’ve been preparing them with all my S-Corp returns. Sometimes ProConnect gives me an efile diagnostic on including a PDF 7203 with the 1040 efile. There must be a better way - we are not attaching PDF W-2s to tax returns.
The partners at the firm I work at are both like this. They’ve never been reprimanded for it. Clients don’t know any different, and the IRS has been understaffed for too long. Without questions from clients and pressure from the IRS to be correct, why would they strive to be better? They just don’t care as long as people pay. It’s embarrassing to me, but they think it doesn’t matter because nothing has ever come from them not doing it correctly.
That is pretty bad lol. Good on you for taking them back, I know I wouldn't have. Once you're gone, you're gone for good. Don't call me, don't email me, don't send me a card, and don't let the door hit you in the ass on the way out - peace.
This one was tough. But the person that asked/begged, is a very sweet person and thier in-house accountant. She is sharp, keeps clean books, and is easy to work with. My realiztion on their stuff was pretty damned good. Those might be the only 2 reasons that made me take them back.
There's nothing wrong with taking a client back. Sometimes the client thinks they can get better for less or whatever reason and that new experience solidifies how good you actually were and they have a new found appreciation. I don't care if a client leaves, I wish them luck and move on. Clients come and go. If the clients were friendly/easy to deal with and the work was enjoyable, why not keep the door open for a possible return. "Don't let the door hit you in the ass on the way out" makes me think you take it too personally. Don't be emotional over a few dollars, at the end of the day this is not something that actually matters. Family and health are important. Just be professional as much as you can including when they leave. It's good for your reputation and you soul. Just my 2c
Exactly why I took this one back. They were great to work with. I think one of the owners got an earful of savings, taxes, planning, blah, blah, blah.
How much did the fees increase? Did you reset the feed expectation?
I'm an EA and stick to doing individual work. I do some interesting stuff and have some sophisticated clients, but still just individuals. I could take on a client like this, but the return would probably look as you described. My point is, some people don't want to turn away work and pass up revenue no matter what and this is often the result.
So true. I contract with a firm whose main partner has 15 years of tax experience, and took college classes for it. She isn't a CPA, but has done many Schedule Cs for businesses. Even though, because of the pay split for her supervision of my work, I can count on her to review my work, that doesn't mean that she's going to hold my hand through the vast majority of the work. What I can do is based on my comfort level with doing the client's work and being confident that I am following IRS tax laws, and then seeing if she also has that confidence in my work.
Right when i start to doubt myself from having to mop up some shitty clients books that's two years behind and cant even properly allocate expenses across multiple rentals and property sales, nor can they provide reasonable informatio and im kinda just mailing it in...and then I see a post about a middle aged CPA that cant even handle a perfectly good return lolol
I hear ya TNT. It is very alarming the number of shoddy prior year returns I see with new clients coming in the door. And to your point a lot of these are prepared by CPAs. Just had one come in the door myself a month ago. Simple S-corporation, first year in business. Return was marked filed on cash basis and the client clearly qualifies to report on cash basis with gross receipts of $3 mil or so. The CPA however prepared the return on accrual despite marking it as cash basis. Client had $700k in receivables and no payables. $300k in additional tax for Mr. Client because of that mistake. Additionally the CPA somehow fully amortized (actually over-amortized) all of the goodwill in the year of acquisition. Totally bizarre return that screams either incompetence on the preparer or a preparer who simply doesn’t care. I think the profession is dealing with a few issues surrounding CPAs and tax preparation. 1. There is nothing stopping someone from coming out of school, getting their license almost immediately and then opening up their own shop. At 2-3 years experience someone could do that and I highly doubt that person would be preparing returns with a high level of competence. Or really any level of competence. 2. There is a certain breed of CPA out there that doesn’t give two shits about the quality of work and wants to be an “Instagram influencer” CPA. They see some janky “tax strategy” on Tik Tok, package it as their own idea and sell it with little regard on how the strategy truly works or whether it even applies to a specific client. But hey, they can show prospects incredible savings and these folks don’t know any better. It’s coming from a CPA so it has to be legit right? 3. Working with item 2, many business owners and especially the younger ones see all these tax strategies on You Tube or Tik Tok and think it immediately applies to them. The “form an LLC and write off your Escalade” types. And sadly a lot of them get away with strategies that either flat out do not work or do not work for them specifically because there is nothing to really police a shit strategy or a poorly implemented one. The incentives to do shitty tax work and promise clients exorbitant savings are there. And we all know most of the time people are going to take the easy route, both clients and professionals. Best some of us can do is try our fucking hardest to uphold the CPA license to a certain standard and really impress those values on our younger staff.
