My accountant took 4 mos to finish tax forms for simple tax. IRS penalty for late file was 1800. Any recourse?

Question

I had taken extensions until the 10-15 deadline. Tax info was given to office 2 weeks prior to that deadline. He delayed. I assumed all was well because usually he is conscientious and takes care of things in timely way--but did inquire once or twice about the amt I owed. He is willing to refund his fee. What is his financial, legal, moral obligation, in that order. How can I most adroitly handle the issue without undo antagonism.

Answer 1

If you had given him most of your information he/she could have entered it into his/her tax program and given you a rough idea as to how much you would owe. Even if you are put on extension you still have to pay the tax you owe by 4/15 otherwise you do have to pay penalties. If you gave him the info only the 2 weeks prior to the 10/15 deadline, then I would say that he has no obligation to pay any of the late file penalty. It sound though with an $1,800 penalty that your return was not so simple. And his offer to refund his fee is most generous. I would take that and run to the bank with it.

Answer 2

You are solely responsible for the timely filing of a return. Providing the information to your accountant 2 weeks prior to the extended deadline may or may not have been enough time for him to complete the work depending upon his other workload.

He probably has no obligation to you but he certainly should have let you know that he would not be able to do it on time so that you could have pursued other preparation options.

Take the refund of his fee and be happy to get that much. And plan ahead in the future and be sure to get a committment IN WRITING if you are approaching a filing deadline.

BTW, any portion of that penalty that is attributable to late payment of the tax due (as opposed to the late filing) is absolutely on your shoulders in every respect. The extenstion of time to file does NOT extend the deadline for payment of the tax due; that was April 15, 2006 and is not affected by the extension of time to file. In all likelihood the late filing penalty is only a small portion of the total penalty amount and may even be less than his bill was depending upon the complexity of your return.