tax accountant - steamed

[hesperus]

So, if you handed all your financial docs to three separate tax people, do you think you' get three different taxes due amounts?

I just switched over to a new tax accountant this year, and some things have occurred with how he has handled the returns, to a point where I'm questioning if he has really gotten us the lowest return possible. Without going into too much detail, the taxes were ready to file by april 13, but he was going to file an extension to go through the returns to see if anything else could be reviewed to our benefit. So, I said OK, and then I didn't hear from him for two weeks. I was expecting to get a call from him to come in and go over our returns and discuss them. Instead, I get a call from his receptionist telling me to come and pick them up. I told her I would like to talk to him, and she says he's in a meeting. So DW and I go in there to pick them up, get home and open them up to discover that they are now three times the amount due then when he was ready to file them on april 13! Naturally, we have a LOT of questions, so we go back in there and he's gone for a long weekend. I request to talk to the principal of the firm, and then lay out the email I received from my acountant that clearly states that they are ready to file at the much lower amount than what is now due. He's also perplexed, and says he'll look at them on monday.

Our investments are somewhat complex, with a large individual brokerage account (2.5M), two trusts (1M) and an IRA (.6M). It's a mix of stocks, MF's, and MLP's. We had one of our MLP's turn over to a stock position (Kinder Morgan) last year, so that kicked in a big capital gains hit. Through this all, our accountant sounded like he had it under control, and I was ready to pay the amount he initially laid out on april 13. So when I get the new taxes due, at three times the amount when we last spoke, without so much of a call to let me know, I'm pretty steamed. At best it's unprofessional to lay this at my feet without an explanation, at worst, it might be incompetence. I have this suspicion that they'll talk next week and tell me the larger amount is what I owe, and I should bite the bullet. However, with how this has unfolded I have lost faith in this group, and am seriously considering taking them to another accountant to go over to really be sure. I have an extension until august or so, so there's time, but it's going to cost $$ to have someone else go over the returns again. Bottom line, I don't like the way this all came down and and I will be making a change AGAIN next year to a new tax accountant.
But to my original question - how many different results can different accountants end up with if you supply them with the same tax documents? Is it worth having someone go over the same returns again?

[GrayHare]

Been there, done that, now I do the forms myself.

[RunningBum]

I don't understand who the three accountants were. Sounds like you had one accountant, who wasn't sure enough of the return to file them so he asked for an extension. He (hopefully unintentionally) misled you about the amount due and found through his review that he had missed something, something big, that made the taxes higher. It was quite unprofessional to hide from you after this rather than give you the explanation you were owed. This alone would probably lead me to going to a different preparer, but it sounds to me like it's one accountant who gave you an interim number that was unfortunately far from your final number.

Did you see all the forms from April 13, and what is different in the final forms now? Or did you only get a bottom line number on April 13. And what is the magnitude of that number? If you had withheld properly or made estimated payments and only owed $100, and now owe $300 (3x), that's different than going from $10,000 to $30,000. That would also determine for me whether it's worth it to go to a new accountant to redo this year's taxes. Not to mention how out of line the first accountant was to drop this on you without a word.

I know MLPs can be complex but is it too much for you to try to do it yourself with Turbo Tax?

[Ian S]

I think there have been tests done where it was shown to be fairly hard to get identical tax numbers using different firms when the return is a bit complex. That said, IIRC, the differences weren't huge. BTW, if you paid the lower amount with the extension, won't you wind up paying interest and penalty if you wind up having to file and pay the higher amount?

I do my own taxes because my experience is I have to spend considerable time to get all the paperwork together and it makes sense at that point just to do it myself with decent tax software. Do you have the paperwork for the original calculation so you can compare to the latest numbers to see where the discrepancy is? That might be quite telling. BTW, as an H&R Block software user for many years, they had a real screwup this year - couldn't calculate ACA premium supports for self-employed folks - so I don't recommend that program anymore.

