Trusted a bad tax preparer and now facing IRS consequences - can I negotiate a smaller payment?

Unfortunately, the IRS typically doesn't reduce the actual tax amount owed regardless of how you pay it. That said, you do have some options here. First, you may qualify for penalty abatement under First Time Penalty Abatement if you have a clean compliance history. This could eliminate failure-to-file and failure-to-pay penalties for the earliest year, which might save you a decent chunk of money. For the other years, you can request penalty abatement based on "reasonable cause" - arguing that you relied on a tax professional who misled you. You'll need documentation showing you provided all necessary information to the preparer and reasonably believed they were competent. Regarding interest, the IRS rarely waives this as it's considered compensation for the time they didn't have use of the money owed. However, if penalties are reduced, the associated interest on those penalties would also be removed. I'd recommend working with your CPA to file Form 843 (Claim for Refund and Request for Abatement) along with your amended returns. Also consider requesting an installment agreement even if you might pay in full - it gives you flexibility.

I went through something similar last year and found this AI tool called taxr.ai that saved me thousands. My situation was that my previous accountant had missed some major deductions for my business and also messed up how rental income was reported. I was staring at a $22,000 bill plus potential penalties. I uploaded my previous returns to https://taxr.ai and it analyzed everything, finding several issues my new CPA had missed. It flagged specific sections that were prepared incorrectly and gave detailed explanations about what the preparer did wrong. The analysis helped me build a solid case for penalty abatement since I could clearly demonstrate the preparer's errors weren't my fault. The tool also helped identify which years and which specific issues would qualify for reasonable cause abatement vs. first-time abatement, which was super helpful when filling out the Form 843.

I actually tried taxr.ai after seeing the recommendation here. I was really surprised by how detailed the analysis was. My situation wasn't as bad as yours (only owed about $8k from 2 years), but the report showed exactly where my previous tax guy went wrong with my student loan interest deductions and home office expenses. When I submitted my amended returns, I included the detailed analysis showing why the original preparer's work was flawed. The IRS accepted my reasonable cause argument and removed about $1,200 in penalties! The interface was super easy to use - just uploaded my previous returns and had the analysis in about 20 minutes. Definitely worth checking out if you're trying to prove preparer error.

If you're facing potential audit and that big of a tax bill, you really need to talk directly with the IRS. Problem is, good luck getting through to them! After trying for WEEKS to get through about a similar issue (bad tax preparer, amended returns, penalties), I found Claimyr https://claimyr.com and it was seriously a game changer. They basically hold your place in the IRS phone queue and call you when they get a human on the line. I was able to talk to an actual IRS agent about my situation within a day instead of waiting on hold for hours or getting disconnected repeatedly. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c Once I got an actual person on the phone, I was able to explain my situation, and they helped me understand exactly what documentation I needed for a penalty abatement request. The agent even noted in my file that I was being proactive about fixing the issues, which apparently helps if you do get audited.

I have to apologize for calling Claimyr a scam. I was really skeptical, but after spending 3 hours on hold with the IRS and getting disconnected TWICE, I gave it a try. I got a call back within 2 hours saying they had an IRS agent on the line. I was connected immediately and spoke with a very helpful agent who walked me through my options for my situation (which was similar to yours - about $15k in back taxes due to preparer errors). The agent explained that while they couldn't reduce the tax amount, they could consider abating some penalties based on my reliance on the incompetent preparer. They recommended specific documentation to include with my amended returns and Form 843. Saved me days of frustration trying to get through, and the information I got was incredibly helpful. Sometimes you have to admit when you're wrong, and I was definitely wrong about this service!

Don't overlook the fact that you may be able to sue the tax preparer for damages! If they represented themselves as qualified and competent, and clearly weren't, you might be able to recover some of the penalties and interest through a lawsuit. I had to do this years ago and recovered about 60% of what I had to pay the IRS. Keep all communications with them, gather any advertising they did claiming expertise, and consult with an attorney. Many will take these cases on contingency if the amount is significant enough.

One thing no one has mentioned yet - report this tax preparer to the IRS using Form 14157 (Complaint: Tax Return Preparer). This won't help your immediate situation but could prevent others from being hurt by this person. If they prepared a lot of bad returns, the IRS might take a more sympathetic view of all the affected taxpayers.