Tax preparer penalties

Attorneys, certified public accountants, enrolled agents or anyone who gets paid to prepare tax returns may owe a penalty if they don’t follow tax laws, rules and regulations.

We mail you a notice or letter if you owe a penalty, and charge monthly interest until you pay the amount you owe in full.

On this page

• What to do if you got an IRS notice or letter
• How we calculate the penalty
• Penalties and regulations
• Interest on a penalty
• Pay a penalty
• Dispute a penalty
• Request a refund

What to do if you got an IRS notice or letter

Check the information on the notice or letter is correct. The notice or letter has information about the penalty, the reason for the charge and what to do next. Follow the instructions.

If you can correct an issue in the notice, there may be no penalty. If the information is not correct, or you don’t agree, you may be able to dispute the penalty or request a refund.

How we calculate the penalty

We may calculate tax preparer penalties based on:

• Number of violations
• Regulations violated
• Rates of inflation
• Tax years involved

Penalties and regulations

Get details on tax preparer penalties with the tax law in Title 26 of the U.S. Code in the Internal Revenue Code (IRC).

Understatement of taxpayer's liability

Applies to tax preparers who understate taxpayers’ liabilities on tax returns:

• Understatement due to unreasonable positions — IRC § 6694(a): The penalty is $1,000 or 50% (whichever is greater) of the tax preparer’s income to prepare the tax return or claim
• Understatement due to willful or reckless conduct — IRC § 6694 (b): The penalty is $5,000 or 75% (whichever is greater) of the tax preparer’s income to prepare the tax return or claim

Tax law: IRC Section 6694

Other assessable penalties

Applies to tax preparers who fail to follow rules and regulations when preparing a tax return:

• Failure to furnish copy to taxpayer – IRC § 6695(a): Penalty is $50 for each failure of a tax preparer to give a copy of a tax return or refund claim to a taxpayer (maximum penalty cannot be greater than $27,000 in calendar year 2022). For returns filed in calendar year 2023, the penalty is $55 for each failure and the maximum penalty cannot be greater than $28,000. For returns filed in calendar year 2024, the penalty is $60 for each failure and the maximum penalty cannot be greater than $30,000.
• Failure to sign return – IRC § 6695(b): Penalty is $50 for each failure of a tax preparer to sign a tax return or refund claim (maximum penalty cannot be greater than $27,000 in calendar year 2022). For returns filed in calendar year 2023, the penalty is $55 for each failure and the maximum penalty cannot be greater than $28,000. For returns filed in calendar year 2024, the penalty is $60 for each failure and the maximum penalty cannot be greater than $30,000.
• Failure to furnish identifying number – IRC § 6695(c): Penalty is $50 for each failure of a tax preparer to include a preparer tax identifying number (PTIN) on a tax return or claim (maximum penalty cannot be greater than $27,000 in calendar year 2022). For returns filed in calendar year 2023, the penalty is $55 for each failure and the maximum penalty cannot be greater than $28,000. For returns filed in calendar year 2024, the penalty is $60 for each failure and the maximum penalty cannot be greater than $30,000.
• Failure to retain copy or list – IRC § 6695(d): Penalty is $50 for each failure of a tax preparer to keep a copy or list of a tax return or claim they prepared (maximum penalty cannot be greater than $27,000 in calendar year 2022). For returns filed in calendar year 2023, the penalty is $55 for each failure and the maximum penalty cannot be greater than $28,000. For returns filed in calendar year 2024, the penalty is $60 for each failure and the maximum penalty cannot be greater than $30,000.
• Failure to file correct information returns – IRC § 6695(e): Penalty is $50 for each failure of a tax preparer to include correct information on tax returns (maximum penalty cannot be greater than $27,000 in calendar year 2022). For returns filed in calendar year 2023, the penalty is $55 for each failure and the maximum penalty cannot be greater than $28,000. For returns filed in calendar year 2024, the penalty is $60 for each failure and the maximum penalty cannot be greater than $30,000.
• Negotiation of check – IRC § 6695(f): Penalty in calendar year 2022 is $545 for a tax preparer who endorses or negotiates any check payable to another person. The penalty for returns filed in calendar year 2023 is $560.00. The penalty for returns filed in calendar year 2024 is $600.00.
• Failure to be diligent in determining eligibility for certain tax benefits – IRC § 6695(g): Penalty in calendar year 2022 is $545 for each failure of a tax preparer to determine a taxpayer’s eligibility for the head of household filing status and the following credits:
  • Any dependent credit including the Additional Child Tax Credit and Child Tax Credit
  • American Opportunity Credit
  • Earned Income Tax Credit
  • Lifetime Learning Credit

  The penalty for returns filed in calendar year 2023 is $560.00 for each failure. The penalty for returns filed in calendar year 2024 is $600.00.

