Legal Question in Tax Law in Illinois

If you were to file a small claim you'd ask for an amount equal to your damages: the penalty is probably the substantial part of the claim, along with interest on the penalty. It seems unlikely IRS could claim false information since apparently the information wasn't false, the credit was just unjustified and therefore not allowed based on the facts submitted. This is an issue between the preparer and IRS. If there were any falsification of information relating to the purchase, I'd have a different answer, but it's still something between IRS and the preparer. Frankly, there comes a time when you need to measure whether going the full nine yards is worth it, in terms of time and energy as well as money (you have to pay court filing fees to bring a lawsuit). I would suggest talking to the owner or manager of the tax office where the return was prepared and try to settle on some amount which is fair.