What you don’t know…….

Another post “from the other side of the desk”:

Sometimes you talk to a client and have to shake your head.  I was brought in to consult with a new client on a particular matter, and reviewed her self-prepared tax return.   After chatting and getting some background, it was apparent the client made a mistake on her tax return.  I caught a very serious error, and brought it to her attention.  It had no bearing on the matter I was brought in to consult on, but due to the fact that the omission brings a massive penalty if the IRS catches it first, I advised her of the issue.

Now, I wasn’t looking for a parade, but her response left me stunned.  She said according to her research, she was under the $400K threshold and didn’t have to file a Foreign Account Report.  She had no idea what she was talking about, because the foreign account reporting threshold is $10,000, and she was confusing FATCA laws for a married couple residing outside of the U.S. with FBAR rules.  (Note  — in this profession, there’s an acronym for everything!)

I told her she was incorrect and was confusing the tax law.  But the part that left me stunned was this: she said the software didn’t prompt her to enter this information, so I MUST be wrong and she doesn’t believe me.  In her mind, if the software didn’t raise the point, then there is no need to report the information.  The software is the end-all for self-preppers and is infallible.


When most people learn about an error, they usually want to do everything to fix it ASAP.  And those are the people a tax professional wants to work with.  It’s not a matter of who’s right/who’s wrong, but of protecting clients from their worst instincts.

We have a saying in our industry – “you can’t care more than your client”.  Now, I am guilty of this one frequently.  I enjoy helping people and care greatly about the work I do. Sometimes one just has to accept that there are people who absolutely don’t care about the tax mistakes they make, and the consequences, potential and actual.  Not sure how they sleep at night.

As for the client who refused to listen to me regarding the foreign account reporting and millions like her, the IRS is spending massive amounts of money in the area of overseas account reporting, doing more prosecutions and involving their Criminal Investigation Division.  Perhaps she may find her research was less than stellar after all.  And I can see it now – she’ll tell the IRS they are wrong, since the software never prompted her.

As my most revered mentor would always say – GARBAGE IN, GARBAGE OUT!

Until next time…………..

P.S. — Don’t forget to check out RealLifeTaxAdvice.com.  I will be doing some free webinars, and there are a number of upcoming appearances.

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