Tax Filing Errors & Accountant Liability

June 27, 2017

Scanning a notice from the IRS indicating that it has determined your tax return contains errors, and that you owe additional taxes and penalties can ruin your day. This is particularly true if you had the return prepared by a CPA or accountant and the additional taxes and penalties are due to accountant liability.  After all, the whole idea of having the “expert” prepare your return in the first place was to avoid the hassle of making the tax computations yourself. What recourse do you have if your accountant made one or more errors on your return?

IRS Looks Primarily to the Taxpayer

When it comes to errors committed by your CPA or accountant, recognize an important rule: The IRS considers the taxpayer—not the accountant—responsible for everything on a tax return. That is to say that if additional tax (and often a penalty) is owed due to an accounting error, the IRS looks to the taxpayer to pay it. Depending, of course, on the circumstances, the accountant may still be liable for the error.

Accountant Liability is Based on a Duty of Care

Generally speaking, the CPA or accountant must possess the skills that an ordinarily prudent accountant would have and exercise the degree of care that an ordinarily prudent accountant would exercise. For example, if you provide your tax records to the accountant and that accountant, or the accountant’s staff, fails to include the information contained on one of your W–2 forms, you likely have a claim for negligence; reasonably prudent accountants check and re-check their work and should catch this sort of error. While you may still need to pay the additional tax, the accountant should be liable for any penalties and interest that you are charged.

Shoddy Advice from the Accountant

Accountants make some errors that have nothing to do with arithmetic. They sometimes give you bad tax advice. Relying on that bad advice can, of course, produce errors in your return. To establish liability on the part of the accountant, you will need to show that you were reasonable in relying upon the information and advice provided. For example, if the accountant comes up with a magic deduction that sounds too good to be true, it is likely that: too good to be true. Reliance may not be reasonable.

Expert Legal Advice is Usually Needed

Establishing liability on the part of the accountant or other tax preparer is fact-dependent. In most cases, careful consideration needs to be given to the underlying factual context. In few instances is a taxpayer equipped to make such a study and analysis on his or her own; skilled income tax attorneys are needed.

Mackay, Caswell & Callahan, P.C.—Experienced Tax Attorneys

Have you or the IRS determined that one or more of your tax returns contains errors? Were those errors caused by shoddy advice or error on the part of your accountant? Have you been hit with additional taxes, penalties and interest? You may need legal help to establish liability in order that the appropriate party—the accountant that caused the harm—accept responsibility (and pay) for the mistakes.

Whether you’re looking for a tax attorney in Queens, or a tax attorney in Rochester, accountant liability is nothing new to the IRS tax attorneys at Mackay, Caswell & Callahan, P.C. We’re available to help you understand your options and your rights. We have more than 30 years of experience in assisting taxpayers with all sorts of tax-related issues. We have offices in Albany, New York City, Rochester, Syracuse, Utica and Watertown, so whether it’s a New York City tax attorney or a Rochester tax attorney you need we stand ready. Don’t delay; we have a New York tax attorney ready to help you with your unique tax issue.


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