With the mess of tax laws in the US, it’s not surprising many of us choose to use a professional service to handle our taxes.
Sometimes mistakes get made, however, and in the worst cases, a preparer may even outright lie trying to get you a bigger refund.
That can put you in hot water, but can a tax preparer be liable for their mistakes?
Read on and we’ll explain exactly how much liability that your chosen service provider can face if they make a mistake that might get you in trouble.
Who Is a Tax Preparer?
A tax preparer is anyone with a certificate from the government stating that they’re qualified to file your taxes.
While there are some requirements, they’re not as strict as you’d think.
Unfortunately, this also means that some bad apples or people who are only qualified in the loosest sense of the word make it through the vetting process. In other words… mistakes happen.
It’s never a good idea to go with the lowest bid for a tax preparer for this reason. Even a trusted tax preparer can occasionally make a mistake, however, so the real question is this: who’s on the hook for said problems?
So, Can a Tax Preparer Be Liable?
Most of the truly reputable firms will reimburse you for any penalties which have occurred, of course. Even if they don’t pay you back immediately they may file the proper paperwork for forgiveness with an amended tax return.
It’s when you’re working with someone who doesn’t do the footwork that the issue becomes more complex.
If your tax preparer won’t handle things for you then they can be held liable in most cases. While you’ll be on the hook for any unreported taxes the professional who messed up the return will have to handle fees and penalties.
In the worst-case scenario, you may have to take them to small claims court. Just the threat of being sued is often enough to get things smoothed over but in most cases, they can easily be found guilty of negligence.
Avoiding the legal process is crucial for anyone who wants to stay in business since their number can be pulled and they’ll be unable to practice if any serious issues come to light in court.
Essentially: if they made the mistake then the fees are their problem but any unreported tax liabilities which didn’t make the paperwork will still need to be paid by you.
Take Action If a Mistake Was Made
Can a tax preparer be liable for their errors? Absolutely.
Whether it was a lie or an honest mistake the fees and penalties fall on their heads rather than yours in most cases.
The important thing as a wronged client is not to let the matter slide.
Instead, you’ll want to bring it to the attention of the business in question and make sure that they know what you know.
Have a mistake made on your returns? Make the call today.