Tax overpayment error on e-filing and proforma
Total Views: 49
Has anyone ever noticed a problem between e-filing a return and having the printed copy different from the e-filed return? A client got a notice that the 2007 federal o/p was not credited to 2008 but rather refunded(line 74a on 2007). His paper copy agrees with the IRS, but my PS file says it was credited(line 75).
Then my 2008 file says it was credited, not refunded, so his 2008 was underpaid without the 2007 o/p, and he owes a bunch of tax. He also owes penalties for underpayment and late payment.
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I've seen that happen a couple of times but I believe in those instances the returns were paper filed rather than e-filed.
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I've never had that happen. Anytime I change a return after printing it but before efiling I make a note of it in my file so I will know something was changed and won't have to rely on my memory down the road.
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New One to me also I will be on guard Thanks AM
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I have also had the same thing happen 3 times. However they were paper filed. I am lucky clients called and said that they got refund they were not expecting. After you tell client refund will be applied, you would think they would call right away and tell you they received refund by mistake. I guess your client finally realizes you don't get it both ways (refund & applied).
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When one of my client companies complained about how "anal" I was to insist that they continue auditing from the ready printed papers, rather than the "easier" on screen audits they'd started conducting, the return auditors insisted they'd do it "their way". Unfortunately, this kind of thing can result. If you can't afford auditors on staff, or you yourself are the "auditor of all" then noting the client status form in the electronic file, as suggested above, is a really good idea.
If the client's printed copy had agreed with yours it would have been a "program error", either ProSeries or IRS. Since his paper was printed by you (or from an electronic file from you) it has to be your error. The client will have to pay the penalty to get it abated (usually) but making the effort to get them abated is usually successful - and no one who lets an error out should avoid trying abatement for fear of a black mark in the IRS's little black book. I'm pretty sure they get much more upset when preparers don't take responsibility.
- If we knew what it was we're doing, it would not be called Research. - Albert Einstein
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Oh, and if the IRS refuses abatement - you should pay the penalty amount to your client - as real money, not a credit against a future tax return.
- If we knew what it was we're doing, it would not be called Research. - Albert Einstein
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I always offer to pay for the penalties, but I do try to get them abated first. Then I offer to pay the interest when it is my fault, assuming I get the penalties abated if they are larger. The time value of money usually means I let them pay the interest(since they had the tax money in their hands anyway) but this time I offered to pay the interest if I get the penalty abated. If not, he will pay the interest.
The error is probably my fault. I might have told him we should apply the o/p to 2008 after I printed the returns but before I e-filed. Although I think there is a problem when you convert the file to e-filing status and the newer version of the return(with the credit, not the refund) should have been e-filed and wasn't. I think the system does not overwrite the new e-filing file over the older e-filing file.
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Well, I cannot say that I have never made an error or never changed a completed tax return, but maybe I did. The signed 8879 for 2007 says the money should be refunded, yet my PS file says credited. Unless I thought I changed it to credited after the client asked me to or not I do not know.
I will still try to get the penalties abated.