

Ask HN: How do I deal with my incompetent accountant? - anon345

(Throw away account.) I was recommended an accountant from a friend when I was setting up my startup's NY S-Corp. Up front, we were very clear that we wanted, in writing, an exact summary of the cost his services would be, and that he should do no work before we approved that price. He said filing would cost $250, so we said to go ahead.<p>We were flying a mile-a-minute during tax season, so we had him file extensions for us. Later on in the year, we worked with him to file our taxes. During the process, he sent a note (that I thought nothing of), saying - in summary - ah yes, we have to file both personal and S-Corp returns for you.<p>In the end, he sent me two bills: one for $200 (why not $250), and another for $400 (assumably for the heretofore forgotten S-Corp return).<p>THEN I just got a letter from the IRS saying I owed $712 (to the S-Corp) for failing to file taxes on time.<p>How on earth do I deal with this situation? The whole point of using an accountant was to outsource the work so I could focus on my business; there's nothing so complex about it that I actually needed his expertise. So now I find myself considering spending considerable time rectifying the screw up.<p>Outside of legal recourse, how do I deal with him? And assuming good faith negotiation doesn't work, what is my possible legal recourse?<p>I assume I can refuse to pay his fee above what he quoted me, and it is HIS obligation to sue me for outstanding payment, but now I'll have to pay the IRS for his screwup in filing, so I assume getting compensated by him for that in court would be something I'd have to tackle.<p>Argh!
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cd34
An extension doesn't stop interest and penalties from accruing. Any tax not
paid by March 15 would be subject to that. That is why you still send an
estimated payment that should cover your expected taxes.

Filing your corporate structure sends the paperwork to the state with your
charter, the election form, EIN number, etc. This is not the same as filing
your taxes. The 1120S return is separate from your personal returns, he's made
a copy for you and your partner, the form is more difficult than a personal
form, so, two copies + more work = $400. The $200 for your personal tax return
seems about right depending where you earn most of your income and depending
on the quality of your recordkeeping.

As for your current situation, if you are unhappy now, it is unlikely you'll
ever be happy with him again. Find a new accountant.

If you paid $200 for personal tax + $400 for the corporations tax + $250 for
the filing, I don't think those fees are too far out of line.

As for your recourse, talk to him, tell him you didn't understand the fee
structure, you're faced with a penalty from the IRS, can he help? Or, get your
new accountant to do it.

Honestly though, I think you will spend more than $712 trying to fight the
IRS.

~~~
anon345
Shouldn't my accountant be on the hook for the $ I owe the IRS as a late fee?
He was supposed to have filed an extension, and clearly forgot.

~~~
cd34
Did he file an extension? If not, and you asked him to, then yes, you probably
have a case. Might be a little difficult if it isn't documented somewhere.

If he did file the extension, you're going to hate this, but, taxes were still
due March 15th. Filing an extension is only to give you more time to properly
file and you're supposed to include a payment estimating your liability. If
you filed the extension, and didn't send in an estimated payment, you're
probably on the hook. You might contend that he didn't estimate the numbers
properly, and, if you get a sympathetic IRS employee who hasn't heard this
story a thousand times before, you might get it reduced.

Your chances of getting the penalty and interest reduced strongly coincide
with your ability to make quick payment. I.e. they offer to reduce the penalty
to x, you're ready to write a check and send it to them tomorrow. If this is
the first time it has happened, it is possible they could waive most or all of
the penalty, but, leave you with the interest to be paid. Best thing to do,
call. Be prepared to stay on hold, have drink in hand, and take notes. Who you
talk to, what their extension is, the time you started talking with them.

No matter what the outcome, the tax lien goes against you, not your preparer,
so, you end up having to take care of it.

The time to do all of this has to be weighed against what is more worth your
time. You could easily spend 4-8 hours handling this and still owe half or
more. Can you earn $712 elsewhere more quickly?

