When your CPA screws up?

[ultrarunner]

I’m not sure best how to resolve and calling on the TBN brain trust.

My CPA filed and under reported income tax PAID tax year 2022… she totally missed the taxes paid on K1.

I caught it within 24 hours and CPA immediately filed amended return.

6 weeks later I receive notice of underpayment and meet with CPA and CPA responds citing clerical error and stated see corrected amended return showing taxes in fact paid in full.

Today, close to a year later I receive notice of possible Lien and/or Garnishment unless 20k paid within 15 days.

The amount now includes significant penalties and interest.

Of course I reached out to the CPA this evening via phone and email.

I’ve never had any issues and never take anything remotely questionable as far as deductions, etc.

Do I pay the amount demanded under protest and fight to get it back or not pay and respond citing my CPA filed original return in error along and again provide the proof no tax is due?

I don’t want to lose sleep over this and certainly don’t want to have wages garnished which casts a bad light with HR/management.

Something similar happened to a friend when his CPA screwed up… He sold a property and carried back a first deed of trust interest only for 3 years yet his CPA incorrectly filed stating the sale to be a cash sale and the IRS wanted the capital gains on the cash sale… like 40k.

It took several in person IRS appearances over 2 years to resolve and caused a lot of anxiety for him… no tax or fees or penalties or interest was found due as it was 100% CPA filing error as no money had been received to owe taxes on.

 

[34Willys]

We're in a similar situation, except it has proceeded to threats of liens on our accounts.
Long story about losing everything in a forest fire, along with many others and super complicated ways to file for losses and gains after insurance pay off income. Plus we had business and rental income.
Our CPA has paid all the late fees and penalties to date and says not to worry. But, we do.
Your CPA should have a rider stating he will represent/defend you in case of audit. Does yours?
It's very easy, as we did, to file multiple extensions.
If your CPA hasn't brought this easy, although temp fix, to you're attention.....?
Patrick

 

[ultrarunner]

CPA 100% acknowledges the screw up... not anticipating any CPA pushback.

The surprise is I thought this had been put to bed 9 months ago... that is until I opened today's mail.

CPA said 9 months back these things occasionally happen and nothing to worry about...

But threat of lien or garnishment worries me greatly...

Does anyone just pay and then go after the IRS to get their money back... and would this totally be the wrong way to quash this?

Since posting another friend said they had a long drawn out tax problem that ultimately was resolved in their favor but it was a cloud over them until it was.

 

[34Willys]

My understanding is, and has worked for the last 5+ years since the fire, as long as you maintain communication through proper channels, they will not proceed with any action. Just you and/or your CPA be sure to keep up with certified mail and email responses. Document everything as you go....

Patrick

 

[seville009]

My advice would be that you send a certified letter return receipt requested directly to the IRS.

Just give a simple non-emotional explanation of the facts, and include any proof (copy of the page ftom the K-1).

That will usually solve the issue. The problem is generally that the IRS computer is sending out those notices.

Retired tax accountant……

 

[Jstpssng]

My advice would be that you send a certified letter return receipt requested directly to the IRS.

Just give a simple non-emotional explanation of the facts, and include any proof (copy of the page ftom the K-1).

That will usually solve the issue. The problem is generally that the IRS computer is sending out those notices.

Retired tax accountant……

I would also include a copy of the amended return.

 

[CloverKnollFarms]

Good thing we are hiring more IRS agents

 

[MoKelly]

Someone said it earlier —- those notices are sent automatically by a computer.

The problem/issue is no human has put your amended stuff into the computer yet (or it was put in wrong).

We had a similar issue at a not-for-profit. Went on for 2 years. We finally had a tax lawyer get involved. He spoke to his contacts and it got resolved in a couple weeks.

 

[Jstpssng]

In 2017 I neglected to check the box saying that I had health insurance. It took 4 years, an amended return and multiple letters and phone calls to getvit straightened out. 3 times I thought it was straightened out. The first time the government shut down and it fell through the cracks. The second time time is when I paid to have the amended return filed; then Covid hit. The third time seems to have been the charm, I got a letter saying it was straightened out and haven't heard from them since. That letter is in a fire resistant strong box with my deed and other important papers.

 

[ultrarunner]

CPA short explanation is the amended return has not caught up with with the original return…

It does seem e-filing hasn’t helped.

The notice has no FTB agent name who sent it or to contact if you dispute…

Notice is pay amount billed or contact if there is a hardship paying.

I’m guessing paying under protest isn’t a good option?

