Florida tax attorney Peter Pappas passes on a depressing story:
After analyzing the taxpayers Z-tapes and bank statements we determined that it had failed to report upwards of $1,000,000 in gross receipts in 2006, 2007 and 2008.
When I called the taxpayer’s New York CPA preparer to alert him to the underreporting he said that he was aware of it and called us idiots for recommending that the taxpayer voluntarily amend its S corporation and individual tax returns to correct the underreporting. Here’s was his justification:Nobody reports all of their cash receipts. That’s the way we do things in New York.
Believe it or not, the taxpayer, on the advice of this crooked preparer, fired us and hired a New York tax attorney¹ to represent it.
So the New York preparer was a (highly regulated) CPA. The apparently crooked lawyer was a (highly regulated) attorney. Both have to pass ethics and CPE requirements. Robert D Flach correctly concludes:
It doesn't prevent fraud, it doesn't prevent incompetence, all while imposing costs on the honest and competent at least as much as on the unscrupulous and inept.
So tell me again why all this new IRS preparer regulation is such a great idea?
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