Unreported Income

If taxpayer fails to provide all income documents and subsequently receives an IRS adjustment letter, who is at fault? Tax preparer wasn't aware of additional income when return was prepared.

Could the preparer have asked more questions, based on the evidence in front of them? As long as the preparer has done their due diligence, it is not the preparer's fault and certainly not their responsibility.

Agreed with SumwunLost, if there wasn't a reason for the preparer to know about it then how can the preparer be responsible?

On the other hand, if there's (for example) a 1099-R that the taxpayer has every year, but this year they are missing it, a diligent tax preparer would ask about/confirm the missing 1099-R and document the answer in case of situations like this.

Agree. If you asked all the questions and the client did not disclose the income, not your fault. Like missingdonut said, if previous returns had something that is not on this one, ask again. That is why I ask for the last three years of returns if I did not do them.

I've stopped chasing clients down for their tax docs - if they forget a 1099 - to bad pay the CP2000 Notice if it comes.
I'm not wasting my time asking - "but you had this in past years - where is it"?
If they want that kind of service - the fee is over $1k annually.
I do have 1-client whose memory is bad, I wait until summer to pull his Wage/Income transcripts, key off that.
My Fee is $1,650.