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If there is a mistake on my taxes, and in turn, I get billed for more money from the IRS and the state, is my preparer liable?

Los Angeles, CA |
Filed under: Debt

There was a mistake on my taxes, so I had to pay the IRS an extra ~$1500 and the state nearly $500 plus fees and penalties.

The first new bill to come was from the IRS. In a very confusing set of emails, my preparer informed me that I did not have to pay the IRS, but then later when I wanted double confirm I didn't have to, told me I had to pay it – so I paid it.

Now I've received a new bill from the Franchise Tax Board in California saying I owe nearly $500 (again including fees and penalties) more to them.

Is my tax preparer responsible for these mistakes? Is there ANY course of action I can take? I understand I'm probably responsible for all taxes, but the fees and penalties – can anything be done?

Attorney Answers 4


  1. Any reputable CPA (I am also) would reimburse a client for any extra penalties and interest incurred which are attributable to the tax preparer's error. Mind you, not the tax, as itnis what it is based on your income and expenses.....but if return was prepared properly what would have been the tax bill vs. What it ended up being in the end. The CPA could always take it upon themself to write a letter seeking to abate some or all of the penalties and therefore hel you and the CPA if they were going to absorb the penalties.

    My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained.


  2. Your explanation is confusing in that you state that you are receiving multiple bills from the FTB. The first course of action you should take is to have a tax professional review documents that you received from the IRS and Franchise tax Board and the tax returns that generated these liabilities.

    Your preparer should be liable for the penalties if you can prove that he/she made the mistakes that caused the penalties. You should ask your preparer to pay you for the penalties your incurred. The interest is another matter. You are being charged interest on the money you kept that should have been paid to the government which most preparers will not refund to you.

    Good luck!
    Phillip M. Smith Jr.
    Los Angeles Tax & Business Attorney
    Licensed in the United States Tax Court
    www.culvercitytaxandbusinesslaw.com
    www.corporateattorney.com
    www.worlclasslawyers.com
    Main: 323-292-4116 ❘ Cell: 562-505-1004

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is philsmithjr@worldclasslawyers.com.


  3. You are responsible for the taxes and interest. You earned the money and had the use of the money from the time the taxes were due and when you ultimately pay them. As far as responsibility for the error, it depends. Sometimes the error is as a result of taxpayer failing to provide information and othertimes it may be an error on the part of the preparer. You should consult your retainer agreement. You should address your concern with your accountant. Your accountant may be willing to write off the fees associated with the correction. If there are penalties, the CPA may be willing to pay the penalty if his/her error resuited in the imposition of the same, or IRS may be willing to waive or negotiate the penalty, if any. From the amounts at issue and your desription of the facts, I do not think a penalty was assessed, just tax and interest. If you are still unsure seek counsel from an attorney or CPA. Best of luck to you.

    This response is not intended to create an attorney client relationship. The response is solely intended to answer the question presented. Additional facts and issues are unknown to the responding attorney. Should you still have questions, legal assistance should be sought by making an appointment to meet with an attorney, rather than attempting to resolve the issue via e mail. This response is merely provided to give direction to assist you in the decision of whether you should contact an attorney or not.


  4. One way to assess the tax return preparer's responsibility is to know: did the taxing authorities assert a penalty was owed by the preparer? If they did then I understand that as them saying a reason for the additional taxes due is the preparer's error.

    Also, it may depend on the fee arrangement made with the tax return preparer's office. I have see contracts where you as client pay an extra fee at the time work is done for you and because of that the preparing company agrees to pay some amount of the taxes (or reimburse you). It is like buying insurance in the event an error is made.

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