Can I place a law suit against a CPA who has made mistakes on my taxes year after year. Many others too.?

Question

I am being audited by the IRS for tax years 2004, 05, and 06. Most people who have had taxes prepared by my accountant are in the audit process with the IRS as well. Much speculation is that the CPA is in trouble with IRS? My issue is that every person who has been to the IRS office meeting so far has had to repay the IRS thousands of dollars. I have talked to people who are paying anywhere from $4,000 to $9,000 to far. My question is that when people go to an accountant in good faith that he/she knows what they are doing and this is the magnitude of what has happened, it is obvious that there is a problem with the CPA. If this was just a problem with my taxes, I would not be so upset but this is a problem with a large number of the CPA's clients. Several people have went to look for the CPA to speak to the person but have been unable to locate. I am curious to know if this is criteria for a class action law suit or something that would be legititmate cause for law suit at all.

Answer 1

Because you are required to sign your tax return, the IRS regulations state that you are responsible for the content of the return, including errors. You will be liable to pay any tax that you owe, as you would have owed the taxes anyway if it had been done correctly. All that the CPA did was to delay you paying the IRS.
THAT IS NOT TO SAY THE CPA DID NOTHING WRONG. Just wanted to be clear there. The CPA should be responsible for paying any penaly or interest that you owe in addition to the actual tax. If s/he is unable to be reached, then the only way to recoup your losses may indeed be through a lawsuit.
I will also reiterate that you need to be working with an Enrolled Agent on this matter. You might not owe as much as the IRS says you do - they make mistakes too. I've seen returns where the IRS was correct, but only partly. And instances where there were deductions that the IRS doesn't know about, because they weren't taken on the original return. It's well worth it to seek out an EA and ask them to review your documents.

Answer 2

From the IRS's point of view, the taxes were done incorrectly so you owe the tax back. Because it was 1-3 years ago, they will also tack on penalty, interest and civil penalties for going to a lousy CPA.

If you successfully sue the CPA, you can't get them to pay the tax, but you could possibly win the penalties, interest and punitive damages.

What part of your tax return is being questioned? The IRS is auditing unreimbursed business expenses on schedule A heavily. Once one person who used a given preparer flunks that area, the IRS starts looking at anyone who used that preparer. Did you ever look at the return that was filed and question any deductions or credits being claimed? If the mistakes are blatant enough you will be hit with accuracy/fraud penalties as well.... Eg, deductions where you didn't have receipts?

Answer 3

I do not know about your legal ramifications for a law suit but I am going to ask if you have someone to help you through the audit. Either another CPA or a tax professional needs to look over your tax returns for these years to tell you what they think the IRS might find in them. That way you would know what the IRS is going to say. I am a tax professional and I tell my clients never go to a meeting with the IRS alone. Also try to find a neutral place to meet them. Maybe if you could find another professional you could use their office. If you are not comfortable with a CPA look for a tax professional that has a certification called EA or enrolled agent. This person has had to take a test before the IRS in order to have this classification.

I would think class action status would be with the number of people hurt. You might look for a tax attorney instead of a CPA or a Tax professional.

Answer 4

If your taxes had been done properly in the first place, you would have paid more in taxes (or received a smaller refund) in the first place. If the IRS is already auditing EVERYONE the CPA prepared taxes for, suing him is useless. Any money he has is already going to the IRS. The IRS MAY waive some of the penalties and interest if they believe you acted in good faith.

Answer 5

yet another $15000 of what? through how, your earlier preparer pays the outcomes (and oftentimes basically asks that they be waved). you're in charge for any tax and activity. permit me get this good. You dumped a stack of 1099-Misc varieties interior the lap of the preparer and you had ****no**** concept what the easily entire grew to become into. Then once you reviewed the tax return, you basically assumed the completed on the return grew to become into good. The IRS regulations say you employ the 1099-Misc varieties to substantiate which you had the earnings that your information teach. you employ the information to do your taxes, no longer the 1099-Misc varieties. pay up.