Conclusiones clave
You can report a tax preparer to the IRS for misconduct, even if you didn’t suffer financial loss, and the IRS can impose penalties, revoke credentials, or take legal action.
You may sue a negligent tax preparer if their actions caused financial harm, but you cannot recover legitimate taxes you were required to pay.
Researching credentials and watching for red flags, such as refund guarantees or refusal to sign your return, can help you avoid fraudulent or unqualified preparers.
Can You Sue Your Tax Preparer for Negligence?
There are instances where a tax preparer’s actions (or lack of) may be grounds for a lawsuit. Depending on the situation, you may be able to sue the individual preparer or the firm that employs them if their actions meet the required elements to prove negligence and you suffer damage as a result.
Understanding the Four Elements of Negligence
Before filing a lawsuit for negligence, you must prove that the following four elements have been met.
- Duty of Care: First, you must show that a professional relationship existed between you and the tax preparer (or tax company), and the preparer was obligated to perform their work with the care, accuracy, and knowledge expected of qualified professionals in the field.
- Breach of Duty: Next, you are required to prove that your preparer (or tax company) failed to meet that standard of care through a specific act or omission. This could be failing to claim eligible credits and deductions, not filing your return, or making other significant mistakes.
- Causation: Additionally, you must show a direct causal link between your preparer’s breach of duty and your financial loss.
- Damages: Lastly, but very importantly, you must offer clear evidence of a monetary loss. This typically includes penalties and interest fees, as well as any fees paid to another tax preparer to rectify the errors. It does not, however, include any additional taxes you may legally owe.
Standard of Care for Different Types of Tax Preparers
It’s important to note that the standard of care threshold varies significantly between general tax preparers and those with a professional license, such as CPAs. Although both can file a basic return, a CPA’s professional license, continuing education requirements, and governing ethical standards hold them to a significantly higher standard of care and accountability.
| Feature | General Tax Preparer | CPA |
| Regulation | Few mandatory professional standards, often seasonal. | Governed by state boards, Circular 230, and AICPA standards. |
| Education/Expertise | May have minimal qualifications; focus primarily on basic tax filing. | Extensive education (typically 150 college credit hours) and broader expertise in accounting, finance, and complex tax law. |
| Due Diligence | Required under Circular 230 if they have a PTIN, but enforcement and professional accountability can be limited. | Must exercise a higher degree of due care and professional skepticism, including ensuring information appears reasonable on its face and seeking supporting data where appropriate. |
| Liability | May have limited professional liability if errors occur, though still subject to IRS penalties. | Held to a higher standard of liability; if an error or omission causes financial harm, they can be sued for damages. |
Damages You Can Recover in a Civil Lawsuit
If you meet the four elements of negligence and wish to move forward with a lawsuit against your tax preparer, you may be able to recover compensatory damages and, in some cases, punitive damages.
Compensatory Damages
- Penalties and Interest. If you had to pay penalties and interest fees due to your preparer’s negligence or error, you could sue to recover these costs.
- Additional Professional Fees. It may be possible to recover fees paid to another tax professional to correct a return, negotiate with the tax agency, or resolve issues created by the negligent preparer.
- Misdirected Funds. Did your tax preparer alter your direct deposit information or direct funds to their bank account without your knowledge (theft)? You can request reimbursement of these stolen funds.
In addition to the damages above, you may also request reimbursement for other direct economic losses sustained as a result of relying on fraudulent information or the actions of your negligent preparer.
Punitive Damages
Unlike compensatory damages, which reimburse you for actual losses, punitive damages are meant to punish for intentional, willful, or reckless misconduct and discourage similar behavior. They are generally reserved for serious fraud or egregious wrongdoing, not for simple negligence or contract disputes.
When Should You File a Formal Complaint With the IRS?
Under most circumstances, you are responsible for basic mistakes or late returns, even if someone else was handling your taxes. There are some errors, however, where the preparer can be held responsible, and a formal complaint is warranted.
Situations Where You’ve Suffered Financial Harm
Under these circumstances, you should file a complaint, as well as a lawsuit (if applicable).
- Filing a return (Form 1040) without your knowledge or consent.
- Altering your tax return without your consent.
- Using an incorrect filing status to earn a larger refund.
- Creating false credits, deductions, or expenses to inflate your tax refund.
- Changing your banking information to route your refund into their own account.
- Omitting income, creating fake W-2s, or falsifying records to generate a larger refund.
- Claiming false exemptions or dependents to generate a bigger refund.
- Charging hidden fees or taking a percentage of your refund, which is prohibited for most preparers.
- Failing to file your return after being paid to do so, causing late-filing penalties or interest.
Misconduct You Can Report Even Without Financial Damages
Not all situations will meet the standards necessary to file a civil lawsuit, but you can file a complaint to ensure others are aware of the preparer’s poor conduct.
- Not signing the return or including a valid Preparer Tax Identification Number (PTIN).
- Refusing to provide a copy of your completed return.
- Holding records until the preparation fee is paid.
