Can I sue my accountant?

Accountants are like other professionals: They make mistakes. Sometimes they even engage in deliberate misconduct. Whether the error or bad advice was intentional or innocent, accountants can be sued for their errors.

Whether your accountant fails to carry out his or her duty of care, or affirmatively and falsely misrepresents some material fact to you—thereby impacting your ability to manage your affairs or allow you to manage your accountant—accounting malpractice can take many shapes. If you perceive these errors or even catch your accountant in the act, you may have an actionable case. You may be benefited by the assistance of our experienced attorneys.

Do you think you have a meritorious case of accountant malpractice? Call 877.858.8018

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What You Need to Prove an Accounting Malpractice Case

Many accounting malpractice cases turn on questions of negligence, which looks to an accountant’s failure to carry out his or her duties in a way that any reasonable accountant would. Questions of competence, dutifulness, and attention are not enough. The law of most states requires a discreet list of necessary showings. In order to succeed with a claim for accounting malpractice that is focused on accountant negligence, you (or your company) must show that*:

  • The accountant owed you a duty of care;
  • The accountant was negligent in carrying out his or her duties, whether by failing to comply with generally accepted accounting practices (GAAP or GAAS), by engaging in deliberate or willful misconduct, or by otherwise acting in a manner inconsistent with the law;
  • You suffered actual harm; and,
  • Your harm was suffered as a direct consequence of the accountant’s actions, misconduct or mistake.

Negligence or misconduct can also occur when the accountant has a conflict of interest and carries out his or her duties in a way that is affected by that conflict.

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Accounting Breach of Contract and Misrepresentations

If you look to your agreement with your accountant, you may find some affirmative promises and contractual obligations the accountant owes you. These are contractual obligations, and they can serve as the basis for a malpractice action against your accountant. These requirements can take the form of an agreement to provide services, or list a set of assured results should you choose the accountant. If your accountant has promised a particular result or assured you a level of care in carrying out accounting services for you or your company and failed to fulfill those promises, then you may be able to bring an action against your accountant. Keep in mind, you must have directly suffered some harm before you have a verifiable claim for accounting malpractice.

Broken promises are not the same as misrepresentations in the eyes of the law. Sometimes when your accountant has made a mistake or substantially failed to deliver on promises or obligations, the accountant may attempt to cover it up. Such an act rises to the level of misrepresentation or gross negligence and may result in greater damages if you successfully prove your claim. In order to do so, you must show:

  • The accountant made a representation;
  • That representation was false;
  • The representation was related to a material fact;
  • The representation has a “provability” element—which means that it can be proven or disproven;
  • The accountant caused you to rely on the misrepresentation;
  • You did rely on the misrepresentation and suffered direct harm or incurred damages;
  • The direct harm or damages were caused by the misrepresentation.

Some of these elements, such as reliance, may be difficult to prove. Again, while claims of misrepresentation brought against accountants may have higher burdens (as is evident from the complicated factors), they can result in higher damage awards.

Offshore Reporting Violations and Abusive Tax Shelters

In recent years we have seen a dramatic increase in accounting malpractice claims involving offshore accounts and tax shelters. The penalties for these violations are the highest in the Internal Revenue Code. Failing to report a foreign bank account could result in a penalty of $100,000 per year or half the value of the account! Failing to disclose certain tax shelters can result in penalties of $200,000 per year!

Like physicians and lawyers, many accountants now specialize. Unfortunately, there are always a few CPAs that handle matters outside of their training or knowledge. Some accountants even earn commissions from promoters of tax shelters (which, just as it sounds like, can be a conflict of interest). If you find yourself on the receiving end of a large IRS penalty assessment and relied on your accountant for tax advice, tax planning or to accurately prepare tax returns, you may be able to sue your accountant.

Few lawyers handle accounting malpractice cases. Lawyers who claim to sue for accounting misconduct may be more interested in business litigation or personal injury cases. But we concentrate on these unique cases and have a proven record of success.

Think you have a case? The time period in which to sue an accountant for misconduct or malpractice is often quite limited. Don’t delay. Call us today for a confidential, no fee consultation.

We help Malpractice Victims Recover Money Damages. Call 877.858.8018

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*Accounting malpractice laws vary from state to state, particularly with respect to claims for audit or actuarial malpractice. This page contains general information only.