She’d hired a tax preparer to handle her returns for 2022, 2023, and 2024, receiving large refunds around $10,000 for both 2022 and 2024. The problem was that she didn’t own a home and had never paid a single cent in mortgage interest her entire life, a fact that only became relevant when the IRS audited her 2022 return and asked for Form 1098 documentation proving mortgage interest payments claimed on her return.
With no such document existing and no knowledge that her preparer had itemized a fake deduction on her behalf, the IRS disallowed the claim entirely, and she now sat on a payment plan working to pay back $25,000 for that year alone.
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Last month, a second audit notice arrived, this time for her 2024 return, requesting the exact same Form 1098 documentation for mortgage interest. Reviewing the paperwork herself, she confirmed the same preparer had done it again, fabricating another mortgage interest deduction on a return where none should have existed, given that her housing situation hadn’t changed at all in the interim.
Why This Isn’t a Small Preparer Error
What happened here goes well beyond an honest mistake or a misunderstanding about deductions. Claiming mortgage interest for a taxpayer who doesn’t own a home and has never had a mortgage isn’t the kind of error that results from careless work, it requires actively fabricating a deduction that has no basis in the client’s actual financial situation. That pattern repeating across two separate tax years strongly suggests deliberate fraud on the preparer’s part, rather than a one time oversight that might otherwise be explained by confusion or a data entry mistake.
That distinction matters significantly for how the IRS and any professional she hires going forward will approach resolving both the current audit and the underlying pattern behind it.
What Kind of Professional Actually Fits This Situation
Given the complexity here, an active audit, a prior payment plan already in place, evidence of preparer fraud across multiple years, and potential exposure on a third year not yet audited, this situation calls for representation beyond what a standard tax preparer would typically handle. Enrolled Agents, CPAs, and tax attorneys can all represent taxpayers before the IRS, but they differ in scope and specialization.
A tax attorney would be particularly valuable here given the fraud component specifically, since attorneys can provide legal advice about her own liability exposure, potential criminal referral risk against the preparer, and options for pursuing the preparer directly for the financial harm caused, protections that fall outside what an EA or CPA is typically equipped to offer given their focus on tax preparation and IRS representation rather than broader legal strategy. Many tax attorneys who specifically handle IRS controversy and fraud cases work directly with EAs or CPAs as part of a combined approach, so finding a firm or attorney experienced specifically in preparer fraud cases would likely give her the most complete support.
Finding Someone With the Right Specific Experience
Given how specific this situation is, not just an audit, but an audit stemming from documented preparer fraud, searching specifically for tax attorneys or EAs who advertise experience with “IRS preparer fraud,” “tax return preparer misconduct,” or “innocent spouse and taxpayer relief” would likely surface professionals who’ve handled comparable cases before. State bar association referral services, the National Association of Enrolled Agents, and the American Society of Tax Problem Solvers all maintain directories that can help narrow the search toward professionals specifically experienced in exactly this kind of dispute, rather than general tax preparation.
Why Reporting the Preparer Matters for Her Own Case
Filing Form 14157, the Return Preparer Complaint form, formally reports the preparer’s misconduct to the IRS and can trigger their own investigation into the preparer’s broader pattern of behavior, which matters both for accountability and because it may reveal she isn’t the only client affected. Filing that complaint doesn’t automatically reduce her own tax liability, since she still legally owes taxes on her actual income regardless of who prepared the return, but it does create an official record establishing that the fraudulent deductions were the preparer’s doing rather than her own attempt to defraud the government.
That distinction matters significantly for penalty and interest relief specifically. The IRS does offer relief in certain cases where a taxpayer can demonstrate they relied in good faith on a paid preparer and had no knowledge of fraudulent claims being made on their behalf, though approval isn’t automatic and typically requires documentation showing she had no reasonable way of knowing what was being filed on her return.
Why Waiting for Professional Guidance Before Amending Makes Sense
Filing an amended return herself before securing professional representation risks inadvertently weakening her position, since how the correction gets framed and documented matters for the broader question of penalty relief and potentially recovering damages from the preparer. A tax professional experienced in these cases would know how to respond to the audit letter in a way that both resolves the immediate 2024 issue and strengthens her position for seeking relief on penalties and interest, rather than simply correcting the number without addressing the fraud context behind it.
Why the 2023 Return Needs Checking Regardless of Whether It’s Been Audited Yet
Given that fraudulent deductions appeared in both 2022 and 2024, there’s a real possibility the same pattern exists in her 2023 return as well, even without an audit notice having arrived yet for that year. Rather than waiting to see if the IRS eventually flags it independently, proactively reviewing that return with her new professional representative, and potentially amending it voluntarily if fraudulent deductions are found, would likely put her in a stronger position than waiting for a third audit notice to arrive. Voluntarily correcting an error before the IRS catches it independently is generally viewed more favorably than having it uncovered through their own audit process, and it prevents a third round of accumulating back taxes, penalties, and interest from building up in the meantime.
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