Moved $6,000 out of emergency fund to pay IRS and to pay bill to accountant.
I'm trying to be Zen about this, on the one hand I understand that our CPA provided a service to us, on an hourly basis, by preparing for audit, attending audit, dealing with examiner. And since, during that time, he couldn't assist other clients he is due his hourly rate.
On the other hand, it was his error that caused the problem and I'm troubled about having to pay him his hourly rate, $2000+, to deal with the IRS for back taxes that we would not have owed but for him.
On the other hand (how many hands can one have), I think it helped during the audit process that the examiner could tell, it was obvious, that the error was entirely the CPA's fault and that there was no intention on our part to defraud the IRS. But, on the other hand, we wouldn't have been in that situation but for the CPA.
Finally, we could be in a situation in which we owed the IRS $20,000 and we came to a resolution for $4,000. But most of the work, post-audit, was done by us. The letter sent enclosing the additional paperwork was drafted by the CPA but completely rewritten by us.
So, I'm happy that we only owe $4000 vs. $20,000. I think that we likely owe less because IRS realized that problem was caused by CPA and therefore no intention on our part. But, we wouldn't have been in this siutation if our CPA had been better informed.
Bottom line, once IRS audit process is over and once we get 2009 taxes done, we filed an extension, we will be looking for a new accountant.