Announcement

Collapse
No announcement yet.

My accountant made a major error on 2017 income tax prep.......

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • My accountant made a major error on 2017 income tax prep.......

    Received a letter from IRS asking for a check for over $21K (unpaid taxes plus penalties plus interest). Apparently my accountant did not include the capital gains on some mutual funds that I had sold in a taxable Vanguard account. I went by his office and he had copies of all the Vanguard end of year tax forms that I had provided. He admitted that he had overlooked the capital gains. He said he was going to file an amended report. Later that day he called me and said he refiled and used a cost basis and got the amount down to about $6,500 Federal plus $1,300 State taxes. I asked about the penalty and he proudly said that reduces you late filing penalty to $600 plus. Now I don't mind paying the taxes plus interest but I do feel he should be liable for the penalty.

    He he has been my accountant for 36 years and I would never ever think of taking him to court, esp over such a small amount. How would you handle this? Ask him to pay the penalty part if he doesn't volunteer to do so. Go ahead and suck up the whole Bill myself and terminate him as a accountant. I know what most of you will reply,but this a small town and I will see him all the time and he is a nice man whose son is a medical doc also.

    P.S. he is the same accountant who didn't know what backdoor Roth was. Bless his bones.

  • #2
    He pays.
    If he doesn't he's no longer your account.

    Comment


    • #3
      I understand mistakes, but this is kinda serious. I think he has to pay. I'd definitely have a proper sit down with him. Because now I have to double check all his work. So why am I paying him...

      Not even about the money. More about him making it up to you. 36 years is a long time. Too long to leave him over this. But too long for him to not want to retain you over this.

      Comment


      • #4
        I'm honestly not real sure what the standard is for this kind of thing. On one hand, that's a pretty lackadaisical error on his part. On the other hand, you're ultimately responsible for your taxes being correct. I would ask him to pay but I wouldn't push real hard. I would probably just pay it and find a new accountant. I probably would have found a new one when I found out he didn't know what a backdoor Roth was.

        Comment


        • #5
          I would certainly ask for the penalties to be paid by the accountant - that is the only decent thing for him to do, impo. Along with an apology for the stress you have been through, of course. Saying this as a CPA who has certainly made mistakes over the years. They will happen and if a CPA tells you differently, they are either lying or very, very inexperienced. However, it is our policy to pay both penalty and interest if there is any question that we may be at fault - and we do not wait for the client to bring it up (at least, if it is a situation we are aware of). This is not to toot our horn, as I believe any honorable firm would do the same. I am flummoxed as to why a CPA with whom you have done business for 36 years would not offer to do the same without being asked. Unless you’re a huge PITA and he’s hoping you’ll leave w/o being fired?

          Yes, the client is ultimately responsible for the taxes being correct. You are attesting to that when you sign your return. This is a big CYA for the preparer. Otoh, this puts the CPA in the position of paper pusher and data entry clerk, not the professional who understands the tax code and prepares the return according to the law and in the best interest of the client. Saying the client is ultimately responsible is technically true when it comes to answering to the IRS but, c’mon, you pay your CPA big bucks (I presume) to advise, optimize your tax liability, and file correctly - and make it right when s/he makes a mistake.

          I absolutely wouldn’t bless his bones, with all due respect (which it appears he doesn’t have for you).
          Financial planning, investment management and CPA services for medical professionals | 270-247-6087

          Comment


          • #6
            Doesn’t TurboTax do this kind of stuff automatically?

            Agree with the crowd that the penalty should be on the accountant.

            Comment


            • #7
              Agree with above. He makes this right or he goes. I would not take him to court over $600

              Comment


              • #8
                Originally posted by jfoxcpacfp View Post
                I would certainly ask for the penalties to be paid by the accountant - that is the only decent thing for him to do, impo. Along with an apology for the stress you have been through, of course. Saying this as a CPA who has certainly made mistakes over the years. They will happen and if a CPA tells you differently, they are either lying or very, very inexperienced. However, it is our policy to pay both penalty and interest if there is any question that we may be at fault - and we do not wait for the client to bring it up (at least, if it is a situation we are aware of). This is not to toot our horn, as I believe any honorable firm would do the same. I am flummoxed as to why a CPA with whom you have done business for 36 years would not offer to do the same without being asked. Unless you’re a huge PITA and he’s hoping you’ll leave w/o being fired?

