What’s your worst tax nightmare? Identity theft? Not having enough to cover your tax bill? Or how about this: discovering that your CPA, enrolled agent, or tax preparer hasn’t filed your taxes for the past three years?
That’s exactly what happened to Dr. Lee, a Florida surgeon who earned over $1 million annually. Dr. Lee’s CPA prepared his tax returns, and he reviewed and approved them for electronic filing. However, the CPA never actually submitted the returns to the IRS.
By the time Dr. Lee found out that his returns were never filed, he was already in a bad spot. He had lost a $288,409 estimated tax payment due to the statute of limitations and ended up owing the IRS over $70,000 in penalties for failure-to-file and failure-to-pay.
Dr. Lee tried to fight the penalties in court, arguing that he shouldn’t be penalized because he had authorized his CPA to file his returns. He claimed he relied on the CPA’s expertise to get the job done. But the court rejected his argument, stating that the responsibility to file tax returns on time lies with the taxpayer—no exceptions.
The court emphasized that relying on a CPA or tax preparer to file your return does not excuse you from the responsibility. This rule stands firm, even when it comes to e-filed returns, which taxpayers cannot file themselves.
Lesson Learned: Double-Check That Your Return Was Filed
The takeaway from this case is crystal clear: Never take your CPA’s word that your return was filed. Always confirm that your return was submitted to the IRS.
Here’s how you can check:
- Create an Online Account with the IRS:
Go to IRS.gov and set up your account. You can request a tax account transcript, which should be available two to three weeks after your return was due to be filed. If there’s no transcript on record, that means your return hasn’t been filed. - Confirm with Your Tax Preparer:
If you don’t see a transcript, reach out to your CPA or tax preparer and ask them to verify the status of your filing.
Alternatively, if you’d prefer to file your return yourself, you can choose to do so by mail or private delivery service. Keep in mind, though, that if you go this route:
- You’ll need to provide your tax preparer with a signed statement that you are choosing to file the return yourself.
- Your preparer will need to attach IRS Form 8948 to the return.
Filing by mail can delay the IRS processing your return, which could be problematic if you’re expecting a refund. So, while you have the option, electronic filing is typically the fastest and most reliable way to submit your taxes.
Stay on Top of Your Filing Responsibilities
Even when you trust a professional with your taxes, it’s essential to keep track of the process. After all, the responsibility to ensure your taxes are filed on time falls squarely on your shoulders.
If you have any questions about your tax filing or need assistance with any tax-related issues, I’m here to help. Feel free to call me directly at 480 355-1398.