When you hire a certified public accountant (CPA) or othertax professional to prepare your state or federal tax returns, you expect to beable to rely on the advice you receive. After all, you are paying for help, andyou have chosen to hire a professional who holds himself or herself out assomeone who can make sure you meet your legal obligations.
So, what happens when your tax preparer makes a mistake?
If you hired a CPA or other tax professional to prepare yourtaxes, the first thing you need to know is this: Since they are yourtaxes, they are ultimately your responsibility. If you underpaid the InternalRevenue Service (IRS) or the CaliforniaFranchise Tax Board, even if you did so in reliance on professional advice,you are still personally responsible for paying what you owe.
What Do Taxpayers Need to Know about Relying on Tax Preparers?
However, while you are ultimately responsible for meetingyour tax obligations, you are not without recourse. Here are some importantfacts you need to know:
1. You Need to Review Your Contract with Your Tax Preparer.
First, you should review your contract with your CPA orother tax preparer. What does it say about mistakes? Most likely, your contractstates that you are responsible for ensuring that you provide all necessaryinformation to your tax preparer, and that you are responsible for ensuring theaccuracy of your returns before filing them. However, your tax preparer shouldhave legitimate obligations as well, and your contract should give youreasonable rights in the event of a mistake.
Depending on the severity of the issue – and whether or notyour tax preparer agrees that he or she made a mistake – your tax preparer maybe able to submit a correction, and he or she may offer (or have an obligation)to pay any fees, penalties, and interest that you owe. However, you, as thetaxpayer, will still be liable for the actual tax amount due. Of course, youwill need to ensure that this amount has been calculated accurately, and thismay mean working with another tax professional.
2. The IRS Penalizes Tax Preparers Who Make Mistakes.
Under Sections 6695 and 6695 (the exactsame section is listed twice?)[BP1]ofthe Internal Revenue Code, tax preparers can face IRS penalties for makingmistakes on their clients’ returns. Similar penalties apply under Californiastate law as well. If the IRS determines that your tax preparer made amistake, this may help you in seeking to avoid fees, penalties, and interest (orhaving these costs paid by your tax preparer).
3. You Need to Be Certain that the Mistake was Your Tax Preparer’s Fault.
Of course, before you point the finger at your tax preparer,you need to be certain that the mistake was his or hers – not yours. If youprovided your tax preparer with inaccurate or incomplete information, then heor she may have had no way of knowing that the numbers stated on your returnwere incorrect.
4. The IRS May Be Willing to Listen if You Relied on Your Tax Preparer inGood Faith.
If your tax preparer made a mistake, you can prove it, andyou can prove that you relied on your tax preparer’s advice in good faith, theIRS or the California Franchise Tax Board may be willing to listen. You shouldspeak with a tax attorney about how best to approach your situation in order toensure that you end up paying as little as possible.
Do You Need a Tax Attorney in Southern California?
The tax attorneys at RJS Law represent individual andcorporate taxpayers in all IRS and California state tax matters. If you arefacing an issue due to a mistake made by your CPA or other tax preparer, weencourage you to call 619-595-1655 or contactus online for a complimentary case evaluation.
Depending on the severity of the issue – and whether or not your tax preparer agrees that he or she made a mistake – your tax preparer may be able to submit a correction, and he or she may offer (or have an obligation) to pay any fees, penalties, and interest that you owe.
The tax preparer who made a mistake should be willing to help you correct it, and may well pay the penalties you owe for it. In any case, you own the error, and you're responsible for sending the IRS the forms and the money needed to resolve the matter. Internal Revenue Service.
The IRS mainly targets people who understate what they owe. Tax evasion cases mostly start with taxpayers who: Misreport income, credits, and/or deductions on tax returns. Don't file a required tax return.
If the H&R Block tax preparation software makes an error on your return, we will reimburse you for any resulting penalties and interest up to a maximum of $10,000. Terms and conditions apply; see H&R Block's Accurate Calculations Guarantee for details.
The due diligence penalty is $545 (in 2022) for each failure on a tax return. These penalties are imposed for failure to comply with the due diligence requirements. The due diligence requirements are documented on Form 8867, Paid Preparer's Due Diligence Checklist.
However, when the IRS detects the false return, the taxpayer — not the return preparer — must pay the additional taxes and interest and may be subject to penalties.
This means that taxpayers are responsible for declaring all of their income, calculating their tax liability correctly, and filing a tax return on time. The IRS depends upon honest reporting. However, they conduct checks on tax reports to make sure that people file correctly.
The Internal Revenue Service may allow expense reconstruction, enabling taxpayers to verify taxes with other information. But the commission will not prosecute you for losing receipts. The IRS may disallow deductions for items or services without receipts or only allow a minimum, even after invoking the Cohan rule.
Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
The Federal Trade Commission last week sued the tax preparation company H&R Block for, in essence, allegedly making it more difficult for consumers to downgrade to a lower cost or free online filing package and for misleading many into believing they qualify for free filing when they don't.
If the amount under/over withheld is deemed too excessive, the IRS can send a lock-in letter notifying the employer how to adjust withholding regardless of the employee's W4 requests. If a W-4 error is caught before filing, individuals can correct this relatively easily by refiling a W-4 with their employer.
If a mistake is made, the tax preparer should take necessary steps to rectify the situation, including amending the return at no additional cost, informing the IRS, and compensating the taxpayer.
If you made a mistake on your tax return, you need to correct it with the IRS. To correct the error, you would need to file an amended return with the IRS. If you fail to correct the mistake, you may be charged penalties and interest.
Most paid tax return preparers are professional, honest, and trustworthy. The IRS is committed to investigating those who act improperly. Complaints can be submitted through our online process, faxed, or mailed. You can upload or include attachments with your complaint.
If you discover an error on a previously filed return, you should file an amended return and pay any additional tax or fee due, including interest. If you have questions, please contact our Customer Service Center at 1-800-400-7115.
If you need to make a change or adjustment on a return already filed, you can file an amended return. Use Form 1040-X, Amended U.S. Individual Income Tax Return, and follow the instructions.
If the address on your return is incorrect, you will need to contact the IRS to have it updated. You can call the IRS directly using their toll-free number: 1-800-829-1040. Send a signed written statement with your: full name.
100% Accurate, Expert-Approved Guarantee. If you pay an IRS or state penalty (or interest) because of an error that a TurboTax tax expert or CPA made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, we'll pay you the penalty and interest.
Introduction: My name is Trent Wehner, I am a talented, brainy, zealous, light, funny, gleaming, attractive person who loves writing and wants to share my knowledge and understanding with you.
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