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An extension doesn't stop interest and penalties from accruing. Any tax not paid by March 15 would be subject to that. That is why you still send an estimated

by cd34 16y ago

An extension doesn't stop interest and penalties from accruing. Any tax not paid by March 15 would be subject to that. That is why you still send an estimated payment that should cover your expected taxes. Filing your corporate structure sends the paperwork to the state with your charter, the election form, EIN number, etc. This is not the same as filing your taxes. The 1120S return is separate from your personal returns, he's made a copy for you and your partner, the form is more difficult than a personal form, so, two copies + more work = $400. The $200 for your personal tax return seems about right depending where you earn most of your income and depending on the quality of your recordkeeping. As for your current situation, if you are unhappy now, it is unlikely you'll ever be happy with him again. Find a new accountant. If you paid $200 for personal tax + $400 for the corporations tax + $250 for the filing, I don't think those fees are too far out of line. As for your recourse, talk to him, tell him you didn't understand the fee structure, you're faced with a penalty from the IRS, can he help? Or, get your new accountant to do it. Honestly though, I think you will spend more than $712 trying to fight the IRS.

anon345 16y ago
Shouldn't my accountant be on the hook for the $ I owe the IRS as a late fee? He was supposed to have filed an extension, and clearly forgot.
- cd34 16y ago
  Did he file an extension? If not, and you asked him to, then yes, you probably have a case. Might be a little difficult if it isn't documented somewhere. If he did file the extension, you're going to hate this, but, taxes were still due March 15th. Filing an extension is only to give you more time to properly file and you're supposed to include a payment estimating your liability. If you filed the extension, and didn't send in an estimated payment, you're probably on the hook. You might contend that he didn't estimate the numbers properly, and, if you get a sympathetic IRS employee who hasn't heard this story a thousand times before, you might get it reduced. Your chances of getting the penalty and interest reduced strongly coincide with your ability to make quick payment. I.e. they offer to reduce the penalty to x, you're ready to write a check and send it to them tomorrow. If this is the first time it has happened, it is possible they could waive most or all of the penalty, but, leave you with the interest to be paid. Best thing to do, call. Be prepared to stay on hold, have drink in hand, and take notes. Who you talk to, what their extension is, the time you started talking with them. No matter what the outcome, the tax lien goes against you, not your preparer, so, you end up having to take care of it. The time to do all of this has to be weighed against what is more worth your time. You could easily spend 4-8 hours handling this and still owe half or more. Can you earn $712 elsewhere more quickly?

by cd34 16y ago

anon345 16y ago

Shouldn't my accountant be on the hook for the $ I owe the IRS as a late fee? He was supposed to have filed an extension, and clearly forgot.

cd34 16y ago
Did he file an extension? If not, and you asked him to, then yes, you probably have a case. Might be a little difficult if it isn't documented somewhere. If he did file the extension, you're going to hate this, but, taxes were still due March 15th. Filing an extension is only to give you more time to properly file and you're supposed to include a payment estimating your liability. If you filed the extension, and didn't send in an estimated payment, you're probably on the hook. You might contend that he didn't estimate the numbers properly, and, if you get a sympathetic IRS employee who hasn't heard this story a thousand times before, you might get it reduced. Your chances of getting the penalty and interest reduced strongly coincide with your ability to make quick payment. I.e. they offer to reduce the penalty to x, you're ready to write a check and send it to them tomorrow. If this is the first time it has happened, it is possible they could waive most or all of the penalty, but, leave you with the interest to be paid. Best thing to do, call. Be prepared to stay on hold, have drink in hand, and take notes. Who you talk to, what their extension is, the time you started talking with them. No matter what the outcome, the tax lien goes against you, not your preparer, so, you end up having to take care of it. The time to do all of this has to be weighed against what is more worth your time. You could easily spend 4-8 hours handling this and still owe half or more. Can you earn $712 elsewhere more quickly?