My Supervisor Has Prepared Another Fraudulent Tax Return
You might wonder why I refer to it as “another.” For more context, please see the link below. Here are the details of a recent case involving a fraudulent tax return: We had a client who earned $500K annually and spent approximately $60K on tuition for their child’s Ivy League education, as indicated on Form 1098-T. Due to their high income, they did not qualify for the American Opportunity Tax Credit (AOTC).
In 2024, the client’s child landed a part-time job. To artificially inflate the AOTC claim, my supervisor included part of the tuition payment on the child’s tax return, listing it on Form 1098-T as a qualified tuition payment. Subsequently, my supervisor reported the remaining tuition amount on the parent’s tax return under Schedule A, misclassifying part of it as a charitable donation to the university—allowing the parent to itemize deductions and effectively lower their tax burden.
After reviewing the documentation prepared by my supervisor, my client expressed confusion over the tactics being used, but my supervisor reassured them, saying, “This is how I handle all my clients.” https://www.reddit.com/r/Accounting/comments/1j938hc/my_supervisor_is_preparing_fraudulent_tax_return/
One response
It sounds like you’re facing a serious ethical dilemma regarding your supervisor’s actions. The use of the term “another” implies this isn’t an isolated incident; it suggests a pattern of fraudulent behavior. Reporting part of the tuition as a donation when it clearly isn’t, as well as manipulating the tax credits to benefit the client unduly, is unethical and potentially illegal.
It’s understandable your client is confused, as these actions can be misleading and can place them at risk for audits or penalties from the IRS. Given that your supervisor has stated that this is a common practice for them, it might be important to consider the broader implications of this behavior, both for the firm and for the clients involved.
You may want to seriously think about addressing this with someone higher up or a compliance officer in your firm. Protecting the integrity of the profession and the interests of clients is crucial, and reporting these actions could prevent further issues down the line—not just for the clients, but for the firm and your professional reputation as well.