[Throwdownmyaceinthehole]

I'm an accountant, but not of the tax type. As an expat, we were required to file our returns thru one of the Big 4 firms that specialized in foreign returns. As the foreign controller I saw many of the expats returns. They were riddled with errors. We had to send them back over and over to be corrected, sometimes up to five times and of course they charged us each time. honestly I think they just dump the figures into a turbotax type of program and don't even look at the results. I know a lot of returns are done overseas as we had to sign authorizations for other acctg firms to access the returns. I do my own, no one cares as much as you do! BUT even as a pretty high level accountant, I still have trouble following the IRS language.

[hesperus]

Sorry for some confusion in the post, as I am still pretty fired up about it.
It's just one accountant, new this year, and the email he sent me on the 13th said they were ready to file, but did I want to file an extension to be sure? I said, sure, if it might help lowering our taxes with more review. Obviously it didn't help lower them. The taxes on the 13th were around 5K total, state and federal. When his receptonist called me last week and we picked them up, they were now 15K. It's a big jump, and there was no phone call explaining or preparing me for that amount of increase. Nothing. He was 'in a meeting' when I called back. I do not know what has caused this huge jump, but I will be all ears when they contact me next week. I'm bracing myself.

I used to do my own taxes (turbotax), but it became a bit too complex when I inherited a substantial sum of investment accounts a few years ago, including the two trusts. With these and state taxes, there are a total of three to four returns to process. I also wanted a good tax accountant to help with making informed decisions with tax loss harvesting, etc. But this guy has been slow to answer phone calls or emails when I do pose a investment tax questions. After a couple of calls and email tax inquiries that he didn't respond to, I called him out on it, saying that I expected at least an acknowledgment of my question within 24 hours, at least telling me he'd get to it when he wasn't so busy. That made him apologize, but it felt like something changed after that. It was interesting to me that not long after after that incident my 'new' taxes due was now a multiple of three.

It's interesting to hear that there may not be a big differences between several different accountants given the same tax information. Perhaps I'll find the same result with another accountant, but that is part of the question. I have a lack of trust in this guy now.

[jon-nyc]

Richard Kinder is the guy you should be pissed at.

Sorry, that's not entirely fair. Sounds like your accountant misled you and then was unresponsive, even evasive.

To your original question, I think three accountants should be able to get really close numbers on an individual return of medium complexity like the one you describe.

[Ian S]

Quote:

Originally Posted by hesperus It's interesting to hear that there may not be a big differences between several different accountants given the same tax information. Perhaps I'll find the same result with another accountant, but that is part of the question. I have a lack of trust in this guy now.

Yeah, I'd have lost trust too. It's a considerable mistake either way: was the first calculation wrong or was it this one? I wonder if the firm will be liable for your interest and penalty charges now. Curious as to how you picked this firm? It seems you'd be just the kind of client they'd value unless they're more into corporations than individuals.

[RunningBum]

I'd be upset too, with that amount.

To answer your questions, with my taxes I'd expect any preparer to come up with the same figures, because my situation is pretty easy. Yours is more complex, but they should still be in the same ballpark.

Perhaps he just flat missed the Kinder conversion and didn't include the cap gains resulting from it until he reviewed it? Still careless on his part, and totally unacceptable that you were blindsided by it.

As upset as you may be now, emotions really don't do much good for financial decisions. I'd try to be calm for when he contacts you next week so that you get the full story. Then I'd fire him and perhaps lay into him for his unprofessional attitude.

[hesperus]

Quote:

Originally Posted by RunningBum As upset as you may be now, emotions really don't do much good for financial decisions. I'd try to be calm for when he contacts you next week so that you get the full story. Then I'd fire him and perhaps lay into him for his unprofessional attitude.

