Liability

[Matt Sova]

E&o

Usually the insurance will not cover acts prior to the date of the policy. So if he comes at you now, it will not matter. You should still get the insurance ASAP though.

[myerstaxes]

I too

graduated from the IRS after 31 years of service...However, from day one when I started my practice I have had E&O insurance, so auditorturnedgood...I advise you to get it ASAP...We live in a litigious society...We are human and can and do make mistakes...

[AuditorTurnedGood]

Sounds like you've never really produced or signed a tax return for him. If so, you're probably only liable for the advice you gave him.

Well, I did produce and sign the incorrect return. (I got all confused on a Fiscal year S-corp and filed the wrong year tax form.) I believe there is literally no change to the numbers, they just need to be on a different year 1120S. This isn't really rocket science, I suppose. I have a prepaid legal plan for the practice (great piece of mind, by the way) that covers up to 50 hours of pretrial and 50 hours of trial time with a firm. I think I can likely out spend him. Thanks everyone!

[Nashville]

Auditor

Auditor turned Good, eh? That's good news to the rest of us since we often need comments from folks who have worked for the enemy.

Yes, errors and omissions insurance is part of your purification & cleansing. Yes, you can apparently be sued for anything (unless you work for the govt or are an HMO). This guy can come after you for being ugly if he wants. But remember, he has to PROVE you're ugly, and that's going to be hard to do if you're handsome like myself.

Sounds like you've never really produced or signed a tax return for him. If so, you're probably only liable for the advice you gave him.

[taxmandan]

...with no change to liability) ???

Ironically, he called today to see if I could crank out his million dollar fiscal year S-Corp return before the extension is up. In 6 days. I stifled laughter. Any thoughts?

Yeah, why stifle the laughter?

Seriously, if there is no change after the corrections why did everyone get all cranked about the mistakes? He can come back on you, anyone can sue anyone in our great country, whether he has standing to get anywhere in the courtroom is another matter. But then the expenses of defending yourself will likely deplete your bank account and that is why I carry E&O insurance, to cover the lawyer costs to defend me. Never had to make the call though, if I make a mistake that incurs penalties and interest, I pay them. Client pays the additional tax due. If I feel real bad about it, I'll offer them a free tax return next year to the client.

[AuditorTurnedGood]

I've had my practice for 2 seasons now, and am now getting professional liability insurance. Question is, what are everyone's expereiences with mistakes/errors and client reactions? I've had a few screw ups with one client, but we fired each other before I was able to correct them. I have notified him via e-mail of the items he needs to address. Can he come back after me for the cost of getting the items resolved? (should just be an amended return or two, with no change to liability) Ironically, he called today to see if I could crank out his million dollar fiscal year S-Corp return before the extension is up. In 6 days. I stifled laughter. Any thoughts?