If your tax preparer made an error on your tax return that cost you money, caused an IRS audit or caused the IRS to pursue civil or criminal sanctions against you, you may have a cause of action against your tax preparer for malpractice. In order to establish a malpractice claim against a tax preparer, you will have to establish that the tax preparer failed to meet minimum professional standards, and that you suffered damages because of this.
Determine the content of the professional standards that bind the tax preparer. Federal standards require only that the tax preparer have a reasonable belief that a position taken on a tax return will more likely than not be considered accurate by the IRS. Although you will need to file a lawsuit in state courts unless you are using malpractice as a defense in a challenge to the IRS, the federal standard will likely be persuasive to a state court. If the tax preparer is a member of a professional association, the standards instituted by that association can also be used to determine which standard of professional care should apply.
Decide exactly how the tax preparer fell short of the standard of professional care that is applicable to him. Mere failure to persuade the IRS or a state taxation authority of the merits of a position taken on your tax return is not enough to establish negligence. Instead, you should argue that the tax preparer's position was in some way unreasonable in light of what the average tax preparer can be expected to know.
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Show that the tax preparer's error caused the damages that you suffered. If the tax preparer made an error in one part of your tax return and the IRS sanctioned you for an error on another part of the return, then the tax preparer's error did not cause you any damages, and you have no cause of action. You will need to show a direct relationship between the tax preparer's error and the damages that you suffered.
Calculate the amount of damages that you suffered as a result of the tax preparer's error. Add to this amount the expenses that you incurred in filing the lawsuit because the court may award you these expenses if you win the case.
Prepare a civil complaint in which you allege all four elements of a standard professional malpractice complaint as outlined above and ask the court for relief. File this complaint with the appropriate state court in your jurisdiction.
- Many lawyers will take a malpractice case on a contingency basis. This means you pay nothing if you lose; but if you win, you must pay the lawyer a fee that is typically equal to about 30 to 40 percent of the judgment.
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