Before filing a complaint, consider giving the preparer a chance to make things right if it was an honest mistake, said Weston, especially because the IRS itself can also be wrong during the auditing process, particularly when relying on its computer generated matching system.
If the preparer is responsible for a mistake resulting in penalties and interest, the preparer may pay them directly to retain the client or appeal to the IRS to get them abated, said Ziegler, who is chair of the ethics committee for the National Association of Enrolled Agents. Enrolled agents are credentialed by the IRS to handle tax returns for any taxpayer without restriction.
On the other hand, if the tax preparer made an intentional or fraudulent mistake, do not go back to them to fix it, Weston said.
Rather, file a complaint with the Office of Professional Responsibility at the IRS and the respective state agency under which the preparer is licensed, if any. After completing an investigation, the IRS could revoke their identification number and the state agency could revoke or suspend the tax preparer's license.
If the tax preparer is a member of a professional organization such as the American Institute of Certified Public Accountants (AICPA), the National Association of Enrolled Agents (NAEA) or a state bar association, a taxpayer can also file a complaint with their respective ethics committees. Pending investigation, it could result in sanctions like suspension or expulsion, Ziegler said.
If the tax preparer is not state-licensed or registered with the IRS, the only recourse is legal action, a logical step if the penalties and interest are very high and exceed the tax owed, Ambrose said, and if the statute of limitations, which is typically within a few years of discovering the problem, has not expired.