What Is an Accountant's Responsibility When He Miscalculates a Client's Taxes?


A paid tax preparer's responsibility when there is a miscalculation error on a client's tax return depends on who is responsible for the error. If the taxpayer failed to provide adequate information to prepare an accurate tax return, the consequences are the responsibility of the taxpayer. If the taxpayer provided adequate and accurate information to the tax prepare and the tax preparer did not properly report the taxpayer's information, any penalty assessed on the tax return should be reimbursed by the tax preparer to his client.

Taxpayer's Responsibilities

The Internal Revenue Service places the responsibility for filing an accurate income tax return on the taxpayer. If the taxpayer engages the services of a paid tax preparer, the taxpayer is still responsible for reviewing the return for accuracy and signing it. A paid preparer is also required to sign the tax return, but the taxpayer is ultimately responsible for any information included on a tax return and submitted to the Internal Revenue Service. The taxpayer may have recourse against a paid preparer for errors that are the responsibility of the tax preparer, but the IRS will still look to the taxpayer to pay additional taxes, penalties and interest on underreported income.

Errors Discovered Before a Tax Return Is Filed

If the taxpayer reviews her income tax return and discovers an error before the return is filed, she should bring it to the attention of the paid tax preparer and have the error corrected before fiing. If the error is due to inadequate or erroneous information provided by the taxpayer, the tax preparer has the right to charge an additional fee for correcting the return before filing it. If the error is due to a preparer mistake, the tax preparer should not charge an additional fee to correct his mistake.

Mistakes Discovered After a Tax Return Is Filed

If the taxpayer or the tax preparer discovers an error after the tax return is filed, an amended tax return should be filed. If the error is due to the taxpayer's providing inadequate or erroneous information, the tax preparer is justified in charging an additional fee to file an amended tax return; moreover, any additional tax, penalties and interest resulting from the error are the responsibility of the taxpayer alone.

If the error is due to a tax preparer mistake, the tax preparer should not charge a fee to amend the return. The tax preparer is also responsible for reimbursing the taxpayer for any penalties resulting from his error. Tax courts usually do not require the preparer to reimburse interest on underpaid taxes under the theory that the taxpayer has had the use of the funds up to the time additional taxes are levied and paid.

Tax Preparer Reimbursements to a Client

If the error is due to tax preparer error, the taxpayer is still required to pay penalties and interest assessed on any underpayment of taxes. It is the responsibility of the tax preparer to reimburse a client for the penalties paid. If a tax preparer error resulting in a client's overpayment of taxes is not discovered until after the statute of limitations expires for a refund of overpaid taxes, the client has the right to file a civil suit against the tax preparer for recovery of overpaid taxes and any costs incurred in the recovery of the overpaid taxes.

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