Can my CPA make any tax problem disappear?

Where the claim comes from

People facing a large balance or an audit understandably hope an expert can make it go away. Some advertisements feed that hope with promises to settle debts for a small fraction of the balance or erase penalties. The IRS's 2026 Dirty Dozen list includes aggressive or misleading offer-in-compromise marketing.

A skilled professional can make a real difference. But the difference comes from knowing the law and the procedures and presenting your facts well, not from getting around the rules.

What the law actually says

Circular 230 §10.34(a) prohibits a practitioner from signing a return or claim for refund that the practitioner knows, or reasonably should know, contains a position that lacks a reasonable basis, is unreasonable under IRC §6694(a)(2), or reflects willful or reckless conduct. The same limits apply to advising a client to take a position.

IRC §6694(a) penalizes a tax return preparer for an understatement due to an unreasonable position. The penalty is the greater of $1,000 or 50% of the income derived from the return. A position is unreasonable unless there is substantial authority for it. For a disclosed position, a reasonable basis is enough. For tax shelters and reportable transactions, it must be reasonable to believe the position would more likely than not be sustained. Under §6694(b), willful or reckless conduct raises the penalty to the greater of $5,000 or 75% of the income derived.

You remain liable for the tax, interest, and any accuracy-related penalty under IRC §6662 on your own return.

The law also provides real relief. The IRS may remove certain penalties under its first-time abatement policy (IRM 20.1.1.3.3.2.1) or for reasonable cause under IRC §6651(a) and §6664(c). IRC §6159 authorizes installment agreements. IRC §7122 authorizes offers in compromise based on doubt as to collectibility, doubt as to liability, or effective tax administration. You can also contest proposed adjustments through the IRS Independent Office of Appeals and, in many cases, the U.S. Tax Court.

What is true and what is not

Suppose you owe $40,000 after an examination, and some of the adjustments are wrong. A practitioner can challenge the incorrect adjustments with documents and authority, request penalty relief if you qualify, and, if you cannot pay the rest in full, propose an installment agreement or an offer in compromise based on your financial information. That can substantially change the outcome. What a practitioner cannot do is invent deductions, backdate documents, or sign a position with no legal support.

Some problems have fixes written into the rules. A missed election, such as a late S corporation election, may qualify for relief under Rev. Proc. 2013-30. Depreciation errors can often be corrected through an accounting method change on Form 3115. An overlooked deduction or credit can be claimed on an amended return while the refund period is open. These are legitimate fixes because the law provides them.

• True: a practitioner can often reduce penalties, correct errors, and arrange payment terms.
• True: some cases qualify for an offer in compromise, based on specific financial tests.
• Not true: the right CPA can erase any liability.
• Not true: a preparer who agrees to an unsupported position protects you.

What to do instead

Bring your practitioner everything: notices, returns, records, and a candid account of what happened. The more complete the facts, the better the practitioner can find legitimate arguments and relief.

Respond to IRS notices by their deadlines, because many rights, such as Tax Court review or a collection due process hearing, depend on timely action. Stay current on this year's filing and payments, since most collection alternatives require it.

Be cautious of anyone who promises a specific result before reviewing your finances, or who says your debt will be settled for a fraction of what you owe without explaining the IRS's criteria. If a preparer is willing to sign something you know is unsupported, treat that as a warning sign.

Finally, ask how the professional will be paid and what the engagement covers. A clear written engagement letter that lists the tax years, the services, and the fees helps you compare options and avoid surprises.

How ebotCPA helps

We review the notices and records, identify the positions the law supports and the relief you may qualify for, and represent you before the IRS under a power of attorney. We explain the options and their likely range of outcomes, without promising a result.

Book a $497 Case Analysis to have Ebot Mbi, CPA, EA review your facts before you act.

Primary sources

1. 31 C.F.R. §10.34(a). Standards with respect to tax returns.

   “Sign a tax return or claim for refund that the practitioner knows or reasonably should know contains a position that”

   Bars practitioners from signing or advising positions that lack a reasonable basis or are unreasonable under §6694.

2. 26 U.S.C. §6694(a), (b). Tax return preparer penalties.

   Imposes the greater of $1,000 or 50% of fees for unreasonable positions, and the greater of $5,000 or 75% for willful or reckless conduct.

3. IRM 20.1.1.3.3.2.1. First Time Abate.

   Describes the IRS's administrative waiver of certain penalties for taxpayers with a clean compliance history.

4. 26 U.S.C. §7122. Offers in compromise.

   Authorizes the IRS to compromise tax liabilities under the standards it prescribes.

5. 26 U.S.C. §6159. Installment agreements.

   Authorizes agreements to pay tax in installments.

6. 26 U.S.C. §6662. Accuracy-related penalty.

   Imposes a 20% penalty on the taxpayer for negligence or a substantial understatement.

Frequently asked questions