IRS Penalty Help for Tax Preparers Get Help With Preparer Penalties and Your Own IRS Debt
Updated
When the IRS penalizes a preparer, the bill comes to you by name, often one penalty per return, and there's no Tax Court review before it can be collected. We handle the IRS side of your civil penalty case and your own tax debt, so your attention can stay on your clients.
$650
The due diligence penalty for each failure on a return filed in 2026. It rises to $665 for returns filed in 2027, with no yearly cap.
How it happens
How Careful Preparers Still Come to Owe the IRS
Your PTIN goes on every return you sign, and the IRS generally treats the signing preparer as the person responsible for its positions (Treas. Reg. § 1.6694-1). So when a client's return comes back understated, the penalty is assessed against you personally. For an unreasonable position it's the greater of $1,000 or half of what you earned on that return (IRC § 6694).
The due diligence penalty grows fastest in a busy office. Each failure on head of household status, the earned income credit, the child tax credits or the American Opportunity credit costs $650 for returns filed in 2026, and one return can carry more than one (Rev. Proc. 2024-40). There's no yearly cap and no reasonable cause exception (IRM 20.1.6).
Then there's your own account. In a lot of offices, most of the year's fees arrive in filing season with nothing withheld, and the rent and software bills keep coming after April. If you hire seasonal help, the taxes you withhold from their pay have to be deposited on time, even in the rush (IRS, trust fund taxes). Add a penalty bill and a tight year becomes real debt.
IRS problems
The IRS Penalty Problems Tax Preparers Bring Us
Some start with one examiner and a stack of EITC files. Others are a penalty bill sitting on top of two years of the preparer's own unpaid tax.
Due Diligence Penalties on Credit Returns
An examiner pulls your EITC, child tax credit, AOTC and head of household files and proposes $650 for each benefit where Form 8867, the worksheet, or notes on your questions are missing. We review the report and argue the exception for offices whose procedures were sound and routinely followed.
See how we helpUnderstatement Penalties Under Section 6694
If the IRS says a position on a client's return lacked substantial authority, it can charge you $1,000 or 50% of your fee, whichever is more. Willful or reckless conduct carries $5,000 or 75%. We gather the authority and the facts behind the position and present them.
See how we helpSigning, PTIN and Client Copy Penalties
Not signing a return, leaving off your PTIN, not giving the client a copy, or not keeping one each cost $65 per return filed in 2026, capped at $32,500 for each type. These penalties do allow reasonable cause, so we build that request with your records.
See how we helpClient Refunds Cashed or Deposited by You
A client with no bank account asks you to cash the refund check or send the deposit to your account. The IRS treats that as negotiating their refund: $650 each for 2026, even when the client asked. There's no reasonable cause exception, so the case turns on the facts.
See how we helpPayroll Taxes for Seasonal Staff
Front-desk help and seasonal preparers on W-2 mean 941 deposits during your busiest weeks. If those slip, the withheld part can follow you personally. A seasonal employer can skip the 941 for quarters with no wages, but never the deposits for quarters it paid.
See how we helpYour Own Back Taxes and Unfiled Years
It happens more than people think: the preparer who files everyone else's returns falls behind on their own. We pull your transcripts, file what's missing as part of the case, and work your balance and any penalty bills into one plan.
See how we help
Your profession
Who Prepares Returns for Pay in the U.S.
The IRS counts 886,338 people with a current PTIN for 2026. Its credential counts list 209,076 CPAs, 71,966 enrolled agents and 26,256 attorneys among them, so most people who prepare returns for pay hold none of those credentials (IRS, return preparer statistics). The penalty rules apply the same way to all of them.
BLS counts 76,480 tax preparers on employer payrolls, with median pay of $54,920 a year (BLS, OEWS May 2025). That count leaves out owners and self-employed preparers, the people this page is written for. At that pay, a single $5,000 willful-conduct penalty is more than a month of wages.
886,338
Individuals with a current PTIN for 2026, as of September 1, 2026.
76,480
Tax preparers on employer payrolls in May 2025. Owners and the self-employed aren't counted.
$54,920
Median yearly pay for those payroll tax preparers, against a $5,000 minimum for one willful-conduct penalty.
Sources: IRS, return preparer statistics · BLS, OEWS 13-2082
Your penalty case
How a Preparer Penalty Moves From Letter 1125 to Collection
Preparer penalties skip the deficiency process your clients get, so there's no notice of deficiency and no Tax Court petition before assessment (IRC § 6696). Your main chance to argue first is Letter 1125, a 30-day letter that comes with the examiner's report and Publication 5. If nobody answers in time, the penalty is assessed (IRM 20.1.6).
