If my accountant made a mistake which could cost me thousands, what do I do?

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If my accountant made a mistake which could cost me thousands, what do I do?

I sold an investment property for $300,000 as a short sale 2 years ago. Since my debts were far greater than my assets at the time of the sale, I needed to file insolvent on my taxes, since the $300,000 was reported to the IRS. I gave all my information, insolvency worksheet, etc. to my accountant,but he failed to do my taxes correctly (which I did not know at the time). Now I just got a letter from the IRS stating that I owe nearly $119,000 in taxes (including penalties and interest). Where do I go from here? A tax attorney or another CPA? Since I obviously cannot pay this, I need to prove my insolvency at the time of the sale but will I be hit with the penalties and taxes even though it wasn’t my mistake?

Asked on October 1, 2012 under Bankruptcy Law, New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If you believe that the accountant that you retained to do work for you fell below the standard of care as one resulting in actual damages to you, you need to consult with an attorney that practices law as a plaintiff's attorney in the area of professional negligence. Once you find several, consult with them to see what your legal recourse is about the matter that you have written about.


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