Friend audited by IRS and needs help?

Question

A friend of mine was audited by the IRS for her 2004 tax return. In the initial communication, the IRS requested certain proof and documents which she promptly sent. Now she received a new letter stating that her return was adjusted and she owes $2,600 and must pay in ten days. She doesn't really understand why because she had her taxes done at a professional place located in NJ. It is called "Malqui Tax" which caters to the spanish population. She has done her taxes there for the past 3 years. They supposedly have audit protection. I advised her to contact "Malqui Tax" and have them provide audit defense but she can not get in touch with them. We googled the place and they have several locations in NJ and none of the phone numbers work. They are all disconnected. What can she do at this point? Thanks.

Answer 1

May I ask what "audit protection" is? I'm a CPA and Tax Preparer and have never heard of that. I'm afraid that your friend has two choices, either pay what the IRS says that she now owes, or find another CPA/Tax Preparation firm to help her. I'm afraid though that another CPA/Tax Preparation firm may tell her that she is out of luck. There has to be a good reason that the phone numbers don't work for "Malqui Tax" anymore, probably because they are out of business now. And a CPA/Tax Preparation firm just doesn't go out of business. More than likely the IRS shut them down for tax fraud, and your friend may find that they prepared a fraudulent return for her and took bogus deductions.

I did some internet checking and have attached articles from New Jersey about Malqui. Seems like they're accused of bilking clients out of refunds.

Answer 2

1. The letter from the IRS should explain the reasons for the changes. Read the reasons carefully and decide if your friend made the error or not. If yes, then figure out how and why this happened. In most of the cases, she does not have any choice.

If your friend did not have any intention of hiding anything and she had given all the facts correctly to the tax preparer, then she can call IRS and explain facts and request for the waiver off the penalty. There is no harm in calling IRS. (your friend will have to pay tax due and interest).

2. If your friend does not agree with the additional charges asked by IRS, she must call IRS and tell them that she does not agree with the proposed changes. If the examiner does not agree, she can meet the examiner's supervisor.

Answer 3

She should buy an old copy of Turbo Tax 2004 and run the return herself to see if the same $2,600 tax owed comes up. Then at least she'd know that it's not a rip-off and should feel good paying her fair share of taxes. This will be much cheaper than hiring a lawyer or accountant. As far as actually coming up with $2,600, the IRS will usually do an Installment Plan if you ask.

Answer 4

Sounds like she's been scammed by the tax prep place. If they've now disappeared, not likely much she can do there.

If she doesn't understand what the IRS is saying, she needs to talk to them and have someone explain it. But after all this has gone on, chances are that she really does owe the amount and will have to pay it. If she can't pay it all at once she can probably set up a payment plan with the IRS.

Answer 5

Well - your search tells you that even though they speak Spanish it turns out they were taking advantage of their clients. My best advise would be to find a licensed CPA or tax attorney and start proceedings right away to find out what is the problem. She can fight it, if she thinks that is not justified, but that place that made her taxes may have made the mistake, which lead to her owing the money. So find a good reputation licensed CPA who will take her case. Don't go to H&R Block or any of those companies- the people working there at most are not CPA's and just know to answer the question asked by the software they use- sometimes not even that. Find an office a a CPA working for himself/herself or a CPA firm.

Answer 6

in the journey that your pal isn't the daddy, then he's going to be banned from claiming EIC for *any* baby for the subsequent 2 to 10 years. The IRS is cracking down on EIC fraud. And fraud this is--as he listed them as the two his nieces/nephews or as foster infants placed with him by way of a courtroom of placement agency. the only way he might have legally claimed the youngsters became to report as single, declare them as qualifying kin (no HOH, no EIC, no baby tax credit) and that still calls for proving the lived with him all twelve months (no longer in basic terms better than 6 months), that he supplied better than a million/2 of each youngster's help *and* that no person else, rather the parent, might or ought to declare them. Edit, by way of the way, for 2012, i've got been seeing somewhat some 20% accuracy outcomes. Say you claimed one greater $5000 refund (whether the IRS never will pay it out)--you are able to owe $one thousand back for the penalty.

Answer 7

Some other Tax Preparer needs to look at the return in question along with the letters received from IRS. They can hopefully explain it to her in terms she could understand.

Unfortunately for her, whether "Malqui" cheated or not, she is ultimately responsible for what is on her return. If the $2600 balance due is correct, she will have to pay it.

Answer 8

In case your pal shouldn't be the daddy, then he's going to be banned from claiming EIC for *any* baby for the next 2 to 10 years. The IRS is cracking down on EIC fraud. And fraud it is--as he listed them as either his nieces/nephews or as foster children positioned with him through a court docket of placement company. The one way he could have legally claimed the youngsters used to be to file as single, claim them as qualifying family (no HOH, no EIC, no youngster tax credit score) and that also requires proving the lived with him all yr (not just greater than 6 months), that he supplied more than half of of each and every little one's help *and* that no person else, specifically the mum or dad, would or could claim them. Edit, incidentally, for 2012, i have been seeing a number of 20% accuracy penalties. Say you claimed one other $5000 refund (although the IRS on no account pays it out)--which you could owe $one thousand again for the penalty.

Answer 9

Not much except arrange for payment schedule with the IRS. The IRS is one of two (other is INS) federal agencies with extra-constitutional powers, meaning they can strip your assets without a warrant in the name of collecting rightful monies owed to the government. She had to sign prepared tax forms, and where she signed includes a disclaimer that the signee has read and agreed to prepared form. The taxpayer, and not the preparer pays for any mistakes. if Malqui is out of business, you;re friend is pretty much out of luck, unless she wants to hire a lawyer (for more money).

Answer 10

Contact the better business bureau. If this compnay is legit they will know how to get in touch with them. If they are not, you will probably have to get a lawyer to help you. A lawyer will be a better communicator of your problems to all the parties involved.