This epic story from Redditor u/redditadmindumb87 is like a good thriller, with loads of hidden cash, federal government service and an accountant who smelled that something was not quite right with his business owner client. So get your popcorn ready, everyone.
“My buddy is an accountant, he has his own firm. His biggest clients are small to medium-sized businesses,” wrote the author in a post two days ago that since went viral. “Well, he had a client who owned 4 different clubs/bars in 2 different cities. Client was always shady, always slow on payment, etc.” Turns out, the client didn’t pay the accountant “a significant chunk of change,” and that was understandably bugging him a lot.
The suspicions rose after the author and his accountant friend realized that the bar owner named Scott could not be doing that bad since his venues were always packed. Moreover, he would even offer a 15% discount for any customer paying cash.
“My friend tells me his plan is to go all 4 of Scott’s establishments, get the prices he charges at each place, piece together how much alcohol he's buying vs how much Scott is saying his revenue equates to. He looks up how much Scott is paying in payroll, rent, bills, etc.,” u/redditadmindumb87 wrote about his accountant friend. What followed was the plot worthy of a Safdie brothers movie where $4.5M was at stake.
An accountant who had enough of not getting paid by his business owner client came up with an epic plan to bust the owner
Image credits: Tima Miroshnichenko (not the actual photo)
The story was shared on the Pro Revenge subreddit by the accountant's close friend who followed the whole story
It’s important to note that underreporting your income is a huge deal to the IRS (the Internal Revenue Service). The agency estimates that the U.S. loses hundreds of billions per year in taxes due to unreported income. Considering the amount of lost revenue, it's not surprising that the IRS has a process for determining unreported income.
In most cases, your information gets red-flagged by a system called the Information Returns Processing (IRP) System. This is a huge database that reviews the earnings you report (or don’t report). It compares your stated income to the information third parties provide. Your employer, banks, and other financial institutions all report to the IRS each year, just like taxpayers. When there is a discrepancy in that data, an alert goes out and the IRS investigates.
The resident tax expert Joe Valinho at Debt.com explained: “Even in the absence of a tax return, the IRS can determine if you owe taxes by the income that was reported to them by others. Using this information the IRS can file a tax return for you, without any deductions and file you as single at the highest tax rate, regardless of your marital status or deductions.”
If a taxpayer underreports income, like in this story, the IRP sends an alert to the IRS. According to the information provided by Debt.com, an IRS agent compares the income on your tax return with the information in the IRP. The IRP allows agents to match income reported on third-party information returns against the income reported by you. If they find that you underreported your income, the IRS begins the collections process.
People pointed out that this story is a great example of how you should never mess with an accountant, others shared their own experiences
