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?