A written protest gets you a hearing with the IRS Independent Office of Appeals before anything is assessed. The IRS has deadlines too: 6694(a) and 6695 penalties generally have to be assessed within three years after the return was filed. A willful or reckless 6694(b) penalty has no deadline at all.
After a 6694 penalty is assessed, you have 30 days from the IRS's notice and demand. Pay at least 15% and file a refund claim on Form 6118 in that window, and the IRS can't levy for the rest while the claim is resolved (IRC § 6694(c)). If the claim is denied, or six months pass, you have 30 days to sue in federal district court or the hold ends.
If a letter mentions an injunction, a criminal investigation, or the Office of Professional Responsibility, that's a separate matter from the civil penalty, and it needs an attorney. Our work is the civil penalty balance and your own IRS account (IRS, tax preparer penalties).
How a preparer penalty moves
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An Exam or Due Diligence Visit
An examiner reviews client returns or your due diligence files and writes up proposed penalties.
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Letter 1125 Arrives
You have 30 days to agree or protest to Appeals. Silence leads straight to assessment.
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The Penalty Is Assessed
The notice and demand goes out and interest starts running monthly. For a 6694 penalty, the 15% window opens.
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The 30-Day Window Closes
Without the 15% payment and Form 6118, collection moves forward like any other IRS balance.
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We File Power of Attorney
We take over IRS contact and pursue the appeal, the claim, or a plan for the IRS to review.
Discreet help
You Don't Have to Explain How It Happened
Your clients trust you with their taxes, which is exactly why an IRS penalty against you feels so heavy. Plenty of preparers in this spot haven't told their clients, their staff, or even their family. You don't have to. We keep it confidential, and we won't judge how a crowded season or one thin file got you here.
Your consultation is free and confidential. Once you hire us and Power of Attorney is on file, the IRS deals with us, so the calls and the back-and-forth stop landing on you.
How We Keep It Discreet
- A free, confidential first conversation
- No judgment about how it happened
- Once Power of Attorney is filed, the IRS contacts us
- Phone, secure document portal, and video, with no office visit
How it works
How We Work a Tax Preparer's Penalty Case
We know filing season is the worst time for this. We work by phone, secure upload and video around your appointment book, and once Power of Attorney is filed the IRS contacts us instead of your office.
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Free Consultation
A representative calls you back, listens to what is going on, and tells you whether we can help.
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Power of Attorney
We file Form 2848 so the IRS contacts us instead of you.
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Transcripts and Returns
We pull your IRS transcripts and get any missing returns filed.
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Request to the IRS
We submit the program request on your behalf. The IRS reviews and decides.
Timelines and outcomes are determined by the IRS based on the facts of each case. Results vary and are not guaranteed.
IRS programs
IRS Options for Preparer Penalties and Your Own Balance
Penalty Appeal
A protest to Letter 1125 gets Appeals review before assessment. If you never had that hearing, you can still ask for one after assessment, and again if a refund claim is denied.
Penalty Abatement
Section 6694(a) and the signing, PTIN, copy and record penalties allow reasonable cause. Due diligence penalties don't, but the IRS can drop them when your procedures were sound and the miss was isolated and inadvertent. The first-time relief for late filing and payment doesn't reach preparer penalties.
Installment Agreement
Assessed preparer penalties can go into an IRS payment plan along with your own back taxes. Interest keeps running, but the IRS generally doesn't levy while a plan is being considered or in effect.
Currently Not Collectible
If the off-season leaves nothing after basic living costs, the IRS can pause collection on what you owe. Interest still adds up, so we revisit it once filing season income comes back.
Where we help
Where We Help Tax Preparers
Preparer penalties come from the IRS, a federal agency, so we work them for preparers anywhere by phone, secure upload and video. These local pages cover the IRS offices and free taxpayer help near you.
More in Professionals & Employers
All industriesFrequently asked
Tax Preparers and IRS Penalties: Common Questions
What Is the IRS Due Diligence Penalty for 2026?
I Got Letter 1125. What Should I Do First?
How Does Paying 15% Stop Collection on a 6694 Penalty?
What Is the Section 6701 Aiding and Abetting Penalty?
Can the IRS Penalize My Firm as Well as Me?
Will a Penalty Affect My PTIN or EFIN?
What Does It Cost to Get Help With a Preparer Penalty?
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