How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Tax.appeal.168 Your Own Question
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3443
Experience:  3+ decades of varied tax industry exp. Tax Biz owner
58285678
Type Your Tax Question Here...
Tax.appeal.168 is online now
A new question is answered every 9 seconds

The CPA firm that I use for my business, prepared my tax return

This answer was rated:

The CPA firm that I use for my business, prepared my tax return and I filed it. I was recently informed by the IRS that the return is incorrect. Instead of a $16,000 refund that my accountant prepared, it turns out to be $0. I was billed $1800 by my accountant to prepare this "incorrect" return. Any suggestions on recourse?
Welcome, THANK YOU for using Just Answer. My goal is to help make your life...a little...LESS taxing.

Accountants are required to carry E&O (Errors & Omissions) Insurance, which is used for the purpose of reimbursing clients in the event that an error has been made. If the CPA is responsible for the error, you can ask him/her to reimburse you part of, if not the entire $1,800 that you paid for the processing of the return. If the Accountant does not want to reimburse you, you can file a claim with their E&O carrier. You will need to ask the Accountant for their E&O carrier information. The Accountant is not supposed to withhold the name of their E&O carrier from you. If they do, you can file a complaint against him/her with the Board of Accountancy. Link to the Virginia Board Of Accountancy below;

http://www.boa.virginia.gov/

Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.
Customer: replied 3 years ago.

Thanks for the E&O info, that is very helpful!


My return was filed in October (an extension). My accountant explained the reason for my significant refund was because she was able to apply my business "losses" to a previous return. She is certified, prepared the return, presented the return to me, BILLED ME and filed it with the IRS. In anticipation of the return, I decided to reinvest the 16,000 in my business by purchasing merchandise for my showroom.


Is there any recourse here? Or just my error for trusting my CPA?

Hello again Stephanie,

It sounds as if she was trying to do a NOL (Net Operating Loss) carryback, which means that if the option was properly electd, business losses can be carried back a certain amount of years and claimed as a deduction. Now, if you're asking if there is any recourse for getting that $16,000, or part of the amount that you spent in anticipation of the refund, sadly, the answer is no. At best, XXXXX XXXXX E&O insurance or the firm's E&O insurance will reimburse you the $1,800, or part of it. Sorry, I wish I could provide you with a more favorable answer.
Customer: replied 3 years ago.

 


Thanks so much! (the answer I expected on the 16K, just thought I'd check in case) Lastly, I've been reading a little about E&O insurance since your reply and I'm not getting the impression that it's "required" in every state. I'm certainly hoping that it is in Virginia, and that my accountant has it. If for some reason she doesn't?


 


 

You are welcome. It appears that E&O insurance for Accountants is a requirement in Virginia. See document at following link:

http://www.camico.com/portal/server.pt?open=512&objID=365&PageID=123947&cached=true&mode=2#14

Even if the CPA doesn't have individual E&O insurance, the firm that she works for should have E&O coverage. As she is an employee of the firm, technically they are responsible for the quality of work that she does.
Customer: replied 3 years ago.

 


Excellent advise - really appreciate the service!

You are very welcome. I'm glad that I could help. I hope that you have a happy and prosperous New Year.
Tax.appeal.168 and other Tax Specialists are ready to help you