Negligent Accountant

[chai1836]

I am in Kansas

A little background. My family has been using my accountant for years so since I moved home from the Military I have used him (last 4 years). This year he has really let me down and I need advice.

I turned in all of my tax information for my S-corp and personal on February 16, 2009. When I called to check the status on April 15, 2009, he stated that he had further questions for my balance sheet (I guess I needed this because my earnings were over $250,000.00) and that my taxes were not complete and he would file an extension. He also casually said "You will just have to pay a week or so of fines and we will get it submitted next week". I called this morning April 23, 2009 around 7:40am, as I type this it is now 10:30 and I have not received a response.

I have paid around $60k in taxes already and I am estimating that I owe between $10k and $20k, that is now late and collecting interest and penalties.

I have NEVER been late on my taxes before and it is now causing me to lose sleep. What do I do? I am worried that this will trigger and audit and cause me further problems in the future and I don't like feeling this way. Do I have recourse to not pay any fees he charges me? Can I deduct the interest and penalties that I owe the IRS due to his negligence? Do I have further recourse to sue for damages? Am I just screwed?

Any advice is appreciated.

 

[davew128]

I suggest decaf. No. Really.

If you estimated that you owed money when he said you needed an extension, did it not occur to you OR him that you should pay that with the extension??? Or waiting until April 15th to find out what was going on? Shouldn't you have called on MARCH 15th when the corporate return was due?

Regarding balance sheet questions, no accountant worth his fee wouldn't ask those questions regardless of earnings. It's kind of hard to have a proper accounting for the tax return without a balance sheet unless you a handful of numbers that don't amount to much.

As for interest and penalties, no they are not deductible.

Bottom line is that while it seems your accountant has dropped the ball, you're not exactly blameless here.

 

[chai1836]

I suggest decaf. No. Really.

If you estimated that you owed money when he said you needed an extension, did it not occur to you OR him that you should pay that with the extension???

I actually called the IRS to ask them and they said not to worry about it if I could get the payment in by the 21st. I was hoping to be done by then.

Or waiting until April 15th to find out what was going on? Shouldn't you have called on MARCH 15th when the corporate return was due?

My fault, I did not specify that I called multiple times without receiving a call back...left numerous messages. Trying to limit the text of my post, I only stated the last call on D-day. I knew that the corporate return had an extension as all of the money was going through personal income...as an S-corp (this is his standard practice).

Bottom line is that while it seems your accountant has dropped the ball, you're not exactly blameless here.

Oh...i know I bear some blame in this but I tried to communicate with him and trusted that everything was under control as it was in years past. I certainly feel that my multiple attempts at communication (multiple messages, visits to his office while he was always absent) absolve me of some of the blame. I still feel that if he takes longer than two months and it is still not complete, the brunt of the blame is on him.

 

[davew128]

The IRS rep was wrong. Date of payment would have been date of mailing if post marked by the 15th. Now maybe administratively it might have slipped by if received by the 21st, but without a postmark, statutorily it is subject to interest and penalty.

That said, if your acccountant isn't returning your calls, its time to go elsewhere.

 

[chai1836]

That said, if your acccountant isn't returning your calls, its time to go elsewhere.

I agree...can't even get him to return my calls to pick up my stuff....

 

[Kiawah]

You now know who NOT to use next year**************

 

[LdiJ]

I am in Kansas

A little background. My family has been using my accountant for years so since I moved home from the Military I have used him (last 4 years). This year he has really let me down and I need advice.

I turned in all of my tax information for my S-corp and personal on February 16, 2009. When I called to check the status on April 15, 2009, he stated that he had further questions for my balance sheet (I guess I needed this because my earnings were over $250,000.00) and that my taxes were not complete and he would file an extension. He also casually said "You will just have to pay a week or so of fines and we will get it submitted next week". I called this morning April 23, 2009 around 7:40am, as I type this it is now 10:30 and I have not received a response.

I have paid around $60k in taxes already and I am estimating that I owe between $10k and $20k, that is now late and collecting interest and penalties.

I have NEVER been late on my taxes before and it is now causing me to lose sleep. What do I do? I am worried that this will trigger and audit and cause me further problems in the future and I don't like feeling this way. Do I have recourse to not pay any fees he charges me? Can I deduct the interest and penalties that I owe the IRS due to his negligence? Do I have further recourse to sue for damages? Am I just screwed?

Any advice is appreciated.

Problem number 1: S-corp returns were due on 3/15 and there is a 89.00 per month, per shareholder, penalty for not filing on time. You are already up to at least 178.00 in penalties on the S-corp return, and more if you have multiple shareholders, and will go even higher if its not filed by 5/15.

Problem number 2: An extension is an extension of time to file, not an extension of time to pay.

Problem number 3: If you estimated that you owed between 10-20k more, you should have sent in at least 10k with your extension in order to minimize penalties late payment penalties.

Problem number 4: You are using an accountant who is taking on more business than he/she can handle and as a result doesn't have the time to follow up with his/her clients on a timely basis, and is giving priority to the "squeeky wheels". Its time to find a new accountant. Prefiribly one who will set an appointment with you and do the return while you are present, so that all questions can be addressed...and if you have to bring back info, will set another appointment to finish the returns. Yes, its inconvenient not to be able to drop off your taxes and then pick them up later...but you need to accept a little bit of inconvenience.

Problem number 5: You need to be giving your accountant a profit and loss report as well as a balance sheet. If you cannot do that then you need to get the necessary software (Quickbooks is good, but so are many others) so that your bookkeeping is tracked properly and you CAN do that.

If you cannot get ahold of your accountant, then send him a letter stating that you either want your completed tax returns by XXX date or you want your records back by XXX date.

While you wouldn't be wrong to hold your accountant responsible for your penalties, if the accountant left you any phone or email messages that you did not respond to promptly, the accountant has an argument that they are not responsible. It is also your responsibilty to know when the returns are due and to be a squeeky wheel well in advance of the deadline.