Should my accountant pay the interest here, or is that not how it works?

July 13, 2015 5:43 PM

The accountant who did my 2011 taxes did a lame job (on several levels). I was notified at some point in 2012 that she'd made en error on my federal return and that I owed more money. Now I just got a notice from the state, saying that I owe them money for the same year.

It's not a ton -- $233, but $50 of that is interest because it's so overdue. Should my accountant pay the interest, since she screwed up the math? Or is it my error because I didn't rectify the situation on my own in 2012? Should I have known that since there was an error on the federal return that there would also be an error on my state return, and thus should have rectified it myself back then?

I never told the accountant about the error back in 2012. The Federal interest was something like $17, and I just paid it and found a new accountant. Should I just pay this and chalk it up to a bad experience with a lousy accountant, or should I notify her and ask her to pay the interest?

posted by swheatie to Work & Money (15 answers total)

Call the IRS first. Call your local Taxpayer Assistance Center (or go in person) and explain the situation and ask if the interest/fees can be waived since it was accountant error. See if they'll play ball with you. (Don't be afraid to call the IRS. They're actually very helpful people.) You recognize the error and are taking steps to rectify this. They will want to help you fix it. Even if ultimately they can't help you out, it doesn't hurt to ask.

Then, once you've talked to the IRS, send an email (so you have it in writing) to your accountant explaining the history of issues. If you still have the interest burden, ask the accountant to pay it.
posted by phunniemee at 5:52 PM on July 13, 2015 [4 favorites]

If you switched accountants, she doesn't really have an incentive to make you whole -- especially if you didn't tell her about the problem years ago.

I agree you may as well call the IRS, and for that matter you may as well email your former accountant -- but I wouldn't expect your accountant to compensate you.
posted by J. Wilson at 6:02 PM on July 13, 2015

If you call the IRS, you should do so at 7AM local time (to you) when they open. At other times the hold queue will likely be so long the system will hang up on you rather than letting you wait.

You will probably also find it extremely difficult to navigate the phone menu in a way that lets you speak to an actual person. A bit of googling will turn up IRS phone menu cheat sheets that will tell you the right buttons to push (e.g. 1 2).

This was my experience last month (not during peak tax season).
posted by ryanrs at 6:05 PM on July 13, 2015 [4 favorites]

You might even want to consider whether dealing with the IRS hotline is worth $50 to you (seriously). But it is true that if/when you get through to an actual human, they are very friendly and helpful.
posted by ryanrs at 6:09 PM on July 13, 2015 [1 favorite]

I think you should have known that a mistake on your Federal return would also be on your state return, especially if you live in a state which uses your Federal number to calculate your state number. On the other hand, I would at least ask for some consideration for a mistake that was the accountant's fault (at least let her know that she messed up and caused you problems) She may or may not care. If she offers you anything, it would be fair to have it based on what you would have owed if you had let her fix in 2012. Personally, I would ask in general terms - this is what happened, this is what I owe, what are you going to do about it - rather than make a specific demand.

Folks - the amount owed is due to the state, not the IRS. I think if you are going to call, it would need to be a call to the state tax people since you aren't contesting the mistake, just asking for consideration on the amount due.
posted by metahawk at 6:13 PM on July 13, 2015 [1 favorite]

If you call and speak to someone at the IRS it is, IME, reasonably easy to get them to forgive the interest &/or penalties as long as they get the actual money you owed them.
posted by poffin boffin at 6:13 PM on July 13, 2015

Response by poster: Thanks, everyone. You have me thinking that it's worth a call to the Tax people, but as metahawk points out, this is the state tax people, not the IRS. Are they likely to be just as friendly and forgiving as the IRS? It's true that I am not contesting the tax. I owe what I owe. It's the interest that's the rub.
posted by swheatie at 6:34 PM on July 13, 2015

Call your state's department of revenue and ask!

I don't know where you live, but I have personally dealt with tax people working for the state of Illinois (albeit for business taxes) and they were similarly helpful.

If you're not sure who/where to call, go to your state's Secretary of State website and just click around until you see something that looks relevant. (Or call your local IRS TAC and ask them who to contact for questions about your state taxes.)
posted by phunniemee at 6:50 PM on July 13, 2015 [1 favorite]

I have had a positive experience with the State of California Franchise Tax Board waiving a small amount of interest resulting from clerical error on a previous year's return (my own fault, even!). I think it is certainly worth asking.
posted by books for weapons at 7:35 PM on July 13, 2015

I don't think you need to have immediately assumed there was an error on both (well, depending on what kind of error it was). I'd call the accountant and let her work it out with the IRS.
posted by salvia at 10:02 PM on July 13, 2015

Ugh. We went through the exact same thing and just paid it. Now I'm wishing we'd at least tried to do something about it, especially the state return.

What I wish we'd done is reach out to our accountant. There's no good reason not to. Tell her what happened and ask for her advice.

And yes, call your state tax board and ask them to waive the interest. Tell them the truth -- you didn't realize that both your state and federal returns were inaccurate.

And then tell us what came of it!
posted by amandabee at 10:40 AM on July 14, 2015

Same thing happened to me and the accountant didn't bat an eye when we told him he had to pay the interest. He sent us a check right away. I personally wouldn't bother telling the IRS that it wasn't your fault-- they really don't care whose fault it is.
posted by Neeuq Nus at 3:55 PM on July 14, 2015

Response by poster: Just a followup for amandabee and anyone else who's interested -- I just talked to someone at the NY department of taxation, a very nice guy, who told me that it was a New York state law that interest be charged and that in 100% of the cases, that's just how it is, and he did not have the authority to waive the amount.

At this point, I could contact the accountant, which I still may do. But as someone said upthread, since I haven't been her client in several years, she probably doesn't have that much incentive to make me happy. If the amount was higher, I might fight harder, but since it's only 50 bucks, I'm thinking I might just go ahead and pay it.
posted by swheatie at 10:12 AM on July 15, 2015

Yeah, I guess it comes down to how much you value your time. For $50, it would be worth my while to send an email or make a phone call. If she puts up resistance, sure, you can always back down later.
posted by salvia at 6:53 PM on July 15, 2015

is it my error because I didn't rectify the situation on my own in 2012? Should I have known that since there was an error on the federal return that there would also be an error on my state return, and thus should have rectified it myself back then?

Absolutely. Take some responsibility. If anything you've got it backwards she owes you for the error but not the interest.
posted by DBAPaul at 3:55 PM on August 11, 2015