Dealing with a situation for our small business in which we have finally discovered that our CPA failed to file 2023 and 2024 tax returns. We are talking an immense amount of negligence.

Does anyone have any recs for an attorney that can assist in pursuing our case, preferably in the DFW area?

Do you have an engagement letter for either of the years? That would be the best place to start to see if they had contractual obligations in writing and signed acknowledgement from you.

If it was all verbal "we'll do x y and z" and you got an invoice for for "services" that's going to be tougher.

Sims said:

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Do you have an engagement letter for either of the years? That would be the best place to start to see if they had contractual obligations in writing and signed acknowledgement from you.

If it was all verbal "we'll do x y and z" and you got an invoice for for "services" that's going to be tougher.

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We have the engagement letter in writing. We also have the signed returns - it looks like they did not submit.

one safe place said:

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How could you just now discover they were not filed?

What type of return do you file (C corp, S corp, partnership)?

Though the negligence may be evident, what sort of damages occurred? I would suppose you won't know until the return is done if a C corp, with the other two you pretty much already should know.

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It's an S Corp.

We only received one notice in each case and then the firm rerouted the notices to their office and stated that they were handling it, speaking to IRS, and no action was necessary on our end. I have all of that in writing.

Still looking for any attorney recs.

amg405 said:

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one safe place said:

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How could you just now discover they were not filed?

What type of return do you file (C corp, S corp, partnership)?

Though the negligence may be evident, what sort of damages occurred? I would suppose you won't know until the return is done if a C corp, with the other two you pretty much already should know.

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It's an S Corp.

We only received one notice in each case and then the firm rerouted the notices to their office and stated that they were handling it, speaking to IRS, and no action was necessary on our end. I have all of that in writing.

Still looking for any attorney recs.

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Unless the late filing negates any elections you would have been entitled to had they been timely filed, seems to me (and I might not be considering something) that your damages will be around $200 per month per shareholder, up to 12 months for each return. One shareholder is one thing of course, ten shareholders is quite another. Probably some chance of getting the penalty abated, at least for one of the years.

If it is as you describe (not that I doubt you), I would bet the CPA firm would pay the penalty. I would consider whether I could be made whole without spending a lot of money on an attorney.

Sorry that it happened to you.

I believe that have insurance for situations like this so hopefully you can just file a claim and not have to get lawyers involved.

We're not even sure that they did payroll right because it seems like they did it at times and not at other times.

The issue with 2022 was W2's and 941's not being filed correctly.

2023 and 2024 are unknown at this point because ours were rejected and we had no idea.

It's a huge mess and I'm having trouble finding an accountant to take this on.

The one guy we found that looked at everything wants $85,000 to fix it all. That seems ridiculous to me.

For what it's worth, I put the facts of the case and the documentation in to Chat GPT and it said it's a textbook malpractice case…

The IRS agent I spoke to that was helping us figure out everything that went wrong advised finding an attorney.

Honestly kinda doubt the IRS agent told you that…they record EVERY one of those calls and they get screened. Not to derail but I 99.99% doubt that part of this story.

Agree with Loyal Ag. If I got this case, I'd hire a forensic accounting firm I always use. They are top notch guys and would straighten it out. I basically sit and monitor everything, but no legal work would be needed unless the CPA won't pay to make you whole.

Bayou City said:

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Honestly kinda doubt the IRS agent told you that…they record EVERY one of those calls and they get screened. Not to derail but I 99.99% doubt that part of this story.

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He did say that verbatim. Even if he was wrong, he was the only 1 of the 4 that actually tried in good faith to help us figure out what the heck happened and went wrong. The rest were jerks with one even saying that he might send an agent to our house. Eye roll.

I appreciate all of yall's help. We were so clueless (obviously) when we started and have learned a lot but this is a difficult time for us.

amg405 said:

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Bayou City said:

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Honestly kinda doubt the IRS agent told you that…they record EVERY one of those calls and they get screened. Not to derail but I 99.99% doubt that part of this story.

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He did say that verbatim. Even if he was wrong, he was the only 1 of the 4 that actually tried in good faith to help us figure out what the heck happened and went wrong. The rest were jerks with one even saying that he might send an agent to our house. Eye roll.

I appreciate all of yall's help. We were so clueless (obviously) when we started and have learned a lot but this is a difficult time for us.

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First off, sorry you are going through all this. Sounds like (and forgive me if I have misunderstood the posts) that you placed your trust in a CPA or CPA firm and they let you down. It will be hard to trust again I would think, but you probably should seek referrals from friends or acquaintances who have a business or businesses and go from there. On the one hand, it sounds as if your value to the company is in doing what you do, and though you don't need to be getting bogged down in the accounting and tax areas, you do need to know what is due and when it is due. Sort of like a checklist only for the purpose that nothing falls through the cracks. At least until you are familiar enough with the new CPA to feel they are on top of things.

