AboutJay Allen Finn, CPA Expertise IRS Audits. All Collection Tax problems; specifically but not limited to, delinquent returns, bank levies, liens, garnishments of wages, Also specializing in Offer in Compromise. Limited to 1040/ personal tax issues
Experience 27 years experience as a CPA in the IRS defense area following a position as an IRS Auditor in the oil and gas industries.
Organizations Texas Society of Certified Public Accountants (Peer Assistance Committee), Houston Chapter of the Texas Society.
Publications Submit your articles.com
Education/Credentials BBA - Bachelors of Business Admin., Magna cum laude, Series 6 and 68 - Registered representative, Series 65 - Financial planner. Certified Public Accountant
Question Our corporation has used the same accounting firm for the past 8 years. Not a move is made to purchase, invest, etc without their advice. Every year I ask if we need to take dividends due to the amount showing in retained earnings. 2008 was the only year I suggested we take dividends and they agreed. Quarterly I submit for their review balance sheets and P and L's to make decisions on estimated tax payments. This is a construction company so income during any quarter can vary significantly. we are eon a cash basis for accounting.
Recently the IRS audited 2006 and 2007 returns. One of their findings is that the accountant should have had us claim money for large projects invoiced in November and December but not yet paid by the customer because we had taken the expenses in the tax year they were invoiced. The other problems were our bank reporting interest income as dividend income and too much retainend earnings. Consequently amended Federal and State returns and to be filed for 2006 and 2007. the result was money owed, 5k in penalty and interest and a $1,000.00 billing from the accountant for his time to represent and amend returns. I don't think 1,000.00 is a lot to amend returns, but I believe they should have known the IRS statutes on the construction income and this would not have happened. Their answer to not catching the sudden 1099 Dividends is that they thought it might be reasonable to assume that we had purchased a portion of the local bank. sSriously, all purchases are discussed with the CPA, and wouldn't that kindof transaction showed in the balance sheet? As far as the retained earnings they wrote and embarrassingly stupid letter to the auditor saying they thought we were in the works of buying something big. Sorry, I don't lie. especialy to the IRS. If they wanted to lie they should not have involved me. I told them to take it out of the letter and put the truth. they did not, they simply avoided the issue in the new draft.
I belive the CPA firm is responsible for the penalties and interest, and should not have charged me anything for the weak representation. They left me alone in my office with the auditor for three days. I had my staff pulling everything for two years for the auditor (list as long as your arm) and that as well as my time taken away from my business have cost me thousands (I do the sales here).
Is it wrong to expect the CPA to accept financial responsibility? Is it wrong for me to think that CPA's shouldn't lie to the IRS? The bank is offering to cover a portion of the interest expense due to their error but the CPA is standing firm that this had nothing to do with them and last week told me that because I am angry about all of this (I am tactful no screaming or yelling done) I should take my future business elsewhere. Is there somewhere I can find the responsibilities, duties, etc for a CPA? In my business we stand behind what we do and make things right!
Answer CPA fees can be disputed especially if he is firing you as a client. I don't want to comment on the time and issues of the the audit because I don't know all the issues and the CPA's story.
However, lying is never acceptable. Also, my policy (which is only my policy) is to never pay tax and interest incurred but to pay any penalty associated with a mistake by the CPA.
