Filing Status

[Tim-1963]

I have a new CPA practice, (I have been auditing and accounting governmental and NFP for nearly 30 yrs), however I am now learning taxes and private industry. I also do CAS. I learned since I decided to prepare tax returns in 2020 that one of my client's in the construction industry who I do CAS for his business, that he filed as Head of Household for the last few years. However, he is and was married while he filed as Head of Household. 

My question is should I recommend he go back and amend this? I will not prepare his tax of course unless he agrees to comply. 

Thank you

[BobKamman]

You can tell him his returns were not correct and advise him that they are still open to IRS audit.  If he asks how likely it is that IRS will discover the mistake, you can point out the percentage of returns that IRS audits in his income range.  If he wants to know the difference between self-reporting and waiting for a possible audit, you can explain the 20% negligence penalty.  As far as recommending an action, isn't that more of a moral choice than professional advice?  Of course, for future returns you want to bring him back into compliance.

Married men who cheat on their taxes are more likely to cheat on their wives, also.  The dilemma might resolve itself when his future ex-wife turns him in.

[abctax55]

My question is should I recommend he go back and amend this?

Yes - and as Bob points out, tell him what the consequences might be if he doesn't.

I will not prepare his tax of course unless he agrees to comply. 

You *can* still prepare his taxes going forward as long as the filing status is correct.  Personally, I wouldn't want to work with a client that refused to amend/correct the prior year returns (assuming the impact is significant....).  Life is too short to work with such folks, IMHO but YMMV.

[sjrcpa]

Did he live with his spouse?

[Tim-1963]

Great detail and advise. Being I just started earning and studying tax as a CPA, i know pretty much nothing compared to all you tax people. 

I was in government for about 30 years, got out, and decided I could not stomach it any more !!!

Thank you for your time and God bless

[Tim-1963]

Yes, I fully agree with your take on just don't file his tax returns. I don't plan to, but still engaged in his CAS on a yearly basis. Just don't and won't do his taxes. 

Thank you for your time!

[Tim-1963]

Yes, he did. I do know that for certain and they have two small children between them. 

Now, I don't know for certain if they are married. He calls her his wife, but I don't have any confirmation they are or were ever married.  

[BobKamman]

@ Tim-1963 "Now, I don't know for certain if they are married."

Maybe his "wife" is a widow who will lose workers compensation or other benefits if she remarries.  I have had several clients in that situation.  Or maybe her spousal maintenance ends when she remarries.  There is no central registry of marriages and divorces in the United States, so it's not easy for anyone, including IRS, to know the facts.  Let's not get hurt, jumping to conclusions.  Thirty years in government can shelter you from the real-world soap opera that tax practitioners experience daily.

Earlier this year, a Tax Court litigant was not successful in his claim that he is married.  His social media footprints did him in.  See

https://procedurallytaxing.com/oversharing-on-social-media-reaches-the-tax-court/