IRS Penalties That Tax Preparers Can Face


IRS penalties that tax preparers can face

While taxpayers are legally responsible for the items on their return, tax preparers can also face penalties for fraudulent or reckless conduct. These penalties can even apply to “ghost tax preparers” who don’t sign the returns they prepare.

Penalties for Errors

Tax preparers are expected to be competent at their jobs and follow certain procedures. When they fail to do so, they can face any of the following penalties:

  • Failing to furnish a copy of the tax return to the taxpayer can result in a $50 penalty for each violation.
  • Failing to sign a return can result in a $50 penalty per violation.
  • Failing to furnish their tax preparer identification number on a return results in a $50 penalty per violation.
  • Endorsing a check that was issued to the taxpayer results in a $520 penalty.
  • Failure to diligently determine eligibility for the Child Tax Credit, American Opportunity Credit, or Earned Income Credit can result in a $520 penalty per violation.

Some of these penalties aren’t severe, but could lead to an investigation from the IRS Office of Professional Responsibility (OPR). Contact a tax preparer defense attorney if your case has been referred to OPR and you are concerned about the threat of suspension or disbarment.

Penalties for Fraud or Reckless Conduct

Penalties become much more severe for fraudulent or reckless conduct when preparing a return. If you prepare a return that has a tax understatement due to an unreasonable position, the penalty is the greater of $1,000 or 50% of the income the tax preparer received for completing the return.

Understatements due to willful or reckless conduct can lead to a penalty of $5,000 or 75% of the income received by the tax preparer, whichever is greater.

When tax fraud is involved, the fines become even bigger, and jail time is a possibility. Fraud and false statements can lead to a fine of up to $100,000 and up to three years in prison. The penalty for submitting a fraudulent tax return or other document is a fine of up to $10,000 ($50,000 for a corporation) and up to one year in jail.

Contact an Attorney

Contact a tax preparer defense attorney if you are being charged with civil or criminal penalties for tax preparer misconduct.

Get help handling your tax preparer defense case by calling Ayar Law at 800.571.7175 to request a free, no-obligation consultation with a competent tax attorney.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.