IRS Form 6118 – IRS Forms, Instructions, Pubs 2026 – In the complex world of tax preparation, professionals like CPAs, attorneys, and enrolled agents play a crucial role in helping taxpayers navigate IRS regulations. However, mistakes or oversights can lead to penalties imposed by the IRS. If you’ve paid penalties as a tax return preparer or promoter but believe they were assessed in error, IRS Form 6118 provides a pathway to seek a refund. This SEO-optimized guide breaks down everything you need to know about Form 6118, including its purpose, eligibility, filing process, and more, based on official IRS resources.
What Is IRS Form 6118?
IRS Form 6118, officially titled “Claim for Refund of Income Tax Return Preparer and Promoter Penalties,” is a specialized form designed for tax professionals to request refunds of penalties they’ve paid but deem incorrect. It applies to penalties assessed under specific sections of the Internal Revenue Code (IRC), such as Sections 6694, 6695, 6700, and 6701. The form, revised in July 2018, allows preparers and promoters to formally dispute and recover overpaid amounts, ensuring fairness in the IRS penalty system.
This form is essential for maintaining compliance and financial stability in the tax preparation industry. Without it, professionals might bear undue financial burdens from erroneous assessments. For the latest updates, always check the IRS website, as developments like post-2017 expansions for due diligence penalties under Section 6695(g) could affect your claim.
Who Should File Form 6118?
Form 6118 is primarily for:
- Tax Return Preparers: This includes individuals or firms who prepare or assist in preparing federal tax returns or claims for refunds. Examples are CPAs, enrolled agents, attorneys, and other paid preparers.
- Tax Promoters: Those involved in promoting tax shelters or arrangements that may lead to understatements of tax liability.
You should file if you’ve paid penalties under the covered IRC sections but believe the assessment was wrong—perhaps due to a misunderstanding of facts, incorrect application of law, or other errors. It’s not for unpaid penalties; you must have already paid the amount in question to claim a refund. If you’re an employer of preparers, you may also file using your Employer Identification Number (EIN).
Note: If the penalty relates to multiple statements or types, you may need to file separate forms in some cases, as combining certain penalties (e.g., under Sections 6700 and 6701) is not allowed.
Penalties Covered by Form 6118
Form 6118 addresses a range of penalties commonly faced by tax professionals. Here’s a breakdown of key types, including updated amounts adjusted for inflation:
| Penalty Type | IRC Section | Description | Amount (as of 2025) |
|---|---|---|---|
| Understatement Due to Unreasonable Positions | 6694(a) | Failing to take reasonable positions on a return. | $1,000 or 50% of income from the return (greater amount). |
| Willful or Reckless Conduct | 6694(b) | Intentional disregard of rules. | $5,000 or 75% of income from the return (greater amount). |
| Failure to Furnish Copy to Taxpayer | 6695(a) | Not providing a copy of the return to the client. | $31,500 maximum per year ($50 per failure). |
| Failure to Sign Return | 6695(b) | Omitting signature on the return. | $31,500 maximum per year ($50 per failure). |
| Failure to Furnish Identifying Number (PTIN) | 6695(c) | Not including Preparer Tax Identification Number. | $31,500 maximum per year ($50 per failure). |
| Failure to Retain Copy or List | 6695(d) | Not keeping required records. | $31,500 maximum per year ($50 per failure). |
| Failure to File Correct Information Returns | 6695(e) | Errors in preparer records. | $31,500 maximum per year ($50 per failure). |
| Negotiation of Check | 6695(f) | Improperly cashing a client’s refund check. | $635 per instance. |
| Failure to Exercise Due Diligence (e.g., for Credits or Head of Household Status) | 6695(g) | Not verifying eligibility for benefits like EITC or AOC. | $635 per failure. |
| Promoting Abusive Tax Shelters | 6700 | Making false statements about tax benefits. | 50% of gross income or $1,000/100% (lesser amount) per arrangement. |
| Aiding and Abetting Understatement | 6701 | Assisting in understating tax liability. | $1,000 ($10,000 for corporations) per taxpayer/period. |
These penalties can accumulate based on the number of violations and tax years involved. Additional criminal penalties, like those under Sections 7206 (fraud) or 7216 (unauthorized disclosure), may apply but are not refundable via Form 6118.
How to Fill Out Form 6118?
Filling out Form 6118 requires careful attention to detail. The form is structured as follows:
- Header Information:
- Enter your name, address (as on the penalty statement), and identifying number (SSN or EIN).
- Provide the IRS office that issued the statement.
- Penalty Identification Table (Lines 1-12):
-
- List each penalty in columns (a) through (j), including:
- Document Locator Number (DLN).
- Date of statement.
- Type of penalty (using letters A-M, e.g., A for 6694(a)).
- Taxpayer details (name, ID, form number, tax year).
- Amounts assessed, paid, and payment date.
- For penalties under 6700 or 6701, some columns (like taxpayer details) may not apply.
- List each penalty in columns (a) through (j), including:
- Total Claim Amount:
- Sum the paid amounts from column (i).
- Reasons for Refund:
- Provide a detailed explanation for each line, attaching additional sheets if needed. Reference specific facts or laws supporting your claim.
- Signature:
- Sign under penalties of perjury, declaring the information accurate.
Attach copies of penalty statements and any supporting documents. For “Other” penalties (type M), specify the IRC section.
Where and When to File Form 6118?
Submit Form 6118 to the IRS service center or office that sent the original penalty statement. Timing is critical:
- For Sections 6694 and 6695: File within 3 years from the full payment date.
- For Sections 6700 and 6701: File within 2 years from full payment, or upon paying 15% within 30 days of notice for a claim.
- General rule: Claims must be filed within 3 years of payment for most cases.
Mail the completed form; electronic filing is not available. If disputing before payment, follow the notice instructions for appeals.
Tips for Successful Refund Claims on Tax Preparer Penalties
- Gather Evidence: Include IRS notices, payment proofs, and explanations showing why the penalty was erroneous.
- Consult Professionals: Work with a tax attorney or advisor familiar with preparer regulations.
- Avoid Common Pitfalls: Ensure all fields are complete; incomplete forms may be rejected.
- Stay Updated: Penalty amounts adjust annually for inflation—check IRS publications for current figures.
- Dispute Alternatives: If the penalty is unpaid, appeal via the notice process before using Form 6118.
By following these steps, you can effectively use IRS Form 6118 to reclaim funds and protect your practice.
Disclaimer: This article is for informational purposes only and not tax advice. Consult a qualified tax professional or the IRS for personalized guidance. For the official form, download it from the IRS website.