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Attorney Wendy! You have assisted me in the past (last

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Hello Attorney Wendy! You have assisted...
Hello Attorney Wendy!
You have assisted me in the past (last month, May). I’m researching my case and came upon another discrepancy which concerns the validity of a contract which is my case. Not only were dates on contract written, rewritten, not supported in typed text, and added in... but I never signed the contract as well. Also, I looked up Commissions and contingent fees under the CA board of Accountancy and it states a licensee shall not perform for a contingent fee specifically when they have preformed an audit or prepared an amended tax refund, claim for refund, or other similar services. (Also notice the contract is headed with Continget Fee Audit) Am I understanding this correctly that this is not lawful? I’ve submitted pictures of contract and CBA rules I pulled.
Submitted: 2 months ago.Category: Legal
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Answered in 21 hours by:
6/1/2018
Lawyer: Attorney Wendy, Lawyer replied 2 months ago
Attorney Wendy
Category: Legal
Satisfied Customers: 1,386
Experience: Member at Keefer & Keefer LLC
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So I can be sure to put your question and issues in context, can you remind me the general issues we previously discussed?

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Customer reply replied 2 months ago
This has turned into a complex issue. First off, we used the same CPA for years. We closed a business and asked him to file our taxes, we gave him all our documents and receipts to show our loses. Prior to him submitting our return we argued that his numbers were off and we did not have documention to support some of the write off he used. He said they were really standard write offs and business expenses. Well we got audited by the IRS and the IRS said we owed a crazy amount over 100k!. There were so many mistakes and we felt it would have been easy to explain this to IRS ourselves, show our documents and receipts and fix this issue. We know we never owed the IRS and we were not expecting a return... we only wanted to file properly. My husband called to fire our CPA and pick up our files. When he arrived at CPA office he was handed our box of files, but asked by our CPA to work this out. Our CPA said there was no way we can go against the IRS ourselves. That he could finish this for us and if he got us a return he would take 25% of return. This was after he knew my husband was there to fire him. My husband agreed to let him speak to the IRS at the meeting and fix the issues. Once this was settled, the IRS agreed we owed nothing to them after mistakes were corrected. We actually got a return. Then we got a bill from our CPA for almost 40k! He wanted 25% of “savings” and of our return. We disagreed with how he was asking to be paid on this, he sent us a copy of a contract (that I sent you a picture of). He made sure BOTH my husband and my signature was always on every contract, except for some reason not this one. I would have never agreed to this to begin with as I read very carefully that small print. My husband says that was not their agreement anyways. That it was 25% of the return. Also, our CPA was paid thousands of dollars to file the taxes originally already. Our CPA hired a collection agency to collect, they will not look at the evidence I have to show we do not owe this money. Now, the CPA has passed away even though they still tell me on the phone they are trying to put a conference call together between us all. I also found that this contract on top of the mistakes looks to be against regulations. Also.. the numbers he’s trying to collect in our “savings” is completely off as well, I have IRS documents to show that too. So, contract is bad, agreements is not true, numbers are wrong, and our plaintiff his now deceased.
Lawyer: Attorney Wendy, Lawyer replied 2 months ago

That was very helpful. I see several issues and things that you may want to consider. First, this is an incredibly troubling situation in which an accountant prepares your tax return and then when audited and errors are claimed then wants a percentage of what relief you get - it tends to suggest that an accountant could actually create suspect deductions in hopes of an audit - knowing the audit will likely be defensible - and then get part of that "savings." Of course, the flip side of the argument is that the accountant prepared your tax returns correctly, as shown by the outcome of the audit, and the audit was an error on the IRS' part and the accountant convinced them of that.

That all said, agreement does provide as a fee 25% of the total saved, which seems extreme again here. But that is - as you note in saying you would not have signed - what it says. And, unfortunately, though I see how you are reading the CBA guidance on contingent fees, I suspect the accounting firm/collection agency would look to that last paragraph:

"Fees are not regarded as being contingent if fixed by courts or governmental entities acting in a judicial or regulatory capacity, or in tax matters if determined based upon the results of judicial proceedings or the findings of governmental agencies in a judicial or regulatory capacity or there is a reasonable expectation of substantive review by a taxing authority."

Honestly, the guidance here is not well written and could be read to be conflicting. I think perhaps the bigger issue is that you did not sign this agreement. That same CBA document states that such documents must "Be signed by the recipient of the product of service." Though your husband was one recipient, I assume these were joint tax returns such that you were another recipient - certainly you and I could not both be entitled to a tax refund but I could sign an agreement without you giving away a portion of that refund.

Now the issue is what to do now that it is turned over to a collections agency. One thing to consider is to dispute any entry on any of the credit bureau reports about this debt (particularly for you). Another option is to consult with a local attorney to attempt to negotiate some other fee for the accountant's work with the audit (e.g., 25% of the actual refund as it was understood). If your file with this accounting firm does, in fact, have every other contract and document signed by both you and your husband but this one, then I would certainly argue this was an incomplete contract that was never finalized. But it is difficult to get collection agencies to even consider "defenses" to the debt outside of a courtroom or without legal counsel to impress upon them that this is not a simple debt collection scenario. The other thing you could discuss with an attorney would be (and you can certainly consider it yourself as well) reporting this accounting firm to the CBA/filing a complaint.

I hope this information helps. If you need additional assistance, feel free to reply to this email. If I answered your question and provided excellent service, I would greatly appreciate your 5 star rating at this time.

Please note: This information is for educational purposes only and is not legal advice. No course of action is being proposed and no attorney-client relationship or privilege has been formed as a result of this conversation.

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Lawyer: Attorney Wendy, Lawyer replied 2 months ago

I just saw your phone call request; I am unable to take calls today but I am certainly happy to answer any follow-up questions via email if that works for you.

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Customer reply replied 2 months ago
That’s fine, email will continue to work.
Customer reply replied 2 months ago
I would like to add that the CPA was paid almost 5k to file the two years that were audited already, also, the audit created the IRS to change numbers in years following these returns, which when that was complete, we ended up owning them money. It was roughly over 4K. So even though originally we saw a return after audit, it created changes in other returns and we owed, and paid them. So even the numbers he would have expected to see if we paid him 25% of a return would have changed after the fact. Very complicated. I keep thinking if he really felt he was entitled to all this money he would have sued us personally instead of using a collection agency to attempt to collect. THey have not reported this on our credit yet. Looks like I will have to hire an attorney as this is too complicated for us. Our next CMC is in a couple weeks.
Lawyer: Attorney Wendy, Lawyer replied 2 months ago

It is unfortunately and unnecessarily complicated. I do think at least consulting with a local attorney will help you figure out all the ways to approach this complicated issue.

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Customer reply replied 2 months ago
Is there a motion we can file based on the main fact that the Plantiff has the burden of proof to prove our guilt and they cannot. We have showed incomplete contracts, inconsistent calculations computed for “owed” monies, and a plantiff whom cannot testify to our history, conversations, and agreements. We are moving to North Carolina next week and really want to wrap this case up as we find representing ourselves from across the country would be a huge financial burden and disadvantage. We cannot afford representation and feel we have enough proof of innocence to see this go to trial, but would like to shut this down. Can I specifically ask the judge to consider anything at our CMC based on this?
Lawyer: Attorney Wendy, Lawyer replied 2 months ago

You could file a motion for summary judgment. This type of motion is essentially saying that even when looking at the facts in the light most favorable to the plaintiff the plaintiff cannot prove its case. You could certainly plant the seed about summary judgment at the CMC basically outlining that you have been provided no evidence that could prove their case.

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