Legal Support & Penalty Defense for Tax Preparers
If you or your firm are under investigation by the IRS, Department of Justice (DOJ), Office of Professional Responsibility (OPR), or state licensing authorities, immediate tax legal representation is critical.
Federal enforcement agencies aggressively penalize CPAs, tax attorneys, actuaries, appraisers, Enrolled Agents (EAs), and paid return preparers for alleged understatement errors, unethical practices, or non-compliance. Todd S. Unger, Esq. provides attorney-led defense to protect your practice, license, and professional reputation.
High-Stakes Exposure for Tax Professionals
The IRS and DOJ utilize statutory penalty frameworks designed to deter fraudulent, reckless, or negligent tax preparation. Tax preparer investigations carry severe consequences beyond monetary assessments—including practice suspensions, disbarment under Circular 230, federal injunctions, and criminal prosecution.
Whether an investigation stems from routine return audits, client complaints, or targeted IRS preparer audits, prompt legal guidance helps protect your rights and business entity throughout administrative or judicial proceedings.
Primary Statutory Penalty Regime: IRC § 6694
Internal Revenue Code § 6694 serves as the primary mechanism for assessing penalties against paid return preparers for tax understatements on client returns:
IRC § 6694(a) – Unreasonable Positions
Assessed when a tax understatement is caused by an unreasonable position taken on a return or refund claim based on the preparer’s advice.
Exception: Penalty is abated if the preparer establishes good faith and reasonable cause for the position.
IRC § 6694(b) – Willful or Reckless Conduct
Assessed when an understatement is due to the preparer’s willful attempt to understate liability, or reckless or intentional disregard of tax rules.
Note: Often triggers immediate referrals to OPR or Criminal Investigation (CI).
Additional Tax Preparer & Appraiser Penalties
The IRS enforces several procedural and disclosure statutes targeting tax professionals, appraisers, and firms:
Failing to provide a completed copy of the tax return to the taxpayer at signing.
Failing to manually or electronically sign a required return as the paid preparer.
Failing to include a valid Preparer Tax Identification Number on filed returns.
Failing to retain completed return copies or client identification lists for 3 years.
Failing to satisfy statutory due diligence rules for Earned Income Tax Credit claims.
Knowingly aiding or advising in the preparation of a document that understates tax.
Disclosing or using confidential taxpayer information without express client consent.
Appraisal misstatements can result in penalties up to 125% of gross fees received.
Employer & Firm Liability: Tax preparation firms, accounting partnerships, and corporate entities are also subject to secondary penalties if management knew, or reasonably should have known, of the non-compliant preparer conduct.
OPR Disciplinary Actions & Federal Injunctions (§ 7407)
Office of Professional Responsibility (OPR): Under Treasury Department Circular 230, CPAs, attorneys, and Enrolled Agents accused of misconduct are referred to the OPR. Disciplinary outcomes range from private reprimands and public censures to multi-year practice suspensions or permanent disbarment from practicing before the IRS.
Federal Injunctions (IRC § 7407): The IRS and Department of Justice can petition federal district courts to enjoin (prohibit) a return preparer from preparing tax returns entirely if they engage in continual abusive or fraudulent behavior.
Protect Your License, Firm, and Practice Today
If you are facing an IRS preparer audit, OPR inquiry, or DOJ investigation, immediate tax attorney intervention is critical to protecting your professional standing.
Frequently Asked Questions
Answers to common questions regarding tax preparer penalty defense and IRS investigations.