The Internal Revenue Service (IRS) wants you to pay your taxes. If you make an error on your return, you can be audited, which will cause potential fines and penalties to pile up. With sweeping tax changes, many taxpayers decided that it is in their best interest to go to an accountant or financial professional to do their taxes.
All tax professionals have a reasonable duty to do your taxes to the best of their ability.
Errors can and do occur, and that’s why it’s important to review your taxes before signing off on them. You'll want to thoroughly read your tax return before signing, and pay close attention to the statement near the end of the return.
The return requires you to sign a statement claiming that the information is correct and factual.
You have a duty to look over your taxes and point out any errors that have been made. When you sign off on your taxes, you’re claiming that you have looked through the return to ensure that there are no errors.
It's much harder to defend yourself if you decide to sue your tax accountant because you’re claiming that you checked for errors.
"Accountants have a duty of care to act in good faith and provide competent and diligent representation to their clients. When they are negligent in their duties, commit fraud or breach of contract, they can be held liable for accounting malpractice," explains Gassman Legal, P.C.
If you did find errors, you should:
Double Check Your Paperwork and Documentation
It’s up to you, the client, to provide your accountant with all of the information needed to file your tax return. If the accountant doesn’t have all of the information needed to do your tax returns properly, he or she will not be liable for your mistakes.
Look Over Your Contract
Volunteer tax preparers are often not responsible if errors are found on a return. The majority of accountants will provide you with some form of an agreement. This form will often outline everything that happens when the accountant is preparing your return.
There may also be a clause that outlines exactly what happens when there’s an error made on the return.
Notify the IRS
If the error was blatant, you’ll want to contact the IRS and the appropriate professional organizations. This should be done after trying to contact the tax preparer. If the preparer ignores all of the evidence, won’t look over your taxes or tries dodging your correspondences, you should contact the following:
- AICPA or
- ABA or
- The appropriate professional organization
If the errors are substantial, you may want to bring the issues in front of a judge. You'll need to make sure that the legal process is feasible both monetarily and legally. Suing the firm or person who did your taxes should be a last resort. If the issue will result in substantial penalties, fines or money lost, it may be in your best interest to bring the matter to court.
Tax professionals often hold themselves to a very high ethical standard, and when they don’t, you can pursue legal action against them.