 

[MoKelly]

CPA short explanation is the amended return has not caught up with with the original return…

It does seem e-filing hasn’t helped.

The notice has no IRS agent name who sent it or to contact if you dispute…

Notice is pay amount billed or contact if there is a hardship paying.

I’m guessing paying under protest isn’t a good option?

I wouldn’t pay - assuming you are right and no monies are owed.

I think your CPA is correct.

If this bothers you, getting a tax lawyer will help move the process.

 

[ultrarunner]

It does bother but it’s a character flaw I have… needing to make sure I’m always squared away…

I paid AZ $131 in tax, fees and interest last year AZ was not entitled because my county was declared a Federal disaster area and granted Federal Income Tax extension and AZ tax code recognizes and accepts this so I was not late but every 10 to 14 days I would receive a computer generated notice for late file and interest.

The late file and interest was greater than tax owed of $65 owed plus CPA charged $200 to file AZ… so that $65 cost me $366 for CPA, late file and interest and then I get overpayment check of $1.31 back… I framed it on the office wall!

 

[MoKelly]

It does bother but it’s a character flaw I have… needing to make sure I’m always squared away…

I paid AZ $131 in tax, fees and interest last year AZ was not entitled because my county was declared a Federal disaster area and granted Federal Income Tax extension and AZ tax code recognizes and accepts this so I was not late but every 10 to 14 days I would receive a computer generated notice for late file and interest.

The late file and interest was greater than tax owed of $65 owed plus CPA charged $200 to file AZ… so that $65 cost me $366 for CPA, late file and interest and then I get overpayment check of $1.31 back… I framed it on the office wall!

I’m very much like you in that regard. It’s an admirable trait.

But, when dealing with the IRS, giving them money they do not deserve - due their own internal mistakes - is not a winning strategy.

Once you prove you are right, it will still take many many many months to get a refund.

 

[plowhog]

It's the CPA screwup. The CPA likely has errors and omissions insurance.

Can you toss it back in the lap of the CPA to resolve, either by paying what is due, or investing their effort to seek and claim a hardship exemption? If you have not yet done so, you can give a limited power of attorney that authorizes your CPA to waste their time on your behalf so you don't have to.

 

[seville009]

I would also include a copy of the amended return.

I wouldn’t, just because that could confuse the whole issue. They might think it’s a “new” amended return.

Just state as part of the facts that an amended return was filed, and just include proof of filing.

 

[5030]

The gummit ALWAYS wants their 'pound of flesh' and usually more it seems. In reality we are literally taxed to death in this country and Federal tax laws are very hard to interpret in the first place.

Never had the issues the OP discusses and don't want them either and why we retain a top tier accountant /CPA to handle that stuff for us. Money well spent in my view.

Far as I'm concerned, we should pay a simple flat tax and eliminate all the tax codes and complex rules and regulations.

In reality, in my opinion, there should be no taxes at all as the government is supposed to be here to help you, not relieve you of your money, not like they are at all fiscally responsible because they aren't and never have been that I can remember and it's getting worse and worse, not better.

My ongoing philosophy about government is...

They make no tangible product, they are the largest employer and they exhibit no fiscal responsibility in spending your money, simply because they didn't earn it in the first place.

I find it sadly amazing that politicians pizz away money like it's going out of style, especially this administration. Just the interest on the National debt is eating them up but they don't seem to care and why should they, it's not their money in the first place.

 

[ultrarunner]

CPA responded this morning…

It appears amended tax return not matched with original.

You need to call them.

 

[Jstpssng]

CPA responded this morning…

It appears that IRS has not matched the amended tax return with your original.

You need to call them.

I would tell them that they need to call to correct their mistake. You can spend as much as 2 hours on hold, waiting to talk to somebody. If they refuse, start looking for a new CPA. I highly doubt they are the only game in town.

 

[ultrarunner]

Since 1985 with the firm but ownership changed 2005…

I spend $1200-$1500 for personal return these days…

Brothers use a CPA Tax Lawyer and it costs more and he has made mistakes but fully took care of it…

Maybe time to switch…

Partnership is about $800 per month…

 

[drssg]

In my one experience at problem-solving with the IRS, written communication was futile. I received a response thanking me for the information I provided, along with the reassertion that I owed them XXX, which I didn't.

It was a hassle to get someone on the phone, but once I did, they cleared it up.

I'm also not following why the CPA wouldn't call them, but I suspect that someone needs to. Personally, I wouldn't send them money with the thought that I'll get it back later. Good luck.