My accountant failed to file my business return on time and I now owe a penalty. Any good advice?

Question

My accountant was always really good up until this year when he kind of went off the deep end with some personal issues. He assured me that he'd file my business return on time and when he didn't he assured me that he filed an extension. Today I received notice from the IRS that there was not an extension filed and that I owe $450 due to my return being filed 3 months late.

What recourse do I have? Will the IRS take into consideration that my accountant failed to do his job and basically lied to me about filing the extension and possibly reduce/waive the penalty? Do I have legal recourse against my now former accountant? Any sound advice would be most appreciated.

thanks.

Answer 1

If your accountant is a person of honor he will pay the penalty amount, but the tax amount is yours to pay. If he refuses to pay it, your only real option is to sue him in small claims court. You could also try reporting him to the state cpa society if he is a cpa.

Answer 2

You owed taxes. Didn't you know that? Filing an extension is not an extension to pay. If the return was filed late because of the preparer, you could have asked the preparer to pay the failure to file penalty, which would be 15% of the balance due on the return.

But since you have fired him, you will have to sue him. I don't think you can expect to recover all the charges. Even if the extension was filed on time, you would still owe the failure to pay penalty and interest.

Answer 3

Starting January 2010, the IRS announced penalties for late filed returns even if there is a refund due on the return. This was NOT the case in the past, and some responders haven't kept up to date. $135 penalty possible. And if you late file, they do NOT have to pay you interest on your refund. YES, you can still efile and do DD, which is quickest way to get your refund. You also find out next day if IRS rejects your return. Print and keep a copy for your records.

Answer 4

The IRS is under no obligation to abate the penalty, but I would respond with a letter explaining the situation and get your return filed ASAP. For a larger amount, it could be worth suing your CPA.

Answer 5

I don't know a lot about his, but I'd think you'd have some kind of legal recourse against your accoutant. He is the one who screwed everthing up and incured these extra charges. He needs to learn to leave his personal issues at home and not bring them to the office. Sometimes it can be hard, but it has to be done. Especially when it comes to something as important as someones taxes. I would suggest getting a lawyer and finding out what you can legally do.

Answer 6

The IRS won't get involved - the return was late, it's your return, so you owe them the penalty. You can state your case and request that the penalty be waived, but don't count on it.

Your accountant should actually cover the penalty for you ethically. You could always try small claims court if he won't make it right, but you might or might not win, and might have trouble actually collecting it if his life is that screwed up.

Good luck.

Answer 7

Pay the $450.00 and ask for a refund from the CPA. You could ask for forgiveness for the penalty. You could file a complaint with the CPA certification/association board.

Answer 8

talk to irs
get a new accountant like me for example [e-mail]
sue him in small claims court
prob have to pay it anyway even if you talk to irs about the issue

Answer 9

Legally, you are liable for the penalty. If the accountant is a decent person, he/she would pay it. I would use a different accountant next year.

Answer 10

I believe you just have to pay the penalty. I'd fire the accountant though.