Academic journal article Journal of Accountancy

Malpractice Claim Accrues When IRS Issues Notice of Penalty

Academic journal article Journal of Accountancy

Malpractice Claim Accrues When IRS Issues Notice of Penalty

Article excerpt

A California appellate court ruled the state's two-year statute of limitations for accounting malpractice claims began to run when the Internal Revenue Service issued a penalty-and-interest notice, not when it began its audit of a CPA firm's client.

In 1985, Margaret and Edward Boykin and Boykin Construction Co. retained Michael Cobin and the Cobin Professional Corp. to prepare their personal and corporate income tax returns. In 1987 the IRS audited the Boykins' 1984, 1985 and 1986 tax returns. The Boykins hired an attorney, Norman Green, to assist Cobin in the IRS proceedings. The IRS audit took two years to complete. Approximately three months into the audit, the Boykins submitted $200,000 to the IRS as a partial payment of the potential assessment. The final audit report, which included the notice of deficiency, was issued June 14, 1989. The IRS assessed $3.8 million in taxes, penalties and interest.

The Boykins sued Cobin in January 1990. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.