Legal Question in Legal Ethics in Maryland
coercion by a CPA
I was involved in a billing dispute with a CPA when I discovered that the same CPA had not elected the basis adjustment under Section 754 of the Internal Revenue Code after my father�s death three years earlier. I notified a legal firm who proceeded to file a request for an extension to make the election within the three-year limit with the IRS. In order to complete their work on the extension request the firm needed the records from the CPA to compile the cost basis of the pertaining real properties. The CPA
refused to release these documents until I paid the outstanding bill under dispute (an amount she had previously agreed to lower). Also, in order for
the extension request to have any validity, the CPA had to sign an affidavit that the option had not discussed with me. Again, the bill had to be paid in the extreme amount as the CPA insisted. I had no choice, because of time
limitations, but to comply. I felt I was blackmailed. Such coercion seems to me to be a violation of professional ethics. What do you think?
1 Answer from Attorneys
Re: coercion by a CPA
If the law firm was requesting that the CPA provide the "source documents" in order
to calculate the basis under the extension, the CPA had no legal right to withhold the "source documents".
The CPA, however, could have withheld work papers, schedules, analyses or other documents that the CPA prepared.
It seems to me that the law firm would not have needed any of the CPA's work so it is likely that the CPA was withholding
source documents. This is the question that needs to be addressed.
I hope the law firm provided you with service to resolve your underlying matter with the IRS. Tax matters can be difficult to resolve
as many CPA's do not possess legal skills and many lawyers do not possess tax accounting skills.
I also question the lowering of the payment by the CPA. Namely, I question whether the lowering of the bill amounted to an accord with an unexecuted satisfaction. You may be entitled to recover the difference; however,
you need to consider this in light of the amount you stand to recover.
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