Oh Boy - Tax Man Wants Answers

April 22, 2009 8:09 AM

a friend just called frantic - her tax preparer failed to file her taxes by April 15. What to do? What next?

She has been doing my friend's taxes for the last 10 years. Not a great communicator and gets buried around tax season. But the taxes have always been filed (mostly electronically) until now. The preparer, a professional, is out of state and considerable distance away. So filing deadline missed, no extension filed, and my friend has no idea whether she's paying or getting back money. All records -- w2s, etc -- were originals so these have to be located.

What next? thx

posted by terrier319 to Law & Government (6 answers total)

The IRS generally doesn't care much who files your taxes (they want to know, but it doesn't change all that much), but they do care when you file your taxes. As such, your friend is probably going to be assessed a penalty of some sort, which she should try to get her preparer to pay. Her preparer has a fiduciary duty to do the things for which he was retained, i.e. file her taxes, in a competent, i.e. timely, manner, which she breached by what can only be construed as negligence (at best).

IANAL(yet), but this seems pretty straightforward. Your friend should tell her preparer to file those damned returns and be prepared to fork over any amount assessed as a penalty.
posted by valkyryn at 8:16 AM on April 22, 2009

Your friend shouldn't panic. She should go to the IRS.gov website and read Publication 17 (I can't paste links for some reason, sorry).

The maximum penalty for filing late is $135. If she owes tax, the penalty for paying late is .5% of the sum owed per month (that's one half of one percent).

Also, you don't owe the penalty for filing late if you have a good reason (like your tax preparer fucking up). And they generally don't assess the failure-to-pay penalty or interest if you pay within sixty days of the date due.

Yes, this sucks, and the tax preparer should pay any penalties and interest that's due. But even if the tax preparer totally stiffs her, it's unlikely to cost her major bucks.
posted by Sidhedevil at 8:24 AM on April 22, 2009 [2 favorites]

I filed my taxes a few days late for three years in a row and never had a problem. YMMV.
posted by torquemaniac at 9:08 AM on April 22, 2009

If she's owed a refund they're unlikely to assess a penalty. In California they even grant you an "automatic extension without filing", i.e. her state taxes may not even be due if she's owed money.
posted by GuyZero at 9:43 AM on April 22, 2009

File them ASAP, obviously. If it turns out she owes, she will be assessed a penalty. If she doesn't owe, probably no real biggie.
posted by CwgrlUp at 6:56 PM on April 22, 2009

From the instructions for Form 4868 (extension request):

A late filing penalty is usually charged if your return is filed after
the due date (including extensions). The penalty is usually 5% of
the amount due for each month or part of a month your return is
late. The maximum penalty is 25%. If your return is more than 60
days late, the minimum penalty is $135 or the balance of the tax
due on your return, whichever is smaller. You might not owe the
penalty if you have a reasonable explanation for filing late.
Attach a statement to your return fully explaining the reason. Do
not attach the statement to Form 4868.

A tax preparer's mistake should certainly be good enough reason. File Form 4868 now, electronically, while gathering records, finding another preparer, or finding out whether the other preparer has anything ready to submit, but just left it on a pile or some such.
posted by dhartung at 10:57 PM on April 22, 2009