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Did a Tax Pro Botch Your Return? Here’s What to Do

March 23, 2018
Income Taxes, Personal Taxes, Taxes
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To err is human, but to err on your tax return is a total dumpster fire. If you did your own taxes, of course, you may have only yourself to blame. But if you think your tax preparer made a mistake on your return, here’s what experts say you can do about it.

1. Make sure it’s actually the preparer’s fault

Before you barge into your tax preparer’s office with a torch and a pitchfork, be sure you provided all the documentation and information he or she needed to do the return correctly. “The accountant obviously can’t know if something exists if the individual didn’t tell them about it,” warns Bryan Kesler, a certified public accountant in Charlotte, North Carolina. Also, take a deep breath before going after volunteer tax preparers — they typically bear no legal liability for errors on your federal tax return, according to the IRS.

2. Check your contract

Most reputable tax preparers will have you sign an engagement letter that outlines, among other things, what happens if there’s an error on the return, says Cindy Hockenberry, the director of tax research and government relations for the National Association of Tax Professionals.

In general, you’re on the hook for any tax you discover you owe, but a decent preparer usually will pick up the tab for penalties (and sometimes interest) you incur because of the preparer’s error. It’s also reasonable to ask the preparer to put together an amended return at no charge if the error is the preparer’s fault, she says.

3. Contact the preparer

Alert the preparer in writing and provide all the correspondence you’re getting from the IRS or state tax authority, Kesler says. “If it’s a halfway decent tax preparer, they’ll absolutely take a look at it, no charge,” he says.

Set up an appointment to talk face to face, Hockenberry says. At the meeting, determine what’s incorrect, then discuss steps to fix it. Document what you discussed and what each person will do.

“If the preparer’s refusing to want to acknowledge the error, help correct the error or anything like that, you would want to have a paper trail because in the off chance that you might want to take this preparer to court, you would want that documentation,” she says. You’ll also need it if you hire a different tax preparer.

4. Notify the IRS and professional organizations

If the preparer is behaving unethically, violating the terms of the engagement letter or trying to dodge you, plenty of licensing authorities and professional organizations want to know about it.

“If they’re a member of an association, you certainly would want to notify the association, whether it’s the American Institute of Certified Public Accountants, American Bar Association, National Association of Enrolled Agents, NATP, whoever it might be,” Hockenberry says. You can also file a complaint with the IRS.

5. Tell it to the judge (if you must)

Suing your tax preparer is typically a last resort, Hockenberry cautions. “Depending on the amount, you might want to weigh whether it’s worth your time and trouble,” she says. “If it was a large amount, I absolutely would take them to court. But you have to realize, then, that taxpayer’s spending money to get money, so to speak, so that’s the unfortunate part of it.”

Kesler adds: “I feel like CPAs are held to a very high ethical standard, so they’re going to tell you if they made a mistake. And if not, then they probably don’t deserve the title CPA.”

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