                Yes, the client is ultimately responsible for the taxes being correct. You are attesting to that when you sign your return. This is a big CYA for the preparer. Otoh, this puts the CPA in the position of paper pusher and data entry clerk, not the professional who understands the tax code and prepares the return according to the law and in the best interest of the client. Saying the client is ultimately responsible is technically true when it comes to answering to the IRS but, c’mon, you pay your CPA big bucks (I presume) to advise, optimize your tax liability, and file correctly - and make it right when s/he makes a mistake.

                I absolutely wouldn’t bless his bones, with all due respect (which it appears he doesn’t have for you).
                Thanks. I agree he should at least offer to pay the penalty. He made a mistake and admitted it. He only charges me about $500 each year and hasn't raised his fees for many years. His daughter whose is in practice with him does our office accounting and is sharp as a tack. I may ask her to do my taxes in the future as I'll be facing the RMD of my profit sharing in a year.

                Comment


                • #9
                  I myself wouldn’t ask him to pay the penalty, with the relationship and situation you are in. I would inquire about the next steps for making the tax payments. If he didn’t outright come out on his own and offer to pay the penalty/interest, then that, would be that.

                  I’d be disappointed, but not angry. Next year when he inquired about doing your taxes, I just say, “I think this year I’m going to give it a go, and do them myself.”

                  Then I’d just do them myself unless things are very complicated, or hire a new accountant.

                  I went to an accountant twice for my taxes. One of the years I watched him do them quite quickly on some computer program in his office for a hearty fee. After that I went back to TurboTax at home. But my tax situation is relatively straightforward. Takes me a couple hours.

                  Comment


                  • #10
                    Always a little awkward to bring this up outside the immediate conversation.

                    you might ask if he can waive next year's prep fee, unless it was already office policy to reimburse penalties and interest.

                    Comment


                    • #11
                      Considering the relationship aspects.

                      His fee was $500 for 2017. Refund or absorb that amount. His mistake was $600+ penalties limits his share to what he was paid. It’s a refund of his fee due oversights he made a you graciously will absorb the rest. He signed as the preparer, that has some responsibilities too.
                      He takes $500 and you take the rest. Sounds fair? Fair deal among friends. Damage done, let’s just agree to split it. You are offering to limit damages to what he got paid.

                      You brought up the daughter. THAT is a whole different dynamic. If she is taking over the practice, time to have conversation about how you fit into the transition process. She may simply say, “Sorry, I got this.”
                      The amended returns should NEVER have been filed without your knowledge first. I would have a potential transition discussion with her first to get her take . She may be in a better position and simply need “trigger” to transfer client responsibilities. Dad may be left with “reviews” making himself useful to her. That sounds like a “win,win,win” in and out of the office.
                      The $500/600 isn’t the issue here. It highlights your previous concerns. By the way, she may raise the price. I wouldn’t argue one minute.
                      RMD’s are simple reporting on taxes. Don’t sweat that (non issue).




                      Comment


                      • #12
                        Well $500 is cheap of your taxes are complex. I do think the accountant should pay the penalty and interest. I would be very upset with this.

                        Comment


                        • #13
                          The accountant I used in the past was a family friend. He didn't charge much but he did not know that an HSA was tax deductible. I told him that I was going to do it on my own. Got busy and it got late in the season so I ended up just going to h&r block. I realized I knew more then the tax preparer. So I have been doing turbo tax ever since.

                          Comment


                          • #14
                            500 is cheap, too cheap really.

                            Comment


                            • #15
                              Originally posted by Ykcor View Post
                              Thanks. I agree he should at least offer to pay the penalty. He made a mistake and admitted it. He only charges me about $500 each year and hasn't raised his fees for many years. His daughter whose is in practice with him does our office accounting and is sharp as a tack. I may ask her to do my taxes in the future as I'll be facing the RMD of my profit sharing in a year.
                              The low fee (and that is a really low fee) probably is not an indication that you are getting a bargain, but that he doesn’t have the support system during tax season for thorough reviews and cross-checks of everybody’s work. The result is that you only learn about the mistakes you find yourself or the government has notified you about. There is no telling what this “bargain” has actually cost you and his other clients over the last 36 years.. Same for any tax preparer who actually has the ego to prepare the tax return while the client is in the office (sometimes watching!) so you can get it right away. While I appreciate your heart for not hurting feelings, I suspect you are paying a very high price for being “nice” in a small town.
                              Financial planning, investment management and CPA services for medical professionals | 270-247-6087

                              Comment

                              Working...
                              X