Follow Up IRS penalty ethical question
Long story short, I made a dumb mistake when filing a tax return and didn't catch it on my review. Normally, it would have seemed off to me but the young taxpayer still had a big payment and I missed it. Totally my fault though, no excuses.
I did end up cutting a check to him for all of the penalties and interest on the notice. It wasn't a very simple return and he is a young kid so I only charged him $500. Those penalties were $1200.
So he sent in the payment but his 2025 refund also was garnished. I initially though that the IRS just wasn't talking to itself, like they do. That may still be the case, and I'm getting a POA to talk to them, but going back and looking at it, the original notice is dated March 2 (and I know the dates on those things can be weird), but he didn't send it to me until April 20. I looked at it, realized I was in the wrong, advised him to pay it, and dropped a check in the mail right away.
So it may be (caveat that the IRS could just be wrong), that there was another $1100 in penalties and interest added to his balance. That amount feels way high to add, but worst case scenario, if it is right, what would you all do?
Some people originally suggested that I pay penalties only. It is true that he held on to the $9000 underpayment for two years. I didn't do that, however. I owned up immediately and cut a check for it all. It's tough because it is originally my mistake but the client is asking me to send him another check for the difference.
I certainly want to do right by him and I feel like I have done so, but it rankles a little if part of the issue is his not getting to me right away. I also only did his return the only year because of the complexity. I'm inclined to adjust for the penalties only but can't decide.
Thanks in advance for your thoughts.
Edit: to grumble once again about the IRS taking two years to send in a notice that their computers should have caught in one second. Something needs to change.