Now that tax season’s over, you probably weren’t planning to worry about your business taxes for almost another year. Then you get a letter from the Internal Revenue Service (IRS) informing you there was a mistake on a previous year’s return, and your company now owes back taxes along with fees and interest.
If a licensed tax preparer did your taxes, they’re responsible, right? Yes and no. If you didn’t pay the amount you owed when it was due, it’s your responsibility to pay that, along with the interest and penalties. However, you may be able to hold your tax preparer accountable if their mistakes led to your tax problems.
Whose fault was the error?
Whether your tax preparer reimburses you for the interest and penalties will likely depend on the reason for the error. If you provided incorrect or incomplete information, they likely won’t. The same is true for the cost of submitting an amended return if that’s required.
If your tax preparer made a calculation mistake or deducted something they shouldn’t have, they should cover the interest and penalties and submit an amended form at no charge -– particularly if they want to keep your business. Unfortunately, not every tax preparer will take that approach, especially when the dollar amount involved is significant.
When you receive a notice from the IRS, it’s best to have your tax returns and tax preparer agreement handy before you call your preparer. Regardless of who made the error, they need to be informed about it.
What recourse do you have if you suffer significant losses?
If you end up being stuck with significant fees and an audit due to your tax preparer’s error or misconduct, you may want to consider a lawsuit to recoup your money and damages.
Sometimes, the best recourse you may have is a civil lawsuit. If your tax preparer failed you and your business, it may be time to speak with an experienced attorney about the problems you have and find out more about your options.