  Tax law: IRC Section 6695

  Promoting abusive tax shelters

  Applies to people who organize or sell abusive tax shelters.

  We calculate the penalty differently depending on the conduct:

  • False statements about the tax benefits of the transaction: Penalty is 50% of the gross income the person made for the activity
  • Provides a gross valuation overstatement: Penalty is $1,000 or 100% (whichever is less) of the gross income the person made for the activity for each entity or arrangement (treated as a separate activity) and participation in each sale

  Tax law: IRC Section 6700

  Understatement of tax liability

  The penalty is $1,000 ($10,000 for a corporate tax return) for helping underestimate a person’s tax liability on their tax return. We may assess this penalty only once for documents relating to the same taxpayer for a single tax period or event.

  Tax law: IRC Section 6701

  Disclosure or use of information by preparers of returns

  Applies to disclosures or uses made on or after July 1, 2019.

  The penalty is $250 for each unauthorized disclosure or use of information given to a tax preparer to prepare a tax return. The maximum penalty assessed cannot be greater than $10,000 in a calendar year.

  If an unauthorized disclosure or use of information is connected to an identity theft crime, the penalty is $1,000 for each use or disclosure. The maximum penalty assessed cannot be greater than $50,000 in a calendar year.

  Tax law: IRC Section 6713

  Fraud and false statements

  Applies to people who commit fraud or make false statements on tax returns. People assessed this penalty are charged with a felony crime and may be:

  • Fined up to $100,000 ($500,000 in the case of a corporation)
  • Imprisoned up to 3 years
  • Required to pay for the costs of prosecution

  This penalty also applies to fraudulent and false activities in connection with offers in compromise or a closing agreement.

  Tax law: IRC Section 7206

  Fraudulent returns, statements or other documents

  It may apply to people who prepare fraudulent returns, statements or other documents. People assessed this penalty are charged with a misdemeanor crime and may be:

  • Fined up to $10,000 ($50,000 in the case of a corporation)
  • Imprisoned up to 1 year

  Tax law: IRC Section 7207

  Knowing or reckless disclosure or use of information by preparers of returns

  Applies to tax preparers who knowingly or recklessly disclose information given to them to prepare a tax return or use the information for any purpose other than to prepare a return. Tax preparers assessed this penalty are charged with a misdemeanor crime and may be:

  • Fined up to $1,000
  • Imprisoned up to 1 year
  • Required to pay for the costs of prosecution

  Tax law: IRC Section 7216

  Actions to enjoin specified conduct related to tax shelters and reportable transactions

  The U.S. government may sue in federal district court to stop a person’s unlawful conduct regarding tax shelters and reportable transactions. The conduct may include violations in Circular 230 PDF and other laws about practicing before the IRS.

  Tax law: IRC Section 7408

  Interest on a penalty

  If a penalty is not paid, we charge interest monthly until the amount is paid in full. The interest rate may change quarterly. Changes to the interest rate don’t affect the interest rate charged for prior quarters or years.

  If we reduced or removed the penalty, we’ll automatically reduce or remove the related interest. For details, see Quarterly Interest Rates for Underpayment and Overpayment of Tax.

  Pay a penalty

  You can pay using one of our safe, quick and easy electronic payment options or you can pay by mail with a check.

  Pay your penalty in full to stop future penalties and interest from adding up.

  Apply for a payment plan

  If you can't pay the full amount of your penalties on time, pay what you can now, and apply for a payment plan. You may reduce future penalties when you set up a payment plan.

  Dispute a penalty

  If you disagree with a penalty or the information in the notice is not correct, you may request a penalty appeal.

  Request a refund

  If you paid a penalty that was assessed in error, you can request a refund with Form 6118, Claim for Refund of Tax Return Preparer and Promoter Penalties. Send the completed form to the IRS office that sent you the billing statement. You must request a refund within 3 years of the date you paid the penalty.

  If you don’t pay the penalty, you may file Form 843, Claim for Refund and Request for Abatement. If you file Form 843, you can’t go to the U.S. District Court or U.S. Court of Federal Claims.