Several weeks ago I was advised by IRS (so far NY hasn't notified me) that my 2010 Federal Return had not been filed. I contacted the CPA who has prepared and filed my taxes for about 10 years. He said he would "take care of it." I then received another notification that 2009 was not filed. Same CPA, same explanation.

I am, of course, being "charged" penalty and interest on both returns by IRS and assume NY will do the same thing.

I finally got the CPA on the telephone (I paid him for both years and actually have copies of both Returns) and he told me there was confusion in his office, he prepared the Returns and sent the copies to me with his bill, the original Returns got filed in his office in my previous name (? ) and no one noticed they hadn't been filed, he notified IRS it's his error.

I then contacted IRS, which has a problem with the explanation (as do I. What does my previous surname have to do with anything?) and will not waive the penalty and interest.

Back to the CPA who will attend any hearings with me without charge BUT is not willing to do anything more than that. He thinks I should have followed up with him when I didn't get a receipt for the electronic filing.

I am guessing that CPAs carry malpractice insurance - but that's just a guess.

Any thoughts on what I do next?

(I am talking over $5,000 in total for IRS because the CPA advised me NOT to make quarterly estimates and, whoops, he was wrong.)

Judy - did you actually pay any taxes for 2009 & 2010? You received a copy of your tax return each year saying you owed $x, but never actually paid that amount to the IRS? If you didn't pay estimated quarterly, and your return was never filed, then what (if anything) have you paid?

Whether the CPA has malpractice insurance is not your concern. If the IRS nails you with a penalty for late filing then my sympathies are with you, and you may want to consider a lawsuit to recover the amount of the penalty. As for not having filed quarterly estimated payments - I bet your contract with the CPA holds him harmless (besides, he'll probably say he relied on a representation from you that led him to conclude that quarterly payments were not needed). And as for interest charges for not paying what you owed in April 2010 or April 2011 I'm less sympathetic, because that is something you should have noticed at the time.

And obviously - time to get a new CPA! Good luck with your meetings with the IRS.

Judy:

You definitely need to consider a lawsuit against the CPA. His failure to file the returns was clearly negligent.

All good comments (and questions). What happened is the CPA handles my corporate books and checks. I went in to his office, signed the paperwork for all the tax returns that were due, brought the files home and put them in my filing cabinet. I know it's negligent, but I never looked at the Returns. The cover letter says I don't owe taxes - but the CPA wrote the cover letter. The CPA has absolutely no explanation of what/why/how. He "believes" that the estate taxes, personal taxes, d/b/a and corporate returns got "confused." Now that I've looked at them, yes, he filed income from here over there and back again.

Now I have to get ANOTHER CPA to go over all my corporate books. I took the corporation over when my husband died, by the way. This gets more and more confusing BUT I today got a letter from IRS which states (following receipt of my explanation and a letter from the CPA):

"You explained that your failure to meet your tax obligations on time was due to reliance on an accountant. However, you are the one who is responsible for filing a return of paying the tax. A failure on the part of someone else does not explain why you could not have taken care of tax matters yourself."

"The law does not permit us to remove interest for reasonable cause."

The CPA says, "Oh, gosh."

So Atlantataxexpert is 100% on target - I need an Attorney (and it's not like I don't know a lot of them) and I need to get someone to review all of my tax records AND eventually ask CPA #1 to pay the expenses.

But that brings me to a question - if you sign where the CPA says to sign, how do you know whether he/she actually electronically files the Returns?

Not looking? That was totally my fault. Unfortunately I strongly suspect everything has to be amended and straightened out and he has cross filed (if that's the word) expenses and income from one return to another.

I am literally sick to my stomach - my late husband trusted this CPA for over 20 years. "We" owned a number of rental properties and two commercial establishments, PLUS he taught, PLUS I have two businesses. Now the estate is involved.

I'm afraid to open my mail!

Judy:

Returns that are filed electronically are acknowledged as received and accepted by the IRS via email. I routinely forward that email to my clients as proof of filing.

It will not help you now, but for future returns, it is something you can ask your new CPA to do.

Thanks - he never offered and I never asked!

What a mess.