Complaint Review: Marfas Bookkeeping Servicesinc - Woodburn Oregon

This is a response to your letter dated July 14^th, 2008 in regards to a consumer complaint that you have received.

First of all, I would like to disclose that Paraskovia Lalev is my aunt, and her son David (my cousin) was the one who filed the complaint without her knowledge.

I have been preparing Paraskovia Lalevs Income Tax Returns since year 2000. Paraskovia contacted me on March 30^th, 2006 and stated that the Internal Revenue Service contacted her via phone for a 2004 Income Tax Audit and expressed her concerns to me that she did not know what the Revenue Agent wanted and asked if I could contact her.

She then gave me the Revenue Agents contact information and I phoned the Revenue Agent, Pat Rose. I left a message with Pat Rose on 3/31/06 and she called me back on 4/4/06. I spoke to Pat on the phone and I stated that Paraskovia wanted me to contact her. Pat Rose then asked for me to fax to her a Power of Attorney. I told her that I would fax it to her as soon as Paraskovia signed it.

Then, I phoned Paraskovia and told her my conversation with Pat Rose and explained to her that she would have to sign a Power of Attorney in order for me to talk to Pat Rose on her behalf. She signed a Power of Attorney on 4/4/2006 and it was faxed to Pat Rose on 4/6/06.

Per the Revenue Agents request for the 2004 audit, all income and expenses had to be verified. Paraskovia dropped off a box of 2004 information. Her 2004 multiple Bank Statements had to be reconciled and an extensive spreadsheet was created showing each deposit by date and source of deposit. Paraskovia worked for many different companies for her self-employed business as well as working for several companies as an employee.

Also, during the audit, it was discovered that she had refinanced her house twice, which there was no records of in the file or in the original tax filings of her 2004 Income Tax returns.

All checks and expense receipts had to be detailed, and reconstruction of mileage had to be created for 3 vehicles that Paraskovia had claimed business mileage expenses on, including mileage her son David Lalev (age 27 in 2004) had driven on behalf of Paraskovias business.

There was a garage/shop that she was using for her business as an office in the home. Multiple pictures, measurements and drawings had to be submitted to prove business usage, as well as 2 IRS Revenue Agents coming out to physically look at the garage/shop to verify an actual business venture existed.

 The entire audit process took approximately 6 months, and the end result was that Paraskovia could not prove some of the expenses that she claimed and that IRS re-classified some of the other expenses on her 2004 Income Tax Returns. She ended up owing some additional income tax, which included interest and penalties. Also, her 2005 Income Tax returns were unable to be filed until her 2004 Income Tax Audit was concluded.

In conclusion, the policies we have in force state that ultimately the client is responsible for the accuracy and the burden of proof for their Income Tax Returns. Paraskovia could not prove some of her expenses and therefore ended up owing additional taxes. She was upset that she owed additional taxes and thought that I could have done more. The IRS agent decided what was allowed and what was not allowed, and what they would accept and not accept as deductions.

She was also upset when she received the initial itemized and detailed invoice from me for $3470.50. This was for the 6 months of work that I had provided for her.

This complaint was generated because since she had not paid her bill, and had ignored my letters and phone calls, I filed small claims against her and due to the amount of the judgment, there was an automatic lien placed on her personal residence. That upset her son David, and that is why he filed the consumer complaint on July 9^th, 2008. When Paraskovia came in to discuss her bill on July 11^th, 2008, she did not mention to me that they had filed the consumer complaint. When I received the DOJ letter on July 15^th, 2008, I phoned Paraskovia and asked her what was going on. I thought we had it all taken care of when you came in on July 11^th? She said that she didnt file the consumer complaint and didnt know anything about it, and she would contact David and ask him. Later that day, she phoned me and said that David would take the consumer complaint off when I took the lien off the house. So this was more a family issue, rather than a consumer complaint about my business issue.

In response to the actual consumer complaint:

I did not pressure Paraskovia in having her audit done by me. She was the one that contacted me and asked me to call the Revenue Agent and she voluntarily signed the power of attorney. The IRS cannot legally contact the taxpayer after they are told that she will have someone else contact them, hence the power of attorney, so I dont understand the statement that she states that I told her that she should not speak to them as she might screw it up. Paraskovia was the one that stated that she did not want to speak with IRS since she did not know what to say.

The complaint also states that the reason for the audit was due to us not filing all monies with the IRS. This is untrue, since whatever income the client brings in for her tax returns to be filed is what we file the returns by. She knows who and how much income she made, and therefore should bring all income to us to file on her tax returns. We have no way of knowing how much income or if all income is being reported to us to prepare the tax returns. The tax returns are prepared with the information that is given to us.

It is unclear what triggered her audit. It could have been computer picked at random or someone could have contacted IRS regarding Paraskovia, etc. When we asked the IRS Agents, they did not know. Pat Rose said they just get the file, and they proceed.

As stated above, her 2005 tax returns were on extension until her 2004 audit was resolved. I didnt have any 2005 information to prepare her 2005 taxes.

Her additional 2004 taxes owed, interest and penalties amounted to approximately $1700. My detailed and itemized statement sent to her was for $3470.50, not over $5000.00. It had accumulated to over $4000 due to interest and monthly late fees. A statement was sent to her every month.

There was never a guarantee that her case would be won. Nor was her case lost.

The amount of my services was based on time spent; it was never based on triple amount of what she owed.

Update:
On July 11^th, 2008, Paraskovia and I agreed on a discounted settlement of her bill, which she has paid.

She had also signed a letter and agreed to remove or add to this complaint that is was all a mis-understanding, which she has not followed through on.

It was more for them being upset with a family member (me) versus my business practices. She thought that I could do better representation of her audit, and was upset that she couldn't prove her expenses and got caught and had to pay the additionla taxes, interest and penalties.

I have great pride in running a succesful business and have been in business for 11 years with no complaints. If you need to contact me my phone number is 503-982-3345.