In part one of this series, we talked about the case of John Spottiswood and his TurboTax return.

Back in April 2013, John Spottiswood filed his 2012, along with the $395,619 in taxes due, via TurboTax. When TurboTax submitted the return to the IRS, it was rejected. Spottiswood was unaware of the rejection and did not discover it until 18 months later when he logged into his 2012 TurboTax software. The result? The IRS slapped an estimated nearly $200,000 in penalties plus interest.

Spottiswood took his case to court.

Interest and Penalties?

Interestingly, Spottiswood did not fight the IRS on the interest. However, he requested that the penalties – both the late filing and late payment penalties, which could total nearly $200,000 over 18 months – be abated.

His reasoning was that he was unaware that there was even a possibility that his return filed with TurboTax could be rejected.

“Intuit may have informed me in the fine print that I needed to log back in to make sure that my return had not been rejected, but if so I did not read this fine print,” said Spottiswood in a statement to the IRS.

(Not a Satisfactory) Outcome

In the end, TurboTax was found not to be to blame for the Spottiswood’s late filing or late payment of their 2012 taxes.

The court sided with the IRS in upholding all penalties, so those will come out of the Spottiswood’s pockets.

This is a key difference between using an online tax system versus a qualified professional such as an Enrolled Agent (EA). Your EA will file your return directly with the IRS and follow up to make sure it was accepted. If not, they (or their staff) will continue contacting you until the return is corrected and filed.

Lesson Learned

First, it pays to have a professional on your side when it comes to taxes. Had the Spottiswoods consulted an EA, their return would not have been filed late. Second, if you do have to go up against the IRS, as the Spottiswoods did, the expert advice of an EA is invaluable.

With cases such as these, there are circumstances under which some (or all) or those penalties could be abated. As a tax professional who must meet stringent requirements and continue their study of tax law, EAs know all of the rules and the ways to help taxpayers in trouble.

However, if you don’t receive that advice, you won’t be aware of it and use it to your advantage.

What you don’t know can hurt you… big time. The Spottiswoods found out the hard way. Learn from their example and don’t let this happen to you!

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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax & Accounting Services as well as the Enrolled Agent and Certified Tax Resolution Specialist for SFS Tax Problem Solutions.
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Now What? I Got A Tax Notice From The IRS. Help! Defining and deconstructing the scary and confusing letters that land in your mailbox. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.

The book is available in paperback and ebook on https://Amazon.com
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For more on SFS Tax Problem Solutions, visit http://sfstaxproblemsolutions.com/
For more on SFS Tax & Accounting Services, visit http://sfstaxacct.com/
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