Taxpayer claimed child for 2 years. He didn't have a child. Claims return was prepared by a tax preparer.

my thoughts exactly - were the returns efiled or paper filed to start off with? Do you see a paid preparer on the return or is it showing self-prepared? If efiled that has to be a real person with a social security number. I would ask a lot more questions. Also did they file HH? Were they "living" with someone and it was their significant others child. Does the taxpayer know the claimed child. way too many red flags here.

Best source is not a third party's article that doesn't describe the requirements for voluntary disclosure, but IRS itself:

https://www.irs.gov/compliance/criminal-investigation/irs-criminal-investigation-voluntary-disclosure-practice

One key point is that the taxpayer should contact IRS, before IRS contacts the taxpayer.  So I would want to know why this person suddenly got religion.  I don't think the facts you describe rise to the level of a criminal prosecution, so the question becomes whether to drag out the process or come clean quickly. Although IRS is unlikely to prosecute the taxpayer, they might be interested in going after the preparer, and they would need witnesses to testify before a grand jury and at trial.  

IF ( and I wouldn't touch this with the proverbial ten foot pole) you take this on, get a retainer.  A big one.

I second the motion of sending him off to a tax attorney.

Your client *may* have been hoodwinked into signing a return falsely claiming a dependent.  I have clients I could do that to as they do NOT even look at what their return says.  But your client is responsible for what he signed (either paper file or efile).

I just noticed the part about the friend's mother being the preparer.  So I started thinking of all the accounting issues.  Maybe she keeps an inventory of unused child SSN's.  Kids whose parents are not eligible to be claimed for any credits, so she pays them in return for their promise not to let anyone else do this.  Can that be expensed, or is it part of cost of goods sold that requires an annual inventory?  LIFO or FIFO?