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If the calcs show the person is getting a refund, the IRS doesn't bother to send letters. Why would they?

A couple of months ago, my wife found a deposit of over $6,000 in her account that appeared to be a tax refund but clearly was not ours. She called the bank and they thanked her for bringing the error to their attention. I am just now beginning to speak to her again.

I'm a better safe than sorry guy. I have always had E&O.

I don't judge. I am happy for the work, and know that usually the client is relieved to get back on track--even if they owe money. The IRS or other collection agencies are just part of the process. We represent our clients when needed and help where we can to reduce penalties. It's what we do.

I have spent between $500 and $600 per year for Professional Liability Insurance for the last 22 years. About 20 years ago I added Earthquake Insurance to my Homwowners Policy for the same reason. It's risk management, you insure against potential losses that you can't afford. How many of you would stop carrying Homeowners/Fire insurance on your home or stop carrying Liability Insurance on your vehicles ???

My, possible most, E&O insurance is based on risk and income. As my business is pretty small, my insurance is $457 this year. I keep it primarily because I do several trusts and the beneficiaries just might not like the way the numbers turn out. Like others here, I do pay for any errors of mine that cause interest and/or penalties. It's in my engagement letter. If the client omits or provides incorrect information, not my fault. If I do the same (transpose numbers, wrong street address, etc.) and a penalty arises from my error, I pay. But I also point out to the client that it was their responsibility to carefully read everything on the return before approving. So far, my errors in over 20 years have amounted to less than $100 and kept the client happy that I was on their side. In 4 more years, the trusts are closed but I will definitely keep my insurance for a year or so after that. Not that I don't 'trust' the beneficiaries... My homeowner's insurance (additional business and umbrella) covers my equipment and any client issues that may arise from tripping, etc. But I have very few actual client visits. This year a 90 year old who insists on coming struggled up the steps. I told her that next year I will come to her. She knocked over my mailbox backing out 2 years ago and nearly hit the telephone pole so I don't let her back out of the drive any more!

back when I only had insurance for tax work it was less than $500 per year. Now that I have coverage for everything but audits my $2mil of coverage is $120 per month. The scariest part of practicing is E-filing, you put in a wrong a/c number etc and you client has huge penalties. Recently a client called that is $750,000 of tax payments didn't come out of his account and he was already demanding that we pay all interest and penalties. Well luckily he was checking from the wrong account. Imagine the late filing penalties if his extension somehow got messed up. Well worth paying for insurance. The most important part of the insurance isn't them paying your penalties but paying for you lawyer when a client claims malpractice.

This would seem to be good insurance, too. Firing "that" guy. You all know what I mean...​

​I agree with this post. I had a client who just dropped out of sight for three years. The IRS did contact him with transcripts for those years and he came to me to "fix" it, which, of course, I did. It was a chance for me to make some extra money and for him to learn a lesson. He saved thousands over the IRS assessment and was happy to pay up much less than he thought he owed.

