How do I fix what my AWOL CPA broke?

June 20, 2012 4:29 PM

I just found out my accountant screwed up and never filed my 2011 taxes. No one at her office is returning my emails or messages. My tax situation is now a complete mess. I don't know where to start to fix this. Help?

So, here's the story. This was my first time filing as an independent contractor and was relieved when I was able to make an appointment with this accounting firm before April 15. My check towards a chunk of the taxes I owed went through, so I thought everything was cool. I only started to get an inkling of something being not quite right when I tried to set up a payment plan with the IRS. I couldn't get a human being on the phone and kept getting error messages when I tried to sign up online. It wasn't until this week, that I miraculously, finally got a helpful human being on the phone I found out exactly why that online form wasn't working. My taxes were never filed. They had been submitted with an error, an incorrect EIN, so they'd been rejected. On top of that, they weren't submitted on the 14th, as I'd been told. They actually been submitted 5 days late, on the 20th.

Unbelievably, my CPA and her firm never informed me about ANY of this. I sent an email in May when I first had trouble setting up the payment plan, but never got a response.I've left messages with the secretary, but no one called back. (I may have also left a kind of crazy, angry, 2-part voicemail after figuring out exactly how much they'd screwed up.) I know I just need to take a deep breath and get a grip (I have money/tax issues outside of this particular situation that are at the root on my anxiety about this), but seriously, what should be my first step? Should I...

A)
Just pay another CPA to re-file? How do I find a decent one? The place I went to was recommended and had good reviews online! I don't really have the kind of friends who need to hire accountants, so I can't ask them. Even if I find someone I can trust, isn't it stupidly throwing my money down a hole to pay another $200--or more!--for services I already paid for once? Honestly, I'm not sure I can afford something like that right now.

B)
Push through and file them myself? Honestly, with the combination of a 1099 and multiple W-2s and deductions and everything else, it completely confuses me and turns my brain to mush. Especially considering that now I might need to add extra forms. For extensions? For 1st time penalty forgiveness? (The latter involves an essay, oh god.) Maybe there are other forms I'm forgetting?

C)
Go back to the people who screwed me over in the first place? Since they are clearly never going to call me back, I'll have to confront them in person. I feel like they are going to somehow put the blame on me, treat me like a crazy lady, and refuse to refund me or submit them properly for free because I probably signed something that absolves them of all responsibility. It it possible that I am not a crazy lady and am justified in feeling wronged?

posted by thewrongparty to work & money (15 answers total)

How do I find a decent one?

Get a recommendation from the lawyer you get to send the CPA a letter stating there will be legal action unless they refund your fees.
posted by griphus at 4:35 PM on June 20, 2012 [18 favorites]

You are responsible for filing a valid tax return, regardless of who prepared them, thus the penalties and interest. That being said, a professional accountant as common practice with cover at least penalties, if not penalties and interest. Further, they will probably carry professional E&O (errors & omissions) to cover liability from lawsuits due to errors such as these.

In terms of how to proceed forward, rather than find another CPA, confront them and ask that they make this right. You paid them a fee to file your taxes and they did not do that correctly. You can be very kind when you do this – obviously this situation is stressful – however you can ask, "OK, a mistake was made and that's fine. What are we going to do about it now?"

If that fails, remind them that they have E&O insurance for a reason. If that fails, you can ask a lawyer to send them a letter, however unless you're willing to take them to small claims court, there's not going to be a lot of teeth in that. Reports to the BBB may provide some leverage.
posted by nickrussell at 4:54 PM on June 20, 2012

Please, for your own well-being, get a lawyer now--one who is experienced in dealing with the IRS--and follow his or her advice. This exact same situation happened to people I am close to, and they say that if they could go back in time they would take the lawyer route immediately rather than wasting time and money trying to sort it out themselves. Eventually they got a lawyer who helped clear up the mess and forced the accounting firm to act, but it ended up costing a LOT more money and time and stress than if they had gotten a lawyer immediately. It will be worth the money to hire a lawyer now!
posted by hurdy gurdy girl at 4:56 PM on June 20, 2012 [1 favorite]

You are freaking out entirely too much about something that happens to lots of people. The IRS does not eat babies. They are not going to swoop into your house and start seizing your silverware. They want you to pay your taxes, but they will give you lots of help doing that before, and if you are cooperative, things will not turn nasty.

The worst thing that can happen is that you'll have to pay a penalty for late filing. Well, okay, it's not so nice to hear that you will have to pay even more money than you thought, but it is not the end of your life.

Frankly, your tax situation doesn't sound that complicated to me, unless "everything else" is a whole lot of stuff. I have 1099 and W-2 income every year. I also have investments, and now a wife and a house. I do my taxes myself using Turbotax. It takes me about an hour each year.

But your CPA has already completed your taxes, although with an error that prevented them from being accepted. I assume you received a copy of your return, no? If so, just fix the mistakes that the IRS identified and submit your return again.