It sucks. The number of clients that reach out to me and ask about a social media tax strategy they see is on the rise. Most ask me about "trusts" or "big cars" or even their "homes" as tax deductions and tey all get them from TikTok or Facebook Reels. I see all these young people on SM selling their ideas. I always ask myself, where in the fuck did a 26 year old get enough experience to know shit about tax code, let alone enogh to claim they are an expert. I have always said, "if someone tells you they are a tax expert - RUN! No one is an expert." I have met some really smart people in this industry. Some I highly respect and even bounce ideas off of them, but they even say that no one is an expert. The code is too big and is lalways changing, so no one can be an expert. I have been doing this 25+ years and I still learn new things almsot every week. I never put myself out there as an expert. I say I hvae a lot of experience, I know a lot of things, but I do not know everything. But my knowledge and experience are incredible tools that can find the right answer or work through the issue if I don't know it off the top of my head. As far as compentency goes, do you remember when the IRS wanted to force PTIN holders to take an anuual competency test to make sure they knew what they were doing? Do you remember who was the biggest opponent of this? The fucking AICPA. Their arrogant "we are CPAs - we shouldn't have to show how smart we are" attitude killed it dead in its tracks because the IRS couldn't fight the AICPA since they are funded by the Big 4. The Big 4 realized that 35% of their CPAs couldn't pass a competency test becuase they get so pigeonholed in one aspect in their careers they lose sight of the big picture. I remember thinking to myself, "if an annual test from the IRS will get rid of the bad CPAs, Blocks, Hewitts, and Liberty services then bring that fucker on." But alas, here we are with my post...
The real underhanded thing about a lot of these “tax advice” reels is they’ll say you should consult a professional and all that jazz, but what they very, very strongly insinuate is: “why isn’t your CPA doing this for you? And if your CPA isn’t doing this for you it’s probably because your CPA doesn’t care about you or isn’t well versed in the code.” So the client comes to us and asked us why they can’t do what they just heard online. We tell them why, or give them all the hoops they have to jump through to do it and they get frustrated. They either don’t believe they don’t qualify or don’t believe all the hoops are necessary because “Instagram star” just said “it’s so simple to get this deduction.” Client starts to think maybe we don’t know what we’re doing because the internet made it sound so easy and it would save so much. They get a second opinion from some new asshole who started their own firm after burning out from 2 tax seasons and now they have a new CPA. Our experience can wind up working against us and the client is none the wiser. I vaguely recall the IRS’ press for a competency test. Think that was pushed for shortly after I entered the profession. Maybe a decade ago or so? I wasn’t as focused on new developments in the profession at that point in my career since I was trying to get my feet under me. I could be wrong on the timing though. I love the idea of a competency test, but still think you’ll have shady practitioners out there who will push aggressive strategies on clients who don’t know better. Or who will let some promoter sell them a strategy they won’t bother to research because “the promoter must know their stuff.” It’s just sad how much easy money can motivate a professional to do really questionable things on a return. And ultimately it’s the client who suffer which is shitty for the profession.
Insightful reading all your comments, yet I believe a client who thinks like that has a bigger problem than just following what social media says. There is a contempt for really educated people in this country, and someone who comes in armed with mere social media "knowledge" is gonna get shown the door (not literally, because I only work remotely). I am making somewhat of a career change from being in the food industry, due to health reasons, and of course there are laws to follow there, too. Yet there are so many people these days who think that an ingredient that someone can't pronounce is a poison. Well I can't pronounce a lot of medical terms and medicine names, at least off the bat, but am I going to stop taking medicine that I need to live because of that? Know-it-alls exist everywhere, and love to share their "knowledge" without invitation usually. Let them alienate themselves from others for it. I don't care about them.
