Even experienced tax professionals get things wrong. According to a Government Accountability Office study, only about 10% of preparers at large tax preparation chains correctly calculated refunds. A separate report found that professionals made more errors than individual filers in some categories.
If you suspect your return has a problem, don’t panic, as the situation is usually fixable. The key is knowing what to do and moving quickly, because penalties and interest don't wait. Our IRS tax accountant team at Lewis.cpa is here to guide you through every step.
Who Is Responsible for the Mistake?
Before trying to get to the root of the fix, it helps to understand the legal reality: the IRS holds taxpayers responsible for the accuracy of a filed return, even when a paid professional prepared and submitted it.
However, you aren’t stuck without options. Under IRC § 6694, a preparer who understates a taxpayer's liability due to an unreasonable position faces a penalty of $1,000 or 50% of their fee, whichever is greater. Willful or reckless conduct pushes that to $5,000 or 75%. But those are consequences for the preparer. The IRS still comes to the taxpayer first for unpaid tax, interest, and penalties.
Practically speaking, you’ll want to correct the return and minimize your own exposure.
Common Tax Preparer Mistakes
There is a wide range in how severe errors are, from a typo that the IRS catches automatically to a significant misreporting that triggers an audit. Knowing what typically goes wrong helps you review your own return more effectively.
Here are the most common mistakes:
- Incorrect income reporting or missing W-2 and 1099 forms
- Improper deduction claims or credits applied to a return that doesn't qualify
- Filing status errors or incorrect dependent information
- Wrong Social Security numbers or bank account details
- Unreported investment income or business expenses handled incorrectly
- Missed estimated tax payments
Some of these the IRS will catch and adjust automatically, while others require you to act.
How to Confirm Whether an Error Exists
Before assuming your preparer is at fault, compare your source documents line by line against the filed return. Tax preparers can only work with the information they receive, so some discrepancies stem from incomplete or inaccurate details that the taxpayer provides.
Documents to compile:
- W-2 and 1099 forms
- Brokerage and investment statements
- Business income and expense records
- Prior-year returns
- Any IRS notices received
Check the return's income figures, filing status, Social Security numbers, dependents, bank account information, and deductions against those documents. If you find a discrepancy, document it clearly before contacting anyone.
First, Contact Your Preparer. Then, Review Your Contract.
Once you've confirmed a problem, contact the preparer directly. Many issues get resolved at this stage, especially when supporting documentation is available.
Before that conversation, check the contract or engagement letter you signed. It should specify whether the preparer is obligated to file an amendment at no additional cost and what their liability covers.
When you speak with them:
- Ask for a clear explanation of what happened
- Confirm whether an amended return is necessary
- Request copies of all workpapers related to your filing
- Keep written records of every communication, including dates and what was agreed to
Most professional preparers are willing to correct legitimate errors when they are identified. If your preparer is unresponsive or refuses to address clear evidence of a mistake, additional steps may be necessary.
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Correcting the Return with Form 1040-X
When a correction requires changing information that affects your income, deductions, credits, filing status, or tax liability, you'll generally need to file an amended return using IRS Form 1040-X.
Common reasons to amend:
- Additional income discovered after filing
- Missed deductions or credits
- Incorrect filing status or dependent information
- Unreported investment or business income
Now, the IRS allows electronic filing for many amended returns, which speeds up processing. You generally have three years from the original filing date — or two years from the date you paid the tax — to claim a refund through an amendment.
If the IRS has already sent a notice, don't assume you need to amend right away. Some notices propose adjustments that can be resolved with a written response and documentation rather than a formal amendment. A qualified CPA can help determine which route makes sense.
What Happens If the IRS Finds the Error First
The IRS cross-references returns against W-2s, 1099s, and third-party data. Routine processing often catches problems like unreported income, duplicate dependent claims, and certain credit eligibility issues.
A CP2000 notice, for example, is a common automated letter proposing additional tax based on income the IRS sees that wasn't on your return. Receiving one doesn't automatically mean serious penalties are coming, and many notices simply request clarification or propose a correction.