In my firm, we had two different ways we monitored due dates just so nothing failed to get filed. A gal that worked for me for over 30 years was just excellent in monitoring due dates and keeping clients updated on what was due and such. Though I have been retired for four years (just do family tax returns now) I wake from a terrible dream 10 or 12 times a year. The dream always involves my not having done one of my former client's very involved tax return, even though I had all I needed to do it, and the deadline is a couple of days away! It is such a nice feeling when I wake and realize I no longer do their return, lol.

Others have given you some great advice and I concur with not getting an attorney involved, at least not at the start of getting this mess straightened out. And though I obviously haven't seen the paperwork, the $85,000 number you were given is likely total bull***** As such, were you to hire them and then seek reimbursement from the old CPA, I would bet you would be hard pressed to do so. If the fee was exorbitant. it is likely you would be in a fight trying to recover it, all meaning more and more legal fees.

I liked your comment about having learned a lot. I am sorry about this being a difficult time, sure sounds like it. Focus on doing what you have done and don't let this sour you or your outlook. This will pass. I hope you get it fixed asap and wish you continued success in your business.

These are the guys I use in Georgia for forensic accounting. Marty Varon is top notch, but since this isn't in litigation, I'm sure you could go with a less expensive option. You should seek a similar firm in Texas, but if you can't find anyone, I'm sure these guys could handle it. Problem is, if there ultimately will be litigation, you'd have to pay them to fly there for trial. That's unlikely though.

https://www.iagforensics.com/

one safe place said:

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amg405 said:

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Bayou City said:

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Honestly kinda doubt the IRS agent told you that…they record EVERY one of those calls and they get screened. Not to derail but I 99.99% doubt that part of this story.

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He did say that verbatim. Even if he was wrong, he was the only 1 of the 4 that actually tried in good faith to help us figure out what the heck happened and went wrong. The rest were jerks with one even saying that he might send an agent to our house. Eye roll.

I appreciate all of yall's help. We were so clueless (obviously) when we started and have learned a lot but this is a difficult time for us.

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First off, sorry you are going through all this. Sounds like (and forgive me if I have misunderstood the posts) that you placed your trust in a CPA or CPA firm and they let you down. It will be hard to trust again I would think, but you probably should seek referrals from friends or acquaintances who have a business or businesses and go from there. On the one hand, it sounds as if your value to the company is in doing what you do, and though you don't need to be getting bogged down in the accounting and tax areas, you do need to know what is due and when it is due. Sort of like a checklist only for the purpose that nothing falls through the cracks. At least until you are familiar enough with the new CPA to feel they are on top of things.

In my firm, we had two different ways we monitored due dates just so nothing failed to get filed. A gal that worked for me for over 30 years was just excellent in monitoring due dates and keeping clients updated on what was due and such. Though I have been retired for four years (just do family tax returns now) I wake from a terrible dream 10 or 12 times a year. The dream always involves my not having done one of my former client's very involved tax return, even though I had all I needed to do it, and the deadline is a couple of days away! It is such a nice feeling when I wake and realize I no longer do their return, lol.

Others have given you some great advice and I concur with not getting an attorney involved, at least not at the start of getting this mess straightened out. And though I obviously haven't seen the paperwork, the $85,000 number you were given is likely total bull***** As such, were you to hire them and then seek reimbursement from the old CPA, I would bet you would be hard pressed to do so. If the fee was exorbitant. it is likely you would be in a fight trying to recover it, all meaning more and more legal fees.

I liked your comment about having learned a lot. I am sorry about this being a difficult time, sure sounds like it. Focus on doing what you have done and don't let this sour you or your outlook. This will pass. I hope you get it fixed asap and wish you continued success in your business.

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Thank you for the kind words and reassurance. I figured I would keep this thread somewhat updated in case anyone else is looking for guidance on something like this...though I pray nobody else goes through it.

I spoke with a very well respected and personally connected CPA here in my town this morning and went over the entire case. He's concurs with y'all that right now keeping the IRS off my back is priority one and that any litigious aspects will have to be dealt with down the road if at all.

He's going to review the issues the IRS has laid out for us and call me back this afternoon to let me know if his firm has the resources to deal with it. He also concurred with y'all that this is pretty rough timing and I would have a tough time finding help with the business and personal deadlines both looming.

I have an irrational hope that the existing firm wakes up to the seriousness of the situation and decides to deal with this this week but I understand that it's unlikely.

