As an individual or the owner of a small business, it is likely you rely heavily on your accountant’s tax advice. Further, you probably don’t even go over your tax returns carefully, especially if you have them professionally prepared. After all, isn’t that the point of hiring an accountant—so you won’t have to wade through the tax code yourself? In some cases, your accountant may simply have entered a number incorrectly, misinterpreted a law, or misconstrued the facts you provide regarding your personal or business taxes.
If the accountant later catches such a mistake, tells you immediately, and takes steps to correct it, there is probably not much harm done. If, however, your accountant has made serious errors on your tax returns which resulted in your owing the IRS a significant amount of money, accounting malpractice may have occurred. In the same vein, if your accountant has failed to provide you with accurate tax advice, which resulted in financial loss to you or your business, accounting malpractice may have occurred. Some examples of accounting malpractice due to tax issues include:
- Failure of the accountant to file a return;
- Filing a return late;
- Tax mistakes which result in significant penalties;
- Offering incorrect tax planning advice which results in financial loss;
- Tax deficiencies from the accountant’s mistake which causes lost income or investment opportunities;
Proving Accounting Malpractice Related to Tax Advice and Tax Preparation
In order to prove accounting malpractice related to taxes, four elements are necessary.
1. An engagement letter delineating the scope of the accountant’s duties and responsibilities.
2. The accountant makes a significant error or omits pertinent information, which results in the submission of an incorrect tax return.
3. There must have been direct and consequential damages from the accountant’s failure to fulfill his or her responsibilities.
4. Your accountant made a significant error, which cost you money.
There can be another factor in proving accounting malpractice, which is whether you contributed to the tax problem at hand. As an example, suppose your accountant asked you to review your tax return for accuracy. Maybe you were busy and didn’t get around to reviewing the return, or maybe you reviewed the return in a negligent manner. In such cases, the last clear opportunity to rectify the problem was in your hands.
Incorrect Tax Advice Could Cost You
Receiving incorrect tax advice could cost you or your business hundreds of thousands of dollars in lost income, lost investments, and tax fines and penalties. Incorrect tax advice could even cost you your business and threaten your family’s financial security. If you were victimized by an accountant and have paid a steep financial price as a result, you should speak to a knowledgeable accounting malpractice attorney.
Contact Accounting Malpractice Lawyers
At Patrick Malone & Associates, our accounting malpractice lawyers understand the seriousness surrounding accounting malpractice. As experienced malpractice lawyers, we have represented individuals and small businesses in the Washington, DC metro area, Virginia, and throughout the State of Maryland. Our Washington DC accounting malpractice attorneys work tirelessly from the very start to ensure that all our clients receive the compensation they need to offset the wrongs that have been done to them. Call us at 1-202-742-1500 or 1-888-625-6635 or fill out our confidential contact form for a FREE Consultation and review of your case.
The accounting malpractice attorneys at Patrick Malone & Associates have successfully represented injured individuals in Washington, DC, Arlington, Alexandria, Annapolis, Rockville, Baltimore, Richmond, Fairfax, Montgomery County, Prince George’s County, and other locations throughout Maryland and Virginia.