Representing Victims Of Accounting Malpractice In Orange County
Klein & Wilson represents Orange County businesses whose accountants have caused damage. If your accountant’s errors caused the IRS or California’s taxing authority to audit income tax returns or assess a deficiency, then contact the firm at (949) 239-0907 to schedule a consultation about your legal options.
Clients trust certified public accountants and other tax professionals to prepare financial statements, make representations to potential investors, and prepare income tax returns. An accountant who abuses this trust through mismanagement or outright fraud can expose their business clients to severe and expensive tax problems. The attorneys of Klein & Wilson have decades of combined experience in business litigation. They help clients seek rightful compensation.
Two Types of Accounting Malpractice; Breach of Fiduciary Duty
There are generally two categories of accounting malpractice: negligent preparation of a tax return and negligent tax/financial advice.
- Negligent tax preparation includes conduct like failing to file a client’s return in a timely manner, failing to list important information on the return, and failing to make a timely/accurate response when tax authorities make inquiries.
- Negligent advice is a broader version of accounting malpractice. Examples include giving incorrect tax advice or information to business owners and failing to provide accurate financial statements.
Some accounting professionals are in a fiduciary relationship with people/entities they serve such as when they as act as a trustee of trust or chief financial officer of a business. People in these positions of trust can cause serious damage if they abuse their authority (e.g., intentionally cook the books or steal money).
When Does It Make Economic Sense to Hire Klein & Wilson?
Accounting malpractice litigation can be expensive because proving malpractice almost always requires expert witness testimony, and these cases rarely settle early. In most cases, Klein & Wilson bills its time on an hourly fee basis. The firm is a good fit when the accountant’s negligence causes the client to suffer at least $500,000.
While the law does not require accounting professionals to carry malpractice insurance, many do. However, many accounting professionals’ fee agreements contain language limiting the accountant’s liability. If you hire Klein & Wilson, the firm will evaluate that limitation and determine if there are ways around it.
The Statute Of Limitations
California law imposes a two-year statute of limitations on accountant malpractice litigation. A frequent point of contention is when the clock begins running in these cases. Courts have ruled that the time limit begins accruing once (1) the plaintiff discovers (or reasonably should have discovered) the alleged malpractice, and (2) the plaintiff has suffered actual harm as a result. Regarding negligent tax preparation, courts typically conclude that “actual injury” occurs when a taxing authority like the IRS assesses a deficiency to the business due to an accountant’s negligence.