On Aug. 25, Robert “Bob” Newsholme, the 66-year-old owner of Flagler Tax Services in Bunnell, shot himself in an apparent suicide attempt. He survived. On Sept. 3, the Flagler County Sheriff’s Office and other law enforcement agencies, including the IRS, served a warrant on Flagler Tax Services, collecting reams of documents and opening numerous investigations of alleged fraud. As of Sept. 10, the Sheriff’s Office had accumulated 57 such cases. Chris Kocher, a tax accountant in Bunnell, offers advice to those who may be finding themselves facing IRS late-payment letters and other demands for accounts.
By Chris Kocher
I am a Certified Public Accountant (CPA) operating here in Flagler County. The Robert Newsholme case has brought out a few very good lessons for many taxpayers I’d like to address.
First, the only thing you should be paying your tax preparers for is their services. They are not the IRS. Therefore, reputable ones do not normally take payments that are supposed to go to the IRS. I advise my clients either to make electronic payments directly through their tax filing, which almost all commercial tax software packages allow, write a check directly to the IRS, along with a proper payment voucher, or utilize the IRS’ online application.
Second, only taxpayers are on the hook for the accuracy of their returns and taxes owed. This is why using a reputable, trustworthy professional is essential. Obviously we can all be fooled by charisma and seemingly good people. It is a real shame when so many people are or were taken advantage of by fraudsters and scammers. I subscribe to quite a few tax blogs. These types of stories are not unique to Flagler County. They are happening all over the country all the time. (The U.S. Justice Department has a whole list of examples, including two from Florida.)
When I have clients who ask about audit and other representations, I explain that they, as the taxpayer, are responsible, but that I will stand behind my work on their returns. My name is on that return, too.
If you were a client of his and unsure if your returns were filed or taxes paid you can go to the IRS website, set up an IRS.gov account, and review your tax account. This allows you to see return information, payment information, and balances due. You need some specific documents to use their system (for identity protection purposes) but this is probably the fastest way to get some answers.
The fact is that the IRS is backlogged. They’re catching up slowly, but their agents have been under a tremendous amount of pressure both last year and this year. It sounds cliche, but Covid, the stimulus packages, the retroactive changes to 2020 tax law for unemployment and Marketplace Insurance and numerous new “Acts” or laws that altered the tax landscape over these past 18 months, in addition to agents having to work remotely for months without adequate access to their own systems, has caused havoc.
The last update was that 10 million or more returns are still backlogged. If you qualified for earned income credit or child tax credit or if you received unemployment in 2020, or it you had Obamacare insurance or if you qualified for one of the self-employed Covid credits (the list goes on), your refund was delayed.
I waited over four months for my refund that was e-filed in March. I got it in August. Also, if you mailed your payment in, the processing and posting of such payments were delayed significantly. I have clients for whom we filed returns in February, March, April. They mailed their payments at that time. They received notices that showed they still owed. Now, if you read these notices, many of them note in there that it may not include payments that were not made directly with the return. But this doesn’t make the taxpayer feel any better.
The point is that just because you got a notice that shows you owe taxes does not mean you were a victim. In this case, it appears to be looking that way, but conduct your due diligence, get the IRS.gov account, and review your own tax account.
Although CPAs are required to pass a rigorous exam and go through a significant amount of continuing education, there are currently no license, registration, or credentials required to “prepare taxes.” The IRS tried to regulate tax preparers a number of years ago but was thwarted by the courts, which determined that the IRS was not allowed to register tax preparers: it’s not in the agency’s job description. So the pop up shops are still out there every year and fraudsters or scammers will continue to operate freely until something changes on that front.
Lastly, as you move forward, always review your tax returns. Preparers are not perfect and mistakes happen. Obviously, there is a huge difference between a mistake and blatant one, or intentional fraud, theft, embezzlement and so on, but errors can be corrected and the sooner the better.
My office has been receiving calls from former Flagler Tax Services clients. I am happy to help how I can, when I can, but you can get updates or information directly from the IRS first. If you find something fishy, call the Flagler County Sheriff’s Office, file a report and get a case number This will help a great deal in your quest to get things cleaned up with the IRS.
Sad story, but we all have to keep moving forward.
Chris Kocher, a licensed CPA since 2003, has been in business in Flagler since 2006. He owns LCI Taxes in Bunnell. See the company’s Facebook page.
Jane Gentile-Youd says
Thank you Chris- how very kind of you to educate the many of us who ‘trust’ our tax preparers . And how kind of FlaglerLive to care about all of us by posting your advice.
Of course we will be contacting you.
Kenneth McGevna says
As a practicing CPA, with over 35 years of experience, I have encountered many of the same problems facing the victims of Flagler Tax Service. As I am certain that, by now, Mr. Newsholme has been designated “An Abusive Tax Preparer” his victims should consider the following actions:
– File a request for abatement of any Penalties which have accrued with The Inspector General for Tax Administration [TIGTA].
Call, write a letter, or use Form 843 to make the request for abatement stating the facts of your situation and the amount of the
abatement you are seeking. You may fax the latter two documents Telephone: (800) 366-4484; Fax (202) 927.7018
– Contact the Taxpayer Advocate’s Office either via Telephone [(904) 665-1000] or faxing Form 911 outlining the facts of
your situation and the assistance you are seeking [(855) 822-3414]
Thank you Chris Kocher for your cogent advice!
I would also add that the IRS has been understaffed for the past 10 years+ due to Congressional budget cuts which only adds to the backlog. I would suggest contacting our Congressional representatives ( Mr. Waltz) to express your concerns and to urge funding to improve proper staffing levels.
Lillie Keeton says
Thanks so much for the article and the advise. I totally agree with what Mr. Kocher said. I have been preparing taxes for over 50 years and I have build my reputation and business on honesty and compliance with IRS.
What is an IRS Enrolled Agent? Is that better than any Tom, Dick or Mary who does tax prep at their kitchen table?
This is from the IRS website: An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years.
As a retired IRS employee, I recommend asking your tax preparer if they’re an enrolled agent. It can make a difference if your return is fairly complicated.