Reposting, since my posts are not showing up again.

Wha-hoo! That's awesome!

Sandi

(1) Max out 401ks - $33,000
(2) Max out IRAs - $10,000
(3) Prepay mortgage - $1200
(4) Add to baby fund - $3500
(5) Add to emergency fund - $7000
(6) House/Furniture fund - $3000

Total - $57,700

(1) - $7100 (22%) (goal is $33,000)
(2) - $3200 (32%) (goal is $10,000)
(3) - $300 (25%) (goal is $1200)
(4) - $750 (21%)($7135 in our baby fund, goal is $10,000)
(5) - $-1800 (-26%)($24,412 in our emergency fund, goal is $32,000)
(6) - $3000 (100%) (Completed)

Total - $12,550 (22%)

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.

Would you be willing to sue him in small claims court? does the decision letter from the irs state that it's the accountants' fault? You don't have to have a lawyer if you take him to small claims court.

I think you should sue, for your time most especially.

No, the relationship is more complicated. I'm just not in a position where I feel comfortable not paying him or suing him. At the beginning of this process I told him we would pay his hourly rate for him to prepare us, for him to attend and represent us, etc. After it came to light that the error was his, I was hoping that he would reduce or waive his fees. But since he has not, I think our plan is to pay it, get our taxes filed this year, and then find a new CPA (and a new insurance agent, since he also serves that role for 4 of our properties).

I'm glad that you are not going to sue the CPA. It's a hassle, and what will you really get out of it? 4k? It's not worth it to me. Luckily, you have money saved for "emergencies" so paying the extra 4k, while it is still unplanned, it's not the end of the world. Why am I not surprised he doesn't feel bad or want to reduce the amount you owe him?

I'm with you on finding someone new for your taxes and your insurance. There has to be someone who is current with the new tax laws, and can give you what you need.

Things could have defintely been worse.

I hope you don't do your taxes this year with him as well. I would be ! I understand your position though, that bites!

Some professionals of that type have "errors and omissions" insurance. You can ask.

If he does carry it, his insurance pays it out to you. His premium may go up a tiny bit, but isn't that incentive for him to stay current on the laws? And I don't think there's anything unethical in making an insurance claim - that's what it's FOR.

I'd ask. He might not volunteer it.

Sandi

Thanks for the feedback GRS friends.

I had planned to use him this year, just because its so late, because he is well versed in our situation, has all our records, etc. and he filed an extension on our behalf. Clearly we are not going to seek the same excemption that got us in trouble.

I might ask about errors and ommissions, I had thought about it before, assume that he has to have some insurance since he is a CPA. But again, our relationship is more complicated and I'm not sure what I'll do on that front.

Hey Sam,

Glad to hear the IRS problems are behind you. I would really, really discourage you from pursuing all this lawsuit talk. Americans have a reputation for suing over every stupid little thing - don't feed into the stereotype. It doesn't sound like this guy willfully tried to commit fraud, it sounds like he made a simple, honest mistake. Correct me if I'm wrong, but it's not like if he hadn't screwed up, you'd be $4,000 richer - this was money you would have had to have paid anyway, right? I mean, there might be some interest/penalty component to that, but isn't this mostly simply returning a refund you didn't deserve in the first place? You're not really out-of-pocket $4,000 due to his screwup. Again, I don't have all the facts, please correct me if I'm mistaken.

Like you said, he knows your situation intimately, and if it was seriously simply an honest mistake, I'd just let this one slide. The US tax code is notoriously complicated, this could have happened to anybody.

All I am saying is, you should have not had to pay for his error. That's exactly why you not only had to pay the IRS back but also him. Why should he be paid for finding his own errors? As a responsible business man he should've admitted that and be conscientious enough to waive the fee. Had you known he was the reason why you owed money I am sure you wouldn't have said you would pay him to prepare the paperwork for the audit. Also he prepared the document and you still had to re-do it b/c it wasn't up to snuff. Why should you have to pay for his error? How fair is that? As usual life isn't fair.

(1) Max out 401ks - $33,000
(2) Max out IRAs - $10,000
(3) Prepay mortgage - $1200
(4) Add to baby fund - $3500
(5) Add to emergency fund - $7000
(6) House/Furniture fund - $3000

Total - $57,700

(1) - $8274 (25%) (goal is $33,000)
(2) - $5000 (50%) (goal is $10,000)
(3) - $500 (42%) (goal is $1200)
(4) - $1200 (34%)($7561 in our baby fund, goal is $10,000)
(5) - $-1200 (-17%)($25,439 in our emergency fund, goal is $32,000)
(6) - $3000 (100%) (Completed)

Total - $16,744 (29%)

Completed funding my 2010 IRA and bought some bargain stocks yesterday.

I thought I bought some bargain stocks yesterday too, until the market dropped again today. Hopefully by the time I retire, everything will be corrected. These gains and losses are killing me (not really, but it's exciting to be dramatic!).

I thought my GRS fiscal fitness friends would be interested in this NYT article on tracking net worth. I was interviewed for the article and my one little quote appears on page 2. I wouldn't agree to have my full identity published so my part in the article is pretty small.

http://www.nytimes.com/2010/05/16/magaz ... f=homepage

My comment on the article was highlighted and I also posted it on my blog, typos and all.

I'm looking forward to reading the full article this weekend. I read most of Ron Lieber's posts and articles so it was fun to be interviewed by him.