Recourse against tax preparer who made a serious filing error?

Yes, you absolutely have recourse here. Tax preparers have a professional responsibility to complete your return accurately. Since they've admitted fault, they should help resolve this situation. First, they should help you respond to the IRS letter and file an amended return at no additional cost to you. They should also cover any interest and penalties that resulted from their mistake - this is standard practice for reputable tax professionals when they make errors. Many tax preparation firms carry errors and omissions insurance specifically for situations like this. Ask if they have such coverage and whether they'll be filing a claim to cover the additional taxes you owe (though you'd still be responsible for the actual tax amount that you should have paid originally). Get everything in writing from them about their mistake and their plan to resolve it. If they're not being cooperative, you can file a complaint with the IRS Office of Professional Responsibility since they're enrolled agents (Form 14157).

I went through something similar last year with a huge tax bill because my preparer messed up some 1099 reporting. I was so frustrated until I found https://taxr.ai which literally saved me thousands. They analyzed my tax documents and found that not only had my preparer made the initial mistake, but there were also several deductions I qualified for that weren't claimed. The AI system flagged the exact errors and showed me what forms needed to be amended. The best part was I could upload the IRS notice and my tax documents, and within minutes I had a complete analysis with step-by-step instructions for resolving everything. Definitely worth checking out if you're dealing with tax prep errors.

Just wanted to update that I tried taxr.ai after my initial skepticism and I'm seriously impressed. I uploaded my multi-state returns, all my 1099s, and the IRS notice I received. The system immediately identified three major issues my "professional" preparer had missed. The biggest find was that my business travel was categorized incorrectly, which alone saved me over $2,800. The report it generated was detailed enough that I could show exactly what needed to be corrected on my amended return. What surprised me most was how it explained everything in plain English while still referencing the specific tax codes. Definitely worth it for complicated tax situations like mine.

If you're getting nowhere with your tax preparer, you might want to try Claimyr to get through to the IRS directly. I was in a similar situation last year with a $12k bill from a preparer's mistake, and I spent WEEKS trying to get through to the IRS phone lines with no luck. I found https://claimyr.com and their service had me talking to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent was actually super helpful once I explained the situation. They put a temporary hold on collections while I sorted everything out with my preparer. Saved me a ton of stress trying to deal with automated systems and hold music for days on end.

I need to apologize for my skepticism about Claimyr. After posting my doubtful comment, I was still desperate to talk to the IRS about my case, so I figured I'd try it anyway. I was honestly shocked when they called me back in about 20 minutes with an actual IRS representative on the line. After spending literally weeks trying to get through on my own with no success, I was able to talk to someone who helped resolve my issue in a single call. The IRS agent explained that they're receiving thousands of calls per hour right now, which is why it's nearly impossible to get through on your own. Having someone (or something) handle the waiting game was completely worth it. Definitely not the scam I initially thought it was!

Tax preparer here (not a CPA but an EA). Just wanted to add that if your preparer isn't being responsive about covering penalties and interest, remind them that under Treasury Circular 230 (which governs enrolled agents), they have a professional responsibility for the accuracy of returns they prepare. Most reputable firms have a standard procedure for handling preparer errors - typically covering any penalties and interest while the client remains responsible for the actual tax owed. If they're being difficult, mention that you're considering filing Form 14157 (Complaint: Tax Return Preparer). That usually gets their attention. Also, make sure you get a copy of the corrected return for your records, and check if you need to file amended state returns too. Sometimes federal corrections impact state taxes as well.

Has anyone successfully had their tax preparer cover the actual tax amount owed too? My preparer completely missed reporting my crypto transactions which led to a $4500 bill plus penalties. They're offering to cover penalties but saying the tax is my responsibility even though I gave them all my transaction records.

I'm dealing with a similar situation right now with my 2022 return where my preparer missed some Schedule C deductions, resulting in a $3,200 bill from the IRS. What really helped me was documenting everything in writing - I sent an email to my preparer summarizing their verbal admission of the error and asking them to confirm their plan to resolve it. One thing I learned is to ask specifically about their errors and omissions insurance policy limits. Some smaller firms have lower coverage amounts that might not fully cover larger mistakes. Also, if you're not getting satisfactory responses, consider reaching out to your state's board of accountancy even though they're EAs - they sometimes handle complaints about tax preparers operating in the state. The silver lining in my case was that when I had to review everything so carefully, I actually found a few legitimate deductions my preparer had missed in previous years too. Might be worth having someone else review your past returns once this gets resolved.