Discussion:Accountant malpractice
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Discussion Forum Index --> Consumer Questions --> Accountant malpractice
| 26 June 2009 | |
| My accountant gave my hairdressers a 1099misc for tips instead of a w2. Now Irs wants their share of the sc and med tax, is this malpractice on the accountants part? | |
| 26 June 2009 | |
| You've got to provide more facts before you can get a reliable answer. | |
| 26 June 2009 | |
| Refer the client to a lawyer, and allow the lawyer to decide the legal rememdy (if any at all).
It is different for each jurisdiction. | |
| June 29, 2009 | |
| It all depends Lyrinda...first off, are they truly employees or independents? Often, in the hair world, we see them as independents, even at times, when they should be employees. AND, what info did you get to the accountant, and when? Generally, W2's and 1099's shouldn't be issued in the same year to the same people, so if everything else went on W2's, then yes, the tips should, too. If no W2's were issued, then issuing 1099's covers your butt, and then forces them to file properly. In any event, you need some more accounting or perhaps legal help with the audit. | |
| 6 July 2009 | |
| You are the employer (or shop owner) Lyrinda. The buck stops with you. Your accountant works for you.
If you are not communicating properly with your accountant, I would find a qualified tax person that will listen to you, and explain things to you. By the same token, you must cooperate fully with your tax person. P.S. I say this because you use the words "my hairdressers". So, if they are in fact employees, and you did not withhold, it's ultimately your problem. My strong guess is is that the accountant was lead to believe that these people were independent contractors, and if that's so, he's doing his job by issuing the 1099's. If you are being audited right now, I hope you will hire a qualified person to help you through the audit. | |
| 6 July 2009 | |
| I wonder what the measure of damages would be? Can't be the additional FICA and Medicare tax due, since it would have been due anyway had the employees been W-2'd correctly. Maybe the trust amounts that weren't withheld from the employees' paychecks? Nooo...they will have paid their income and FICA taxes anyway so that's a wash.
Interest? Penalties? Hm. Pain and suffering? Interesting question. It might be accounting malpractice but the damages might be too small to pursue. Spend $100 and talk to a lawyer for half an hour. But based on what you've written, you might be best off by paying what's due and chalking it up to bitter experience. | |
| 7 July 2009 | |
| Since it sounds like you want to do whats right.... Have hairdressers go back the last 10 years and make sure they claimed all of their tips. They can still amend the returns and pay up. | |
| 8 July 2009 | |
| Can you go back ten years? I was under the impression that the statute of limitations would have expired after three years? | |
| 8 July 2009 | |
| You can go back as many years as you want to amend a return and pay taxes you owe. You can not get a refund for those years beyond the statute. | |
| 8 July 2009 | |
| And the IRS can't assess additional tax for years on which the statute is closed. That doesn't mean you can't voluntarily amend a closed year and pay additional tax.
They'll always take your money <G>. | |
| 8 July 2009 | |
| Oh, I see. But if you do this, does that give the IRS a whole new three year SoL period to audit you? | |
| 13 July 2009 | |
| They have 3 years to audit the changes on the amended return. If an amended return is a claim for refund (which, of course, has to be filed within the statute), they'll probably audit it but the worst they can do is deny the claim; they can't assess additional tax if the statute has expired on the original return. That's why we often file claims for refund close to the expiration of the statute on the original return; by the time the tax authorities get around to auditing the claim, the original SOL is gone.
If it is an additional tax payment for a closed year, they can theoretically audit the changes, but why would they bother? All they could do is determine an overassessment and give the taxpayer a refund. They couldn't assess any additional tax. | |
| 13 July 2009 | |
| KatieJ: In your experience does filing an amended return with a claim for refund usually result in an audit? Or does the chance of an audit remain in the expected range for the original return? | |
| 30 July 2009 | |
| I can't speak for the IRS, but I can tell you that the California FTB audits all claims for refund over a certain amount (I don't know what that amount is any more). The audit may consist merely of an auditor looking at the return and deciding not to ask any more questions. Or it may be a full-blown audit. | |
