IRS withholding refund?

Question

So I get my taxes filed by CPA for the first time in my life, and paid a premium fee of $685.  Things went smoothly for the most part, other than couple of MAJOR issues which I cannot afford to overlook.  I am detailing one of them in this post. Since the other one is irrelevant to this post, I will keep it outside of this post.

When my CPA sent me the final documents I noticed that the debit date for Virginia Taxes is 5/1/2020. The very last date allowed by law (not withstanding this corona virus crisis we are currently in). I am not the kind of person who waits until the last day for doing anything. I am not a procrastinator and very proud of it !

So while I am now waiting for my VA taxes to get debited from my account, I noticed my IRS refund is delayed.. Is the Federal Govt waiting on VA to inform them to release my refund?   My taxes were filed and accepted on/around 3/16.

When I go to IRS website, I get the following message.

Your tax return is still being processed.

A refund date will be provided when available.

When inquired, I was told that this is a default, which is a bunch of bull***t, and they did not have other option. I did not argue with the CPA's assistant, who did the filing, and majority of the work, but its unfathomable that software would be written in such fashion as to only permit the date of withdrawal to be the last possible date allowed by law, before penalties kick in and interest start accumulating.

I later discovered that in the past, I had been able to file my own taxes using Turbo Tax and pay both IRS and VA Tax Authority well before 4/15.   I think with a bit of training, I could do a lot better job working for CPA than some of these clowns..

John Hyre · Answer

Sounds like a tantrum and another person to add to my "Run Away!  Run Away!" List.  VA has nothing to do with the Feds.  That's just raw speculation, paranoia, and scapegoating....dangerous traits in a client.  That the money was taken out later than you wanted is a  minor issue unless it cost you money (penalties, etc.).  I see no indication of that.

Forgot you had realtor income?  That'd be more serious if you gave her docs (1099's, list of expenses, etc.).  Not clear from the context - you mention that you mentioned it, but I cannot tell what material you gave her, if any.

But your overall attitude (especially your response to Carl) & approach scream "fast to blame others" and "difficult person, not worth the money, next".

Linda Weygant · Answer

No, the IRS is not holding your refund waiting on Virginia.

Likely the IRS is not processing your return because there is a matching issue or other discrepancy.  For example, I have a client whose IRS refund has been showing as "processing" for over a month.  When we looked into it, I determined that my client did not give me a form 1095A showing the health insurance advanced payment credit.  Despite me asking if he had such a form.

So the IRS is now waiting to process the refund so they can add in this credit and figure out the correct refund.

Because of the pandemic, the IRS was neither working on this processing nor are they answering the phones.  It just is what it is.

Odds are good this is NOT your CPAs fault.  Could have been that you forgot a form.  Could be that there is some other reason.  But IRS Processing delays are not under the control of your CPA.

Also, $700 is not "Premium" fee.  It's fairly standard for a real estate investor / self employed person.

TLdr - you're freaking out and blaming your CPA and you really need to stop.

Natalie Kolodij · Answer

Most firms set the default date to pay as the due date- Every firm I've ever worked for has this as a default. People KNOW that date- but if you change it or pull earlier people are incredibly upset when it comes up earlier than they expected.

I personally send my client the link to make the payment themselves for this purpose. It's kind of a damned if you do damned if you don't situation. This firm did the thing that most people prefer- paying on the due date and you're very unhappy about it.

You mentioned you saw this on the documents they sent you- Did you ask them if it could be withdraw sooner and they told you this wasn't an option? Or was it not mentioned until after the return was filed?

The federal tax return is in no way waiting on the state.

If they E-filed and submitted and it says it's pending then it's pending.

Lots of things cause this- Often certain tax credits the IRS takes longer to process if they're refundable.

You said that you had several other CPA's look at it who said the work was good- so I'm not sure how you feel they mishandled your account?

Caleb Heimsoth · Answer

@Chinmay J. How much is your tax refund? The amount that you are freaking out about this makes me think it’s rather large.

Let’s assume that’s the case, if you do a “quick glance” at your tax situation throughout the year, you can make adjustments to make sure your tax refund isn’t so large.

Every year I do this and my tax refund is quite small, meaning I pay about the right amount of taxes every year. I do this because I don’t like giving the government an interest free loan while they hold my money.

You mentioned your state tax return too.  I have yet to receive my state tax refund (have received federal), but it doesn’t matter to me since it’s less than 10 dollars.

