IRS Red Flags: I’m Being Audited and It’s My Accountant’s Fault

Tax audits are certainly unpleasant occurrences–but let’s face it, they happen. Just because they’re a fact of life, however, doesn’t mean you shouldn’t avoid an IRS tax audit like the plague. Nobody wants to go through that experience, which is why it’s so important to be extremely thorough when completing your annual tax return.

But what if you’re like many people who rely on a tax professional instead? Isn’t the purpose of hiring an expert to do your taxes specifically to prevent errors that lead to an audit? You would think so. Unfortunately, having your taxes completed by your CPA or other professional does not make your finances audit-proof. If you’ve been selected for an audit and think it’s because of something your accountant did, here’s what you should know:

Tax Accountants Are Not Liable for Audits

Even if you are fully convinced that your accountant screwed up your return, it’s you who must pay the consequences. You may think it’s not fair, but remember signing the bottom of your return before mailing it in? You were confirming that all the information presented was accurate and true. Income tax preparation simply involves reporting the information that you provide. It’s your responsibility to review your return for any problems before signing it.

Plus, shady personal tax professionals are hard to come by. Accounting fraud, when it does occur, is much more prominent within larger companies and organizations. It’s very unlikely that your personal accountant is going to purposely provide the IRS with false information without your knowledge.

However, it doesn’t seem fair to be put through the hassle of being audited when your accountant really did make an error. They’re the expert, not you. That’s why most tax professionals, while not required by law, will compensate you if you do end up owing money to the IRS or are inconvenienced because of something they did wrong.

The world of accounting is not without dishonesty, however. If you believe you might be the victim of an outright tax scam, you can report the suspected fraud by filling out a Form 3949 A and sending it to the IRS.

No One Has to Be at Fault

Usually, taxpayers believe they did something wrong in order to be red flagged for an audit. The truth is that you can be randomly selected without any provocation on your part. Unless the IRS is planning on sending an actual agent to visit you at home (a bad sign) or you’ve really engaged in tax fraud (also not good), you likely have nothing to worry about.

As long as you are aware of the IRS red flags that alert the IRS to pay special attention to you and you do your best to avoid them, there’s really no need to fear a tax audit at all.

You might be wondering whether you should even bother paying to have your taxes done when there’s plenty of software available to help you do them yourself. Find out in Can Tax Software Replace My Expensive Accountant?