You trust your tax professional to prepare your tax returns accurately and without mistakes. When errors do happen, however, you might wonder how they can affect you as a taxpayer and what steps you can take to remedy them. You can avoid serious IRS penalties and fines by using these tips to handle tax preparer mistakes.
Review Your Tax Return Before Signing It
The most common sense way to avoid tax preparer mistakes is to thoroughly read your tax return before you sign it. Tax returns include a statement at the end that emphasizes that the taxpayer agrees that all of the information on the return is correct and factual.
If you sign the return before reviewing it thoroughly, you may find it more challenging to defend yourself of that end statement. In fact, it obligates you to read through the return and check it for errors that could cost you a significant amount of extra taxes or IRS fines and penalties later.
If you do find mistakes on your tax return, you should point them out right away to the tax preparer. You have every right as a client to expect the tax preparer to either explain or fix the errors before you sign the return.
Make Sure the Errors are Truly the Fault of the Tax Preparer
Another tip for dealing with mistakes on your tax return involves making sure the tax preparer truly is to blame for them. After all, you have the obligation of providing all of the documentation and proof of income and assets to the tax preparer. He or she cannot simply take a guess at how much you earn and to what exemptions or deductions you are entitled.
If you fail to provide the needed information to prepare an accurate and factual tax return, the tax preparer cannot be blamed for the mistakes. In this instance, the blame will fall on you for not providing everything the tax preparer needed to do your taxes correctly.
Contact the Tax Preparer in Person
If you find mistakes on your tax return, you should contact the tax preparer as quickly as possible. If possible, you should meet with this individual in person to go over the return and point out the errors. In some cases, the preparer may be able to correct them or submit an amended return for you.
Likewise, depending on your particular situation, the tax preparer may be willing if not obligated to pay for your IRS fees, penalties, and interest on your tax debt. The tax preparer may not gain your full trust. However, he or she may be able to remedy the situation before it costs you anymore money with the IRS.
Know Your Rights as a Client
Before you sign a contract with the tax preparer, you should read through the agreement thoroughly and understand to what rights you are entitled as a client. In particular, the contract should clearly stipulate what remedies the preparer can offer to you if or when he or she makes an error preparing your return.
In some instances, for example, the preparer may be obligated to pay the interest and penalties you accrued because of the errors but not the extra taxes you owe to the IRS. In other cases, you may have the opportunity to purchase extra insurance on your return that obligates the preparer to pay for the interest and penalties as well as the extra taxes you owe because of his or her mistakes.
You should take note, however, that this obligation will not be upheld if it is determined that you caused the preparer to make mistakes on the return. If you purposely or accidentally withheld information about your income, assets, or other taxpayer details, the preparer will not have to cover expenses related to the mistakes.
Know the Statute of Limitations
If your tax professional makes mistakes when preparing your return, you have a finite amount of time to act in order to remedy the situation. In most instances, the statute of limitations is three years for errors that caused you to pay too much to the IRS. To solve this dilemma, you bear the burden of providing proof that you overpaid and are owed a refund on that money.
If the mistakes caused you to underpay the IRS, you could face collection efforts on the remaining balance for three years from the time of the error. The IRS has three years from that date to collect on the money you owe to the federal government. However, if the error is substantial such as leaving out or not reporting 25 percent of your income, the IRS has up to six years to collect on that debt from you.
Incidentally, no statute of limitations applies to situations like fraud or evasion. If you fail to file your taxes, purposely defraud the IRS, or withhold information from it on purpose, the IRS has an unlimited amount of time to pursue and collect money from you.
Pay the Penalties
Regardless of the mistakes your tax preparer made, it is ultimately up to you to pay what you owe to the IRS. You bear the responsibility of paying penalties and interest, not the preparer.
If you fail to pay this money, even with the preparer’s mistakes, the IRS will come after you and not the tax professional for this debt. After you pay the penalties, you can then pursue reimbursement from your tax preparer.
Alert the IRS and Other Organizations
You also have the option of alerting the IRS and tax professional organizations about your preparer’s mistakes. In particular, you should notify the IRS if your preparer:
- Behaves unethically
- Violates the term of your contract or engagement letter
- Purposely avoids contact with you
- Refuses to reimburse you for penalties, fines, and other money he or she owes you
You also can notify professional organizations like the American Institute of Certified Public Accountants, the American Bar Association, and the National Association of Enrolled Agents about your preparer’s misconduct.
Hire Top Tax Defenders to Assist You
Finally, you may be able to remedy the debacle caused by the preparer’s mistakes by hiring the professionals at Top Tax Defenders. We have tax professionals on staff who can review your return, check and find errors, and then advise you on how to correctly them quickly and for as little money as possible.
Top Tax Defenders can also help you file a new amended return if necessary as well as deal with any IRS collection letters you receive. The professionals there know the inner workings of the IRS collection practices and can help you avoid further penalties and interest that you cannot afford to pay. They can even act on your behalf and represent you before the IRS to get the situation resolved completely.
You count on your tax preparer to complete your tax return correctly and accurately. You may not be prepared for what happens if he or she makes a mistake. These strategies can save you time, money, and hassle dealing with tax return errors. You can also hire Top Tax Defenders to assist you in remedying costly mistakes caused by your tax preparer’s negligence or misconduct.