Will not go into details, but it involves a company of which I am a share holder. We have certain gains and losses that need to be treated very carefully to take advantage of in the future.

Some of my colleagues said their CPA didn't really understand the situation and deducted this year's loss from their income which resulted in a lower tax than expected. We know this is not right. They work with their CPA to rectify the situation.

I told my CPA to file for an extension and I will go by with all this forms to talk face to face sometime in June.

If the CPA does make a mistake, and IRS comes after what they are due, who is responsible? I assume I still owe the taxes, but what about fines, interest? Also what if the opposite happens, if the CPA does not treat this loss properly and I cannot deduct it next year, can I do an adjustment? or is the CPA responsible somehow next year?

in other words, beside entering the number in their software and making sure they do their job right, is there any liability on these CPAs?

The IRS will get what its due. My accountant made a mistake and said he will cover the $1,200 in late fees and interest but I'm not sure what kind of enforcement is available.

Sounds like you need a new CPA.

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I don't think there's liability unless the CPA offers a guarantee as part of his business. Ultimately, you are responsible for what's on your return. Of course, you can sue your CPA, but the IRS is not going after him or her on your behalf.

Note: This advice is worth exactly what you paid for it.

I doubt very much that they'll cover your taxes. But if there was an error on their part and was based on info that they had at the time they prepared the returns, they might offer (or you should request) that they prepare the amended returns for all of the years that their error impacted at no charge and possibly cover the cost of penalties that are a result of the error.

If you later find a mistake in your tax filing, you file an amended return and owe interest and penalties if the amended return results in more tax. You only get the refund amount, no interest, if the amended return goes in your favor.

Your CPA is technically liable if they mischaracterize information - that’s their job to know this as tax preparers.They are not liable if they were not provided with accurate or factual information. Whether it’ll be worth chasing the CPA is another matter.

I did my taxes at H&R Block for many years because they offered a very inexpensive peace-of-mind insurance option that guaranteed payment of interest, penalties, AND incremental taxes due on any mistakes they made. My guy made the same minor mistake two years in a row and that insurance paid for itself many times over.

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_____________________________________

I reject your reality and substitute my own!

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mattkime
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Sounds like you need a new CPA.

why??? what did I say that made you make this statement?

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space-time

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mattkime
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Sounds like you need a new CPA.

why??? what did I say that made you make this statement?

Hm, looks like I conflated their CPA with your CPAs. There are too many CPAs in this thread!

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If you think you might owe a large amount of money, pay estimated tax to save on interest.

You will owe the additional tax, interest on the owed taxes, a penalty and interest on the penalty. The problem is that you are not filthy rich so the IRS’s automated system will catch the error.

My CPA will pay nothing if he makes a mistake. He has made a few which I caught before mailing the prepared return. He will redo the return, correcting his errors, at no additional charge.

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Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.

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Speedy
My CPA will pay nothing if he makes a mistake. He has made a few which I caught before mailing the prepared return. He will redo the return, correcting his errors, at no additional charge.

Wow, that is mighty generous of your CPA.. not charging you extra because of his mistakes. /sar

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“No persons are more frequently wrong, than those who will not admit they are wrong.” -- François de La Rochefoucauld

"Those who cannot accept the past are condemned to revise it." -- Geo. Mathias

The German word for contraceptive is “Schwangerschaftsverhütungsmittel”. By the time you finished saying that, it’s too late

This is a question you should ask your CPA. Just what does he promise you when you pay him to fill out your Return?

The least he should cover is the penalties you accrue due to his error. He should not have to pay the base increase in taxes, as they were yours originally. Whether he reimburses you for his preparation may be negotiable.

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Will not go into details, but it involves a company of which I am a share holder. We have certain gains and losses that need to be treated very carefully to take advantage of in the future.

Some of my colleagues said their CPA didn't really understand the situation and deducted this year's loss from their income which resulted in a lower tax than expected. We know this is not right. They work with their CPA to rectify the situation.

I told my CPA to file for an extension and I will go by with all this forms to talk face to face sometime in June.

If the CPA does make a mistake, and IRS comes after what they are due, who is responsible? I assume I still owe the taxes, but what about fines, interest? Also what if the opposite happens, if the CPA does not treat this loss properly and I cannot deduct it next year, can I do an adjustment? or is the CPA responsible somehow next year?

in other words, beside entering the number in their software and making sure they do their job right, is there any liability on these CPAs?

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Ed (modelamac)

Trying to figure out some people is like trying to smell the number 9.

Maybe consult a tax lawyer, too?

If your CPA doesn't guarantee their work against errors THEY make - find a new one.
Not much they can (or should) do if the error is from incorrect information you give them, though.

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Paul F.
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A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
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Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.
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Eureka, CA

I humbly suggest that you overpay in order to avoid any fines or fees.

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If the CPA does make a mistake, and IRS comes after what they are due, who is responsible? I assume I still owe the taxes, but what about fines, interest? Also what if the opposite happens, if the CPA does not treat this loss properly and I cannot deduct it next year, can I do an adjustment? or is the CPA responsible somehow next year?

in other words, beside entering the number in their software and making sure they do their job right, is there any liability on these CPAs?

CPA's have malpractice insurance. That suggests that they get sued at least occasionally. Of course the question is whether a given CPA has dealt with a particular issue following standard CPA practice. And, also whether it's worth suing a CPA for errors that s/he won't take responsibility for.

My tax-attorney daughter was recently involved in a case where an CPA apparently messed up for years and hundreds of thousands of dollars. It was worth hiring her firm to clean up the accounting mess. Apparently the CPA has denied any wrong-doing or lack of professional abilities and has refused to compensate the owner of the property for the mess-up. The owner of the property is apparently going to sue using the litigation side of my daughter's firm to try to recover their losses.