A client’s tax returns were incorrectly filed by their CPA firm. The firm prepared a preliminary tax return for the client to review that was never intended to be filed. Subsequent to their review, the clients realized that they had not provided the tax preparer all income and expenses for their business. The tax preparer then created a duplicate tax return within their software to correctly include the additional income and the additional expenses provided by their client.
The incorrect tax return was inadvertently filed with the IRS. This simple mistake by the CPA firm resulted in a tax liability for their client of approximately $80,000. Had the correct return been sent to the IRS, it would have generated a $10,000 refund.
The IRS contacted the client and were pursuing collection of the $80,000. The CPA firm could not get the IRS to recognize that an erroneous return had been filed.
When we got involved, we aggressively approached the IRS to recognize the error and get the client’s filings corrected. We implemented a strategy of filing an offer in compromise – doubt as to liability.
After nine months of going through difficult negotiations with the IRS, we were able to get them to accept the correct return in place of the erroneous return that was filed by the CPA firm.
Their client was very happy because they were no longer being chased by the IRS for the $80,000, and they were due the $10,000 refund.