​Deep sigh. What we are talking about is not a fundamental spiritual belief. We are discussing the meaning of a section of tax law. I do share your belief in absolutes and also share your concern that society is blurring those lines. I applaud you for your concern for and commitment to being absolutely faithful to immutable scriptural/spiritual truth--a commitment I share. But this ain't that! In this instance, you are (IMO arbitrarily) placing a much higher burden on the taxpayer than does the IRS. The government does not ask for a declaration that the person is fundamentally opposed to accepting ANY government benefit. They ask only for a declaration that the person is fundamentally opposed to accepting a government sponsored benefit that is linked to their service as a clergy person. Benefits not linked to that service are NOT included in the declaration. Here is the actual statement that the clergy person must certify on Form 4361 (highlights are mine): I certify that I am conscientiously opposed to, or because of my religious principles I am opposed to, the acceptance (for services I perform as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner) of any public insurance that makes payments in the event of death, disability, old age, or retirement; or that makes payments toward the cost of, or provides services for, medical care. (Public insurance includes insurance systems established by the Social Security Act.) I certify that as a duly ordained, commissioned, or licensed minister of a church or a member of a religious order not under a vow of poverty, I have informed the ordaining, commissioning, or licensing body of my church or order that I am conscientiously opposed to, or because of religious principles I am opposed to, the acceptance (for services I perform as a minister or as a member of a religious order) of any public insurance that makes payments in the event of death, disability, old age, or retirement; or that makes payments toward the cost of, or provides services for, medical care, including the benefits of any insurance system established by the Social Security Act. I certify that I have never filed Form 2031 to revoke a previous exemption from social security coverage on earnings as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner. I request to be exempted from paying self-employment tax on my earnings from services as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner, under section 1402(e) of the Internal Revenue Code. I understand that the exemption, if granted, will apply only to these earnings. Under penalties of perjury, I declare that I have examined this application and to the best of my knowledge and belief, it is true and correct. There is nothing there about forever swearing off any and all public insurance benefits--only those that are directly associated with clergy service. Further, there is a clear acknowledgement that the applicant must continue to pay into the public insurance system (via FICA or SECA tax) on non-clergy earnings. The reason for that is that it is the clear intention of the underlying law that the exemption is restricted only to those benefits directly associated with clergy earnings/activities, and that secular earnings are still subject to tax, and that the person is not voluntarily forfeiting any benefits so-earned. Well garsh. This has gotten to be a rather long thread and has deviated somewhat from its original intent. I do enjoy a spirited debate, but I don't think I have anything further useful to add. Therefore, I'll not be commenting on it any further.

A couple of days ago my daughter informed me she & her hubby didn't file in '05 & '06. The IRS assessed them a bunch of bucks (computed tax on their income with no withholding or dependent exemptions). She wanted me to 'fix it, daddy'. Even though they're grown & gone I still love it when every once in awhile I once again get to be a hero for my kids! [FWIW--they still owe some bucks but it is less than half what the IRS claimed.] Since I've replaced my computer several times since those ancient days, I had to reload the '05 & '06 software. Wow. What a difference from today's. It was much faster and much sleeker. I remembered why I once loved using ATX. As is often the case, in our drive for 'new & improved' we humanoids meet only the first half that goal. And for some reason we call it 'progress'. Go figure.

A couple with whom I worked with for years in my regular job came to me this year after their long time taxman passed on. I asked the wife to bring in their last year's return (2013) and their info for 2014 so I could match items. You may only imagine my astonishment when she set down and passed me a 2009 tax return ! They have not filed a return since then ! In a word they now need to file five years of unfilled returns. I asked about letters from the Service and was told she had not received one lately ! Further, she seems in no hurry to bring me info for the 2010 filling. Where is the IRS in all of this ? How is it a couple who are both gainfully employed not get a visit or some punitive action from the Service ? Have any of you experienced anything like this in your practice ? I once had a client who always owed money each year despite my efforts to change his ways. His wife showed up the next year after he died and informed me she got a letter from the Service he owed over $30,000 in tax from prior YEARS ! Along with the farm loss fiasco I wrote of earlier I am beginning to suspect that the Service is simply overwhelmed in not addressing these easily seen deficiencies.

I have been practicing since 1973 and have never had E&O insurance due to cost. I do have an additional umbrella policy on the house to cover liability in case of falling on the ice, etc. Any errors over the years I have paid the penalty and interest portion and told the tax payers they had an interest free loan from the IRS for the time it took the IRS to find the error.

I do not have E and O insurance, but I do have business liability on my Homeowners policy. I explored the issue and the insurance co didn't seem to know where to put my small practice. As someone else cited, if I make a mistake, I pay for it; and I can only think of one instance over the years where that has happened and since it was partially the client's fault, I fired the client.

​ E & O would not cover what Sara mentioned. Read JRS' post a couple of posts up. In fact, theft of records or data might, or might not, now be covered under a practitioner's general liability policy either. Some of the advertisements I've seen lately are selling a separate policy or rider to cover identity theft and data breach issues meaning that purchasing that insurer's basic policy won't cover identity theft and data breaches.

I have had three returns ready for a "taxpayer" to pick up and mail for three years now. He received 1099-Misc forms all three years and owes for all three years. We've all seen those un-mailed red copies of 1099-Misc forms in the issuers' paperwork, but I think IRS gets most of them. It is dumbfounding to me that so many of these go undetected or un-skeered. Don't know which it is or it's some combination of both.

