By entrusting your taxes to the professionals, you can relieve a lot of stress. Tax professionals are well versed in the latest changes in tax law and can advise you on tax deductions that will make your life easier.
Unfortunately, it cannot be guaranteed that hiring a tax professional will result in an error-free return. In the event that you do discover that your preparer botched your return after the fact, you may wonder what steps you can take.
Naturally, if you did your own taxes, you may only have yourself to blame. But if you believe your tax preparer made a mistake on your return, here are the steps you can take.
What Happens If A Tax Preparer Makes A Mistake?
Even if the preparer makes an error, you are still responsible for paying the penalties. If the error resulted from your omission of information, you're responsible for it, and you'll need to correct it with your tax preparer.
However, if the mistake was caused by your tax preparer, you must inform him about the correspondence you have received from the IRS.
Helpful Resource: What to do if you receive a letter from the IRS
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. However, they are not required to do so. Make sure you read the contract you signed with the tax preparer to determine their responsibilities.
You may need to take an alternative approach if you suspect misconduct. Form 14157 must be completed and submitted to the IRS with all supporting documents. Form 14157-A must be filed if the error impacts your tax return or refund.
Among the situations in which you can report a tax preparer are:
- Failing to inform the client before they file a Form 1040
- Making changes to the tax return documents
- Causing a larger refund based on incorrect filing status
- Creating false dependent exemptions or exemptions to generate a large refund
- Overstating or omitting income
- Creating false expenses, deductions, or tax credits to generate a large refund
- Redirecting refunds
In the following cases, you may still report the tax preparer if the mistake does not impact tax returns or refunds.
- Misuse of a Preparer Tax Identification Number (PTIN) on a tax return
- Failure to provide clients with a copy of their tax return when requested
- Failing to sign tax returns they prepare and file
- Failure to release client records until the preparation fee is paid
- Using free tax software to prepare client returns
- Falsely representing oneself as a certified accountant, an attorney, an enrolled agent, or an enrolled retirement plan agent
What to Do If You Find a Mistake From Your Tax Preparer
Take a deep breath and don't panic if you find an error on your tax return. To fix the mistakes, you'll need to find them first.
Double-check the information you provided your accountant with. In order to make the most accurate return, it is your responsibility to provide all relevant documentation to the accountant.
As soon as you understand where the mistakes are, have received some clarifications from your accountant, and know what must be done to make things right with the IRS, it's time to talk to your accountant about your case.
Outline your situation and discuss your concerns with your accountant. You shouldn't let your tax preparer off the hook just because he or she offered you a goodwill gesture for messing up your return. Examine your tax preparation contract once again and make sure you understand the terms and conditions.
Is A Tax Preparer Liable for Mistakes?
If your tax preparer makes a mistake that results in you having to pay additional taxes, penalties, or interest, you are liable for these fees, not your tax preparer. Since it's your tax return, you are responsible for it.
You can report tax preparers for misconduct or sue for damages if you believe they are engaging in misconduct that results in an IRS audit and penalties.
Are accountants liable if you’re audited?
The IRS doesn't care if you had a mistake made by your accountant. Your tax return is your responsibility. Even though you hired an accountant, you are still liable for any errors. That means if you are facing an audit, it is important to contact the IRS or a different tax professional to ensure that you are getting the help you need.
Can You Sue A Tax Preparer for Mistakes?
Litigating a tax preparer is usually the last resort since the taxpayer would incur significant legal fees. It is possible to obtain relief from undue taxes and fees if the amount in question is substantial. In addition, if the tax preparer is not registered with the IRS or licensed by the state, the only recourse may be legal action.
The state court in your jurisdiction can receive a standard professional malpractice complaint from you.
It is best to research the candidates and find one who meets your needs in order to avoid dealing with these problems.
Fixing Errors on Filed Returns
It is possible to ask your preparer to make the necessary corrections, including filing an amended return, if the error is the result of an honest mistake.
If the mistake results in fees or penalties, the provider will often compensate the customer directly to make things right. Many tax preparers offer to contact the IRS on your behalf to negotiate forgiveness of the error or a reduction in the penalties, but not all are qualified to do so.
Whenever you suspect misconduct on the part of your preparer, you should take a different approach. Forms are available for download from the IRS website, which needs to be filled out and mailed or faxed using the contact information on the form.
Should you receive a notice from the IRS about a problem with your return, send the forms along with copies of any supporting documents to the address shown on the letter. In the absence of a notice, send it to the address you use to send your Form 1040.
An investigation will be conducted. If it finds intentional wrongdoing, it might revoke the individual's preparer tax identification number. State regulators may also take action against licensed preparers.
Revisit Your Old Returns
When an error is found on your return, it is possible that the same error was made on previous returns - especially if you are using the same preparer. There is some good news, however. If you overpaid, you have three years from the return's due date - or two years from the date you paid the tax - to amend your return and claim a refund.
If you underpaid, the IRS cannot collect additional tax if the original deadline or filing date was over three years ago. Otherwise, you may be liable for additional taxes.
What if my Tax Preparer filed my taxes too late?
All taxpayers are responsible for the information on their own tax returns, according to the IRS. The same is true whether you hire a paid preparer, use a personal or corporate accountant, use tax software, or file your taxes yourself. In other words, even if your accountant fails to file your return and is unreachable, you are still liable for filing a tax return on time. You can be fined and charged interest if you file late or not at all.
If your tax preparer fails to file your return, and you file late, you will be penalized. If you can demonstrate that you took the necessary steps to file your tax return timely and that the return was late due to no fault of your own, it may be possible to have your penalties removed from your tax bill.
You should contact the IRS if your taxes are past due.
Helpful Resource: What happens if you don't pay your taxes?
How to Report a Tax Preparer
Form 14157, Complaint: Tax Return Preparer, should be used to report a tax return preparer for misconduct. A sworn Tax Return Preparer Fraud or Misconduct Affidavit must accompany the form. The form is used to explain what happened, and what the tax preparer did that was improper.
You can also file a written complaint with the IRS Office of Professional Responsibility. In your letter, you should include the name and address of your tax preparer, as well as a detailed account of the preparer's misconduct.
The Office of Professional Responsibility, however, only accepts complaints from enrolled agents. To file a complaint, you should fill out Form 3949-A if your tax preparer is not an enrolled agent.
Learn from the Experience
Getting an accountant to fix mistakes on your tax return can be an eye-opening experience. Whether you are trying to get your tax return adjusted or have just come out of it, take note of the lessons you learn along the way so you can avoid repeating the same situation in the future.
Even professionals make mistakes sometimes. The professionals can mess up, but the consequences are not just bad for them, but for you as well. When you lose deductions and credits that you're eligible for, you pay more in taxes than you actually owe, or you don't get a refund. Even worse, you might receive a refund that you're not entitled to. Sooner or later, the IRS will come after it.
By reading over the tax return before you sign off, you can protect yourself against your accountant filing a tax return with errors. An accountant will typically ask you to review your return and sign a statement certifying that all the information is correct and accurate.
It may also be a good time to start looking for a new tax preparer for the next year if you aren't satisfied with your accountant's handling of your situation. It's important to remember that not all professional tax preparers are created equal when looking for the right accountant.
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