Yes, have to keep a level head for financial decisions

[RE2Boys]

If this firm your dealing with is like most others, I'd bet that the accountant was so snowed under reviewing returns on April 13 that he knew he could not in good conscious release your return. Sure it was done, but there was no way it was going to be properly reviewed before he'd sign off on it.
Most firms have a back office of anything from experienced preparers to college interns doing the actual grunt work of sorting through all the papers, entering into the software, hopefully interpreting what is going on in your financial life correctly from your notes or your answer to questions and sending it forward for review.
Professionally, he owes you an apology and explanation of why the change in your calculated tax liability. And of course, if you've lost trust, it is appropriate to change. You don't mention how long he had your paperwork in before April 13th or if there were last minute documents delivered. Revisiting a return you had not looked at for some time many times will result in something overlooked, especially in those last frantic days of the tax season.
I'm one of those back office folks and sometimes all it takes is forgetting to check a box in the software ( for example, checking the box that a K1 is the final one thus releasing any past losses that were disallowed in previous years) that can dramatically change the results of a return. Your accountant's real mistake was giving you an interim number before he properly and fully reviewed your returns. Possibly in the case of Kinder Morgan MLPs,the back office person may have not recognized that a sale of an MLP usually results in some of the gain to be taxed as ordinary income instead of as a capital gain.
And some firms concentrate on their real profit centers, servicing businesses and their owners and not really putting in the resources to handle lots of individual returns.
Agree, it may be you need to seek out a different firm.

[Bamaman]

Remember that a CPA has just passed a 2 day test. It doesn't mean that they're specialists in any specific field of accounting, however. And few younger CPA's have ever managed businesses or had complex personal financial situations of their own.

And like physicians, not all CPA's are created equal. It takes a long time to get proficient in many areas of taxation. The true experts on taxation have gone to tax school at an university like NYU. Unfortunately, the IRS changes the rules constantly.

I can understand why the young CPA wanted to get an extension and look at the numbers when he had more time and less stress (than mid April.) He won't get around to doing his own personal taxes until October. And it sounds as if he had to research your taxes--after a 2 week vacation 4/15 to 5/1. But he should have returned your messages or had someone within the firm answering phone calls. There's no excuse for his behavior.

And if you feel reluctant about his version of your tax return, pay another more experienced CPA an hour's labor to look over your 2014 tax return. He could tell you whether the tax return is right on, or if it's a poor attempt at a tax return.

[wanaberetiree]

"Been there, done that, now I do the forms myself."

+1

[donheff]

Quote:

Originally Posted by hesperus I used to do my own taxes (turbotax), but it became a bit too complex when I inherited a substantial sum of investment accounts a few years ago, including the two trusts. With these and state taxes, there are a total of three to four returns to process.

We had/have a similar situation. While DW was working her multistate partnership income was intimidating so we used an accountant who we were satisfied with. But your experience documents why I decided I should HTFU and learn to DIY. Nobody cares as much about your situation as you.

When DW ERd I figured it was time to do it myself. DW gets a ~$30K income stipend from to remain associated with her firm so we still have two states to file returns in, six others the firm files in, plus all the misc issues associated with self employment taxes and partnership income. So for one year I ran TT parallel to the accountant filing the real thing. He did quite a bit better at first until I figured out what I missed. Eventually I got the two returns to match close to dollar for dollar. Since then I have done them myself. This past year I tried Tax Act out but since I still got TT for free I ran those parallel and in the back and forth caught another mistake that saved me a few bucks. A bit of a PITA but worth the savings on tax prep fees.

[MichaelB]

Quote:

Originally Posted by hesperus It's interesting to hear that there may not be a big differences between several different accountants given the same tax information. Perhaps I'll find the same result with another accountant, but that is part of the question. I have a lack of trust in this guy now.

Large differences between tax preparers for the same situation are more likely when preparing a business tax return, because the tax code is far more complex. Personal taxes are less so, although MLP and trusts are more complex than most personal returns. So, this is probably a matter of human error, or the preparer doing this type of return for the first time and making a rookie mistake.