One attorney you might consider consulting is a tax attorney. Don't call my ex wife. Ha.

LOYAL AG said:

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amg405 said:

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We're not even sure that they did payroll right because it seems like they did it at times and not at other times.

The issue with 2022 was W2's and 941's not being filed correctly.

2023 and 2024 are unknown at this point because ours were rejected and we had no idea.

It's a huge mess and I'm having trouble finding an accountant to take this on.

The one guy we found that looked at everything wants $85,000 to fix it all. That seems ridiculous to me.

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You've got three different problems and you need to look at them that way.

1. Your income taxes aren't current. At a minimum business and maybe personal too. This is honestly an easy fix and not worth litigation.
2. Your payroll taxes may be wrong. This is a harder fix but probably still not worth litigation.

Pause there. This needs to be addressed and an attorney is not a useful hire in this case. Now it's March 9 and you aren't going to find a "local" CPA that's even a little bit willing to look at it right now with the filing deadlines approaching. Your best better here is a larger firm with a sizeable staff. I don't know where you are located but I have a Houston area firm that will talk to you about it even now. It's not going to be fixed in the next week, it's going to take maybe a month to research and get it right. On the payroll side maybe longer.

3. You have a potential litigation against the prior service provider. The price of fixing this isn't $85k, that's a "I don't want to do this" price. But it won't be free. I would get a firm quote then call the other firm and tell them the price of fixing their mess and they can either commit to pay it or you can tell them you'll file a suit.

You still aren't looking for an attorney but rather a CPA to fix the mess. The IRS agent is wrong and shouldn't have spoken on that aspect.

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Is there a way you can get me the Houston firm rec? I am running low on options at this point.

This thread is becoming my group therapy, haha....

I've had two CPA's tell me in 24 hours that this is a real bad situation and also a real bad time of year.

My local guy hasn't called me back yet so there's a little bit of hope there.

I had a well respected guy out of a decent sized group in Frisco decline today and also give me a rec for a tax attorney. Not a super encouraging sign.

amg405 said:

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one safe place said:

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How could you just now discover they were not filed?

What type of return do you file (C corp, S corp, partnership)?

Though the negligence may be evident, what sort of damages occurred? I would suppose you won't know until the return is done if a C corp, with the other two you pretty much already should know.

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It's an S Corp.

We only received one notice in each case and then the firm rerouted the notices to their office and stated that they were handling it, speaking to IRS, and no action was necessary on our end. I have all of that in writing.

Still looking for any attorney recs.

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Don't know where you live but any attorney who handles business litigation.

I can talk to seidel schroeder & associates if you'd like.

You should be documenting your efforts, the responses, and prices, as you try to find your solution provider. This way you can support, for your damages, the high price you had to pay to get a provider to work now during busy season or the IRS fines for waiting until after busy season.

amg405 said:

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LOYAL AG said:

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amg405 said:

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We're not even sure that they did payroll right because it seems like they did it at times and not at other times.

The issue with 2022 was W2's and 941's not being filed correctly.

2023 and 2024 are unknown at this point because ours were rejected and we had no idea.

It's a huge mess and I'm having trouble finding an accountant to take this on.

The one guy we found that looked at everything wants $85,000 to fix it all. That seems ridiculous to me.

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You've got three different problems and you need to look at them that way.

1. Your income taxes aren't current. At a minimum business and maybe personal too. This is honestly an easy fix and not worth litigation.
2. Your payroll taxes may be wrong. This is a harder fix but probably still not worth litigation.

Pause there. This needs to be addressed and an attorney is not a useful hire in this case. Now it's March 9 and you aren't going to find a "local" CPA that's even a little bit willing to look at it right now with the filing deadlines approaching. Your best better here is a larger firm with a sizeable staff. I don't know where you are located but I have a Houston area firm that will talk to you about it even now. It's not going to be fixed in the next week, it's going to take maybe a month to research and get it right. On the payroll side maybe longer.

3. You have a potential litigation against the prior service provider. The price of fixing this isn't $85k, that's a "I don't want to do this" price. But it won't be free. I would get a firm quote then call the other firm and tell them the price of fixing their mess and they can either commit to pay it or you can tell them you'll file a suit.

You still aren't looking for an attorney but rather a CPA to fix the mess. The IRS agent is wrong and shouldn't have spoken on that aspect.

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Is there a way you can get me the Houston firm rec? I am running low on options at this point.

This thread is becoming my group therapy, haha....

I've had two CPA's tell me in 24 hours that this is a real bad situation and also a real bad time of year.

My local guy hasn't called me back yet so there's a little bit of hope there.

