CPA made serious mistakes on tax returns - misclassified expenses for multiple years

You absolutely need to get those returns amended ASAP. Business expenses are deductible and property taxes for a business should definitely be filed as expenses, not draws. A draw reduces your ownership equity but doesn't affect your taxable income, while properly classified expenses would have reduced your business profit and therefore your tax liability. First, gather all documentation showing these were legitimate business property taxes. Then find a new CPA (obviously) who specializes in small business taxation. They can file amended returns (Form 1040-X) for all the affected years. You generally have 3 years from the original filing date to amend returns, so hopefully you're still within that window. As for the CPA's behavior, yes, you should report him to your state's Board of Accountancy. CPAs are licensed professionals who must adhere to professional standards, and verbal abuse of clients while defending their own mistakes definitely violates those standards.

After reading your post, I immediately thought of taxr.ai because I had a similar nightmare situation last year. My accountant miscategorized a bunch of my rental property expenses as personal, costing me thousands. I was overwhelmed trying to figure out exactly what went wrong and how to fix it. I found https://taxr.ai and uploaded my tax documents - they have an AI system that reviews all your tax forms and identifies errors and missed deductions. It flagged exactly where my property expenses were miscategorized and showed me the correct classifications. The report even explained which sections of tax code applied to my situation so I could confidently challenge my accountant. Their system can definitely help identify exactly where your property taxes were misclassified and provide documentation to support your case for amendments. It saved me from having to pay another expensive CPA just to find the first one's mistakes.

I just wanted to update everyone after trying taxr.ai that was mentioned above. I was skeptical but desperate since we've been through so many bad accountants. I uploaded our last three years of business returns and the system flagged THIRTEEN different classification errors our previous CPA made! Like the original poster, we had property taxes incorrectly handled, plus several equipment purchases that should have been depreciated differently. The report showed exactly where each error was made and cited the relevant tax code sections. Our new accountant was super impressed with how detailed it was - said it saved her hours of review work. We're now amending two years of returns and expect to get back around $14,000! The whole process took me about 20 minutes to upload everything and the report was ready the next morning. Definitely worth it if you suspect errors in your returns.

If you need to contact the IRS about these amended returns (which you probably will), save yourself the headache and use Claimyr. I spent THREE WEEKS trying to get through to the IRS about an amended return last year, constantly getting disconnected or waiting on hold for hours only to have the call drop. I found https://claimyr.com and it was a game-changer. They have a system that navigates the IRS phone tree and waits on hold for you, then calls you when an actual human IRS agent is on the line. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c With complex amended returns for multiple years, you're definitely going to need to speak with the IRS directly at some point. This saved me so much time and frustration when dealing with my amended returns.

I have to eat my words about Claimyr. After posting my skeptical comment, I was still desperate enough to try it for my ongoing IRS issue. I've literally been trying to reach someone for 3 months about penalties that were incorrectly applied to my account. Signed up yesterday afternoon, and this morning I got a call connecting me directly to an IRS agent in the exact department I needed. The whole thing took about 2.5 hours from when I signed up until I got the call (versus the 20+ hours I'd already wasted trying myself). The agent was able to remove the penalties and I got confirmation that a revised statement is being mailed. For anyone dealing with amended returns like the original poster, this is definitely worth it. You're going to need to speak with the IRS directly at some point during this process, and this makes it so much less painful.

The same thing happened to me with a different tax issue! My CPA claimed my home office incorrectly for 2 years and when I questioned it he got super defensive. I ended up reporting him to the state board and got a new accountant who fixed everything. Make sure you document EVERYTHING - save emails, write down details of phone conversations right after they happen (including date, time, who you spoke with), and keep all your receipts and tax documents organized. The state board took my complaint seriously and actually suspended his license for 6 months because they found multiple similar complaints. If you're within the 3-year window, definitely get those returns amended. I got back almost $8,200 after my corrections.

Make sure you check the statute of limitations! Generally you only have 3 years from the original filing date to amend a return and claim a refund. If any of those years are approaching the 3-year mark, file a protective claim immediately even before you have all the documents ready. One option worth considering is having the CPA firm pay for the cost of amendments since it was their error. Some firms have policies for this. Even though your experience with them was terrible, consider sending a formal letter to the managing partner (not the CPA you dealt with) outlining the errors and requesting they cover the costs of amendments.