I am from Ohio, and have a situation that I am in doubt with. My brother has gone to the same CPA for numerous years. This past year he was audited. The audit found that the CPA had mistakenly put his home mortgage interest on Schedule C instead of Schedule A on his 2005 taxes. This mistake cost my brother over $12,000 in back taxes, interest and penalties. Is this not the responsibility of the CPA? Is this not the reason why we go to licensed accountants, to be sure that things are accuratly reported on our taxes? All the research I have found shows that it could be considered Gross Negligence, but none of those are from lawyers in Ohio. I could not find anything in the Ohio laws that protect the tax payer from errors by their accountants.

Any help would be great!

Thanks

Hello qutytoad,

Perhaps the reason you can't find what you are looking for is that you are implicating this with tax law and/or your accountant as such, when it may actually be Commercial Law. The facts you provide suggest negligence or breach of duty, this is a civil matter, not necessarily an Administrative matter. Your cause is not against the IRS per se, but against a private licensed operator of a business.

So, following this logic, it is breach of duty as it applies to any licensed individual. Not to say that there aren't certain requirements in regard to what the IRS requires of a professional, but generally that is a matter of testing and licensing and baseline requirements. You see, you are not contesting the IRS's decision, you are contesting the Accountants business practices; this leads us to commercial law.

I may be wrong, and all states are different, but I would explore this avenue. Think breach of fiduciary duty. Good luck, and remember, of all the doctors in the world, there has to be a worst one; this doesn't necessarily make him negligent.

Lawford

I will definently check that out and thank you for the information. I really don't think he was negligence per say but he should atleast be responsible for his error. He is trying to say it is not his responsibility to correct or pay and that it will be my brother that pays for his error.

I can understand this is a frustrating situation for you. Whether or not the accountant was negligent in preparing the tax return is something that an attorney would need to review with you. It may be worth it given the $12K that the mistake cost. Licensed professionals should carry professional liabilty insurance. Negligence generally means that someone failed to act in accordance as a reasonable person (or professional) would in a similar circumstance. That basically means that if the accountant failed to act as any other competent accountant would reasonably act in the same circumstances, then there could be a basis for liability. Of course, whether the way the accountant acted "reasonably" in this situation is dependent upon what information was supplied and a variety of other factual circumstances. http://resources.lawinfo.com/en/Dict...l?q=negligence

I suggest you contact an attorney to discuss the options moving forward, both in dealing with the IRS and with the accountant. You can find an attorney through the locator service on LawInfo's home page at: http://www.lawinfo.com/.

Good luck!

Here's the thing, If your acountant was wrong, it only proves that your brother must pay it by the right or correct criteria.

Whether the acountant made an error or not, you must first pay what you are ultimately proved to owe; it is up to you to prove that there was some incompetnce or negligence on the part of the accountant that in some way cost you more than you, by law, should have owed.

The flaw must come about first, then you can prove fault or damages based on that.

Sorry, that is the best I can do to explain it. Other than to say, you owe what you owe. Your accountant's mistake doesn't change that. What you need to prove, is that your accountant's bad advice put you in a weak position where you were uninformed, and that you made a detrimental choice based on that advice that you wouldn't have made without the information. It must certainly prove that more was lost than the tax debt. It's called, from one end, reasonable reliance. In that your reliance was based on an untruth, or an inconceivable mistake, hence, negligence. Good luck,

Lawford.

Also, please don't think me without compassion, but it's about what someone intentionally or incompetentaly did wrong, and that it changed your position to your detriment. It's not that a mistake was made, but that you invested based on that misinformaton.


Lawford