Filling out tax paperwork and doing it correctly requires expertise but understanding how taxes are calculated and figuring out (roughly) what you owe isn’t that hard.  You can read a few books and understand the basics.  Unless you’re doing dozens of real estate transactions a year, you can handle this.

Without knowing more, your 700 dollar CPA fee is reasonable.  You may think you didn’t get the best service and that’s your right. I will agree with you that the assistant doing the entire return probably isn’t okay. There should be some input throughout the process from the cpa.

My cpa does that.  He does some of the work and someone else does some of it too. He checks it, I review it, and then sign and they file.

I have caught small discrepancies (not anyone’s fault, I just had a lot of moving parts). That’s just life.

Jai Reddy · Answer

@Chinmay J.

Carl ends by saying ‘Thank you for sharing your experiences as they help others’.

You end by saying ‘Take your meds, old man’

I had read your profile before you deleted your details which stated you have no spouse and no children. I can see why. I am glad your genes end with you. Good riddance.

Carl Fischer · Answer

@Chinmay J.

How  and why did you chose this cpa firm? There are great CPAs in this BP forum who will help you understand the specifics of this situation. However, You are so typical of many investors and it is one of my pet peeves. Executing your “due diligence” after signing up. You have to ask your questions before you sign on the dotted line. For example, you like to get your work done before it is due-did you ask the CPAs you interviewed- what percentage of your clients file ahead of deadlines and how soon do they get their refunds? The cpa could of answered with a percentage or could have said we try to make sure our clients don’t overpay taxes during the year and can use that money all year and not wait for a refund. Maybe both answers or more answers. Neither one is right or wrong but you decide what fits your goals and expectations. Make sure you ask questions that are important to you as well as figuring out the CPAs knowledge and execution processes. However this is a learning process and BP forum posts will help you. It’s good to learn from your mistakes but great to learn from others mistakes. Thank you for sharing as your experience can help others. Follow the CPAs on the forums you can get a good feel for them for free-@Michael Plaks, @Ashish Acharya, @Lance Lvovsky, @Elizabeth Cummings, among others.

Joe Splitrock · Answer

@Chinmay J. my taxes were e-filed about the same time as yours and I owed money. I mailed the check on 4-14 and it was cashed a week later. I guess they are happy to take money but slow to give it back!

As far as your concerns with the VA payment date, generally speaking it is better to hold on to your money longer. I assume most CPA do not have people sending payment earlier than necessary. I don't consider it procrastinating if you send before the deadline. Most businesses hold their cash as long as possible. We hold ours in a high yield savings account. Not that I am going to get rich off the interest, but every dollar helps.

As far as your realtor income, are you saying they failed to claim your commissions?

Chinmay J. · Answer

I had made payment of $7000 on Jan 1st at the request of the CPA to avoid any penalties or fines, as the W2 holdings were not good enough this year. I had a lot of extra income. When everything was said and done that was over the needed amount by $2500 (approx). So I am getting approx $2500 as refund.

Usually my holdings are in line with the tax code and I am able to adjust them well, but I can't help it if I get $10,000 check as a realtor. No one can foresee that.

It is unclear as to whether CPA ever did any work on the back end. She didn't even have the manners and decency to introduce her assistant. The assistant started asking me for documents as if we had long standing relationship.  Some people definitely need to learn their manners.

Thanks for responding.. I like your posts. You are a good guy.

Natalie Kolodij · Answer

I'm still not sure what you think the big mistakes were?

Steven Hamilton II · Answer

@natalie and @Linda covered this perfectly. as a side note this is literally been one of the most difficult tax seasons for all accountants out there. We've had the stimulus we have had PPP loans EIDL loans, our phones have been ringing off the hook with questions about it people who aren't our clients are asking for help so chances are if they were cold or distant all they might just be a little stressed out.

As for the due date I can tell you my firm we default our due date to the latest the IRS allows us to pay this is simply because most clients do not want to pay prior and setting up and auto debit allows them to keep the money in their bank longer.

This year we've noticed several returns get hung up in the IRS system and just saying processing I have one that we filed on February 15th that is still saying processing and we can't get a hold of anybody to find out what's going on.

You are making an assumption that the assistant dealt with everything they may deal with communications for the accountant so that way they can work on physical work on tax returns.

IRS withholding refund?

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