Discussion:$10,000 Penalties & Interest

Now he owes $10,000 in penalties and interest for 2007, of which almost $6,000 is for late filing. Other than politely asking, is there anything I can try to help get these reduced? He has been making payments of $1,000 per week for the past several months and has reduced the actual tax due to under $10,000 but now owes almost the same amount in penalties/interest. This guy is not a tax evader, he just really needs to be hand-held and relies on the accountant to take care of things for him and let him know what to do and by when.

Whenever I submit a 2553 under the late relief rev procs, the reasonable cause is that the taxpayer expected a third party to file but failed to do so. I would file the 843

Now maybe it was all the prior tax preparers fault in this case, but just maybe the taxpayer has some responsibility here. I know over the years how many taxpayers I have had who drop tax docs off at the office on the deadline and then go AWOL for a year and half and then still don't have all the additional paperwork I had requested at the first meeting. Or somehow never got my phone call or email or letter. All I am saying is sometimes a little professional courtesy is called for. When ever I get a new client I have learned that if they have a problem with the prior preparer it is not always the prior preparers fault, the client may need to be honest with themselves.

I'm not too quick to point the finger in this case, but if you know you have a client like this you should provide the extra service they need to get things taken care of and charge for your extra time. I was actually able to convince him to let me start doing his bookkeeping and payroll every month to avoid future messes and so far everything is going well. I believe the CPA was doing this for a while and then the client decided to do it himself because he was paying a lot and receiving bad service/attitudes. This might be why the CPA decided to blow this guy off, but what he did was still wrong. He could have told him sooner that he needed to find a new accountant.

Did he have an expectation return was going to be filed timely

I strongly disagree, I will not file a return with knowledge the return is incomplete. If you did, then you would set yourself up for lawsuits/complaints.

And yes charge accordingly for the baby sitting fees.

TexCPA 20:37, 22 September 2009 (CDT)