suing tax preparer that is not a CPA ?

[carol denby]

What is the name of your state (only U.S. law)? Texas

make a long story short....we hired a lady, assumed she was a CPA, to prepare our taxes 3 years in a row....we were audited by IRS due to red flags which i did not understand until IRS pointed out serious mistakes....the numbers i provided to our 'accountant'....were not the numbers she used to file our return......now we owe about $13,000. to the IRS .....all the money we received in tax refunds over this 3 year period.... i did not know she 'blew up' the numbers just to get us a refund.....and all she could have gotten out of it was a 'repeat client'...and it worked...... can we take her to small claims court ? i have all the proof of paperwork i faxed to her with numbers on it for her to prepare taxes....she never once called with any questions....we always thanked her for her refund 'magic'.....and never read any of the paperwork she prepared and produced to the IRS.... that's why we pay hundreds of dollars to preparers to do our taxes....we are ignorant of the laws and credits and deductions, and assumed we paid for such people to do it for us.....if they make you happy with refund...they get repeat clients....sounds like a scam to me.... so...can we take her to small claims court to make her accountable for this $13,000. ? and if you add in the money we paid her as well as penalties, interest, and other B.S.....we are up to $l5,000. now.... hello......because she is not a CPA supposedly we have nothing to fight with or to.....so.....although i have my proof.....would a court just simply say that is not really proof ? the accountant could supposedly say i 'verbally' gave her different numbers, although we never talked on the phone...all communication was via e-mails and fax.... i'm past 'sick'.....she needs to be under the jail house if not IN IT ! not death row...but pretty close to it ! thanks in advance for any leads.....

 

[sandyclaus]

What is the name of your state (only U.S. law)? Texas

make a long story short....we hired a lady, assumed she was a CPA, to prepare our taxes 3 years in a row....we were audited by IRS due to red flags which i did not understand until IRS pointed out serious mistakes....the numbers i provided to our 'accountant'....were not the numbers she used to file our return......now we owe about $13,000. to the IRS .....all the money we received in tax refunds over this 3 year period.... i did not know she 'blew up' the numbers just to get us a refund.....and all she could have gotten out of it was a 'repeat client'...and it worked...... can we take her to small claims court ? i have all the proof of paperwork i faxed to her with numbers on it for her to prepare taxes....she never once called with any questions....we always thanked her for her refund 'magic'.....and never read any of the paperwork she prepared and produced to the IRS.... that's why we pay hundreds of dollars to preparers to do our taxes....we are ignorant of the laws and credits and deductions, and assumed we paid for such people to do it for us.....if they make you happy with refund...they get repeat clients....sounds like a scam to me.... so...can we take her to small claims court to make her accountable for this $13,000. ? and if you add in the money we paid her as well as penalties, interest, and other B.S.....we are up to $l5,000. now.... hello......because she is not a CPA supposedly we have nothing to fight with or to.....so.....although i have my proof.....would a court just simply say that is not really proof ? the accountant could supposedly say i 'verbally' gave her different numbers, although we never talked on the phone...all communication was via e-mails and fax.... i'm past 'sick'.....she needs to be under the jail house if not IN IT ! not death row...but pretty close to it ! thanks in advance for any leads.....

First issue: You ASSUMED she was a CPA, but you never verified it, and apparently never even asked if she was. That's on YOU.

Second issue: You signed the tax returns that were submitted in your name. Did you even bother to ask them how they came up with these "magic" refunds? After all, YOU gave them the figures to put on the documents. You have to take SOME ownership of the fact that the returns were not prepared properly (especially given the fact that the preparer was NOT a CPA as you assumed). If you are going to pay hundreds of dollars to someone who is preparing your taxes, then you need to make sure that they are qualified to perform the service you are paying them to perform.

Third issue: I believe that Texas Small Claims court has a maximum judgment amount of $10,000. You can't demand more than the limit in Small Claims, but you can lower your claim to $10,000 in order to max your demand to the jurisdictional limit.

 

[davew128]

FAfter all, YOU gave them the figures to put on the documents. You have to take SOME ownership of the fact that the returns were not prepared properly (especially given the fact that the preparer was NOT a CPA as you assumed).

Some? How about all?

That said, there are preparer penalties for preparing a fraudulent return. I don't know that OP will be off the hook for any taxpayer penalties either because a reasonable person who keeps a copy of the "numbers" sent to their preparer would at the very least look at the return beyond the line for the refund and where to sign.

 

[davew128]

and never read any of the paperwork she prepared and produced to the IRS

and you think that is somehow acceptable?

we are ignorant of the laws and credits and deductions, and assumed we paid for such people to do it for us....

Nothing wrong with that.

if they make you happy with refund...they get repeat clients....sounds like a scam to me

I agree. In fact I would consider you an accomplice since a large refund is what you were looking for, not a correct and accurate return that minimizes your tax within the allowable confines of the law.

so...can we take her to small claims court to make her accountable for this $13,000. ?

You can take her. You won't win though, since correct original returns would have cost you that much in tax anyway.

she needs to be under the jail house if not IN IT ! not death row...but pretty close to it !

Yet you LOVED her when you were getting those fat refunds.

More to the point, when the return was audited, who represented you and what numbers were provided to substantiate the return? I think I already know the answer here.....

 

[LdiJ]

I am going to add something here....just for others who may be reading this thread.

