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 » From: Hamilton, MA Dear TaxMama: I had an accountant that prepared my personal and corporate tax returns. I was always getting letters from the IRS you overpaid or you underpaid. The accountant couldn't answer my questions. So I fired him after 4 years and hired a new accountant. The new accountant redid my last 4 years of taxes. He states to correct the errors I need to pay an additional $70,000. What is my 1st accountant reponsible for? I paid him $4,000 a year to do my taxes. Thanks Allison Dear Allison, OUCH!!! That's awful. And you paid a ton. I don't know how complex your tax returns are, but that seems to be too much, unless he was also doing bookkeeping. Regardless, you only need to go back and file three years worth of tax returns. Anything past three years after the date of filing is no longer open to audit by IRS. So, I'm not sure why your new accountant is preparing 4 years. Also, if there is such a HUGE discrepancy, please get another opinion. No disrespect to your present accountant, who is undoubtedly meticulous. But, there are so many ways to interpret transactions, legally, that there may be a reasonable way to bring down that $70,000 balance due. Do that before filing the changes. You only want to amend those years once. What is your previous accountant responsible for? Morally or legally? Well, if you want to go to the trouble to sue him, you will probably be able to get a judgement for his fees Will you be able to get the interest you will have to pay? In the past, I would have said, no. But, if you argue that your investments were worth SO much more then, and now, they've dropped dramatically (f it's true), you may convince a judge to give you the interest. Any penalties assessed that IRS won't eliminate - you bet. He's responsible for those. (Well, it depends - if you could look at the return and see that it was obvious income was missing ... and he didn't explain...well, he might be responsible for a year or two. But why did you stay with him for 4 years?) But he won't be responsible for the tax. You would have owed it anyway. Good luck! This time, I hope you have someone reliable. Best wishes, Eva Rosenberg Your TaxMama  |
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