Legal Question in Civil Litigation in California

Malpractice by a CPA and Attorney

In 1994 I received a settlement award from an insurance company. I was told by my attorney that the settlement would not be taxable. I filed my r eturn in 1995 with a cpa that had been doing my business and personal taxes for more than 20 years. He did not question the settlement nor mention that the IRS could consider it taxable. He did not mention that punitive damages were taxable. I was audited in 1997. The IRS came back and called the entire settlement taxable ($300,000.) They sent me a tax bill for $325,000 (interest and penatly and tax). I have spent $20,000 in legal fees fighting them. I think they will settle on an amount of $50,000. However, my I feel my CPA was at fault along with my attorney. I have other issues with my CPA but I would like to sue him for what it has cost me to defend myself with the IRS. I can't find an attorney to help me. I would like to file the suit myself but I don't know how.


Asked on 6/27/99, 11:59 pm

1 Answer from Attorneys
Robert E. Drescher Law Offices of Robert E. Drescher

Re: Malpractice by a CPA and Attorney

It is very hard to prove negligence on your CPA. Unless it is in writing that s/he advised you that the award is non-taxable. As for your attorney, a closer look at the standard continguency agreement may indicate that any award may be taxable, seek advise from your CPA.

As for filing the suit on your own, you will need to go to the law library and research the actions, Civil Procedure and Pleading and Practice Guides. The best are Mathew Bender Pleading and Practice guides. It is very hard to handle a matter such as your without the formal legal training.

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Answered on 7/08/99, 2:32 pm


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