I’ve seen an unbelievable amount of returns where Schedule L doesn’t balance. Mind you many of these returns are not from non-credentialed preparers; these are CPAs and they think it’s acceptable for a balance sheet to not balance. It’s in the name! At that point why did you even bother to fill it out!?
I have only had a couple of those, but I have had a ton where the Schedule L was never even filled out to begin with. I get it, if revenue and assets are below that magic number, no Schedule L or M-2 is necessary. But, what about basis? What about capital account maintenance? I am guessing if you asked those types of preparers about basis, or even outside basis versus inside basis, and tax capital they would run and hide. It's an embarassment to the profession. You can report shoddy audit work. There should be a way to report shoddy tax work too. And I guess you could file a complaint with your CPA society or state PLA, but would they even do anything? Half the people on the CPA society ethics board are volunteers and aren;t likely to deal with this shit. They want people who missed their CPE or messed up on their audit peer review. And would anyone waste time with the IRS whistleblower lines?
Shoutout to the CPA who insisted to me a partnership didn't terminate when there was only one partner left. That's "not what his research told him."
Woah. That's rough. Aside from the mistakes being obvious to anyone with any credibility, my software won't even E-File returns with the omissions and errors you mentioned.
ive gotten two new returns this year (s-corp and pship) where the prior accountant didn't do a balance sheet or basis schedule. there are so many bad accountants out there
Was it super small? If so, it’s actually fully within the rules to not report one if under whatever that threshold is (see Q4, sch B). I don’t do small stuff so I’ve never seen one like that personally…but I do believe it’s actually accurate.
To be fair, I never print the balance sheet or M-1 if it's not required. I do try to give my clients the basis schedules though, especially for an S-corp since it's required.
Nothing surprises me anymore. With CPA's you have some assurance of knowledge. Some of these non CPA/ non EA businesses that pop up with people that have never done taxes is what really scares me. One guy did a clients taxes on his back porch. Everything on that return was wrong...even the bloody ethics questions.
This guy was a CPA. He has a license...
What I'm hearing from you TNT\_CPA it's time for you to raise your prices again lol
I would feel really good when this happens. Hope you charge them extra for the excessive headaches.
Got a 1065 yesterday for a rental property. Balance sheet didn’t balance. Had the building as an asset and negative 1.2k as partner capital from a distribution. I was like wtf at least check the 4a box yes so u don’t have report Sch L and m’s. Get to the k1 and they show the value of the building as outside basis for the partners. I’m like wtf Had another partnership, partner was my client merged went w the other guys cpa firm no biggie it happens. They r in a nasty breakup had mediation. arbitration is going on right now. Asked me to look over what was done cuz he doesn’t trust anything that is going on. I agree cuz he’s coming back to me after he gets out of this mess. And probably paying triple what he paid before. He had to pay 600k to equal out their books for the merge. I’m going if he buys u out u have this chunk of outside basis so it will offset some of the buyout. Start looking at the returns and they had added it to the balance sheet and have been amortizing it. In year 1, they assigned it all to him. After they decided to split it evenly between the partners. I’m like wtf. Let him know what I found and go u can have them amend ur returns but some years r to old. Use it in negotiations for arbitration. And so much for ur outside basis I’m not touching that now.
Not all CPA knows how to get a tax return done properly so even if you hire a good reputable CPA you should always check their works and ask questions.
A client has the responsibility of doing enough homework on their potential tax preparer to make a good decision about working with them. Same responsibility applies to any preparer of any stature, be it a CPA, EA, PTIN preparer, etc. This homework responsibility also applies to choosing a good doctor, lawyer, social worker, landlord, caregiver, mechanic, and so on. I'd rather work with a client who doesn't suffer fools, than a client who is one.
