Based on the advice of their CPA, an Arizona auto dealership ‘thought’ they reduced their tax liabilities through stock ownership plans devised by their CPA. Much later the IRS disapproved of these plans. The IRS sent past due tax demands to the owners. Eventually, the IRS settled the claims against the owners. The owners paid big bucks in fines and penalties. These owners then sued the CPA for negligence, breach of contract and other claims. The Maricopa County superior court judge concluded that the professional negligence claims accrued when the IRS issued its demand and those claims were barred by the statute of limitations.
The Arizona court of appeals reversed. It rejected a doctrine that the owner’s claims accrued upon the IRS’s demands. It also rejected a different concept that the claims accrued upon a final decision in the tax appeal. Instead, the Arizona court of appeals adopted a fact-based approach to claim accrual.
The Arizona court reasoned that the notice of deficiency did not necessarily commence the statute of limitations because continued consultation with an accountant after the notice of deficiency based on a reasonable belief of IRS error is legally inconsistent with requiring the commencement of a malpractice action regarding the same conduct.
Adopting a case-by-case or fact-based approach to claim accrual brings accounting malpractice claims in line with cases reviewing the statute of limitations for attorney malpractice.
Feel free to call Bill Miller from Scottsdale, Arizona at 602-319-6899 if you need help in an Arizona Court proceeding or you think the statute of limitations may have expired. His office is off the 101 in Scottsdale.
We also handle, Breach of contract, Non-compete agreements, Non-disclosure agreements, Employee theft and embezzlement, Insurance purchases and enforcement of policy coverage, Negotiation and/or enforcement of commercial leases, Negligence and gross negligence resulting in losses, Intentional acts causing a company to suffer damages, Tortious interference with contractual relationships, Unjust enrichment, Real Estate fraud, Consumer fraud, Conversion/Theft, Intentional and/or negligent misrepresentation, Business torts and Real estate title & escrow.

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