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,
Chapter 7 Bankruptcy Attorney
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.
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
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.
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!
Steven A. Leahy
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.
1 found this helpful
5 lawyers agree