The California Franchise Tax Board send us a proposed assessment for our 2004 personal taxes saying that the wrong form was used and that we owe $2000. Our accountant is the one that used the incorrect form. We have spent a year trying to dispute this (at our accountant's advice), and now it turns out that she really did use the wrong form. So we have to pay the bill, plus monthly interest. Is our accountant responsible/liable for any of this?

Yes she is responsible. But they problem is you owe the money but she should pay the interest and any penalty