Can I Sue My Tax Preparer if I Get Audited- Understanding Your Legal Rights and Options

Can I Sue My Tax Preparer If I Get Audited?

Tax season can be a stressful time for many individuals and businesses. While most tax preparers are trustworthy and knowledgeable, there are instances where mistakes or negligence can occur. If you find yourself in a situation where you are audited by the IRS or another tax authority, you may be wondering if you can sue your tax preparer for any resulting financial loss. In this article, we will explore the circumstances under which you might consider taking legal action against your tax preparer.

Understanding the Role of a Tax Preparer

A tax preparer is responsible for preparing your tax return based on the information you provide. They should ensure that your return is accurate and complies with tax laws and regulations. While tax preparers are not responsible for the outcome of an audit, they may be held liable if they acted negligently or fraudulently in preparing your return.

When Can You Sue Your Tax Preparer?

1. Negligence: If your tax preparer made a mistake in preparing your return that led to an audit, you may have grounds to sue them for negligence. Negligence occurs when a tax preparer fails to exercise reasonable care in preparing your return, resulting in a financial loss for you.

2. Fraud: If your tax preparer intentionally prepares a fraudulent return on your behalf, you can sue them for damages. Fraudulent activities include filing false information, inflating deductions, or hiding income.

3. Misrepresentation: If your tax preparer misrepresented the tax laws or your rights to certain deductions or credits, and this resulted in an audit, you may have a case. Misrepresentation can occur when a tax preparer provides false or misleading information about your tax situation.

4. Failure to Follow Procedures: If your tax preparer failed to follow proper procedures, such as not providing you with a copy of your return or not informing you of potential tax liabilities, you may be able to sue them for damages.

Steps to Take Before Suing Your Tax Preparer

Before taking legal action against your tax preparer, consider the following steps:

1. Review Your Return: Carefully review your tax return to determine if there were any errors or omissions that may have led to the audit.

2. Consult with a Tax Professional: Seek advice from a tax professional or an accountant to assess the situation and determine if you have a valid claim.

3. Gather Evidence: Collect any evidence that supports your claim, such as correspondence with the IRS, your tax return, and any communication with your tax preparer.

4. Consider Mediation: Before proceeding to court, consider mediation or arbitration as a way to resolve the dispute amicably.

Legal Action and Damages

If you decide to sue your tax preparer, you will need to file a lawsuit in civil court. The damages you may seek can include:

1. Refund Penalties: Any penalties or interest you incurred due to the audit.
2. Tax Liabilities: The amount of tax you were required to pay as a result of the audit.
3. Legal Fees: The costs associated with hiring an attorney to represent you in the lawsuit.

Conclusion

While you can sue your tax preparer if you get audited, it is important to understand the legal requirements and the likelihood of success before taking action. If you believe your tax preparer acted negligently or fraudulently, consulting with a tax professional and gathering evidence will help you determine the best course of action. Remember that seeking legal advice is crucial in navigating the complexities of tax law and pursuing a claim against your tax preparer.