Long story short. My primary residence in California was foreclosed on in early 2015. The lender set me a 1099-C, after I'd already filed taxes for 2015, alleging that I was personally responsible to pay back the loan even though the loans - being purchase money loans - are non-recourse here. I then hired a CPA to help me "take care" of this situation. He indicated that he would file an amended return in "due course" (after he had finished filing all the other more important tax returns by April 16, 2016). His claim was that he could do this since I had 3 years from the date of filing the original return to file an amended return, and that the IRS would not even begin matching their records with our returns until at least July, 2016.
I then contacted the bank, and insisted that they correct their erroneous 1099-C. After several weeks, they issued an amended 1099-C in which they did not check the "debtor is personally responsible to pay back the loan" box. I notified the CPA of this and sent him the amended 1099-C. Never heard a word back from him.
Fast forward to last week, I received an "invoice" for $500 from this CPA, stating that it was for "preparing both the 2015 return and the amended return". I noticed that the invoice did NOT say that the amended return had been filed, only that the return had been prepared. I emailed this guy IMMEDIATELY and asked him why he was charging me for preparing the original return when I had given him copies of the original return that I had filed. He explained that he needed to create the original return to file the amended return. I then emailed him asking if he had filed the amended return already and he responded back saying he was busy and would get back to me "soon".
Not a peep since, but another invoice appeared in the mail a couple of days ago, reiterating I pay his office $500. I left him a voice message and an email asking him if he had filed the amended return. Never got a response to either the voice message or my email.
I also remember a conversation with him when this ordeal first started wherein he stated that he won't file an amended return UNTIL the IRS started "asking questions". When I sent him a copy of the amended 1099-C, he said "this is great", but still would not prepare an amended return. He repeated the need for me to wait to do so until the IRS began to "ask questions". I have a feeling now that he's going to come back and tell me that he is NOT going to file an amended return, since the IRS would have received a copy of the amended 1099-C from the bank, and would no longer "have any questions to ask". Please note that I NEVER RECEIVED a copy of the alleged amended return from him.
I am angry and frustrated. Since I did sign a contract to pay him to prepare my amended return, I suppose I should pony up the $500, but should I demand that he file the amended return (as part of the contract) ? I would also appreciate it if people knowledgeable in tax law could tell me if the whole "they aren't asking any questions, so you don't have to explain anything" approach that this guy is taking is a legitimate approach or if it is only going to cause me more trouble and $$$$$$ down the line, should Uncle Sam decide to "ask questions" ?
Should I just cut my losses and find someone else to file an amended return for me or just get copies of the amended return he claims to have prepared and file it myself ? I am really uncomfortable with the whole "be quiet until they come nosing around" stand (not to mention that he's NEVER said anything about filing AN AMENDED STATE RETURN) !!!