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Can I sue my tax preparer for mistakes that resulted in an audit for 2 years?

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prplheather

Junior Member
CA - I used a certified tax preparer to do my 2009 and 2010 taxes and was later audited for both years resulting in a tax bill of $24,265. I contacted the tax guy and he provided me with more paperwork to take with me which was of no value in the end. He never took any responsibility and the fault was his. I had told him I received a lump sum for a class action settlement and he logged it as a schedule C as if I was some independent contractor and then had write offs against it. The IRS is trying to impose a huge repayment amount that I simply can't afford and according to their website I don't qualify for an Offer in Compromise. Are there any legal steps I can take against the tax preparer?
Thank you.
 


Zigner

Senior Member, Non-Attorney
What are your damages?

It's a trick question. You don't have damages. You owe the tax in spite of the error(s).

Now, you *may* have a case to recover any penalties.
 

tranquility

Senior Member
I agree with Zigner (Although we might pay interest if wrong as well. They would not be damages, but it seems fair to us.), but am also curious about what the class action was about. (Was it overtime or something like that.) What costs were written against it?
 

prplheather

Junior Member
The class action lawsuit was against a home builder that I used to work for and they treated us as independent contractors, not paying overtime or providing meal breaks. The tax preparer put it down as like 1099 income and then wrote off a bunch of false expenses against it such as what I would've incurred like clothing, mileage, whatnot. He didn't tell me what he was doing and I had no idea.
 

Proserpina

Senior Member
The class action lawsuit was against a home builder that I used to work for and they treated us as independent contractors, not paying overtime or providing meal breaks. The tax preparer put it down as like 1099 income and then wrote off a bunch of false expenses against it such as what I would've incurred like clothing, mileage, whatnot. He didn't tell me what he was doing and I had no idea.

You didn't check before the return was submitted?

Whyever not?
 

swalsh411

Senior Member
You only had no idea because you didn't review your own tax return.

Best case
for you is they pay the interest and penalties. You owe the tax.
 

prplheather

Junior Member
Ok admittedly I trusted someone and didn't review my own tax return. I guess this is what I deserve. Thanks for all your help.
 
CA - I used a certified tax preparer to do my 2009 and 2010 taxes and was later audited for both years resulting in a tax bill of $24,265. I contacted the tax guy and he provided me with more paperwork to take with me which was of no value in the end. He never took any responsibility and the fault was his. I had told him I received a lump sum for a class action settlement and he logged it as a schedule C as if I was some independent contractor and then had write offs against it. The IRS is trying to impose a huge repayment amount that I simply can't afford and according to their website I don't qualify for an Offer in Compromise. Are there any legal steps I can take against the tax preparer?
Thank you.
You can report the preparer to the IRS via form 14157 see: http://www.irs.gov/pub/irs-pdf/f14157.pdf


Additional info:
http://www.irs.gov/uac/How-to-Choose-a-Tax-Return-Preparer-and-Avoid-Preparer-Fraud-2010
 

ShyCat

Senior Member
According to OP's second post in this thread, it sounds more like deliberate tax fraud, not incompetence:

The tax preparer put it down as like 1099 income and then wrote off a bunch of false expenses against it such as what I would've incurred like clothing, mileage, whatnot.
Incompetence does not encompass making up expenses that "would've incurred" but in fact did not.
 

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