Academic journal article Journal of Accountancy

Ohio Court Lengthens Limitations Period

Academic journal article Journal of Accountancy

Ohio Court Lengthens Limitations Period

Article excerpt

An Ohio Court of Appeals ruled that the four-year statute-of-limitations period for bringing a malpractice action against an accountant for negligent preparation or filing of tax returns did not begin before the assessment of an IRS penalty. On July 14, 1993, the plaintiff, Joseph W. Gray III Inc., filed suit alleging that John E. Barry (since deceased) had failed to file IRS form 5500R for the company at the close of the 1987 tax year. As a result, the company claimed it had incurred an IRS tax penalty of $9,000. The company said that even though the accountant's failure to file had occurred in 1988 and the plaintiff did not file its suit until 1993, the cause of action did not begin until the IRS levied its penalty in 1993. The accountant's estate argued that his negligence, for the purpose of determining the statute-of-limitations date, began at the time of the alleged negligent conduct--in this case, in 1988. …

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