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Level 1

CPA failed to run payroll and quarterly taxes

Hello Everyone! I'm an S-corp owner (single member s-corp). I found myself in a miserable situation with a CPA I hired to run my payroll and make quarterly payments. He hasn't answered my calls or emails for months, and when I finally confronted him in person, I found out he hasn't run my payroll and hasn't done anything! He was charging me a monthly fee for the services he hadn't performed. I'm frustrated and lost; I think his behavior was unfair and unethical.

I will hire a new CPA and request a refund from the current CPA.

I'm trying to understand the consequences of me as a company owner not doing payroll/not filing quarterly taxes for Q1, Q2, and Q3. Is there a penalty I need to pay? Is there any forgiveness for people in my situation? Should I send them a letter explaining my situation, with screenshots of endless emails and messages I've sent to my CPA? Or they won't care?

I want to make the right decision and avoid complicating this situation. Any advice is appreciated. 

3 Replies
Level 15

CPA failed to run payroll and quarterly taxes

yes there can be substantial penalties for failure to file and failure to pay. get your new CPA involved in this ASAP.  they should be using their best effort to correct the situation and possibly contacting the IRS in order to see what can be done with regard to potential penalties.   If the previous accountant was in fact a CPA, you should contact your state's professional CPA society. his license could be revoked and you might be helping others by doing this.  you may also want to contact a lawyer especially if there are penalties. 

Level 15

CPA failed to run payroll and quarterly taxes

The IRS page details the potential consequences of an employer's failure to pay federal employment taxes:

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
Opus 17
Level 15

CPA failed to run payroll and quarterly taxes

If we are only talking about 2022, then I believe it is acceptable for the S-corp to pay your annual salary in one lump sum, say on December 30. Since you had no payroll for Q1, 2, or 3, you aren't in arrears of any payroll taxes.


I don't know how common this is.  There is certainly an argument to be made that your S-corp should be paying salary to the officers more frequently (say, monthly).  But I don't think it's wrong to be paid your salary in a single year end lump sum. 


If you have been taking a salary by taking money out of the till, just not recording it as salary at the time, you might be able to reconcile that as a draw or an advance, with the actual salary paid on December 30 and then you repay the draws (possibly with interest).  


Be sure to confirm this with your new CPA, of course.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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