Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

We had an employee embezzle over $500,000. She also gave our…

We had an employee...

We had an employee embezzle over $500,000. She also gave our accountant bad numbers for our taxes, causing us to under report income. My question is do we need to prosecute in order to have solid proof of the theft for the IRS?

Accountant's Assistant: What state are you in? It matters because laws vary by location.

CA

Accountant's Assistant: Has anything been filed or reported?

Not yet

Show More
Show Less
Ask Your Own Tax Question
Answered in 2 minutes by:
3/7/2018
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,639
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Ask Your Own Tax Question

You as the employer should report the embezzled income on form 1099-MISC as non-employee-compensation. You must prepare a form 1099-MISC for each tax year the employee embezzled funds.

Restoration of embezzled funds does not affect the reporting requirement. Income is recognized at the time the embezzler takes control of the funds, and, is, therefore, not affected by subsequent restitution.

It is the responsibility of the embezzler to prove to the IRS that the amounts reported by his or her employer to the IRS are not correct. Their proof would also help you should you decide to prosecute but you are not required to in order to claim the amount for taxes.

Please let me know if you need more information.
If not then please scroll up to see the STARS to rate so I am credited.

Ask Your Own Tax Question
Customer reply replied 1 month ago
Thank you. ***** need to be more specific. We are on the fence about prosecuting. The embezzler has a young family and want to sign their house over to us. Our biggest concern is if we claim the theft to the IRS does that rise a red flag to be audited and would we need to prosecute to protect ourselves?

No it does not mean you would be audited. No you are not required to prosecute. As I said the embezzler would need to show proof that the amount you claim on the 1099MISC is more than they owe the company back. The value of the property they offer and you accept would reduce the $500k and unless this happened in one year you have to calculate how much in each year was stolen and issue a 1099MISC for each year.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,639
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
Robin D. and 87 other Tax Specialists are ready to help you
Ask your own question now
Was this answer helpful?
Ask Robin D. Your Own Question
Robin D.
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,639
17,639 Satisfied Customers
Experience: 15years with H & R Block. Divisional leader, Instructor

Robin D. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,451 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

56 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

17,639 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
What form to use for my 1099-MISC made 1470.00 work for
what form to use for my 1099-MISC made 1470.00 work for Uncle, also work at my college bookstore made 3256.69 in 2016.Did not file 2016 tax,i did not know. … read more
abci168
abci168
Principal
27 satisfied customers
What IRS form being used for reporting employee wage
what IRS form being used for reporting employee wage quarterly beside form 941 (employer tax return)? is there a link to download that form from IRS website?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a question about how to report 1099-Misc royalties.
I have a question about how to report 1099-Misc royalties. … read more
Gerald, Esq
Gerald, Esq
Juris Doctor
3,826 satisfied customers
A Form 1099-MISC was issued to Estate of a deceased person
A Form 1099-MISC was issued to Estate of a deceased person that was an attorney, and reported in Box 14, Gross Proceeds paid to an attorney. How is this reported on the Estate return?… read more
Cole Parker
Cole Parker
Principal/CPA
Bachelor\u0027s Degree
87 satisfied customers
I got a 1099-misc from a former employer. They reported
I got a 1099-misc from a former employer. They reported income that I earned as a result of stocks held in my name since 2007 when I was an employee. But, they reported the amount in box 7, which mean… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My daughter had a 1099-MISC form from the sale of an FFA
My daughter had a 1099-MISC form from the sale of an FFA project animal. … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Will the IRS accept a 1099-Misc as compensation as officer
Will the IRS accept a 1099-Misc as compensation as officer on an S-Corp? Client didn't need up getting payroll set up and does not have a W-2. What do I do here?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
Receive a 1099-MISC for income earned when working for an
Receive a 1099-MISC for income earned when working for an HVAC company. Do I have to pay self-employment tax or can it be filed as income on a 1040 without doing a schedule C or F. It was income only,… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
IRS says for State and local taxes on 1099 misc income given
Second opinion] IRS says for State and local taxes on 1099 misc income given to contractor. If the sales taaxes are imposed on you as a buyer and collected from you by the service provider, do not rep… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
828 satisfied customers
I have 1099-misc income for a 1st mortgage owned by my
I have 1099-misc income for a 1st mortgage owned by my S-corp. Where do I enter this information in my 1120S? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
IRS says for State and local taxes on 1099 misc income given
IRS says for State and local taxes on 1099 misc income given to contractor. If the sales taaxes are imposed on you as a buyer and collected from you by the service provider, do not report the sales ta… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I recieved a 1099-misc income form. I was working for a
I recieved a 1099-misc income form. I was working for a local baseball league in the concession stand. When I put the info in my tax return It says that You have not entered your principal business or… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
Amended Form 1099-Misc the original tax year 2017 Form 1099
amended Form 1099-Miscthe original tax year 2017 Form 1099 was understated . How do I correct this… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
TAX: Taxpayer received form 1099-Misc with income reported
TAX: Taxpayer received form 1099-Misc with income reported in box 7 (non-employee compensation) of $4189. The taxpayer performed services as a Substitute Teacher. Is this income reported on SCH C and … read more
Carter McBride
Carter McBride
LLM
973 satisfied customers
I am late filing my 1099 Misc for non-employee compensation.
I am late filing my 1099 Misc for non-employee compensation. I did not order enough forms so wanted to do it onlne so I won't be any later than today. :( … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
I am trying to prepare 1099 misc forms and I am not getting
Hi, I am trying to prepare 1099 misc forms and I am not getting the blue screen to select. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
My wife is a property manager and is doing 1099 misc forms
My wife is a property manager and is doing 1099 misc forms for the owners that she represents. Does she base the rental income for the owners on the total gross or on the income after her fees are sub… read more
abci168
abci168
Principal
27 satisfied customers
What are the forms for reporting Rental Income to the IRS on
What are the forms for reporting Rental Income to the IRS on foreign properties - we collect each month? Is this filed separately from our personal returns?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,080 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x