Unfiled Tax Returns & Preparer Penalties

Tax Preparer Liability

The IRS is watching tax preparers more closely than ever. If you are a tax preparer who is facing an audit of your records, or an investigation for possible negligent or fraudulent preparation of tax returns, you should put your case in the hands of a knowledgeable tax controversy lawyer. Importantly, do not try to respond without the advice of experienced tax counsel. The consequences for a mistaken response are serious. You could lose your right to prepare returns, lose your business, and subject yourself to significant civil or criminal penalties.

At McFARLANE LAW – A Tax Law Firm located in Scottsdale, Arizona, our attorneys can help you respond to IRS inquiries. We offer a free initial consultation to discuss your case.

Tax Preparers Held to High Standards

Professional tax preparers are held to high standards and are subject to substantial penalties if the IRS suspects negligence or fraud in the preparation of tax returns. Any understatement of income or overstatement of deductions could result in a taxpayer audit. If you were aware of the inaccuracy as a tax preparer or failed to adequately investigate the tax item, you could be subject to significant fines and penalties.

If you prepare returns claiming a child care credit or other credits, there are very detailed record-keeping requirements to be kept in each client’s file for each tax year, regardless of whether you know the taxpayer’s personal situation and have years preparing their returns. Penalties begin at $500 per return infraction and escalate from there. Before you respond to IRS inquiries, you need to consult a tax litigation attorney. Thinking you can adequately respond to a Revenue Agent’s inquiries would be a mistake.

In addition to possible penalties, the Revenue Agent may report you to the IRS Office of Professional Responsibility. This division of the IRS could suspend you from future return preparation practice if your actions were negligent, reckless or intentional. Our lawyers can represent you before the Office of Professional Responsibility to protect your livelihood.

Contact us for a free consultation at T. 480.991.0032 or [email protected] and put our experience on your side! Stephen J. McFarlane is a former IRS litigation attorney with an LL.M. degree in tax law and tax procedure.