Any tax experts?

[Snacky]

Last year I used a CPA to do my taxes.  Now it seems that CPA wasn't on the up and up and was shut down by the IRS but now I just received an audit letter.

 

 

Any ideas?

[BIFFY]

Hi, I'm a CPA in Pasadena, CA.

 

I'm sorry to hear you used a CPA that wasn't legit.  "Shut down by the IRS" means he was doing fraudulent stuff with his, or his client's, tax returns.

 

First, respond to the audit letter.  They will want to make an appointment for you - if you need time, or want to look for another CPA, just try to push the appointment out as far as they will let you.

 

Second, review your tax return for the year under audit.  Look for deductions that may not be correct.  I got a new client one time and looked at her prior return and saw mortgage interest.  I reminded her that she hadn't provided me with the current interest amount and she said "I don't have a house".  The tax preparer just put in an amount!  Anyway, try to see where the problems are.

 

Third, consider engaging another CPA to help with the audit.  It keeps you out of the hot seat, and should make things go smoother.  The CPA should be able to identify the issues that will be the most difficult, and should minimize any damage from the audit.  Understand, though, that if there are bogus deductions, they will be disallowed.  It's pretty rare for a CPA to do this stuff, so ask your friends or at work and get a referral to a reputable tax preparer.

 

If you do go for your own audit appointment, don't worry.  Just stick to the issues listed on the audit letter.  Also, realize that if you can back up your deductions, they will be allowed - if you can't, they will be disallowed.  This isn't a trial - just be honest and deal with the substantiation you have, and be prepared to pay for the substantiation you don't have.

 

Good luck!  If you have any other questions, let me know.

 

Barry

[Snacky]

Thats the thing, I have no deductions other than an IRA.

 

For the problems, the CPA sent in a bogus Schedule A form with tons of stuff I never said I had.

 

I've already wrote out a check for the tax owed, just don't think I should be held liable for the penalties and interest, especially when I provided the IRS with info and being a witness for them.

 

Was told by someone else to write them a letter explaining it all and send in an Offer in Compromise with the check and ask that they drop the penalties/interest.

[E!]

I use Turbo Tax right off of my home computer and I have not had a problem with the IRS yet  

[BIFFY]

You don't need an offer in compromise at this point.  Since you've paid the tax, send them a letter asking for abatement of the penalties.  Under the circumstances, it may well work.  It is very difficult to get an abatement of interest.  Keep in mind that while you are asking for penalties to be abated, the IRS computer will still have you in it's sites.  You should also call and ask for a "collection hold" - that gives you time to write your letter, and for the IRS to process and act on it.

 

Remember, when you sign your return, you are indicating that you agree with what is presented.  The IRS won't easily let you blame someone else, like your preparer.  It's worth a try though.  Good luck!

 

Barry