Does the tax code obligate a tax preparer to report mistakes?

sjbraden: Does the tax code obligate a tax preparer to report mistakes?
For example, let’s say an accounting firm has been wrongly doing calculating something for several years before learning of their mistake. Does the Internal Revenue Code or any Circular require a tax preparer to report the mistakes to the IRS? If so, is there a penalty for failing to disclose the mistakes once the tax preparer gains knowledge of the error?

If possible, could you please specify exactly where this rule can be found?

Answers and Views:

Answer by v b
Circular 230 covers preparers.

Knowing there is a mistake and not fixing it will cause the preparer to flunk the accuracy section 10.22.

The preparer would be required to notify their client and certainly not continue to use the erroneous data to prepare subsequent tax returns if the client refuses to correct it.

Answer by michael971
Yes it is in circular 230. The tax preparer must inform the client of the error and the consequences of not correcting. The preparer should not notify the IRS.
There may be penalties for not disclosing the error. The client in this case may not liable for penalties but will have to pay interest if there was an underpayment.