It does not require a CPA designation to be a good professional tax preparer. It does not take a CPA designation to be a good tax preparer who can be held accountable for their errors.

The majority of CPAs work primarily in the large corporate arena and many of them do not do tax at all. Many tax preparers with no credentials at all know more about the tax code than some CPAs.

However, anyone who receives an unexpectedly large refund should be asking their paid preparer to explain to them why the refund was so much larger than expected, and to show them how it all worked out the way that it did.

Its also in your best interest to be present while your tax return is being prepared...and to have your information as organized as possible to ensure that there are no misunderstandings about numbers and what they represent.

I can prepare many tax returns in 30 minutes or less, most tax returns in less than an hour, and I have never had a single return take me more than 2 hours, unless it required special research. That means that you don't have to spend all that much of your time sitting on the other side of the desk, being present to answer questions and participate in the preparation of your return.

A good preparer will pay the penalties for you if they made an error. Some will even pay the interest. Some will also refund your preparation fees. However no tax preparer will pay your tax, because that gets into a murky area of ethics.

 

[tranquility]

and I have never had a single return take me more than 2 hours

I guess everyone needing the 2 hours for their return came to me. In fact, it seems that ALL the ones left will take more than that.

I must be slow.

But as to the rest, I'm surprised no one has added; If the OP is correct on the events, they have a right to the penalties they pay from the preparer. Sometimes, interest too.

But, the preparer never owes the tax. Legally, probably not the interest on the tax either.

 

[LdiJ]

I guess everyone needing the 2 hours for their return came to me. In fact, it seems that ALL the ones left will take more than that.

I must be slow.

But as to the rest, I'm surprised no one has added; If the OP is correct on the events, they have a right to the penalties they pay from the preparer. Sometimes, interest too.

But, the preparer never owes the tax. Legally, probably not the interest on the tax either.

I really should say that in that last 8 years I haven't had one that took me more than two hours, again unless special research was needed.....I LOVE our current software.

 

[tranquility]

Only by electronically entering (aka client entering or their software) data can you get some returns done in a shorter time. I type fairly fast, can 10 key with the best of them and know the software VERY well and there is no way I can enter some in two hours, let alone check the output.

The software isn't perfect. Sure enough (remember the thread) we had a client come in with a solo 401(k) where he had a schedule C. The program could not correctly calculate the employer portion of the deferred compensation (not due until the return was) even after we put in the employee portion contributed before the end of the year. After messing with the program for an hour, I called the usually helpful support person and couldn't get a correct result there either. Finally had to force the number in an odd way to make everything work out the way it should. Pity I won't be able to bill for any of the time. (Except for the calculation.)

I recall this because of the other gentleman who couldn't understand why an online calculator wasn't able to be relied upon. We pay a lot for the software specifically for taxes. Sometimes, all the interactions to make a thing true or correct are more complex than one might suppose.

 

[LdiJ]

Only by electronically entering (aka client entering or their software) data can you get some returns done in a shorter time. I type fairly fast, can 10 key with the best of them and know the software VERY well and there is no way I can enter some in two hours, let alone check the output.

The software isn't perfect. Sure enough (remember the thread) we had a client come in with a solo 401(k) where he had a schedule C. The program could not correctly calculate the employer portion of the deferred compensation (not due until the return was) even after we put in the employee portion contributed before the end of the year. After messing with the program for an hour, I called the usually helpful support person and couldn't get a correct result there either. Finally had to force the number in an odd way to make everything work out the way it should. Pity I won't be able to bill for any of the time. (Except for the calculation.)

I recall this because of the other gentleman who couldn't understand why an online calculator wasn't able to be relied upon. We pay a lot for the software specifically for taxes. Sometimes, all the interactions to make a thing true or correct are more complex than one might suppose.

Perhaps you deal with a different mix of complexity than I do.

Example: Last week I did a return for a client with a small store (very good records, schedule C) 6 rental properties (again good records) , various 1099-MISCs, interest and dividends, social security, a couple of stock sales and a schedule A. It took me about an hour to imput everything and then I spent another 30 minutes to re-review everything with the client to make sure I didnt make any typos, or other errors.

If the records are not good, I send them home to try again, and/or refer them to some bookkeepers we know to help them get the records in decent order. If special research is required it could take longer.

 

[tranquility]

Just from the problems we bring up and the knowledge we bring to the tax forum, we certainly have a different clientele. I'd say an hour and a half on the return you mention, if the data is clean, is fair.

 

[davew128]

they have a right to the penalties they pay from the preparer

I disagree. Taxpayer has a duty to at least review the return. Its obvious that did not happen.

I also sometimes wish my individual returns could all be done with a perfect error rate and rock solid workpaper trail in less than 2 hours.....

 

[tranquility]

I agree, the workpapers are the problem. Once the data gets all clean and neat, that's when data entry into the program takes the time I'm talking about. (And, a person as LdiJ described, could possibly fall into that category. I know I have many just like that who are very particular about their bookkeeping and it makes it very easy to do a return.)

I also agree the OP has a duty to review his return. With you I think the misstated amount is probably so grossly in error the taxpayer should have seen and corrected it with the preparer before signing. But, let me see the return and what was faxed and the findings of the IRS first before having a clue as to who I'd blame for with this. All I really know though is a person who wants a preparer to pay his taxes for him, is not going to get what he wants for Christmas.