BCR Advisory money issues
Finance

Morgan Stanley admits errors caused many clients to underpay taxes

This article was sourced from The Wall Street Journal. Article by Liz Hoffman.

Morgan Stanley said it had given a “significant number” of wealth-management clients incorrect information that caused them to underpay their taxes.

In its annual regulatory filing Monday, Morgan Stanley MS, +0.68%   said it is in “advanced discussions” with the Internal Revenue Service to resolve the issues at no cost to affected clients. It said it had set aside $70 million to cover the costs, which include paying any taxes owed to the IRS by clients who underpaid, as well as reimbursing clients who overpaid.

“We are committed to making this right for our clients with minimal inconvenience to them,” a spokesman said in a statement.

The problem occurred because Morgan Stanley’s reporting systems in some cases generated the wrong cost basis for clients who owned a particular stock or bond, the firm said. That determines how much gain or loss is recognized when a security is sold, for example, which determines how much tax is owed. The errors affected returns filed for tax years 2011 through 2016, meaning some clients will prepare taxes for an April filing deadline with incorrect information. Clients won’t have to refile, and any settlement would cover this year’s returns, a spokesman said.

An expanded version of this report appears on WSJ.com.

For specialist advice regarding your specific circumstances, please contact the BCR team.

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BCR team
The BCR Advisory team are a national represented firm with its main office located in Sydney. It is a boutique corporate advisory, recovery and insolvency firm that specialise in the SME market. The team’s reputation is built on their extensive experience within the industry as well as their fresh and innovative approach to problem solving for distressed business owners. Let us know what you thought about this article by leaving a comment below. Alternatively, you can get in touch with the BCR Advisory through our contact page.

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