Complaints

• Initial Complaint

  01/08/2023

  Complaint Type:

  Service or Repair Issues

  Status:

  Answered

  More info

  Details: Date of Transaction 1 - March 2, 2023 Amount Paid: $594.38 Date of Transaction 2 - March 24, 2022 Amount Paid: 426.01 Committed to provide: -A comprehensive business tax return. -Properly categorizing receipts & expenditures. To allow ourselves & banks to properly assess profits and margins. Nature of dispute: -Did not properly categorize receipts and expenditures. Example 1, everything is listed under raw materials making it seem like our business is not profitable. Example 2, our rent paid for the year that was filed, is not correct and this number is off by a huge amount. (These are only a couple examples, as there are several more). - We had a consultation with a CPA and he immediately saw multiple categories that our previous accountant did not categorize properly. Making our numbers entirely screwed up. - We discovered that our books were incorrect after applying for funding with our bank. ***** **** ** *** **** *** **** **** ** ***** **** ** ********* *****. Therefore, resulted in no funding to move our business forward. Also, stated if our mortgage was up for renewal we potentially could lose our home. Did business try to resolve problem: NO No attempt to resolve problem. Even after reaching out to express issues on June 7th, 2023 and also June 30th, 2023. ***The only way to have a full picture of our business and its probability is to have a CPA do a complete financial statement. This is also the only acceptable way for our bank to reconsider funding for the growth of our business. The estimated amount provided for this service is $2,000-$4,000. Therefore we are also requesting that Padgett Accounting pay for this fee as well, considering that if our taxes were properly assessed we would not have to have completed a financial statement. **** ** *** *********** *** *** **** **** ******* ***** **** ** *** ** ********** *************

  Business response

  09/08/2023

  **** ** ********** * 
  August 9, 2023

  
  RE ********

  
  The two years in question had expenses categorized sufficiently to prepare tax returns based on the information
  from the client. The tax returns were reviewed by the client prior to them signing and then to be filed. During
  both years we took reasonable steps to ask additional questions regarding the business activity prior to
  completing the tax returns. We have extensive notes, emails and phone calls to this client requesting
  information to complete the tax returns. The attempt to gain funding or to remortgage their personal residence
  was never discussed or conveyed by the client at time of tax preparation.

  
  Example 1 from the BBB letter claiming that “everything is listed under raw materials making it seem like our
  business is not profitable” is not accurate. We have categorized expenses into 18 separate categories with
  purchases being the largest expense as well as 4 separate capital cost classes for amortization with multiple
  items included in Class 8 for equipment. The purchases category would include all raw materials, jars, oils, etc.
  to prepare the final goods with an ending inventory to adjust for unsold goods.

  
  Example 2 from the BBB letter claiming that “rent paid for the year that was filed, was not correct and this
  number is off by a huge amount” was prepared accurately for third party rents paid from July to December
  2022. If they are referring to the property taxes claimed under home office expenses this was reported as zero
  on the business statement since there was no taxable income and they would receive a greater benefit by
  claiming the full amount for the ******** benefit, a nontaxable payment they would receive instead.

  
  While the client had revenue growth for 2022 the cost to produce this revenue alone in purchases was
  significant. The client also had capital costs for new equipment purchases totaling close to $30,000 and a
  carryforward of home office expenses from the prior year that brought the business income to NIL for reporting
  purposes. The clients also used a significant amount of their personal savings to support this business which
  indicates a need for cash flow.

  
  Regarding the opportunity to obtain funding - The bank manager that reviewed this return may have limited
  knowledge in tax preparation since this can be a normal situation with loss carryforwards and capital cost items.
  The loss carryforward of home office expenses from the prior year will not increase the loss but maintain NIL for
  profitability and then carryforward any additional home office expenses to the future year.

  
  If the client feels that the expenses were not accurate we would be willing to do a complementary T1
  adjustment to reflect those changes and have the business statement updated based on their revised and
  supported documents.

  Customer response

  18/08/2023

  
  Complaint: ********
  
  I am rejecting this response because:

  The response to this matter is completely unsatisfying. Expenses categorized was not ‘sufficiently’ prepared based on the information we provided to Padgett. This is the issue in question! If they were properly assessed, then our current CPA and bank would not question the matter and bring multiple issues to our attention.

  
  Tax returns were not properly reviewed by us, because we were not brought into the office by appointment to have them explained to us by a professional. We are not familiar with the terminology or tax preparation for a business; therefore, an appointment to provide a review should have been an option. We were rather, advise to come in and sign, NOT review.