One issue here is the cause is not clear, so the tax preparers have not yet been forthcoming. In these matters they need to be completely open.

A second issue is, even though an extension is filed the total tax still needed to be paid on 4/15. If that did not happen, there will probably be penalty and interest. They should absorb that cost entirely because it is their fault.

It doesn't make sense to pay for another tax preparer to look it over, that's what the partner or owner of this office is doing right now.

[Closet_Gamer]

After a similar experience with a tax preparer, I now do taxes myself.

And an experience with work options/RSUs hammered that point home again this year.

Fidelity's 1099s for options/restricted stock vesting and sales were a complete train wreck because they didn't properly show the cost basis or the income tax withheld. Three different sets of numbers on three different pages, none of which were accurate and due to partial block sales vs the original order size, couldn't be easily traced back to the original sell orders. I spent about six hours doing forensic accounting to stitch it all back together and figure out what was really paid/owed. All in, the govt owed me money.

I went to work and bumped into several people with long faces saying they owed $50k in taxes. Each had just turned over their docs to a tax guy who robotically fed the page showing the sales with a $0 cost basis into the computer without thinking or asking why that would be the case. These guys were getting taxed as tho they had gotten the stock at $0 rather than the real issue/strike price!!

I bet I saved other folks at work collectively $250k by telling them how to stitch it all back together (that's IF they followed it and got their tax guy to do it right).

I hate doing taxes, but $-for-$ it's probably the highest hourly pay rate activity I do all year by ensuring I pay the correct taxes. It's a $1k/hour if I avoid a $25k mistake...

[Texas Proud]

Quote:

Originally Posted by Throwdownmyaceinthehole I'm an accountant, but not of the tax type. As an expat, we were required to file our returns thru one of the Big 4 firms that specialized in foreign returns. As the foreign controller I saw many of the expats returns. They were riddled with errors. We had to send them back over and over to be corrected, sometimes up to five times and of course they charged us each time. honestly I think they just dump the figures into a turbotax type of program and don't even look at the results. I know a lot of returns are done overseas as we had to sign authorizations for other acctg firms to access the returns. I do my own, no one cares as much as you do! BUT even as a pretty high level accountant, I still have trouble following the IRS language.

Way way back when I was a tax accountant.... and I did expat returns...

They make it look like someone with experience does them... but in reality it is a first or second year accountant that puts the number into a program (much more sophisticated than Turbo Tax though)... there is supposed to be a Senior that takes a look at it.... and then a Manager or Partner, but when I was doing it the last review never happened.... they just sent it out...

When I was an expat, they screwed up my return every year.... I had to get it fixed most of the time because it affected my equalization payment... I never had it redone 5 times, but I guess it was because I told them exactly what to do to fix it....

[Texas Proud]

Quote:

Originally Posted by Bamaman Remember that a CPA has just passed a 2 day test. It doesn't mean that they're specialists in any specific field of accounting, however. And few younger CPA's have ever managed businesses or had complex personal financial situations of their own. And like physicians, not all CPA's are created equal. It takes a long time to get proficient in many areas of taxation. The true experts on taxation have gone to tax school at an university like NYU. Unfortunately, the IRS changes the rules constantly. I can understand why the young CPA wanted to get an extension and look at the numbers when he had more time and less stress (than mid April.) He won't get around to doing his own personal taxes until October. And it sounds as if he had to research your taxes--after a 2 week vacation 4/15 to 5/1. But he should have returned your messages or had someone within the firm answering phone calls. There's no excuse for his behavior. And if you feel reluctant about his version of your tax return, pay another more experienced CPA an hour's labor to look over your 2014 tax return. He could tell you whether the tax return is right on, or if it's a poor attempt at a tax return.

It is a bit longer...

You also make it sound like anybody can pass that test... but the stats are that 80% that take it fail... where almost a lawyers and doctors who take their tests pass... it is not an easy test..

