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Dwayne B.
Dwayne B., Attorney
Category: Legal
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Experience:  Began practicing law in 1992
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I had a new CPA firm do my taxes in 2011. As part of the discovery

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I had a new CPA firm do my taxes in 2011. As part of the discovery process, he advised me that my 2009 taxes should be amended because of a debt relief issue. My ex husband an I amended our return based on this advice and the potential of getting $100,000 back. We filed this amended return. We were then audited. Larry Burkholder & Associates the firm then said that the audit from start to finish should be no more than $10,000. We also never signed an engagement letter as part of the process. Fast forward to end of February 2013, and Larry and his associate presented us with a bill of $15k and threatened not to attend a critical IRS audit meeting if we didn't pay in full. The bill was surprising as we had been asking since September when the audit started for estimates and bills. We never received an estimate or monthly bill. Even when we got the surprising bill of $15k there was no detailed itemization of how the figure was contrived until days later. We have now switched accountants and have also learned that they did not provide critical information to the IRS auditor that she was asking for. They did have us sign power of attorney forms. They admittedly did some work, but no where near $15k. What is our recourse?

JD 1992 :

Hello, and thank you for contacting Just Answer. I am an expert here and and I look forward to assisting you today.

JD 1992 :

Generally there are two avenues to pursue, but they are not exclusive. You can pursue both routes.

JD 1992 :

The first is filing a complaint with your state's licensing agency. In CA it would be a complaint through the CA Board of Accountancy. Their online site for the complaints is http://www.dca.ca.gov/cba/consumers/complain.shtml

JD 1992 :

Next, you can also sue them for professional malpractice or negligence.

JD 1992 :

Along with that suit you could also sue them for breach of contract since they said it would be a maximum of $10k and ended up being more.

JD 1992 :

I don't think you would have a realistic claim against them for causing an audit, but the rest of it sounds viable under your facts.

Customer:

We did already file a complaint through CA board of Acccountancy.

JD 1992 :

Then the only other step would be to file the lawsuit.

Customer:

We are looking at sueing them. I did offer to pay them $6k to make it go away. They wouldn't take that. I don't think they caused the audit as when you are asking for that much from the IRS it is realistic that they wouldn't want to give it up or rule in your favor. What I guess is crazy is that they never gave us a monthly bill or disclosed any billing to date despite us asking. Additionally, they are now trying to collect this through a collection agency even though it is only 60 days past due.

Customer:

Aren't accountants required to provide an engagement letter, proper estimates, and monthly progress bills? Also when they threatened to not receive a critical IRS meeting, I gave them my credit card. They didn't charge it.

JD 1992 :

I thin you have several valid grounds on which to sue them. The fact that they failed to provide the critical information to the IRS is a big deal as well.

Customer:

Yes I think we will threaten to do that. They also wrote me threatening emails two days before audit demanding full payment then flip flopped the next day after I said we had no agreement nor expectation of that excessive bill with no end to the audit nor progress in site.

JD 1992 :

If you are going .to pursue them then pursue them on all grounds

JD 1992 :

You can also recover your attorney's fees.

JD 1992 :

The chances are good that they will try to resolve this short of a trial.

JD 1992 :

Did you have additional questions?

Customer:

No I think I am good for now. How do you recover attorneys fees? Is there a way I can share your answers or print them with my ex husband. Thanks.

JD 1992 :

As to the attorney's fees it is just another element of damages you can sue for under a breach of contract theory.

JD 1992 :

Once you issue your Positive Rating on this question it will lock open (no longer time out) and also change to a Q and A format and you can then use the print function on your browser to print it out.

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