When is your tax preparer responsible for problems with your tax return?

Even people who don’t have particularly complicated tax returns often rely on professional tax preparers for all sorts of reasons. They want to ensure that they take advantage of all possible deductibles and credits, they can’t keep up with all of the changes to the tax laws, and/or they simply don’t have the time or patience to do their own taxes. Taxpayers rely on these professionals to complete their tax forms accurately and completely. That’s why they pay them.

But what if the Internal Revenue Service or the state revenue department finds a problem. Who’s responsible?

If there’s an error that resulted in you not paying enough in taxes, you will need to make up the difference. As for penalties and interest that are charged because of that error, who pays those depends on who was responsible for the error or omission. If you neglected to tell your tax preparer about an additional source of income, you’d be responsible. If you gave them all of the correct information and they neglected to report it or did so incorrectly, you can and should ask them to cover the additional expenses. 

Whether they will take responsibility, however, is another matter. Look at the contract you signed with them to see what it says. Some tax preparation services will cover the costs, even if their contract doesn’t require them to, in order to keep your business.

If you suspect some kind of misconduct on the part of your tax preparer, that’s an entirely different issue. The IRS has forms for reporting suspected misconduct whether it impacted your return and the amount you paid or not. Some examples of what the IRS considers misconduct are:

  • Changing a document after the taxpayer has signed off on their return
  • Using an incorrect filing status or creating false tax exemptions, credits or expenses to generate a larger refund
  • Falsely adding or omitting income
  • Directing refunds to someone other than the taxpayer
  • Failing to put their signature along with the taxpayer’s on the returns
  • Claiming to be a certified accountant, enrolled agent or another professional when they aren’t

If you find yourself facing legal ramifications because of the negligence or actions of your tax preparer or if you are considering taking legal action against that preparer, an experienced attorney can offer valuable guidance.

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