Small business owners, self-employed professionals, married couples with diverse investments and countless others pay accountants to prepare their income tax returns. They do not want to risk making mistakes when calculating their income tax obligations.
They count on professionals to help them maximize the deductions, write-offs and credits that they can utilize to reduce their tax liability in a legal and appropriate fashion. Taxpayers working with accountants generally provide them with financial records and then may physically come to the office to sign the final return in some cases.
They often expect their accountant to manage the filing process. Occasionally, those who have paid for the services of an accountant may receive notice from the Internal Revenue Service (IRS) that they have past due taxes or an unfiled return. In that situation, what options do frustrated and frightened taxpayers have?
Filing a malpractice lawsuit
Accountants handling income tax returns generally understand that they have a duty to submit the return by April 15th or the next business day if the 15th falls on a weekend. The failure to do so can lead to significant financial consequences for the taxpayers. They could be responsible for thousands of dollars in interest and penalties, in addition to whatever taxes they may have due.
Technically, the accountant is not directly liable for those amounts. The taxpayer must cover those amounts, as the IRS does not care who made the mistake. However, taxpayers can notify the IRS that their accountant was to blame for the issue, although they must still typically make arrangements to pay what they owe as quickly as possible to avoid additional interest accruing.
An accountant who fails to file a tax return as they should has made a mistake so egregious that just about any competent professional could have avoided it. As such, their clients may have grounds for a malpractice lawsuit.
A successful malpractice lawsuit against an accountant can lead to financial compensation and a sense of vindication. Clients may also want to reach out to state licensing authorities to notify them of the malpractice that they experienced. That could result in a review of the professional’s conduct and potential disciplinary action against them.
Reviewing IRS communications and interactions with an accountant who failed to file a return – with the help of a skilled legal team – can help clients evaluate their options. Those harmed by accounting malpractice may have several options available as they seek to remedy the situation.