​I still use QB Pro 2003. I will until I am forced to put it out to pasture. When I got the software, I conned the support rep into giving me the password since at the time, I did not have an internet connection. I can load it as many times as I want. I only load it on my machines, but I have had a lot of machines in the last 12 years. Tom Newark, CA

At a professional association meeting a couple of years ago the IRS liaison told of a preparer in our IRS area whose office had been broken into. The thief took tax returns or data, I don't remember which. Long story short, the preparer did not have insurance and just the cost of paying for credit monitoring for all those clients put her out of business. I would say no one can afford NOT to have E&O.

. Thank you, Jerry.

I agree that speed of data entry is not the only factor to consider, but surely it should be one factor, and an important one at that as its one of the few variables we have any control over. Not only is the entry process quicker, Drake doesn't require that all the docs be sorted into some particular order to achieve any kind of efficiency. The ability to bounce almost instantaneously from Sch A to Sch C to W2 to whatever and then back to point A, is really nice. Another thing that sets Drake apart: when I started with Sabre back in the olden days, I paid about 25% of what ATX now costs. I got essentially what I'm getting now with Max (fed/state/municipal tax prep software and their Zillion Forms or whatever they called it). In the time they have quadrupled their price Drake has had one price increase...of $100. The pure efficiency of the Drake software is impressive. Opening the software, opening a file, zipping around the program, doing the tax computations all happen at speeds that leave ATX sitting in the dust. It is not without its drawbacks, but for me, when I stacked them up side by side, the clear winner was Drake. As I mentioned in my earlier post, a return that 4 or 5 years ago took an hour now takes an hour and a half. My fees haven't gone up 50%! The net effect is that I'm making 1/3 less per hour now than I was five years ago.. Why did that happen? I think there are three reasons: 1) the software is created by programmers (rather than preparers) and suffers from the bloat that seems to be inherent in programmer driven environments, 2) CCH chose to change the programming language several years ago (gee, wasn't that fun?!?), and 3) their apparently conscious decision to make the data entry process increasingly complicated (again, likely a programmer driven mod). It all adds up to me saying a reluctant goodby to a software package I used to love using.

Jack, with all due respect, I think you are still missing the point. I respect your opinion, but your view does not take into account a complete perspective of the law at question. I agree that 'yes' must be yes and 'no' must be no. That is not at issue. What is at issue is what we are saying yes or no to. It is not what you seem to think it is. If it were, I would agree with your point ... but it is not. I would reiterate what others have said: when they opt out, Form 4361 does NOT require that clergy persons certify they are fundamentally opposed to receiving ANY/ALL guvment benefits. What they must certify is that they have a deeply held religious conviction (i.e., a fundamental belief) that it is not appropriate to receive a government benefit that is exclusively related to their service as a clergy person. The underlying rationale is that they do not think it is appropriate for the government to compensate them (even in an indirect way through a future insurance benefit) for their clergy service. To recap, this has nothing to do with whether they can accept any government benefit. It is based exclusively on whether a clergy person can (in good conscience) accept a government benefit that is directly related to performing a clergy service. That is a huge distinction. And that is the ONLY thing they are opting out of.

Nothing to fix. The bank should refuse the deposit. The IRS will then sit on the refund 2-4 weeks and mail the taxpayer a check.

Yes, I had a client do this and it took a while for the IRS to track down the payment when I made the mistake of treating it like an extension payment.

You'd also think with the increase in price, You'd still hear that saber tiger roar................. Must be audio is very costly added to software..

​This is so true. I have used Quicken forever. It used to be flawless. I am totally frustrated with 2010. Wish I could go back, but I will probably certainly never go forward. WAY too much crammed into a simple usable program.

Quicken '98 and QuickBooks 2001 were the best versions of those two programs. After that they added useless feature after useless feature, without adding much of any really new functionality, and without fixing persistent bugs from year to year. "New and Improved!" just means it's new, they took out some good stuff, and the improvement is that it now *must* be updated every few years since support stops. Grrr.