My friend is worth $10 million. As his bookkeeper, I’m asked to record illegitimate expenses. Could I be prosecuted?

2 months ago 58
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Dear Quentin,

I enactment remotely for a person doing bookkeeping enactment for his corporation. He writes disconnected expenses successful a “gray” country that I tin overlook, and judge would walk an audit test. However, determination are different expenses that I cognize are not legitimate.

My person has a precocious nett worthy — good implicit $10 cardinal — and could easy spend these idiosyncratic expenses. Besides my conscience bothering me, however would the Internal Revenue Service and instrumentality enforcement presumption my participation?

I americium told what the expenses are — and I grounds them successful our accounting software.

Friend successful a Quandary

You tin email The Moneyist with immoderate fiscal and ethical questions related to coronavirus astatine qfottrell@marketwatch.com, and travel Quentin Fottrell on Twitter.

Dear Friend,

“I did what I was told” does not clasp overmuch sway for professionals who cognize the quality betwixt illegitimate and morganatic expenses. You person blurred the boundaries betwixt leader and friend, bookkeeping and taxation dodging, and idiosyncratic work and nonrecreational obligation.

The IRS volition clasp your friend/employer liable for fines and repayment of backmost taxes should an audit uncover superior errors oregon taxation evasion, but helium could constituent the digit astatine you for incompetence or, worse, knowingly making mendacious claims. If you signed disconnected connected these accounts, you could besides beryllium liable and look hefty ineligible fees.

Unless you could assertion a “due diligence” oregon “good faith” defence — you had grounds to judge that the claims made were close and implicit astatine the clip you balanced the books, and/or you were relying connected accusation fixed to you — you could find yourself successful blistery h2o on with your employer/friend.

You hazard damaging your reputation, successful summation to immoderate ineligible repercussions. You are required to comply with Generally Accepted Accounting Principles (GAAP) and/or Generally Accepted Auditing Standards (GAAS). I’ll adhd 1 much to that: Generally Accepted Personal Standards.

Do not let others, careless of their relation successful your life, to pb you into fishy decisions and hazard your bully name. Today, it could beryllium dodgy bookkeeping, and time it could beryllium a person asking for wealth oregon a spouse asking you to co-sign connected a false owe application. You lone person 1 signature. Use it wisely.

“When bookkeepers and accountants are interacting with the IRS, it is important for them to supply close and honorable information,” Acting Assistant Special Agent successful Charge Lisa Mendelsohn of IRS Criminal Investigation said successful a recent lawsuit where an accountant was charged with providing mendacious accusation to the IRS.

“Those who supply mendacious accusation volition beryllium held accountable,” she said.

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