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I just got a letter from IRS, that a certain line on my 1099 from 2009 was supposed to be blank, but had a number. Income tax was prepared by an accountant. The letter states that now I have to pay that amount, plus an interest inquired from 2009 till the day I pay this off. If it makes any difference, I had to pay in 2009 and didn't get anything back.

I understand that because I signed the return, it's my responsibility. But from my perspective, it's the responsibility of the tax preparer because they made a mistake. I still don't know where the number came from. Plus an interest for over a year will be a big number. Also the letter says that I will get a bill from IRS in 4-8 weeks?

So, is tax preparer responsible to pay? Why it takes IRS over a year to process paper work and then after it's done another 4-8 weeks to send a bill? Are they just hiking up the number to get more money in interest?

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You don't know what you are talking about.

There are no penalties.

The preparer failed to provide the services for which s... (more)

Mamzer (May. 01, 2011 @ 10:23a) |

it does sound like you need to verify your return was filed properly and/or correct any mistakes. Then make the payments... (more)

xit (May. 02, 2011 @ 11:21a) |

Is this standard everywhere? Just curious what the standard is. My long time accountant had me underpay due to a mista... (more)

riznick (May. 02, 2011 @ 11:31a) |

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FWF owes interest, not OT. Mods please Beloit this over there.

Did you ask your preparer to pay the interest, or are we your one stop shop for advice?

u

I did ask her to pay the interest and she refused. She said that she had a "computer glitch".

You owe interest, she owes you a refund of your prep fee.

you owe interest for not properly setting up withholding to avoid having to pay more

@morecowbell: sorry, you're not making any sense. I don't get what you're saying.

sounds like a case for judge judy or joe or whomever is doing that these days...

dmitriy1980 said:   @morecowbell: sorry, you're not making any sense. I don't get what you're saying.whether or not you get it doesn't reflect anything upon whether or not i make sense

I just listened to a IRS agent giving a presentation last week.

It's you, not the preparer, that is ultimately responsible for any mistake.I understand that because I signed the return, it's my responsibilityexactly.

First, stop figuring out if IRS is out to get you. They are, but it's not personal. IRS is not your ex-girlfriend. Stick to the fact and figure out if their calculation and fact is right or wrong then follow through.

and mod, move this to Finance.

dmitriy1980 said:   @morecowbell: sorry, you're not making any sense. I don't get what you're saying.

He's saying you should go to tax preparation school. Americans all have same knowledge about taxes and every situation is the same. /s

dmitriy1980 said:   I did ask her to pay the interest and she refused. She said that she had a "computer glitch".

Did you impress upon her the fact that her good name will get dragged through the mud for not making good on a mistake?

yea I did. So, I either will take her to court, or I'll file a complaint with BBB and/or DA office. Not sure if this will help.

If it will be make you feel better, then do it. If not, move on.


morecowbell said:   dmitriy1980 said:   @morecowbell: sorry, you're not making any sense. I don't get what you're saying.whether or not you get it doesn't reflect anything upon whether or not i make sense. Just a guess, but you are a single guy, right? tee hee! =D

dmitriy1980 said:   yea I did. So, I either will take her to court, or I'll file a complaint with BBB and/or DA office. Not sure if this will help.

You really don't get it. I said drag her name through the mud, not take her to court and lose. All you're going to do is make an ass of yourself.

Just make sure that whenever anyone googles for her, the first thing they see is how she screwed up. Then pay your taxes and interest and call it a day.

Get this crap outta OT

One year, my accountant (whom I have been working with for many years) apparently forgot to file my return or not send over the payment (it was 5 years ago, so, I forget the exact details). I ended up paying about $2K in fees and interest. He knew he messed up, so, offered to do my taxes for free for next 5 years (I pay about $500/year for him to do them). He said he would like to win back my trust during that time. Long story short, I did take him up on his offer.

My advice to you is to try to work it out with your accountant. Ask for a refund of prep fees and at least partial refund of penalties and interest. If this is an accountant you have worked with for many years in the past, and are willing to work with again, then perhaps ask for a fee waiver for next few years equivalent to penalties and interest.

dmitriy1980 said:   I just got a letter from IRS, that a certain line on my 1099 from 2009 was supposed to be blank

The part I don't understand is who issued the 1099 and why would you have to pay more tax if it is incorrect?

