Paul A Thomas wrote:

(snipped)

- quote -

Well Paul, I consider myself an honest preparer and
routinely do neither.

1. client has had use of the tax to be repaid at a rather
reasonable interest rate. Only if that rate were more than
he could get elsewhere would I consider making up the
difference. For example, if the IRS rate is 6 and his
opportunity cost is 3% on cd's, then, and only then, might
I consider refunding the difference. Another example, if
his opportunity cost is 19% (interest on credit card and
therefore he's a perennial debtor, then he's been getting a
bargain.

2. as for penalties, I can always get those abated for him
with a reasonable "mea culpa" letter. i.e. client relied on
a professional, etc. etc.

ChEAr$$,
Harlan Lunsford, EA n LA
2 Apr 2005
13 days and counting

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Jerry Natowitz wrote:

- quote -

As to the preparer, it depends on who does or might regulate
him.

Is he a CPA? EA? There are authorities who deal with such.

Now the news, good and bad.

First the bad; yes, you still owe the tax.

More bad: you also owe the interest, since you've
"benefited" from using the government's money.

Good news! Since you relied on a professional, you can get
out of the penalties. Speaking in terms of IRS only of
course. Not sure about "Taxachussetts"

ChEAr$,
Harlan Lunsford, EA n LA
1 Apr 2005

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"Jerry Natowitz" <root[at]j2.datafoundry.com> wrote

- quote -

A honest preparer should cover the additional costs to you,
and that would be the interest and penalties.

- quote -

Well, you don't say that they are a CPA or EA. If so, then
there are regulatory boards to file a complaint with. If
not, then there is just like, the better business bureau.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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I would like to find out what liability a paid tax preparer
has for his mistakes. I just finished double checking the
third set of corrections to my Massachusetts 2003 return.
The first set reflected changes due to mistakes in taking
the state dependent care deduction. I found out about this
when the Massachusetts assessed me for back taxes and
interest in my 2001 return for the same thing.

When I finally (a month later) received the changes, I
examined the return line by line. Why I should have to do
this when I paid the man $160 escapes me, but I'm glad I
did. He misattributed interest and dividends. He
incorrectly attributed the FICA withholding from my wife's
W2 as mine, resulting in $2000 less deduction on the Mass.
return than I should have.

What I didn't catch is that he did this on the Federal too,
and then took a credit for excess FICA withholding. So now,
I owe almost $4000 more tax on my 2003 Federal return. Did
he even bother to tell me this. No, I had to figure it out
when instead of an expected $300 refund, I owed $3800 (plus
interest, but I don't think penalties). Interestingly, that
despite the original return being e-Filed, the IRS hasn't
flagged this yet.

He is also incompetent, the company he bought his software
from went belly-up, and rather than take his lumps and
replace the software, he continues to use it, bugs and all.
The State dependent care problems are as example, as is that
I had Code V on a W2, which should have flagged a change to
the cost basis of stock options I exercised.

I figure that there is no way I can stick him with the
additional tax, as I did owe it all along. But interest and
possible penalties? Is he answerable to either Federal or
State regulatory bodies?

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