You Be the Judge
By Ric Edelman
Aileen Lam used TurboTax in 2004 and 2005 to complete her tax returns, including the filings of Schedule C to report profits and losses from her real estate business.
In 2008, the IRS gave her notice that her rental losses weren’t permitted because her father lived rent-free in the property.
As a result, the IRS said Lam had underpaid her taxes by $9,400 and had to pay the taxes plus a $1,882 penalty.
As part of her defense, Lam cited the case of U.S. Treasury Secretary Tim Geithner, who used TurboTax to file his tax return in 2001. Geithner infamously failed to pay $35,000 in self-employment taxes between 2001 and 2004 when he worked for the International Monetary Fund, nearly costing himself the post of Treasury Secretary. Lam said it wasn’t her fault TurboTax messed up her taxes, any more than it was Geithner’s.