Do you mean a line on your 1040 or supporting schedule?

BrlDsguise said:   dmitriy1980 said:   I just got a letter from IRS, that a certain line on my 1099 from 2009 was supposed to be blank

The part I don't understand is who issued the 1099 and why would you have to pay more tax if it is incorrect?

Do you mean a line on your 1040 or supporting schedule?


Fed Income Tax can be withheld on a 1099. If the accountant reported that tax was withheld on the 1099 when in fact it wasn't, then OP would still owe the amount falsely reported to have been paid.

It seems your income tax return was filed incorrect. File an amended return, fix the error and owe anything?

gatzdon said:   BrlDsguise said:   dmitriy1980 said:   I just got a letter from IRS, that a certain line on my 1099 from 2009 was supposed to be blank

The part I don't understand is who issued the 1099 and why would you have to pay more tax if it is incorrect?

Do you mean a line on your 1040 or supporting schedule?


Fed Income Tax can be withheld on a 1099. If the accountant reported that tax was withheld on the 1099 when in fact it wasn't, then OP would still owe the amount falsely reported to have been paid.


If that is the case the accountant correctly completed the return even though it was based on an incorrect document.

The OP should have known the 1099 was incorrect and would be responsible for the interest.

My thought is that any reputable and honest tax preparer would step up and at least pay the interest/penalties on the error. The difference in taxes is something you would have owed if it was done property so you're probably on the hook for that. If they aren't willing to do that there's no reason to trust them in the future so take your business elsewhere, file a complaint with the BBB or any authority over them and tell anyone you know who uses them about your experience.

I cannot tell for certain but it sounds like the accountant treated some dividends reported to you on a 1099 as qualified dividends when they were ordinary dividends. The IRS says you owe some more money because they are taxable at a higher rate.

What is the interest rate that the IRS is charging you and the total amount of interest? It should be fairly insubstantial unless we are talking about a lot of dividends.

Pay what you owe the IRS. If your tax preparer wants to retain your business, she can offer you a good deal on future services or offer to pay you back for some of the cost of the error.

PS: The computer glitch excuse is BS. The last thing a good accountant does before filing a return is read the actual forms that are going to be filed and review for any errors. She probably made an input mistake and then didn't catch it when she reviewed your return. Mistakes do happen but blaming it on a computer glitch is not valid when the glitch should have been caught when she reviewed the tax forms.

The preparer should offer you something if they made an error. That said, if it is only interest, do realize that you did have use of the money for the period. So it is not as bad as it seems.

dmitriy1980 said:   Plus an interest for over a year will be a big number.Just how much are we talking about?

Also - did the preparer also prepare the 1099? How would she be responsible if the 1099 was erroneous in the first place?

Standard practice in my neck of the woods is that if a preparer error causes underpayment which results in taxes, interest and penalty owed, the preparer covers the penalty. The taxes were owed by the taxpayer the whole time, he just didn't have to pay them as soon as he should have. The interest (which is quite small) can be looked at as the taxpayer's cost of getting an involuntary loan from the IRS.

What? No one is demanding pics of the preparer???

dmitriy1980 said:   I just got a letter from IRS, that a certain line on my 1099 from 2009 was supposed to be blank, but had a number. Income tax was prepared by an accountant. The letter states that now I have to pay that amount, plus an interest inquired from 2009 till the day I pay this off. If it makes any difference, I had to pay in 2009 and didn't get anything back.

I understand that because I signed the return, it's my responsibility. But from my perspective, it's the responsibility of the tax preparer because they made a mistake. I still don't know where the number came from. Plus an interest for over a year will be a big number. Also the letter says that I will get a bill from IRS in 4-8 weeks?

So, is tax preparer responsible to pay? Why it takes IRS over a year to process paper work and then after it's done another 4-8 weeks to send a bill? Are they just hiking up the number to get more money in interest?


