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contractor. Mary Ann Irussi, a local accountant, prepared tax
returns for petitioners for 1995 and 1996, the years the
construction business began operations. The gross revenues from
the construction business ranged from $2.5 million to $3 million,
and petitioners owed about $45,000 in Federal and State income
taxes each year Ms. Irussi prepared returns for petitioners.
Petitioner was not satisfied with Ms. Irussi’s services for
several reasons. Petitioner stated that he wanted a return
preparer who would be more responsive to his needs, timely answer
his questions, and reduce his income tax liability. Petitioner
did not check with any local accountants or professional return
preparers. Instead, a relative told petitioner that a tax
preparer named Anthony Borrelli from St. Louis, Missouri, would
reduce petitioners’ taxes. Petitioner contacted Mr. Borrelli by
telephone a few times, and the two spoke for approximately one-
half hour each time. Mr. Borrelli mentioned Code provisions, and
petitioner assumed Mr. Borrelli was familiar with them.
Petitioner hired Mr. Borrelli without determining whether he had
the education, experience, or credentials to prepare returns
professionally. Petitioner never asked Mr. Borrelli to provide
references or information regarding Mr. Borrelli’s credentials or
experience.
Mr. Borrelli prepared returns for petitioners for the years
at issue. Mr. Borrelli provided petitioners with a tax organizer
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