[Anonymous]

One of my coworkers has “some guy” who did his tax returns for a few years. Three other coworkers also went to “some guy” this year.

At lunch we talked about the refunds they’re getting. One of them is single and rents an apartment, so I don’t know how “some guy” found more than $6300 in deductions to make it worth itemizing. Legally, I mean.

He mentioned work clothes, but we’re a business casual office so I think it fails both tests.

1. You must wear them as a condition of your employment.

2. The clothes aren’t suitable for everyday wear.

Should I say anything?

[Missy]

Not sure what you'd even say. I get the feeling your friend already has a good idea if things have been fudged, and unless you've seen his return you're only making assumptions about what is going on. Your friend could be completely off base anyway and talking out his backside.

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[Biff-1955-Tannen]

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[Biff-1955-Tannen]

“Snitches sleep in ditches …” lol

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[Anonymous]

If you're wondering whether you should say anything to your coworkers to alert them to the likelihood of this being potentially fraudulent, if you work in a career line that they're more likely to be unaware of the rules, then I'd be inclined next time the conversation comes up to say something like “Ya know, I don't think that's actually deductible…” cause they might just be trusting this guy and not know any better. If you worked in tax, then they'd be making an idiotic decision fully informed, but given they're having “some guy” do their taxes, I'm assuming you're not in tax. Outside of tax, the tax knowledge of accountants is often minimal, and I've been surprised at the things that people have genuinely not known and been appreciative when informed about. If you say it in a friendly, casual enough way, then those who don't know can be aware and modify their behavior accordingly, and those who are happy being fraudulent can carry on their way hopefully without taking offense.

If you're asking should you report it to the IRS, I'm not aware of any ethical obligation to do, and given that you don't know for sure what totaled up to the $6300 of deductions, you don't know for sure what's going on. My knowledge of tax law would agree with yours that business casual isn't deductible, but that's not the whole $6300. While I fully agree that it sounds like there's something shady, it also sounds like all that you know is water cooler talk. To my knowledge you're under no obligation to report it, so then it'd be up to you whether you'd consider water cooler talk substantial enough evidence for you to want to report it.

The “some guy”, though, could be in a lot of trouble if a lot of his clients ended up with fraud investigations, cause presumably he knows he's been having them claim questionable items. I wouldn't want to be him. 😐

[June2016]

I remember someone telling me that in the past tax law wasn't very specific on what is considered as “work clothes”, so people would deduct business suits, etc and get away with it. Maybe “some guy” tax preparer thinks they can still get away with it legally.
As for the other deductions maybe he had a large amount of medical/dental expenses along with something else? If he ever brings it up again I would just mention nicely that you don't remember that being a deductible. He might not realize it isn't legal and thinks that his tax guy is just being strategic.
People who don't understand tax don't realize that if every tax preparer follows the correct rules the outcome will always be the same. Those people think that they can find skillful tax preparers who can get them a refund or reduce the amount due.

[monikernc]

are you a tax expert?
first of all i would think twice before saying anything unless you think they would care and really do not know any better. if i did say anything, i would ask them what their withholding amounts are – they may have too much tax withheld from their pay and get more back than you would think is likely. student loan interest, maybe? the clothes things sounds a bit shady, i agree.
i think the one question i would ask them is who is signing their return? if this ‘some guy' is truly shady and these coworkers are really dumb about these things, chances are ‘some guy's signature is nowhere to be found. if that is the case, i would ask why they think he didn't sign them.

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[Missy]

And one thing I learned doing taxes this year is how completely clueless the average taxpayer is. For all you know, “some guy” just asked if your coworker had business clothing expense, your coworker said he spent 600 on khacki's, “some guy” decided standard deduction was better but your coworker misunderstood. You'd be amazed at the stuff clients told me their tax preparer did the previous year that was completely false. If your coworker is not in tax, he could honestly believe he deducted a picture of a unicorn he walked by in the mall.

Old timer,  A71'er since 2010.

Finance manager/HR manager

 

 

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Author]

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