Would this bug you (tax accountant filing for extension)?

[dr.girlfriend]

We are using an accountant for the first time this year.  Granted, he seemed to take us on relatively late in the year (in February).  We had told him that a large part of hiring on an accountant was because we wanted help accurately assessing my husband's estimated tax payments now that he's freelance. We got him all our tax info in early March, we do not have a lot of complications except for the switch of DH from salary to freelance.

As we got closer to the 4/15 deadline for estimated tax payments for 2021, we were checking in with him, and he was kind of like, "I think it's fine to file by the 6/17 deadline and just pay any penalties for estimated tax underwithholding, it's not going to be much." (paraphrasing).  Now that it's 6/17 we were trying to check in again without being obnoxious, just like, "Hey, have you filed our taxes, or...?" and he emailed us last night (Sunday night before the deadline) saying, "I have a few more questions for you, why don't I file your state taxes but get an extension on your federal taxes..."  

The questions he said he had are kind of ... not worth the delay in my opinion.  He said there were maybe some more potential business expenses that could offset taxes for my husband, but we discussed these pretty thoroughly previously.  I really feel like he's just busy and not meeting deadlines.  Would this bug you?  We have a weird city tax thing that made us want to get someone in our city, and some of the people recommended to us had minimum charges of $5k for management, etc., so he was kind of last on our list.  He has not been great at communication but did come recommended from someone who freelances.

Not sure if professionals are just more blase about the deadline, or if I'm being a control freak, or what.

[winecat]

He's saying it's NBD for you to pay a penalty because he doesn't have your taxes done? If you owe, you have to get your payment in today or pay penalties. (I think. I don't know if that changed with the cluster that was 2020.)

[Pilsy]

I do think tax professionals are very comfortable with filing extensions, but that doesn't mean you're being a control freak or your take on the situation is wrong. He is likely very busy, and he definitely didn't communicate this well.

We have paid penalties for underwithholding on estimated taxes in the past, and the penalties were very modest, but I don't feel like it's his place to 1) cause the delay - especially without communicating about it earlier - and 2) judge whether the penalty is large or small since he's not paying it.

[jinkies]

It seems like 2 different issues-- he is already a month overdue on estimating your quarterlies, and now he is filing for an extension on your 2020 taxes.

When did your H start freelancing? Do you have any confidence that the accountant will have the payments estimated in time for the June payment? Is HE absorbing the penalty for the quarterlies, or expecting you to since it's "not much"?

The extension really isn't a huge deal. But he should be giving you an estimate for the quarterlies outside of that (Unless your H freelanced all last year and he's using that income as a baseline?)

[Susie]

Personally, yes, it would bother me.  I don't want my tax filings taking up any of my mental real estate beyond the due date.  I am type A, so they will take up some mental real estate until they're filed.  My accountant does my 2021 estimates and provides those at the same time as my 2020 return is finished.  I'm usually doing the safe harbor amounts anyway.

Professionally, also don't think it's ok.  I'm not a tax professional, I'm an attorney, but I'm in a practice area where extensions of time are available for a fee on many of our filings.  We obviously take them for client delay reasons with some frequency, and in those cases the client pays the fee.  In the rare circumstances where we take extensions because of something happening/causing delay on our end, we not only cover the cost of the extension fee, but we also apologize to the client for the delay.  As a rare occurrence, most clients don't mind as long as it's on our dime, but if it starts to become regular, clients rightly get upset.

[sicilygirl]

Thought I'd offer up my opinion from the perspective of the CPA (especially since I've seen several of these types of posts recently)...

When I work on tax returns, I work in a FIFO order (first in, first out) based on the date information is submitted by the client. I've worked at 6 different firms during my career, and every single one operated this way, so it's safe to assume that your CPA operates the same. I use the date that the client submitted a substantially complete file to me. For example, if they send me a W-2 in January and the other 95% of their info in June, I'm using the June date. If they submit the majority of their info in February but are waiting on a few 1099s or K-1s, then I use the February date. Complexity of the return does not factor in to when it gets completed.

