A taxpayer is now confronting a $328,000 federal tax liability stemming from fraudulent actions committed by her former accountant in the 1990s, despite having no direct involvement in the misconduct. The Internal Revenue Service is pursuing collection based on the accountant’s criminal conviction.
- IRS is pursuing a $328,000 tax liability against a taxpayer linked to a former accountant’s fraud.
- The accountant was convicted in 2023 for embezzlement and filing false returns between 1993 and 2001.
- Total liability includes $287,000 in unpaid taxes, $41,000 in penalties and interest.
- The taxpayer claims no knowledge or intent to evade taxes and is contesting the assessment.
- The case highlights client liability under federal law when preparers commit fraud.
- Over 1,200 similar IRS cases involving preparer misconduct are under review nationwide.
A California resident is being pursued by the IRS for a $328,000 tax deficiency linked to financial fraud committed by her former tax preparer over three decades ago. The accountant, who was convicted in a federal court in 2023 for embezzlement and filing false returns, had managed the woman’s tax affairs from 1993 to 2001. She claims she had no knowledge of the fraudulent activity and was not involved in any tax evasion. The IRS issued the deficiency notice in January 2026, citing the accountant’s criminal conduct as the basis for holding her responsible under federal tax law. The case hinges on the principle that clients may be held liable for tax obligations when an authorized preparer commits fraud, especially when the client failed to exercise reasonable oversight. The IRS determined that the accountant systematically underreported income and overstated deductions across multiple years, resulting in a cumulative tax underpayment of $287,000, plus $41,000 in penalties and interest. The total liability now stands at $328,000. Despite her lack of intent, the IRS maintains that her continued use of the same preparer for nearly a decade constitutes a failure to monitor or verify filings, which diminishes her claim of innocence. Legal experts note that while the taxpayer’s case is unusual, it underscores the risks of relying on unverified tax professionals. The IRS has not pursued similar actions against other clients of the same accountant, which raises questions about the consistency of enforcement. The individual is now seeking legal representation to contest the assessment, arguing that she relied on the accountant’s professional status and had no reason to suspect wrongdoing. Her appeal may set a precedent for how the agency handles liability in cases of preparer misconduct. The outcome could influence future policy regarding client accountability, particularly in cases where preparers are later found guilty of crimes. Meanwhile, the IRS continues to collect unpaid assessments in similar situations, with over 1,200 such cases under review nationwide as of early 2026.