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Am i liable for penalties if my tax preparer lied on my taxes and I did not sign the return?

Ontario, CA |

I recently ordered my transcripts form the IRS and realized that for the past 2 years, my tax preparer lied on my taxes and diverted half of the refund to his bank account. He never asked me for my signature on the returns for both years because he claimed it was an electronic filing. Also, the tax returns he gave me does not match the transcript. I have confronted him about it but he is refusing to admit what he did. I have consulted with a tax attorney and he is telling me to amend my taxes but I am afraid that I will be asked to pay the penalties and fees but I had absolutely no knowledge of the false claims he made on my taxes. and has refused to give me the original tax returns. What should I do? Should I report him to the IRS?

Attorney Answers 1


First, you should most definitely report this person to the IRS; they are quite hard on return preparers who engage in that sort of fraud.

Second, you should immediately contact your local IRS office to see if you can get copies of the actual returns that were sent to the IRS. You should also ask for copies of your wage and income transcripts and start collecting all of your tax information for those years because you will need that information to make sure you end up with correct returns at the end of the day.

The IRS will initially assess penalties against you if you will end up owing additional tax once proper returns are filed; however, from your description it sounds as if you have a good case to have the penalties abated on the grounds that you acted with reasonable cause and without willful neglect.

The issue of whether you will have to file amended returns or whether you should simply file new returns presents a more interesting question. Since you appear to have never had the opportunity to review the returns that were supposedly filed, and since you appear to have not given this preparer the proper authorization to electronically file those alleged returns for you, they are not really your tax returns. As such, under the tax law you have technically not yet filed original tax returns for those years, and would therefore technically be entitled to (or required to) file original tax returns.

I would urge you in the strongest terms to immediately consult with a competent local tax professional - a CPA or a tax attorney - to see what your best course of action is; the facts in your case are complicated enough that you will not get the best answer you should get simply by getting answers for free online - don't take candy from strangers.

Finally, you should also report this return preparer to the police because he in fact stole money from you and, depending on how much he stole, you might consider whether it would be worth the time, effort and expense to sue him to recover the money he stole from you.

Good luck.

My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference. If you wish to consult with me please contact me at dana@nytaxcounsel or visit my website at

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