> If you're acting in good faith and your accountant does something crazy or evil, your liability is limited to some extent.

From my understanding, you are the person signing off on the paperwork that is submitted to the IRS.

There is this cache 22 with taxes.

You are responsible, but you outsource it to a accountant. Because you are not knowledgeable about the taxes. But you are expected to be knowledgeable to understand the tax documents that you submit to the IRS. That is why the accountant always ask you to review the documents and sign them like 20 times.

The same applies when you run a company, depending on the country, you need to prove yourself knowledgeable in accounting, before you are allowed to run a company. Normally that is included in a university degree, but if you have a middle school diploma, you need to do a official examen to get that degree.

Whatever you submit for your company, you are again responsible. Even if you hired a accountant.

So while technically, if a accountant makes gross mistakes, the bill will always fall in your lap, because you are expected to understand the reports you submit to the IRS. And catch any errors before doing so.

With the IRS, the burden of proving your innocents is often put you. Its because the good faith argument can be misused easily. That is why the buck stops at you.

So using a LLM or a accountant, really does not matter. Sure, a accountant can go to jail if there has been major issues (its not going to be with one client issue).

But you can lose your house / company, have your life ruined by whatever you submitted.

I don't think that's actually the case. If you get an tax attorney to document your treatment and indicate that they believe it's legal (e.g. a tax opinion letter), then you're off the hook for penalties and criminal liability (assuming the tax attorney did everything properly). You still have to pay the difference though.

An accountant may not save you from financial penalties but I believe that they are liable for them so you can recover it from their insurance.

This is also something where how you interact with the IRS really really depends on your initial interactions.

If the IRS comes to you and says "your taxes are wrong you owe X amount" and you immediately turn around and prepare to fight them then they are going to be merciless with you.

But if they come to you and you turn around and show the auditor your methodology and what you thought you were supposed to be doing, etc and focus on fixing the issue and settling your debt then they are going to hook you up with IRS staff dedicated to helping fix this kind of stuff.

And most importantly they'll connect you with someone who can set up a payment plan out over whatever period of time to pay back what you owe without killing your business or taking your assets.

But again if you get audited and immediately become adversarial then they'll assume you were doing it intentionally and will take anything not bolted down.

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The rationale is basically that the IRS staff are mostly there to help you get your taxes in order and ensure that those taxes are paid but as soon as it starts to look like you are intentionally avoiding paying your taxes you get kicked over to the enforcement divisions and eventually the criminal divisions.

So good faith is absolutely something the IRS will honor but that stops the moment it looks like you are trying to hide stuff from them.