Shady Client Wouldn’t Pay His Taxes So His Accountant Reported Him for Fraud and Got a Million Dollar Payout

An accountant found the perfect way to make one of his late-paying clients pay the money he owed.

He recently posted the story on Reddit as a cautionary tale for everyone considering not paying their accountants. 

Here’s the story. 

Photo Credit: Shutterstock.

The accountant owns his own firm, mainly catering to small to medium-sized businesses. He always has a few clients who seem reluctant to pay their accountant fees on time.

The worst ever was a local guy who owned four bars and clubs in two cities – a real shady type. For the sake of this story, let’s call him Scott.

As luck would have it, one of the accountant’s friends was a regular at Scott’s bar. And during a conversation, he discovered that Scott’s bars were jam-packed with paying customers every night. Besides, Scott offered all customers a 15% discount for paying their bar tab with cash.

“This stinks,” thought the accountant. Scott was always saying that business was down, and that’s why he wasn’t paying his bills on time. 

“This guy has got the money to pay and is clearly up to something dodgy. I’m going to investigate,” the accountant thought.

A few days later, the accountant joined his friend for a few drinks at Scott’s place. This was the perfect opportunity to see what was happening at the bar.

It didn’t take long for the experienced accountant to figure out what was going on. Scott was offering a cash discount, pocketing the money, and vastly underreporting his income. 

He clearly had more money than he was telling his accountant. This made the accountant furious. Not only was Scott cheating the taxpayer, but he was also putting off paying his accountant out of pure greed.

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So the accountant decided to teach Scott a lesson. He spent some time at all of Scott’s bars, using the information on menu prices and the number of customers coming in to estimate how much Scott was actually making.

Then he compared that figure to the income Scott reported on his accounts. In total, the accountant guessed that Scott was underreporting his income by as much as 40%. Shocking behavior.Cheaters needed cheaters’ justice. So the accountant did what any good and ethical accountant should do; he partnered up with a lawyer, got the case airtight, then passed Scott’s details onto the Internal Revenue Service (IRS).

Then the accountant fired Scott as a client, meaning he would never get his fee. But that wouldn’t matter because the accountant had a plan. 

As it happens, the IRS doesn’t play around. Scott was in big trouble.

After a lengthy investigation, including a lot of legal wrangling, the IRS sent Scott a statement saying he’d underreported his income by around $4.5 million. The IRS told Scott to pay up or face the consequences – and by consequences, they meant jail.

The accountant was glad when he found out that Scott got what he deserved. But he had another reason to be happy. In fact, he had over a million reasons to be happy.

As the person who brought the case to the IRS, the accountant was now in line for a whistleblower’s bonus. Based on how much the IRS recoups, it will be anywhere from $675k-$1.3 million. Not bad. Not bad at all.

When asked about his windfall, the accountant said, “I no longer have to worry about my mortgage, and it would have been much cheaper for Scott just to pay me.”

The moral of the story? Never mess with the IRS, and always pay your debts.

Would you have reported Scott to the IRS? 

Source: Reddit

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