As for the essay? You've just written here pretty much exactly what you'd want to tell the IRS! But it can be even shorter. They just want an explanation. It doesn't have to be in highfalutin' language. "I paid my CPA to prepare and file my taxes. They failed to do so by the deadline and also made an error that caused my return to be rejected. As soon as I found out about this I began trying to make things right. Please waive my penalties and interest. I will straighten this out and it won't be a problem next year."

Of course it goes without saying that your CPA owes you a refund. But this isn't a disaster by any means. Relax.
posted by kindall at 5:07 PM on June 20, 2012 [10 favorites]

Usually a CPA should pay for all fees and expenses that are due to your mistake. Speak to the IRS and speak to the ethics board of the CPA licensing bureau in your state.
posted by jeather at 5:12 PM on June 20, 2012

To get in criminal trouble with the IRS you basically have to tell them to go f*ck themselves. It's almost that blatant. If you offer to pay anything, they'll probably take it, and if you pay as agreed, they won't bug you.

But if your CPA never filed your return and told you they did, that's probably on them. You may have a cause of action here. I'd consult an attorney.
posted by valkyryn at 5:13 PM on June 20, 2012

It's always easy to say "hire a lawyer," but that isn't the right course of action here. It doesn't make sense to spend hundreds of dollars (or more) to have a lawyer demand a refund of $200. Your money would be better spent hiring a new accounting firm to handle your late filing. The new firm should be able to advise you on how to make the late submission and maybe even help you avoid a penalty. I have filed amended returns and late returns (my fault) and my accountant navigated the filings perfectly well. As for how to find a new accountant, sounds like you had the right approach the first time but somehow ended up with a lemon via bad luck.

In the meantime, send a letter to the first accountant terminating their services for nonperformance and demanding a full refund plus reimbursement of any penalties/interest you have to pay the IRS. Identify each effort you made to communicate with them about their error and their lack of response. Describe your conversation with the IRS representative confirming that your return wasn't filed properly. Say that you had to hire another firm to make the filing. Threaten to take them to small-claims court if they don't pay up.
posted by brain_drain at 5:19 PM on June 20, 2012

Is this CPA a partner? If not, you will get more traction by directly calling one of the partners and setting up an appointment.
posted by Nickel Pickle at 5:31 PM on June 20, 2012

omg, calm down. talk to the IRS and explain the situation to them. every time i have had to talk to someone from the IRS, they have been extremely nice and helpful. you will probably just have to fix the mistakes made by your accountant and pay a late filing penalty.

did you pay your CPA for her services? if so, i'd try to get that back along with the late payment fee. i'd send a certified letter. you can decide whether it's worth it to you to retain an attorney to recover your payment. then find a new accountant—someone who comes recommended.
posted by violetk at 5:32 PM on June 20, 2012

Something similar happened to us. Get a new accountant to file/refile for you - and do this ASAP before the IRS notices you're late. It just gets worse if you don't deal with this right now.

Get a recommendation from someone you know (and it is ok to ask bosses, coworkers, parents etc) just get on top of it now. You can sort out what to do to your old CPA later. Good luck!
posted by cestmoi15 at 5:39 PM on June 20, 2012

If it's any comfort, my experience with the IRS was that they were willing to knock off the late fee when we proved that we thought things had been sent on time. In my company's case it seems something got lost in the mail, and I ended up sending the IRS things like photocopies of the accountant's dated letter saying "here's your tax forms that we just prepared for you!" and so forth to show that we had made every effort to pay taxes on time.
posted by needs more cowbell at 5:42 PM on June 20, 2012

Roughly the same thing happened to me. At least you paid at least some of what you owed off your what I assume was 1099, I didn't and ended up owing 30k. What happened? Nothing. I filed, set up a payment schedule, and paid in monthly installments.

Do not think up any excuses to put off dealing with it or you could end up with a lien against you if you let it go on long enough (I'm talking 5 years before they notice you) . Just file and start paying.

They just want money and will be incredibly accommodating to get it.
posted by Ad hominem at 5:49 PM on June 20, 2012

As an aside, when I dealt with them they had the nicest sweetest call center people ever. I paid online through the arcase EFTPS and drunkenly left the year off a payment. I got a nasty letter and called them up in a panic and the lady at the call center spent 10-15 minutes trying to calm me down.
posted by Ad hominem at 5:55 PM on June 20, 2012

Seriously, the people at the call center have got to be aliens or really great AI or something, they are *so nice* in the face of what must be a constant firehose of anger and anxiety.

Just get another accountant and take it from there. I wouldn't spend too much money trying to get back what you're owed from the first accountant, but a certified letter is probably step 1.
posted by Lyn Never at 7:13 AM on June 21, 2012

Hello again. I just want to address the "you don't need a lawyer yet" thing. I work with CPAs and lawyers all day. As far as jobs go, CPAs are hardasses second only to the lawyers. If you were trying to get Jim's Fishing and Bait Shop to refund you some money, you could probably get by without a lawyer. If you're trying to get a CPA to do what you want (and they don't) you need some firepower on your side. Of course it's worth a shot to do it on your own, but I wouldn't expect anything until someone with authority enters the picture.
posted by griphus at 7:19 AM on June 21, 2012 [1 favorite]