Comment by holdingunsteady
3 hours ago
My tax accountant mis-filed my taxes a couple years ago, which cost me about $20K (which I learned after I switched to another accountant later). Don't know if Claude / GPT would make the same mistake or not given SOTA today, but feels like there's an opportunity for models to be saving me thousands or tens of thousands of dollars a year.
>mis-filed my taxes a couple years ago, which cost me about $20K
What do you mean by "cost you $20K"? That your tax liability was calculated by the accountant to be higher than it actually should have been? Or that the accountant calculated your liability too low, which was caught and billed by the IRS?
In the first case, you can still file for a refund within 3 years (I'm omitting some technical details), but in the latter case, as mentioned by others, you still owe the tax whether it was correctly reported on your original return or not.
Years ago I had a similar issue. Accountant did something incorrect, increasing my liability by around $50k. Tax date came so I paid it, but moved accountants. New person fixed the issues, refiled, but it took a long time to get the refund back. IIRC, the IRS did include some nominal interest for the time they had the money.
Sounds like an opportunity which could end up costing or saving $10k and which may be difficult to evaluate.
Someone still needs to take liability for mistakes.
The real issue is that accountant most likely has a track record of those kinds of mistakes - but you have no info on other clients. So you weren’t as informed at the time you chose them vs the new one.
People misunderstand the concept of liability. Yes your tax professional is liabile for fraud or gross misconduct, but if they make a mistake which results in unpaid taxes or fees you're still the one on the hook.
Typically you are on the hook for paying the actual taxes and penalties, but if you acted in good faith on the negligent advice of a tax professional many jurisdictions allow you to recover the costs of penalties and interest accrued as a result of the negligent advice.
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Yeah, I looked him up just now actually, and he has a 3-star rating on Yelp... Which I think is pretty low for accountants?
I think the red flag should have been when he printed out all my tax returns and made me pick them up in person, and didn't even send a digital copy.
In this case accountant DID NOT take liability for mistakes.
It's not the accountant that paid $20k for his mistake but the accountant's client.
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i'm a bit unclear who has the liability even when you use a CPA. accountants are humans that sometimes make mistakes.
The IRS made it crystal clear to me long ago. The tax filer is responsible for everything on the tax return, regardless of the preparer. Of course, accountants can be liable in other ways, but the filer has to pay the fines if the accountant makes a mistake.
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In NZ the liability is generally on you and not the accountant.
> Someone still needs to take liability for mistakes.
I am not aware of setups available to me that would transfer liability onto accountant.
So in either case I am taking liability.
(also, I am pretty sure that if corporation loses 10 millions over accountant making bad decisions, they are not going to recover that funds either)
yeah i think liability ultimately lies on the individual. of course, you could sue your accountant, but that feels hard, maybe almost as hard as suing the model providers.
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My obligatory comment about my experience with tax accountants:
https://blog.nawaz.org/posts/2022/Nov/do-you-trust-your-tax-...
I'm also 0 for 4 on tax preparers / tax accountants, so I concur with you its best to just do it yourself, which is what I now do. Only time I ever got audited (and failed) was when I had employed an accountant, since then I've never had a problem including passing audits. The tax code isn't /that/ complicated for most people's situation, and it's well worth understanding it.
I'm 1 for 6. And my current firm is overworked. I'm moving to do it myself (three companies, fund admin and personal). Recently Found a Tax-Accountant, not a CPA, who does advice only, no paperwork, who I'm using to cross-check my AI tools.