Discussion:Unreasonable Client Regarding Understaement of Tax Lliability
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Business Growth Community --> Unreasonable Client Regarding Understaement of Tax Lliability
| 4 April 2007 | |
| I have a client who received a notice from the IRS for additional tax which was the result of an error I made last year. I mistakenly spilt the client's return from married filing jointly to married filing separately since the software showed it would be more beneficial. Unfortunately I didn't pick up the fact that the couple had lived together during the year thus the program excluded her Social Security Income from being taxable. I offered to amend the return back to MFJ and pay any interest and penalties she may incur. She's insisting I pay her tax liability. What should I do at this point? I feel like just writing her a check for the interest that calculated and forgetting about it. I have enough stress at this time of year. | |
| 4 April 2007 | |
| The MFJ + Interest + Penalties is good enough. Her liability will exist either way so she can go tell the IRS to pay for her. | |
| 4 April 2007 | |
| Do you have E&O insurance? If so, let the insurance company handle the claim. If not, let the client know that the tax is THEIR responsibility, and you'll pick up the interest and penalties. You then wait for their reaction - hopefully just an angry outburst - worst case scenario - you're looking at a law suit claiming negligence. | |
| 4 April 2007 | |
| Your client have no basis on a negligence suit against her tax liability which will exist if it was filed correctly in the first place. She is trying to bluff you out. | |
| 4 April 2007 | |
| You may be responsible for the error and thus you have offered to make good by paying the penalty. They have had the use of the money, so the interest is theirs, not yours, yet you have offered to pay it as well, more than reasonable. The tax liability is theirs, not yours. Had you done the return correctly they would have paid that same amount last year. | |
| 4 April 2007 | |
| An amended return(s) cannot trigger any penalty if orig return timely filed. IRS has not the assessment authority, unless it audits to develop facts as to negligence. A 1040X would not be audit-selected for that issue alone. | |
Rgtaxservice (talk|edits) said: | 4 April 2007 |
| Request a copy of the notice. Then cut her a check for penalties/interest "per your policy" and mail it to her. You are not required to nor liable for paying her tax liability. She would have paid it anyway.
Contact her several days after you mail the check to see that she received it. If she's persistant regarding the 'balance due', tell her that same logic would apply to past refunds and it turns she owes YOU money. | |
| 4 April 2007 | |
| go back and see now if they would be better MFJ - and recommend they amend and pay the lesser tax. Tell them you will only pay the interest and penalties if they file your corrected return. Give them this year's and next year's free. | |
| 4 April 2007 | |
| Do you need this client? I would offer resolution of situation - and you are being more than generous - and then after all is done, fire her. She's a loose cannon on your deck. | |
| 4 April 2007 | |
| all good ideas, I had a client that sent the state return to the federal address and the federal to the state, (envelope messup), I showed the client the letter they signed when they picked up the return on where to send the returns. I then amended my 'letters' to state to contact me ASAP with any IRS notice they recive. A double CYA, client wanted a full refund of the tax prep fees, i told them no and gave them the contact info for my state board, never heard from them since,
Good Luck Scott | |
| 4 April 2007 | |
| your offer is reasonable to any reasonable person. just send them a a letter with check (make a copy), ignore them. | |
| 4 April 2007 | |
| Thank you all for your comments. It's helped me relax. I have to realize it's impossible to please everyone. I'll try to reason with her otherwise I'll just send her a check for the interest & penaty on the notice. Thanks. | |
To join in on this discussion, you must first
log in.