You are correct that having a CPA does not mean you know about taxes... but most know the enough to do 1040s.... and it does not sound like the OPs tax return is that complicated.... just move numbers from the info forms sent in into a program.... just have to make sure you do not type something in wrong...

[Golden sunsets]

Quote:

Originally Posted by hesperus So, if you handed all your financial docs to three separate tax people, do you think you' get three different taxes due amounts? I just switched over to a new tax accountant this year, and some things have occurred with how he has handled the returns, to a point where I'm questioning if he has really gotten us the lowest return possible. Without going into too much detail, the taxes were ready to file by april 13, but he was going to file an extension to go through the returns to see if anything else could be reviewed to our benefit. So, I said OK, and then I didn't hear from him for two weeks. I was expecting to get a call from him to come in and go over our returns and discuss them. Instead, I get a call from his receptionist telling me to come and pick them up. I told her I would like to talk to him, and she says he's in a meeting. So DW and I go in there to pick them up, get home and open them up to discover that they are now three times the amount due then when he was ready to file them on april 13! Naturally, we have a LOT of questions, so we go back in there and he's gone for a long weekend. I request to talk to the principal of the firm, and then lay out the email I received from my acountant that clearly states that they are ready to file at the much lower amount than what is now due. He's also perplexed, and says he'll look at them on monday. Our investments are somewhat complex, with a large individual brokerage account (2.5M), two trusts (1M) and an IRA (.6M). It's a mix of stocks, MF's, and MLP's. We had one of our MLP's turn over to a stock position (Kinder Morgan) last year, so that kicked in a big capital gains hit. Through this all, our accountant sounded like he had it under control, and I was ready to pay the amount he initially laid out on april 13. So when I get the new taxes due, at three times the amount when we last spoke, without so much of a call to let me know, I'm pretty steamed. At best it's unprofessional to lay this at my feet without an explanation, at worst, it might be incompetence. I have this suspicion that they'll talk next week and tell me the larger amount is what I owe, and I should bite the bullet. However, with how this has unfolded I have lost faith in this group, and am seriously considering taking them to another accountant to go over to really be sure. I have an extension until august or so, so there's time, but it's going to cost $$ to have someone else go over the returns again. Bottom line, I don't like the way this all came down and and I will be making a change AGAIN next year to a new tax accountant. But to my original question - how many different results can different accountants end up with if you supply them with the same tax documents? Is it worth having someone go over the same returns again?

Hesperus; We owned KMR with huge unrealized capital gains when it converted to KMI last year . The gains stayed with the converted KMI shares with the same continued lower cost basis as the KMR shares, so no CG due last year. True the shares of KMI will now start throwing off taxable(qualified) dividends starting this year but no big CG bill last year or until we sell. I was worried for a bit until I located an explanation on the Kinder Morgan investor website documenting tax treatment. Also our brokerage treated it in this manner and did not report CG's on the 1099. Not sure if you owned KMR or KMP, but I believe the tax treatment was the same regardless of which shares you owned. If I were you I would hunt down that explanation from KM and confront your brokerage firm if they reported CG's. Your accountant may have used the brokerage firm's erroneous reporting. If you can't find it on the investor relations webpage PM me. I still have it in my records.

[Texas Proud]

To the OP...

Again, this was way back when I did taxes and read articles about taxes...

There was some group that had a contest with very complicated issues... professionals would submit what they thought the return should look like... IIRC, there were hundreds of submissions, but only ONE was prepared correctly.... to be fair, they were throwing in things that even most tax accountants do not every see....


Do you know IF he actually had the return 'done' on the 13th Sometimes they just do a quick estimate and if they miss some limitation of a loss or something else that estimate could be way off.... also, they might not have looked at AMT.... and you could very well be paying a big amount of AMT... so your regular tax could be low, but throw in AMT and you get hit hard...