With the exception of the past two years, when due dates have changed after tax season has started, I have a cut-off date. If you submit your info before that date, you return will be filed timely assuming no hold ups from you. If submitted after, you're going on extension. That way the client always knows up front.

For those that are extended, I provide estimates prior to the original due date. Estimates are not always accurate of course, though I do run estimates conservatively and with a cushion. If penalties and interest are assessed based on a mistake on my part, whether that's due to an incorrect calculation or late filing for some reason, I cover them for the client. If they are a result of the client not providing complete or timely information, that's on the client to cover.

All this to say that extensions are just a part of working with CPAs sometimes, but penalties and interest due to "just not getting to it yet" are not okay.

I will say that the past year and a half has been extraordinarily difficult for our profession (and many, many others obviously!) because of constantly changing due dates, recommendations, and tax law.

Specific to your situation, the IRS did not announce until April 13th how they would handle overpayments that resulted from the 2020 tax return. So until that date, many CPAs operated under the expectation that if an extension was filed and an extension payment made by 5/17, that any resulting overpayment would be applied as of 4/15 (the date Q1 payments were due). That didn't turn out to be the case. Overpayments resulting from extension payments made after 4/15 this year, will be applied as of the date of the actual payment.

So... it's been confusing and difficult and I would try to extend some grace to your CPA because of that. However, that's much easier to do when you have a long-standing relationship with them and know this is not the norm for them. I hope that ends up being the case for you!

[ellipses84]

I’d be annoyed. I basically had my accountant ghost me though which resulted in a late filing I did myself and now I’m going back with a new accountant to backcheck my work and amend if necessary. My expectations align with what other posters have said about law and accounting. I’m in a professional service industry too and I wouldn’t make my clients pay extra for a delay caused by me. Often times, delays are caused by my clients for not giving me info in a timely manner and I always give them a heads up about the potential repercussions.

[jwright]

To piggyback off of sicilygirl, I saw a lot of CPAs frustrated with the April 15 estimate process given the delayed deadline of May 17. I saw more than a few in online forums and networking say that they were just going to prepare first quarter estimates when they prepared the returns as usual, so returns prepared later in tax season between April 15 and May 17 would simply have a late first quarter estimate. The assumption being that one month or less late on one estimate at 3% would not materially affect the balance.

However, that's a separate issue than filing an extension without being upfront about that possibility. We always had a deadline of April 1 and two week turnarounds, but those "rules" were very well advertised and if it was obvious we were getting more slammed than usual we would warn people well in advance.

I think the delays may be understandable, but the communication was poor and he is coming off as disorganized. I'd be willing to stick it out through the year, but would understand if you didn't want to continue with him either.

[dr.girlfriend]

May 17, 2021 15:45:35 GMT -5 jwright said:

To piggyback off of sicilygirl , I saw a lot of CPAs frustrated with the April 15 estimate process given the delayed deadline of May 17. I saw more than a few in online forums and networking say that they were just going to prepare first quarter estimates when they prepared the returns as usual, so returns prepared later in tax season between April 15 and May 17 would simply have a late first quarter estimate. The assumption being that one month or less late on one estimate at 3% would not materially affect the balance.

However, that's a separate issue than filing an extension without being upfront about that possibility. We always had a deadline of April 1 and two week turnarounds, but those "rules" were very well advertised and if it was obvious we were getting more slammed than usual we would warn people well in advance.

I think the delays may be understandable, but the communication was poor and he is coming off as disorganized. I'd be willing to stick it out through the year, but would understand if you didn't want to continue with him either.

Thanks, jwright and sicilygirl, this context makes a lot of sense.  Our impression was that he was not great with communication to begin with -- he took a long time to contact us after our initial inquiry, and I think we might have even reached out again before we heard from him.  But, it sounds like a complicated year, and I know a lot of the city tax stuff was jumping all around because of people working from home, so maybe I'll cut him extra slack this year and see how next year goes, especially since he was inputting all our info for the first time and next year he would just be updating.