*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
Sometimes I do my own tax preparation, and sometimes I pay someone else to do the work for me. At one point I used the same accountant for a stretch of four years, but what I didn't realize was that I was relying on the wrong accountant. That truth would end up costing me $5,000 and involve a lot of time and frustration.
Good to Great
The first year that I used the "wrong" accountant I did so out of utter frustration. I was to the point that I could no longer do my own tax preparation and this particular accountant had worked with some of my former colleagues who highly recommended her.
Because I had so many "tricky" situations that particular tax year I thought I was going to have to pay over $7,000 in taxes. After the accountant took the reins I only ended up paying around $2,500. That was good, and the next year I was informed that I didn't have to pay anything. That was great. However, I should have known something wasn't quite right.
No Signature?
When I asked if I needed to come into the accountant's office to sign my return I was told it wasn't necessary. She said it was being filed electronically and that she would take care of everything and would even store my files for me. I sent her a check for her services and happily went about my business.
In my third and fourth years using this accountant I again owed no taxes and again had to do nothing more than send her a check. As far as I was concerned I was being taken care of by one of the best.
The Reality
A few months after I sent my former accountant a check for her services that year I got a letter from the IRS. The letter claimed that I had filed no returns for the previous three years. Thinking I was looking at some sort of scam letter I quickly called the IRS. This was no scam, but instead a nightmare coming true.
No Answer and No Help
I attempted to call my accountant several times to see what was going on and sure enough there was no answer. I went to her office to find she had not been there for several months. I had no idea where she was and, worst of all, she had all my files and personal information. Suddenly I realized that I had been duped.
The Penalty
I had no choice but to redo my taxes for the previous three years. The only difference was I had no files, no records and no receipts to work with. When it was all said and done I owed over $6,200 in back taxes, penalties and late fees. I pleaded with the IRS for help given my situation. They didn't really care about that, but since it was my first time being in trouble with the IRS they did agree to drop around $1,200 in penalties. I still had to pay them $5,000.
Careful Now
Looking back I suppose I was an easy mark as I blindly accepted what my accountant told me and questioned nothing. I simply took her word for everything and assumed she was doing her job. Though it was a hard and expensive lesson to learn I have come out of it better off. In fact, the last accountant I worked with told me I was the most thorough person she had ever helped with tax preparation and, knowing my story, she totally understood why.
5 comments