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  1. #1
    Join Date
    May 2011
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    3

    Default Can I Bill the IRS if its Error Costs Me Money

    Hello all,

    Question: the IRS recently sent me a notice stating that they believed I owed nearly $600. I knew this was an error; my accountant knew it was an error. I asked my accountant to look into the matter, and she did get it resolved unconditionally in my favor (IRS's e-file system apparently LOST one of my returns). Unfortunately, I now owe my accountant over $400, since it was an IRS mistake and not hers.

    I understand that my accountant is entitled to be paid for her services. That is not the issue here; I will pay her (even though I really can't afford to do so). The issue is that it's incredibly unfair that the IRS made an error and I'm now out a large sum of money.

    Do I have any recourse whatsoever (other than complaining to my representatives)? Can I request reimbursement of documented expenses from the IRS -- or am I simply f**ked?

  2. #2
    Join Date
    Jan 2006
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    38,867

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    how do you know it was their error and not you or your accountants?

    what did your accountant do that cost $400?

  3. #3
    Join Date
    May 2011
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    3

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    Well, here is the part of explanation from my accountant:

    "The issue starts with the K-1’s and how they [IRS] handled them in relationship to the Schedule SE’s (self employment taxes)"

    I don't want to go into too much detail on a public forum, but basically they screwed up, fixed that internally, but didn't propagate the corrected changes through all of the forms, so they were not showing the correct figures for earned income.

    It took her a long time on the phone to sort out the problem, thus her bill... I'm a business owner, so it's not just a 1040 form for me.

  4. #4
    Join Date
    Jan 2006
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    38,867

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    in one post you state they lost a return

    (IRS's e-file system apparently LOST one of my returns)
    and then in this one, you state something totally different.

    "The issue starts with the K-1’s and how they [IRS] handled them in relationship to the Schedule SE’s (self employment taxes)"
    those are two entirely different situations.

  5. #5
    Join Date
    May 2011
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    3

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    Quote Quoting jk
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    in one post you state they lost a return



    and then in this one, you state something totally different.



    those are two entirely different situations.

    True -- because my accountant had initially thought that the former is what had happened. When I contacted her later for more information, she explained the entire situation to the present.

    I am not an accountant. I am an engineer by training, and an auctioneer by choice -- so I really do not understand the exact nature of what happened beyond what I explained. I could tell you how to write assembly code for any number of 8- and 16-bit microcontrollers, or how to lay out a printed circuit board... but business tax forms and tax law are beyond me... so I leave those to a professional.

    So, the second post is accurate and true to the best of my knowledge, based on what my hired professional told me.

  6. #6
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    I could tell you how to write assembly code for any number of 8- and 16-bit microcontrollers, or how to lay out a printed circuit board..
    C++ (for Arduino)?

    Just kidding.

    This is now going places beyond my understanding so I'm going to let it lay. There are couple folks that post here regularly that might be able to delve into this further without you having to disclose too much. Check back occasionally.

  7. #7
    Join Date
    Sep 2005
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    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    You can bill the IRS for your accountant's time, but they will ignore the bill.

    I expect that you will be able to deduct the accountant's fees on your next tax return.

  8. #8
    Join Date
    Oct 2006
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    16,474

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    Quote Quoting Mr. Knowitall
    View Post
    You can bill the IRS for your accountant's time, but they will ignore the bill.

    I expect that you will be able to deduct the accountant's fees on your next tax return.
    Yes, you will be able to make that deduction, although I find the situation surprising. Our firm does not charge any additional fees to defend a return that we prepared, whether we made an error or not. There are some exceptions to that, (ie if the taxpayer gave us knowingly erroneous information that causes a great deal of extra effort on our part) but that is our general policy.

  9. #9
    Join Date
    Jan 2006
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    38,867

    Default Re: Send the IRS a Bill. (IRS Error Cost Me a Large Sum of Money)

    Quote Quoting llworking
    View Post
    Our firm does not charge any additional fees to defend a return that we prepared, whether we made an error or not. There are some exceptions to that, (ie if the taxpayer gave us knowingly erroneous information that causes a great deal of extra effort on our part) but that is our general policy.
    that is what I have seen in most firms. That is typically accepted as part of job of compiling and filing tax returns for a client.

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