Ask The California Employment Tax And Payroll Tax Attorney – The Importance of Choosing a Tax Return Preparer You Can Trust – The Murrin Case – Part 1

By Robert S. Schriebman
2024

Introduction

This is Part 1 of a 2-Part series.  Choosing a trusted tax return preparer or advisor cannot be overemphasized as will be discussed in this series of articles.  Stephanie Murrin’s tax return preparer was a crook and the fallout from his fraudulent activities caused Ms. Murrin a nightmare of substantially assessed taxes, penalties and daily accruing interest.

Taxpayers bear legal responsibility for the accuracy of their income tax returns, regardless of the preparer.  In IR-2024-31, the IRS has warned against unscrupulous tax return preparers, highlighting red flags such as the absence of a signature on the tax return.  The IRS has advised taxpayers to avoid such unethical practices and to select a tax professional with a valid Preparer Tax Identification Number for added security.

Here are a few pieces of advice from the IRS:

• Seek a preparer available year-round.
• Review the preparer’s history.
• Inquire about service fees, avoiding those tied to a percentage of the refund or suggesting direct deposit into their accounts.
• Provide records and receipts, good preparers ask to see these documents and do not hire a preparer e-filing using pay stub instead of Form W-2.
• Never sign a blank or incomplete return.
• Thoroughly review the tax return before signing it.

Taxpayers are expected to report preparer misconduct to the IRS by utilizing Form 14157, Complaint: Tax Return Preparer.  In cases where taxpayers suspect a preparer filed or altered their tax return without consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

When a Bad Tax Return Preparer Gets on the IRS’ Radar

The IRS is smart, and they have task forces whose job it is to identify and weed out bad tax advisors and tax return preparers.  When an unscrupulous preparer/advisor is identified, it is a common practice for the IRS to put that preparer/advisor out of business.  What about the clients?  The IRS may audit each and every client and assess additional taxes and severe penalties including civil fraud penalties if the IRS can prove the client was complicit.  Normally, the IRS has three years to audit a filed income tax return.  But if fraud is detected, the statute of limitations for examination goes out the window.  The IRS has an unlimited period of time to go back and review returns.  Even if the client was not involved in fraudulent behavior in any way, the unlimited statute of limitations still applies.  This means an innocent client can be hit with huge assessments.  This is what happened to Stephanie Murrin.

Conclusion

In Part 2, I will discuss the Murrin case and the horrific impact of the unlimited audit limitations period.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.  Mr. Schriebman is in private practice.  He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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