I had a well respected guy out of a decent sized group in Frisco decline today and also give me a rec for a tax attorney. Not a super encouraging sign.

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Shoot me an email at and I'll connect you by text or email.

I would be leery of any CPA firm who would take on this type of project at this time of year. I would not even talk to a potential client during February, March, or April, but would tell them to set up an appointment in late April or go somewhere else. They will all have existing long-term clients that do not have any mess to unravel and understandably they will want to take care of them first. Their routine folks they deal with year after year.

I may be wrong, but from what you have described, I cannot imagine there is as much to getting this resolved as you think. But too much for anyone to deal with at this time of year.

one safe place said:

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I would be leery of any CPA firm who would take on this type of project at this time of year. I would not even talk to a potential client during February, March, or April, but would tell them to set up an appointment in late April or go somewhere else. They will all have existing long-term clients that do not have any mess to unravel and understandably they will want to take care of them first. Their routine folks they deal with year after year.

I may be wrong, but from what you have described, I cannot imagine there is as much to getting this resolved as you think. But too much for anyone to deal with at this time of year.

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Agree on this but the firm I'm going to refer him to is a bit bigger. They won't act on it til next week after the business filing deadline but maybe they have a call, line out a plan and give some piece of mind.

What is your CPA saying with regards to all of this? Are they not trying to help and make it right?

LOYAL AG said:

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amg405 said:

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LOYAL AG said:

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amg405 said:

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We're not even sure that they did payroll right because it seems like they did it at times and not at other times.

The issue with 2022 was W2's and 941's not being filed correctly.

2023 and 2024 are unknown at this point because ours were rejected and we had no idea.

It's a huge mess and I'm having trouble finding an accountant to take this on.

The one guy we found that looked at everything wants $85,000 to fix it all. That seems ridiculous to me.

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You've got three different problems and you need to look at them that way.

1. Your income taxes aren't current. At a minimum business and maybe personal too. This is honestly an easy fix and not worth litigation.
2. Your payroll taxes may be wrong. This is a harder fix but probably still not worth litigation.

Pause there. This needs to be addressed and an attorney is not a useful hire in this case. Now it's March 9 and you aren't going to find a "local" CPA that's even a little bit willing to look at it right now with the filing deadlines approaching. Your best better here is a larger firm with a sizeable staff. I don't know where you are located but I have a Houston area firm that will talk to you about it even now. It's not going to be fixed in the next week, it's going to take maybe a month to research and get it right. On the payroll side maybe longer.

3. You have a potential litigation against the prior service provider. The price of fixing this isn't $85k, that's a "I don't want to do this" price. But it won't be free. I would get a firm quote then call the other firm and tell them the price of fixing their mess and they can either commit to pay it or you can tell them you'll file a suit.

You still aren't looking for an attorney but rather a CPA to fix the mess. The IRS agent is wrong and shouldn't have spoken on that aspect.

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Is there a way you can get me the Houston firm rec? I am running low on options at this point.

This thread is becoming my group therapy, haha....

I've had two CPA's tell me in 24 hours that this is a real bad situation and also a real bad time of year.

My local guy hasn't called me back yet so there's a little bit of hope there.

I had a well respected guy out of a decent sized group in Frisco decline today and also give me a rec for a tax attorney. Not a super encouraging sign.

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Shoot me an email at jason@praeviscfo.com and I'll connect you by text or email.

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Sent. Thank you!!

Nm

Update - Loyal Ag's contact reached out to me immediately and we have a call set for Monday. I appreciate you and the Aggie network so much!

This will be our 4th accounting group to meet with and generally the first reaction is something to the effect of "oh wow…" haha so we will see what they think.

Definitely would agree by way of experience that this is truly the toughest time to find help (other than the attorney) due to tax deadlines. Hopefully if someone reads this down the road they can avoid this.

I also formally fired and revoked power of attorney yesterday for the existing accounting group. Still radio silence from them as expected. We are meeting with a CPA friend this afternoon who isn't taking the case but is going to help us with a business extension and a change of address form. Turns out the existing group changed our business mailing address without our knowledge.. which the tax attorney said is not normal but not unheard of. There is no telling how many notices went to them and we never knew it.

Fun times! Fortunately I was a high school administrator in a previous career so my documentation over these years is impeccable. I have a feeling that a malpractice attorney may have a treasure trove of info down the road.

Good progress.

Focus on fixing the IRS issue.

You have time to work on malpractice later.

(I am also an attorney who has handled cases like this)

This guy really is dead set on litigation. Respira profunda. Calmate guey.

Bayou City said:

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This guy really is dead set on litigation. Respira profunda. Calmate guey.

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Rude!!

Haha when you get screwed like this you get a little salty…