- Using off-the-shelf tax preparation software or IRS Free File, which is intended for personal use.
- Falsely claiming to be a CPA, attorney, an enrolled agent, or other licensed professional.
How to File a Tax Preparer Complaint With the IRS
If you believe your preparer acted improperly, the IRS offers a clear process for submitting a complaint.
Intrucciones Paso a Paso
- Reúna la documentación
Collect copies of the tax return, emails, invoices, payment records, and any evidence of misconduct. - Complete IRS Form 14157 (Complaint: Tax Return Preparer)
This form is used to report unethical actions, fraud, or improper conduct. - Adjuntar Form 14157-A (If Applicable)
This form is specifically for situations involving suspected identity theft or a return filed without your permission. - Mail Forms and Supporting Documents
Servicio de ingresos internos
Attn: Return Preparer Office
401 W. Peachtree Street NW
Mail Stop 421-D
Atlanta, GA 30308 - Monitor IRS Correspondence
The IRS may contact you for additional information while reviewing your complaint.
You can also file your forms and supporting documents by fax (855-889-7957) or en línea. If you need the IRS to re-evaluate or correct the return, follow normal procedures for amending or disputing a return in addition to submitting your complaint.
IRS Tax Preparer Penalties and Sanctions
Depending on the severity of the case, the IRS can impose penalties and sanctions on anyone who gets paid to prepare a tax return and fails to follow tax laws, rules, and regulations.
Civil Penalties
Civil penalties can arise even if a lawsuit isn’t filed.
- Understatement of a Taxpayer’s Liability: If the understatement is due to unreasonable positions, the penalty is $1,000 or 50% of the amount charged to prepare the return, whichever is greater. For those due to willful or reckless conduct, the penalty increases to $5,000 or 75% of the preparation fee, whichever is greater.
- Failure to Furnish Copy to Taxpayer: For 2025, the penalty is $60 for each failure.
- Failure to Sign the Return: This carries a $60 penalty (2025), as well.
- Failure to Provide PTIN: Those filed in 2025, $60 multa.
- Failure to Retain a Copy or List: $60 en 2025.
- Failure to Correct Information Returns: For 2025, this is $60.
- Negotiation of Check: The penalty for returns filed in 2025 is $635.
- Failure to Determine Eligibility For Tax Credits: This is specific to those filing under head of household and certain tax credits (Child Tax Credit, Additional Child Tax Credit, American Opportunity Credit, Earned Income Tax Credit, and Lifetime Learning Credit). The penalty is $625 for each failure (2025).
For a list of penalty fees for prior tax years, be sure to visit the Tax Preparer Penalties page en IRS.gov.
Criminal Penalties
Those who commit fraud or make false statements on tax returns may be charged with a felony crime and can be:
- Fined up to $100,000
- Imprisoned for up to 3 years
- Required to pay court costs
Además, tax preparers who prepare fraudulent returns, statements, or other documents may be charged with a misdemeanor and fined up to $10,000, as well as face up to one year in prison.
Those who knowingly or recklessly disclose information given to them to prepare a return, or use that information for any purpose other than to prepare a return, may be charged with a misdemeanor and fined up to $1,000. They may also be jailed for up to a year and be required to pay court costs
Professional Sanctions
In addition to civil and criminal penalties, the IRS may impose professional sanctions. The Office of Professional Responsibility (OPR) may:
- Disbar or suspend, restricting them from representing taxpayers before the IRS.
- Issue a permanent injunction, stopping them for being able to prepare returns altogether.
- Revoke their Electronic Filing Identification Number (EFIN), preventing them from filing returns through the IRS e-file program.
How to Choose a Good Tax Preparer
You are ultimately responsible for the information provided on your return, so choose your tax preparer wisely.
- Review the preparer’s history by checking the Oficina de Mejores Negocios (BBB) website.
- Request licensing information and check with the relevant associations to verify their “good standing” status. For attorneys, check with the State Bar Association. CPAs can be verified through your State Board of Accountancy’s website. For enrolled agents, visit the IRS Directory of Federal Tax Return Preparers.
- Discuss fees upfront and be wary of those who claim they can get a larger tax refund than their competitors. You should also avoid anyone who charges based on a percentage of your refund.
- Understand their credentials and qualifications. Attorneys, CPAs, and enrolled agents can represent you before the IRS for any situation. Annual Filing Season Program participants may represent you in limited circumstances if they prepared and signed your return. Tax preparers who have an active preparer tax identification number, but no professional credentials and do not participate in the Annual Filing Season Program, are authorized to prepare tax returns. They cannot, however, represent you before the IRS.
- Request their PTIN. In order to legally prepare tax returns for a fee, all preparers must have a preparer tax identification number (PTIN). Make sure yours has one and enters it on your return.
Taking the time to verify your tax preparer’s qualifications and history is crucial in ensuring your tax return is done correctly. Remember, if something doesn’t feel right, trust your instincts and look for a different preparer. It could save you from an IRS headache or even serious legal trouble down the road.