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Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 482
Experience:  Former IRS Revenue Agent
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I had an accountant who was handling my bookkeeping and

Customer Question

i had an accountant who was handling my bookkeeping and making qtrly payroll payments at $1500 per qtr. never made the payments to the IRS and took the money for himself.
this happened over two years for a total of $30k. I have since straightened it out with the IRS and paid them $30k thus my total loss is $60k.
i have since found out that his address' are bogus and he can't be found.
what are my options on any way to find him, get any of my money back, can the money lost be considered a tax deduction. do i contact the FBI?
thank you
Submitted: 1 year ago.
Category: Tax
Expert:  Dr. Fiona Chen replied 1 year ago.

Dear Police and IRS,

I am sorry about your situation.

1) Your total loss is 30K. The other 30K is the tax you should have paid. It does not make things better, but at least is a more accurate perspective.

2) The first line of defense and recovery should be your insurance, business or error and omission insurance. Police report and all your communications with the IRS can substantiate the fact of your loss. In the insurance policies, there could be coverage for all kinds of losses. You may be able to recover some. That is the best route to get any cash recovery for your loss.

3) Find an attorney to discuss the insurance recovery thing before you approach them. Insurance' s company first strategy is to decline our request and find fault of us. You may want to have an attorney to represent you and your company to approach the insurance company.

3) In terms of how you report on your tax return for theft and casualty loss, it depends on your business' structure and type of tax return you report. If it is Schedule C business, partnership, and/or S corporation business flow through, the casualty will be reported on your personal tax return, form 1040 Schedule A, line 20, using with Form 4684. The deduction is subject to 10% of the adjusted gross income on the return. There is a statute of limitation on this. Also, the definition of the date of loss is usually the date you found out and made sure that you could not get it back. This number if causing you loss more than the year's income, may be able to have loss carry back similar to Net Operating Loss. So, please find a professional to help you. -- I don't know what to say, that is where you trouble started.

See below link for Form 4686 instruction.

https://www.irs.gov/pub/irs-pdf/i4684.pdf

Let me send you this much for a first response. Otherwise, the discussion is becoming too long to read.

I am still writing and will send you second part very soon.

Regards,

Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP

Expert:  Dr. Fiona Chen replied 1 year ago.

p.s. I meant form 4684.

Expert:  Dr. Fiona Chen replied 1 year ago.

Dear Police and IRS,

Continued Part II.

5) If it is Form 1120, we still use form 4684. It may need to flow through form 4797 or it is a straight deduction of Other Deductions because you lost cash.

This is smaller issue than what you are facing now. In the event like this, we feel the importance of using some enterprise service provider. At least, they have some insurance coverage.

6) 20 months is a long time for someone never paid over to the IRS. You should have IRS collection agent came to your business door unless the returns were never filed. In 20 years, have the person come to your business location to work for you and you handed him/her cash? If you write a check to him/her, there is a traceable track, it is just we cannot find that track on our own easily.

7) Of course, you should go to FBI. In major cities, FBI all have walk in complaint center through which you can just go in. An In-Take agent will start an initial conversation with you.

8) If your local police is not pushing it forward for whatever reason, you may contact your state attorney's office. To protect statute of limitation, you may also initiate a lawsuit of some sort. Consult an attorney on this.

9) There is a contributory factor in any type of lawsuit in terms of civil. Action against (or collecting from) insurance company can belong to this category. Criminal is in this case easier because the person took (stole) your cash and that is fraud.

I hope I addressed your questions. Please feel free to follow up. Otherwise, I am ready to be evaluated by you for your satisfaction with my answer to your questions.

Regards,

Fiona

Expert:  Dr. Fiona Chen replied 1 year ago.

p.s. I meant in 20 months. There are many clues for a professional to investigate and follow up. governmental agencies have a lot more data sources than we do. We personally are hard to do.