Help Me Howard: Tax Mistake

WSVN -- We all know nothing in life is certain except death and taxes. Fortunately, you are still alive. Unfortunately, guess what time of year it is?

Sharon Pryce: "Be fair to Uncle Sam."

Sharon, like the rest of us, has to pay taxes. In fact, she pays through two jobs.

Sharon Pryce: "I have been doing two jobs for the past five years. With my son going to school I do two jobs because I'm a single parent."

Sharon's tax trouble began last year when she paid a company $327 to do her 2006 return. First, the good news:

Sharon Pryce: "I was so happy for the return that I saw. At that time, I got back over $2,000."

Then, a couple of months ago, the IRS got back in touch with her with some bad news.

Sharon Pryce: "In December of 2007, I received a letter from the IRS that I owe them $1,228.12, and I said, 'Oh, my goodness! For what? I really don't understand.'"

So she took the letter and her old tax return and went back to see the people who had done the return.

Sharon Pryce: "He took my records and went through, and admitted, and apologized to me, 'Yes, there was an error made by one of our staff.'"

A big error, and so Sharon asked a big question.

Sharon Pryce: "Who is responsible for the $1,228? He said, 'You.' I said, 'Oh, no. I paid you $327 to do a good job and you screwed me up. You are responsible.'"

They disagreed and did offer to pay the $70 in interest to the IRS but not the $1,228 to the IRS and not the $327 she had paid them to do her tax form.

Sharon Pryce: "I work in the medical field, and if I screw up and give the patient wrong medication or the wrong injection, I am fired. I won't get paid either because I screwed up my job."

But, with a tax mistake, who's responsible, Howard?

Howard Finkelstein: "If the person who does your taxes makes a mistake, they have to pay the interest or penalties the IRS charges you, but, legally, they don't have to pay any taxes you owe because you would have had to do it if they had done their job right the first time. As for their fee, they still get it because after two attempts, they did the job right."

When we spoke to the people who did Sharon's taxes, they told us they are sorry for the inconvenience and reminded us they did pay the interest the IRS imposed on Sharon. They then decided to do what they were not required to do, and they refunded Sharon the $327 they had charged her to do her taxes. She, though, will still have to pay the IRS the taxes she legally owed them. Howard says as your taxes are done, be aware of some things.

Howard Finkelstein: "If you hire a company or an accountant to do you taxes, your aren't trained to catch most mistakes. The backup to catch it is the IRS; and if they catch it sometimes you have to give them money, but sometimes the IRS gives you money."

Sharon at least got her $327 back and now, like the rest of us, has to trust an accountant to get it right the first time.

Sharon Pryce: "I work hard, I pay my tax, I need efficiency, I need reliability, with those who prepare my tax."

Patrick Fraser: "Now, if you discover there was a mistake in your tax return, a mistake that cost you money, you have three years to file an amended return and get that money back. Of course, the IRS can go back as far as they want to collect taxes. So if you find out you owe them something from years ago, you might want to pay them before they come after you with interest and penalties."

Turmoil taxing and troubling you? Want to deduct it from your life? Contact us, you've got our interest.

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