Tax accountant made reporting errors on past returns...?

Question

In preparing 2006 returns I have discovered my account may have incorrectly figured self-employment tax on several returns from past years, resulting in under-reporting of those taxes. I hold him fully responsible, after all this is what I pay him for. Is he financially liable for any taxes, penalties and interest that is owed as a result of those mistakes?

Answer 1

Even though you got income tax return prepared by accountant, you are the one who is responsible for taxes, interest and penalty.

Most cases, accountant may pay for penalties, but it varies.

You need to file amended tax return now. Check this links for filing amended return.

http://tax1040.blogspot.com/2007/04/how-do-i-fill-out-amended-return-form.html
http://tax1040.blogspot.com/2007/04/what-should-i-do-if-i-made-mistake-on.html

-Infoman
Not a legal advice.

Answer 2

I am aware of the law in Australia and if this case relates to Australia then - definately 100% liability sits with the tax consultant for the professional error made in the preparing a return.

If the mistake relates to the information provided by you then he will be able to pass the burden of blame on you - so make sure that you provided all the information in a correct and true. And then you find that the mistake occured due to the consultant's professional mistake than he will be liable to pay the tax panelty and interest occuring on it.

Before disputing the case - kindly talk to the consultant if he has got any genuine reason instead of just sorry.And the next alternative is to use the law in amending the retur of income in time and filing a revised corrected return to the tax authority just to avoide penalty and interest and as far as tax is concerned you have to pay it anyways as it is your responsibility to pay in either of the situation.

Best wishes

Answer 3

No, he is not liable. By law, the taxpayer alone is solely responsible for the accuracy of a return. When you sign it, you are attesting to the accuracy and completeness of the return.

The preparer is not liable for any taxes, penalties or interest charges that result. Many will offer to cover the interest and penalties and to prepare any amended returns without charge but there is no legal obligation for any of that, it's strictly a matter of goodwill on their part.

Answer 4

That depends.

He might be responsible for the penalties, however, you will still be responsible for the taxes owed, since the tax liability always existed, even though he might have made a mistake.

Most CPAs will gladly cover penalties and interest if the mistake was theirs, but they will not pay your taxes.

Answer 5

You are the one legally responsible for the accuracy of your return.

That said, most accountants would reimburse you for penalties and interest that were due to their mistake. Since you were the one who should have paid the taxes in the first place, you'd still be responsible for that, they wouldn't be likely to reimburse you.

The IRS would look to you for the money. Getting reimbursed from the accountant for extra money you'd have to pay due to their mistake would be between you and the accountant.