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.
[BP1]Samecode section?