  
  There are emails with questions from Padgett’s office. However, it does not negate the fact that our taxes were still completed incorrectly and the information we provided was not executed properly. 
  
  We did not discuss our attempt to gain funding during tax preparation because we were not looking for funding at that time. However, what would have been the difference? Our taxes were still not accepted by our bank. In addition, we were NOT looking to re-mortgage. This was a scenario the bank brought to our attention. Advising that ‘IF’ our house was up for renewal it would have been denied.
  
  Example 1: Referencing 2022 - Rent / Our total Rent at ** **** *** * **** *, Thorold ON was $5,706.50 (before tax and TMI). Prior to this location we rented a kitchen and paid on a per day bases as needed, at ** ***** ** *, Thorold, ON. This is outlined in our ‘Receipt Log-2022’ to Padgett’s office. The amount total for ***** *** is $1,790. This was missed entirely by Padgett’s office for the months of ‘January, March, May, and June’.
  
  Example 2: Referencing 2021 – Rent / Our total for ** ***** ** *, Thorold, ON is $1,730. This is outlined in our ‘Receipt Log-2022’ to Padgett’s office. On our return has “Rent” listed as 0.
  Padgett filed $6,000 as our total rent paid for the year.

  
  Example 3: Referencing 2022 – Equipment / Handheld laser Date Coder. This piece of equipment is outlined in ‘Receipt Log – 2022’. Approx. amount of $699 was not imputed under Class 8. 

  
  Example 4: Referencing 2022 - Chart A – Motor vehicle expenses (Insurance) / Only claimed insurance from old vehicle in the amount of $1,727. Disregarded the 1 month of insurance paid on new vehicle (Dec-Jan) for $157. This was outlined in document provided to Padgett under ‘Additional Totals 2022’.
  
  Please note*** That we also can see for tax year 2021, under section ‘Chart A’ Motor Vehicle Expenses – this entire section is left blank. I’m not sure if Padget categorized some of these expenses elsewhere. However, this is exactly why Padgett’s office should have given us an opportunity to have appointment to explain our taxes to us.

  
  The examples outlined above are only a few. To properly obtain a clear picture, is to have our current CPA provide a complete financial statement. As also requested by our bank contact.
  
  Injection from our personal savings was not brought to tax year, 2022 – this injection was made in 2021. We did not have savings left for tax year 2022, this is why we obtained funding from BDC and Venture Niagara.
  
  ** **** ** ********* ** *** **** * ****** ******** ******* ** *** **** ***** **** ******* ********* ** *** *********** **** *** **** ********* ** *** *** *** **** ************* ********* ********** ****** ***** ** ********* ** **** ***********
  
  Considering we came to Padgett to prepare our taxes, if our business was shown not to be profitable or is raising a red flag – why was this not discussed to us from Padgett. Accountants are supposed to provide guidance. When we initially questioned Chris directly at Padgett’s office regarding our concern, his response to us was “We don’t audit your books”. This was absolutely news to us. If this was truly the case – then why would we provide you with a Receipt logbook? ********* ** *** ****** ****** 
  
  We decline the complementary T1 adjustment. We were advised by our current CPA and our bank advisor that this would not be in our best interest and could result in a full audit. We stand strong with our original request for Padgett to refund the preparation fees for 2021 and 2022. Along with the cost for a complete financial statement completed by our current CPA.
  
  Sincerely,
  
  ******** *******

  Business response

  26/09/2023

  Response to reference ******** - Sept 1, 2023
  
  Our previous comments about this file were accurate from the information provided.  Our office was contacted to prepare tax returns and not to audit or create financial statements.  Our fees to prepare financial statements would be in line with the amount in the previous letter. 

  During the years of 2021 and 2022 some expenses were consolidated for simplicity since they were relatively low and may not have been separated to the expense lines as described by the client. We did not receive a request for a formal meeting to review details of these tax returns and we would have provided this if requested.

  We accept that client’s comments about declining a T1 adjustment and feel that this would not typically result in a full audit if adjusted.

  Customer response

  05/10/2023

  
  Complaint: ********
  
  I am rejecting this response because:

  It does not appear that we will come to a satisfactory resolution. ********** ** **** ** ****** ******* ********** * ********* **** *** ******** ** ******** ******** 

  
  Sincerely,
  
  ******** *******

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