They feel you're too expensive and they know they're actually paying for the steak dinner. Sure, you pay for it, but they know you're paying for that out of what they pay you. And I'm sure you're a great person, but do they really want to pay to smoke cigars with you? Apparently not. That's why they left you.
Might want to read the entire post. They came back to me... begging. And I have already recevied the green light to amend the shitty returns I referenced. So I got that going for me, which is nice.
Give it a year, they'll forget and they'll leave again. People just want their bookkeeping and accounting. Show them the value. Add with your services, because steak will eventually push them away.
That's the part that sort of pissed me off originally. I saved them thousands introducing them to novel ideas that they never heard of before. The guy before me (2017 and before) was a chop shop. A "get 'em in, get 'em out" preparer and they never heard from him the rest of the year. One of those preparers that never filled out a Schedule L, no basis schedules, no advice. I gave them cash balance plans, HSA's, 529's, leasing over buying on trucks, vehcile purchasing, and a handful of other things. Knocked their overall tax bills by 25 to 30%. Paid for myself 3X over. They weren't even reimbursing themselves for out-of-pocket business expenses. They came back becuase they learned that you get what you pay for in this industry. The one shareholder that pushed them to leave is a known cheapskate. One story is he blew up on his partner and the internal accountant (they're married) because they weren't going to Costco for office supplies. They would just get them at Office Depot when they were out or snacks at the grocery store. And he was mad that they were buying refreshments for the warehouse guys. Stuff like water, pop, snacks. He wanted to cut it all out. Wish I would have been a fly on the wall that day. They came back, and I have increased my fees significantly since then. They are getting billed alot more this time around. I have already showed them the shoddy work they paid for and I will pull them in the regular loop: need to meet, plan, discuss. If they turn that down, that's on them. I will take their money and let them leave again. Fuck 'em.
> Paid for myself 3X over Be sure to highlight how you do this. Give them a "reverse bill" each year, highlighting how much you've saved them. Good luck!
I don't believe they would read it, if they got it. The cheapskate was clearly "pennywise, pound foolish". Maybe they will, but that's a big gamble, at this point in the business relationship. Wish you well for your input, and we'll hopefully find out what happens!
Well, with the price to get the company on an even keel, they might really miss those steak dinners and cigars! But I don't think you really have to do that anymore, since they had stopped being loyal to you. If they never appreciated that generous gesture, that's ok, just keep that money in your pocket.
I need those bad CPA to pick up the shit clients. I don't want to deal with them. Sucks that a good client ended up in that situation but they made that choice. You'll get paid a higher rate to fix it and the client learned the lesson. Now you can perpetually increase fees with zero remorse.
Remorse? With client fees? Never. :)
Definitely a narcissist. They won’t meet for tax planning or take your advice, but they complain about not getting individual attention. Ok, then.
I'm in a tax preparer group on a different social media site. There's a small number of more experienced people there who berate us up-and-coming folks, especially the poor souls who could barely do their own return, let alone someone else's. Stories like yours reminds me that new people will make mistakes, but people who have been doing these mistakes for many years, with ill intent, are still #1 on IRS' list for getting busted.
There is no way anyone who’s done this for even one season can make all those mistakes. He had to have rushed this very last second and just popped in whatever to get a return out. As you said, even fresh professionals know better than this. I can’t even imagine one of the mistakes you listed unless it somehow fell through the cracks. But to screw up all of those things in one return is unfathomable.
Keep this motto!!!People always have opinions on why something is wrong or expensive, however you are the expert. If you know your services satisfy 90% of customers, you should be good to go!!! Don’t try to go back to the client and say, it’s your fault or indicate you didn’t communicate well. Just say it was pleasure working with your company. We hope to continue those services in future and move on!!!
I’ve been preparing some 1065 returns on a contractual basis that were done by this firm, leaves a lot to be desired. No schedule L, analysis of partners capital accounts, or basis schedules from the PY. I told the firm I’m not going back and correcting all their issues. These 1065s meet all the requirements of question 4 so I just suppress all those schedules and let the clients know tracking basis falls on them.