7 Warning Signs of Accountant Malpractice That Put Businesses at Risk, Says Chicago Litigation Attorney Jordan Matyas

“Corporations place trust in their accounting professionals, but unfortunately, not all tax preparers deliver the standard of care their clients deserve,” said Jordan Matyas, founder and managing Accounting and CPA Malpractice Attorney, at 1818. “When accountants make errors or provide negligent advice, it’s typically the taxpayer who faces immediate consequences from the IRS, including penalties and interest, even when the mistake wasn’t their fault.”

Matyas, whose firm represents victims of professional malpractice, emphasizes the importance of knowing the warning signs of potential accountant negligence during tax season. Based on the firm’s experience handling accountant malpractice cases involving businesses of all sizes, Matyas has identified seven key red flags for corporate taxpayers when working with tax professionals.

The Changing Landscape of Tax Enforcement

Recent federal legislation has dramatically expanded the IRS’s enforcement capabilities. The Inflation Reduction Act allocated nearly $80 billion to the IRS, with approximately $46 billion specifically earmarked for enforcement activities. This funding has already translated into more staff, better training, and sophisticated data analytics systems.

While the IRS has stated that increased enforcement will focus on high-income individuals and large businesses, technological improvements in their systems will affect all taxpayers. Enhanced data matching programs can now more efficiently identify discrepancies in tax returns across all income levels.

“Many business owners don’t realize that when the IRS finds errors in their returns, they’re liable for not just the additional tax, but also penalties and interest—even if the mistake was entirely their accountant’s fault,” Matyas noted. “The burden falls on the business to pursue recovery from the negligent professional.”

Warning Signs of Accountant Malpractice This Tax Season

According to 1818’s litigation team, taxpayers should be alert to these potential red flags:

• Missed Deadlines Without Extensions: Tax professionals who miss filing deadlines without properly filing for extensions can subject clients to significant penalties and interest
• Unrealistic Promises: Accountants who guarantee specific refund amounts or unusually favorable outcomes should raise immediate concerns
• Poor Communication: Professionals who are consistently difficult to reach during tax season or who fail to answer questions about your tax situation promptly
• Resistance to Providing Documentation: Accountants who are reluctant to provide copies of filed returns, worksheets, or documentation supporting positions taken on returns
• Lack of Explanation: Tax preparers who cannot or will not clearly explain the reasoning behind tax positions taken on your behalf
• Unexpected IRS Notices: Receiving IRS correspondence identifying errors or discrepancies in returns prepared by a professional
• Unwillingness to Stand Behind Their Work: Professionals who avoid responsibility when questions arise about their preparation or advice

“The relationship between a business and their accountant must be built on trust and transparency,” said Matyas. “When that trust is violated through negligence or incompetence, it’s not just disappointing—it can be financially devastating to businesses of all sizes, from startups to established corporations.”

Steps to Take if You Suspect Accountant Malpractice

1818 Litigation Attorneys advises taxpayers who suspect their tax professional has been negligent to take these immediate steps:

1. Preserve All Documentation: Maintain copies of all tax returns, communications with your accountant, and IRS notices
2. Request Complete Records: Ask your accountant to provide all documents related to your tax preparation, including worksheets and supporting documentation
3. Seek Independent Review: Have another qualified tax professional review your returns to identify potential issues
4. Comply with IRS Deadlines: Regardless of who is at fault, respond to all IRS notices by the required deadlines to avoid additional penalties
5. Document Financial Impact: Calculate and document all financial harm resulting from the alleged malpractice, including additional taxes, penalties, interest, and professional fees
6. Consult with a Malpractice Attorney: Speak with an attorney who specializes in accountant malpractice to understand your legal options and the strength of your potential claim

“Acting promptly is crucial,” emphasized Matyas. “There are strict time limitations for pursuing accountant malpractice claims, and the sooner you address potential issues, the better positioned your business will be to protect your interests.”

Common Forms of Accountant Malpractice Affecting Businesses

Based on cases handled by 1818 Legal, the most frequent forms of accountant malpractice include:

Filing Errors

These include computational mistakes, improperly completed forms, and missed deadlines that result in penalties and interest charges.

Inadequate Tax Advice

This occurs when accountants fail to inform clients about tax-saving opportunities or provide incorrect guidance, leading to underpayment or overpayment of taxes.

Failure to Identify Tax Obligations

Many accountants fail to properly advise clients about all applicable tax obligations, particularly in complex situations involving foreign assets, cryptocurrency transactions, or multi-state operations.

Inappropriate Tax Strategies

Some professionals recommend overly aggressive tax positions without adequately explaining the risks of audits or penalties to their clients.

Documentation Failures

Poor record-keeping practices that leave clients vulnerable during IRS examinations or unable to substantiate positions taken on returns.

“What makes accountant malpractice particularly damaging is that the consequences often compound over time,” Matyas explained. “An error on one year’s return can trigger IRS scrutiny of multiple years, exponentially increasing the financial impact.”

Contact:

1818 Litigation Attorneys
Jordan Matyas
1818 Legal
200 West Monroe Street
Suite 2025
Chicago, IL 60606

About 1818 Litigation Attorneys

1818 Litigation Attorneys is a leading Chicago-based litigation firm handling professional malpractice claims. The firm represents plaintiffs in cases involving accountants, attorneys, and other professional negligence. With a proven track record of successful recoveries, 1818 Litigation Attorneys has established itself as a champion for individuals and businesses harmed by professional misconduct.
The firm’s accountant malpractice practice has extensive experience holding tax professionals accountable for negligence and errors that cause financial harm to their clients. 1818 Litigation Attorneys offers initial consultations to evaluate potential malpractice claims.
For more information about protecting your rights during tax season or to schedule a consultation, please visit https://www.1818legal.com/.
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Contact:
1818 Litigation Attorneys
Jordan Matyas
1818 Legal
200 West Monroe Street
Suite 2025
Chicago, IL 60606