Tax Preparer errors and holding them responsible

[GTS1101]

I have a new client who used a tax service that made several errors on their tax return. For one they took a NOL carryover deduction in the amount of 65,000 that did not exist. They showed charitable contribution carryovers from prior years that did not exist and they reported donations that the client never made. This client gave the tax preparer who is a CPA all the paperwork and he told them to watch TV while he prepared the return and did not ask any questions. The client has been audited and I am going to help them but my question is how does my client go about reporting this tax preparer and making sure that he pays for the penalities and interest due to his errors. Should they get a lawyer. I was just curious as to how do you hold tax preparers accountable for their mistakes and report them if necessary. They had also paid the preparer $500 to go to the audit and the tax preparer did not show up to two appointments that the IRS scheduled for him to represent them. He is also ignoring them and will not return any phone calls or emails.

Thanks!

GTS1101

[ChEAr$]

In the first place, penaltes will be assessed by IRS on the taxpayer only. It is then up to him to contact former preparer
(whom I can't believe would be a CPA) for restitution. Failing that, maybe the "cpa" will return telephone calls from the lawyer taxpayer engages.

[appelman]

How about the OPR?

I believe they are set up to receive and act on taxpayer complaints.

[Y2KEA]

The taxpayer is responsible for everything stated on his/her return. That said, if the preparer has "cooked" the return & is in fact a CPA, TP should file a complaint with the State Board of Accountancy & OPR. If the preparer has E&O insurance, a claim should be made with them.
Bottom line, the TP owes any taxes, penalties & interest which are in fact due.
This may not help much, but this is what you have to work with.

[David1980]

Yes, if really a CPA the state board. If not a CPA, you can report them to the IRS. There's a form, 14157. http://www.irs.gov/Tax-Professionals...eturn-Preparer

The impression I got from a talk from David Williams who was heading RPO at the time they really don't check many of these reports. So I wouldn't expect the complaint to accomplish a whole lot, but it might make them feel better. Along the same lines, you can always report to the BBB.

My guess is most people intentionally preparing fraudulent tax returns don't keep E&O insurance. But you never know. I'd probably try getting out of penalties arguing I relied on the preparer. Might work, might not.