It is ultimately the person who signs the return who has to pay. Document matching occurs many months or e even a year after the return is filed. The actual billing notice is a "follow up" to the preliminary notice about the income discrepancy. The later issued bill most likely is to give you some time to respond to the notice. The balance due notice is probably geared to be issued a month or so after the first notice. All of the notices are computer generated.

taxmantoo said:   Standard practice in my neck of the woods is that if a preparer error causes underpayment which results in taxes, interest and penalty owed, the preparer covers the penalty. The taxes were owed by the taxpayer the whole time, he just didn't have to pay them as soon as he should have. The interest (which is quite small) can be looked at as the taxpayer's cost of getting an involuntary loan from the IRS.

BTW, if the 1099 was wrong, and the preparer went by what was written on the 1099 without the taxpayer indicating that there might be an error, that's not preparer error, it's the preparer being given the wrong info. (but if that were the case, the IRS copy of the 1099 should have had the same error on it and nobody would have ever caught it)

pay your taxes and move on. have you ever made a mistake?

If you want to say they're responsabile for something, penalties and the tax prep fee would be it, and even that isn't a written in stone thing. and if there were penelties she should be able to write letters and get them removed.

interest-you had use of your money.
tax- you owe the money.

next time go to HR Block and pay to get that warranty.

sueing? give me a break, go get a lawyer incurr some legal fees and sue her. you can pay her fees and your.

taxmantoo said:   taxmantoo said:   Standard practice in my neck of the woods is that if a preparer error causes underpayment which results in taxes, interest and penalty owed, the preparer covers the penalty. The taxes were owed by the taxpayer the whole time, he just didn't have to pay them as soon as he should have. The interest (which is quite small) can be looked at as the taxpayer's cost of getting an involuntary loan from the IRS.

BTW, if the 1099 was wrong, and the preparer went by what was written on the 1099 without the taxpayer indicating that there might be an error, that's not preparer error, it's the preparer being given the wrong info. (but if that were the case, the IRS copy of the 1099 should have had the same error on it and nobody would have ever caught it)


If as gatzdon suggested the 1099 mistakenly had taxes being withheld the IRS would have caught it when it reconciled the issuer's 1096 and tax payments. That may explain why it took a year for them to notify the OP of the balance due.

Seems like the OP is not responding to anything on this thread so what really happened is a guessing game.

I think you've received all the advice you need. No doubt it's your responsibility in the IRS' eyes to pay the interest. However, I understand where you're coming from - you are paying a professional because you don't know how to do it yourself. Your signing of the return is not a check of the professional's work, but a requirement of the IRS. But your only recourse here is to try to work something out with your accountant. If what she offers isn't satisfactory, don't use her in the future. And definitely write reviews online of exactly what happened and why you were not satisfied with her proposed solution. No slander necessary, because anyone who reads just the facts will prefer to go with a different accountant.

dmitriy1980 said:   I just got a letter from IRS, that a certain line on my 1099 from 2009 was supposed to be blank, but had a numberWhat Box on the 1099 had a number??

If you were given an incorrect 1099 and she went by that, why would you think the accountant is at fault?

ledwards said:   What? No one is demanding pics of the preparer???preparer is an accountant

Alcibiades said:   ledwards said:   What? No one is demanding pics of the preparer???preparer is an accountantSo? If she's hot, lets see them

@kirbydog: nope, bad guess.
@BrlDsguise: you're right, I meant to say 1040. Sorry for all the confusion.

Skipping 13 Messages...
taxmantoo said:   Standard practice in my neck of the woods is that if a preparer error causes underpayment which results in taxes, interest and penalty owed, the preparer covers the penalty. The taxes were owed by the taxpayer the whole time, he just didn't have to pay them as soon as he should have. The interest (which is quite small) can be looked at as the taxpayer's cost of getting an involuntary loan from the IRS.

Is this standard everywhere? Just curious what the standard is. My long time accountant had me underpay due to a mistake which caused a penalty. He didn't offer anything. I thought that was odd, but didn't want to persue it. Total penalties was like $150 which is less than I pay for the services.

I've had an employee make a mistake in the past and I gave my client a $4000 credit. Client didn't ask for the credit, but I felt that was the right thing to do.



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