What responsibility does CPA have when preparing someones taxes?

Answer 1

I add to the other answers, that CPAs, attorneys, and Enrolled Agents are subject to a set of rules and regulations published by the Department of Treasury. These rules are summarized in Circular 230

http://www.irs.gov/pub/irs-pdf/pcir230.pdf

In particular, a CPA that engages in unauthorized conduct (such as incompetence, fraud, misappropriation of funds, etc) can be disbarred, fined, or charged with criminal offenses.

Answer 2

The CPA has the responsibility to use due diligence, which means using all reasonable care to prepare the return accurately. If the person gives them false information or fails to provide all the necessary information, it's the taxpayers fault, not the CPA's.

In any case, the ultimate responsibility is the taxpayers's - if there's an error, the IRS will come after the taxpayer, not the preparer.

If the make an error that costs the taxpayer fines or penalties, most reputable CPA's will pay the fine or penalty if it results from their error. The taxpayer is still responsible for the additional taxes, though, since they would have been responsible for that even if the error hadn't been made.

Answer 3

The CPA has the responsibility to use professional judgment in the preparation of the return, and also to obey the law. While the information represented is ultimately the responsibility of the taxpayer, a CPA, or any paid preparer for that matter, is prohibited from helping file returns they know or should know are false.

That does not mean that the preparer has to verify or audit any information, but it does mean that if something doesn't make sense, the preparer is obliged to inquire as to its accuracy, and not to prepare the return if they believe the information being represented is not materially correct.

If a CPA makes an error in the preparation, it is common for the preparer to pay any penalty that arises from that error. Generally, the CPA will not pay the additional taxes, as those taxes would have been due anyway.

Contrary to other opinions, the IRS LOVES to assess penalties and fines for a CPA preparing fraudulent returns. Punishing the preparers puts that fear in other preparers, which leads to increased compliance.

Answer 4

I can't believe that all answers that were correct got bad ratings. Just because you don't agree with the answer doesn't mean that it is wrong.

Burritoman was the only answer I gave a bad rating to. All the rest were good ratings.

Enrolled Agent.

Answer 5

they have the responsibility of ensuring a proper return provided the client provides accurate information

Answer 6

If the CPA screws up, it's their @$$.