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Our tax preparer made a mistake with our 2010 tax filings and now the IRS wants us to pay a lot of money.

Bethlehem, PA |

In 2010 my wife and I took out $22,000 from my retirement plan to help us out. Ten percent was automatically deducted and paid to IRS. We gave all this info to our tax preparer. And all of this was submitted to IRS. Now IRS wants us to pay over $8000 and my preparer is saying it is because we were in a higher tax bracket and should have reported this additional money to the IRS in 2010. But we did and we gave our tax preparer all this information, the forms, the statement from my retirement account which showed that the $2,200 dollars was automatically deducted. Why didn't our tax preparer tell us all this backin 2010? Do we have any legal recourse against him and is there anything I can do with the IRS to mitigate this? Thank you,

Attorney Answers 3

Posted

First, the amount you owe strictly in taxes themselves is amount you owe, not your preparer. But, if your not paying this amount initially was due to professional error then the I.R.S. may excuse you from paying penalties.

This answer does not create an attorney-client relationship.

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Posted

You have a few possible courses of actions, before deciding on anything I would consult an attorney or CPA. I would have to look at your tax return to figure out exactly what was recorded and where the error is. In general, you can pay the penalty and file suit against your CPA to recover the penalty, and/or you can try to get the IRS to abate the penalty. Sometimes something as simple as a letter to the IRS explaining the situation and requesting abatement can get the penalty waived.

However, it does not sound like most of the $8,000 owed is due to a penalty; it sounds as if it was unreported income. In this case, it is your responsibility as the taxpayer to pay the taxes owed. If you owe the IRS and will have difficulty paying it, you should consult a tax attorney to help negotiate the debt's collections.

Best of luck,

Andrew B. Gordon , Esq., CPA
Gordon Law Group, Ltd.
847.580.1279 | ABG@GordonLawLtd.com
www.GordonLawLtd.com

Andrew B Gordon is a CPA and attorney licensed to practice law in Illinois. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.

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3 comments

Asker

Posted

Thank you for your responses. Our tax preparer is saying he never recieved the form 1099R which shows we withdrew money from my retirement account and paid a $2,000 penalty at thepoint the funds were dispersed, even though he has it stapled to the package of all our tax forms from that year. He said this morning that 'for some reason' it does not appear as though the IRS assessed any penalties for this'. The problem is he made a mistake and now we are left owing over $8,000 and don't know where to turn for help because this is a huge debt for us. We don't know how low we can get the payments to the IRS and over what period of time. We also don't know if there is any legal recourse for us because we feel we paid him to do a job and he failed. At this point we need help getting through this, he stated an amended return would have to be filed. Is there any way we could ask the IRS to alleviate some of this or mitigate the amount we owe under the circumstances?

Andrew B Gordon

Andrew B Gordon

Posted

Yes, it is possible. Please call me and we can talk about this in more detail. I can also help you set up a payment plan with the IRS. 847-580-1279

Asker

Posted

Thank you - I will most likely call you tomorrow.

Posted

Remember, your tax preparer is your agent. Meaning you are responsible for their work - that's why you sign your tax return under penalty of perjury. However, your tax preparer's error should not change the amount of tax you owe. Because of the error, you may have been assessed penalties. Often penalties can be abated based on "good cause." Relying on the advise of your tax professional is a stated "Good Cause" and may allow you to escape any additional fees or costs (there are other stated "Good Causes" you may be able to take advantage of). Abatement is not always easy - but worth the effort.

I hope this helps!
Respectfully,
Steven A. Leahy
www.chicagotaxteam.com

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.

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Posted

Should I contact the IRS by phone and ask if they can possibly lower the amount I owe based on our financial difficulties? Or just start paying. And does anyone know how we can arrange for these payments to be made, is there is definite time limit for repaying the full amount? Thank you.

Steven Anderson Leahy

Steven Anderson Leahy

Posted

Generally, you can work out a streamlined payment plan without going through a full investigation (supplying your financial information to the IRS). These types of plans can go 72 months. If you get into one of these plans, you may be able to avoid a lien being placed against you - a major benefit.

Steven Anderson Leahy

Steven Anderson Leahy

Posted

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