What If My Tax Preparer Makes A Mistake?
- July 10, 2019
- Posted by: Platinum Tax defenders
- Category: Tax Relief
What happens if your tax professional makes a mistake on your taxes? Is your tax professional held liable for errors they make on your tax returns? Below we will discuss the topic of tax preparer liability. After reading this, you will come to understand when a tax professional may be held liable for errors. You will also learn what the penalties are for mistakes on your tax returns that your tax professional makes.
Liability of a Tax Preparer
Previously, tax preparers were not held liable for gift and estate and generation-skipping tax returns. However, a tax preparer can be responsible for income tax returns. For example, if a tax professional makes an error – whether accidentally or intentionally – they will be held liable.
What is a Tax Return Preparer?
Two types of tax return preparers exist:
- Tax professionals licensed to practice under state law and before the IRs. These individuals include CPAs, tax attorneys, and enrolled agents.
- Professionals who are not licensed but can prepare tax returns. These individuals cannot practice before the IRS.
The IRS defines a tax preparer as a person who prepares for compensation. Tax preparers may also employ one or more persons to prepare taxes for payment. A tax preparer does not include someone who did a tax return without receiving compensation.
What are Tax Penalties?
The IRS will impose penalties on a tax return preparer who understates a taxpayer’s liability. Preparers are charged fines if the IRS determines they knew or should have known that the error existed. The penalty will be $1,000 or 50 percent of the income for each mistake in a return. If the preparer had a good reason for the understatement or acted in good faith, they will not receive a fine. In the case of a reckless error made by the preparer, they will pay the penalty on each return. The penalty, in this case, is $5,000 or 50 percent of income derived. The IRS defines willful or reckless conduct as any deliberate attempt to understate a tax liability. In addition to monetary penalties, preparers can also receive injunctions. An injunction is a court order saying the preparer cannot practice for some time.
The dangers of injunctions for tax preparers
If a tax preparer cannot practice for some time, they will likely lose many clients. The preparer may need to re-open every return they prepared for the years falling within the statute of limitations. Additionally, the preparer may lose their license if they are found liable for tax preparer fraud.
Can Tax Preparers Be Sued for Making Mistakes?
If they have committed negligence or malpractice, you can sue tax preparers for their mistakes. In California, the client is typically in an excellent position to catch an error. Therefore, a 100 percent recovery is rare.
Who has to pay if a tax preparer makes a mistake?
The taxpayer will be responsible for additional income tax if the preparer makes a mistake. However, the preparer can also be held liable for other penalties and interest. The tax preparer will often resort to small claims court as the only viable economic option. Working with a tax preparer who is not reliable can cost you big dollars a taxpayer. Before you choose which tax professional to work with, do your research. Platinum Tax Defenders have been helping individuals file their taxes for over a decade. Our dedicated and expert staff can help you file your tax returns correctly and efficiently. The trusted CPAs we work with make sure you get the most amount of money back. Additionally, we won’t fool you and run you the risk of going into back tax debt.
What if your tax professional makes a mistake?
If your tax professional makes a mistake, bring it to their attention. For errors on taxes, an amended return can most often be filed to correct the mistake. Most trusted tax professionals will cover any penalties and interest related to their own mistakes. Make sure you are working with a trusted tax preparer. Platinum Tax Defenders has a team of top CPAs whom you can trust to prepare your taxes correctly.
Get help from tax experts at Platinum Tax Defenders
Tax law can be very complicated. Therefore, it’s understandable that it can be easy to make a mistake on your taxes. However, when you’re working with a professional, you want to be able to trust that they won’t make mistakes. The IRS is not so forgiving when it comes to errors. If you are a taxpayer who believes your tax preparer has made a mistake, seek out proper advice.
Additionally, if you are a tax preparer who has unintentionally made a mistake, you need legal help too. The intersection of taxation and criminal law can be very confusing. Few attorneys are competent to handle this sort of controversy. Platinum Tax Defenders specializes in all types of tax issues. You can trust that our CPAs will file your tax returns, so you get the best outcome.
Contact Platinum Tax Defenders today for a free consultation
If you’re afraid your tax preparer has made a mistake, talk to a tax specialist at Platinum Tax Defenders. Our team will take a look at your tax return and determine what the error was. Additionally, if you owe back taxes as a result of your tax preparer’s mistake, we can help with that too. Tax debt can leave you in bad financial shape. That’s where a tax relief services company can come in handy. A tax relief specialist understands the complicated tax code, especially when your tax refund is at risk. For the best tax outcome for any situation, contact Platinum Tax Defenders.
We’ll make sure we file any tax return amendments for you on time. If you’re worried you have a mistake on your tax returns, call Platinum Tax Defenders for a free consultation today. We’ve been in the business for over ten years and understand the IRS better than anyone.