In more serious cases, especially where significant underreporting is involved, the IRS may issue an audit notice rather than a standard correction letter. These situations often require a different level of response and documentation, and professional representation can be a worthwhile investment.
Ignoring any IRS correspondence makes the situation worse. Review every notice carefully and respond within the timeframe stated. Official guidance on notices is available at IRS.gov.
Penalties, Interest, and Who Pays Them
The short answer: you pay the tax owed regardless of who caused the error. Interest accrues from the original due date until the balance is paid. Accuracy-related penalties under IRC § 6662 can add 20% of the underpayment.
Whether the preparer reimburses you for penalties and interest depends on:
- Your contract with them
- Whether they carry professional liability (errors and omissions) insurance
- Whether they acknowledge fault
Some preparers will voluntarily cover costs related to qualifying errors, and others won't. The IRS won’t wait for that dispute to be resolved. That said, pursuing abatement through the IRS and pursuing your preparer are not mutually exclusive, and you can do both at the same time.
Requesting Penalty Relief
The IRS has two main paths for reducing or removing penalties.
First-Time Abatement
If you have a clean compliance record for the prior three years — no penalties, no missing required returns — the IRS may waive a single penalty without requiring a detailed explanation. It applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties and is often the faster route.
Reasonable Cause Abatement
This requires showing that you exercised ordinary care and prudence but were unable to meet your tax obligations due to circumstances beyond your control.
Situations the IRS regularly accepts:
- Serious illness or death of an immediate family member
- Natural disaster or casualty that disrupted your ability to file
- Inability to obtain records despite reasonable efforts
- Reliance on incorrect written advice from the IRS itself
One important nuance: relying on your tax preparer alone is generally not sufficient. The Supreme Court ruled in United States v. Boyle that taxpayers have a non-delegable duty to file on time. However, if you can show that you disclosed all information accurately, had no reason to suspect an error, and acted in good faith, that documentation strengthens any abatement request significantly.
To request abatement, call the number on your IRS notice or submit Form 843 (Claim for Refund and Request for Abatement) in writing. Form 843 cannot be e-filed and must be mailed to the same IRS center that handled your original return.
When a Preparer's Conduct Goes Beyond a Simple Mistake
Not every issue is an innocent oversight. In some situations, misconduct warrants a formal complaint.
Warning signs include:
- Returns filed without your review or approval
- Deductions or income figures you don't recognize
- Refunds directed to an unfamiliar bank account
- Refusal to provide copies of your filed return
- Promises of unusually large refunds before reviewing your documents
If you suspect misconduct, report it to the IRS using Form 14157 (Return Preparer Complaint). You can also file a complaint with your state's CPA board or, if the preparer holds an active IRS credential, with the IRS Office of Professional Responsibility.
How to Reduce the Risk of Future Filing Errors
While no return is completely risk-free, a few habits significantly reduce the likelihood of problems.
Review the Return Before You Sign
Never sign a return you haven't reviewed. Check income figures, Social Security numbers, dependents, bank account information, and the deductions and credits listed. Even experienced preparers can miss something, so reviewing everything once more can act as a final safeguard.
Keep Organized Records Year-Round
Good documentation makes corrections easier if questions come up later. Hold onto:
- W-2s and 1099s
- Expense receipts and business records
- Investment and brokerage statements
- Prior-year returns
Work with Credentialed Professionals
The IRS recommends verifying a preparer's credentials before hiring. Look for someone who signs returns as required by law, provides copies of all filed documents, stays current on tax law changes, and is available after filing season, not just in April.
Lewis.cpa Can Help Review Tax Return Errors
Discovering a mistake on your return is stressful, but acting quickly usually limits the financial impact. Whether you received an IRS notice, spotted an error after filing, or want an independent review of a return prepared by someone else, Lewis.cpa can evaluate the situation and determine the right next steps. Contact us today to discuss your tax concerns with our team.
