Dealing with federal and state tax forms is complicated, and most people are willing to pay someone else to do the work for them. However, these professionals can make mistakes. While a qualified tax preparer is educated and skilled in their work, it is ultimately your responsibility as the taxpayer to file an accurate return.

Some mistakes can include losing credits and deductions, missing out on a bigger refund, or paying more taxes than you should. In other cases, the consequences can be much more dire. If this happens, there are several ways you can try to rectify the mistake.

Notify the preparer

If you receive correspondence from the IRS about a mistake, notify the tax preparer immediately. Ideally, they will correct the error through an amended return at no extra cost and offer compensation; however, they are not obligated to do so.  

Study the agreement you signed and identify the extent of their liabilities. Keep your eye on the fine print and determine if there are remedies for such mistakes. If there are none, move on to the next step. 

Report the preparer

If there are no safeguards in your agreement and the tax preparer is unwilling to correct the errors, you can take a different approach. If you suspect misconduct, complete and submit the IRS Form 14157 together with supporting documents. Use Form 14157-A if the mistake impacted the tax return or refund. 

There are several valid scenarios in which you can report a tax preparer, including:

  • Filing an individual Form 1040 without the client’s consent 
  • Using an incorrect filing status, false expenses, credits, deductions, or exemptions to generate a larger refund
  • Amending changes to the tax return documents
  • Misdirecting refunds 
  • Omitting or creating income 

You can also report the tax preparer if they fail to provide you with a copy of the tax return, and they should not hold your tax records until you pay a preparation fee. False claims about their certification as an enrolled agent, certified accountant, or tax lawyer are also grounds for reporting a tax preparer.

Sue the tax preparer

Taking legal action against the preparer should be the last resort, considering the costs involved. However, a lawsuit is a valid course of action when the amount involved is quite significant and you are asking the court for relief from the excessive fees and taxes. Legal action also makes sense when the tax preparer is unlicensed by the state or unregistered by the IRS.