Discussion:Errors and Omissions insurance

penalties and interests. It is not a big deal. My ex- boss at JH does not carry any insurance liability. He used to tell to the client: "Okey- Probably my preparer did that mistake. I'm not sure. Lets say he did it. Considerer the extra refund as a free loan. I'm willing to pay for the consecuences of our mistake. In the IRS letter you can read that: "Penalties $100.00 Interests: $78.00 But the federal income tax due is your and you have to pay that amount from your own pocket. Also, we amend your return for free , and we refund the fees you paid to us for a preparation that was wrong. Other situation, of courses if you are dealing with corporations, wages, and the trust fund

I did not hear about the negligence penalty. Well,now I think I read about it- after all, I had to read thousands of pages to become an EA- (But obviously, I cannot remember all detais moist of the time) Thank you for telling me that the stuff exists. I dont understand where the thousand dollars came from. The 20% is aplied on what? Also, I never heart of a preparer that got that penalty. Then, My conclusion: It is unlikely to be involved in that situation. Insurance premium, I have a license, is based on probabilities. I don't recommend do not carry E and O liability insurance. Just that it should be sheaper- as you notice- and Arch CPA said if you just do personal returns. I respect your credentaisl JR1- I'm learning a lot reading your posts and other people's post too. See you.

I got two clients with - I'm almost sure about that- bogus numbers. One of them, brought me a fake W2, and probably a fake FL Driver License. Just one case, but there are a ring in Florida doing that. Another cliente came with his 1040 done- self employee- No 1099 Misc. A dependend child... He want to get a rapid refund... I refused to process a Rapid Anticipation Loan- I knew it would be rejected by the bank-- and He refused to pay i n advance. Three years ago... I tell you later

Service company -- another small operation with only the owner and office manager. Office manager had a lot of autonomy. Owner was smart in that he had bank statements mailed to his P.O. box address. He reviewed statements carefully. One brokerage account was sent directly to the office, however. You know how you can pay credit cards online and all you need to enter is the bank account and routing numbers? Well, that's what she did. Except that she paid per personal cards with company funds. Then when that wasn't caught, she started forging checks on this brokerage account. Transactions were posted to "draws" to avoid scrutiny from tax preparer. (I provided other accounting services to this client.) Owner started wondering why there was a cash flow problem when he was actually making more money than the prior year. Brokerage company ended up calling office manager and asked her about a particular check, which tipped her off that she was being checked out. Total amount taken estimated to be about $40,000 over about nine months. (This one should really make you want to protect your bank account numbers!)

Contractor -- entrepreneur client set up a separate wholesaling business and hired close acquaintance as manager. Business was going well, and manager realized he could make more money if he took sales directly. He set up another company with a similar name, opened new checking account, etc. Client has a big network and found out what manager was up to. Activity was pretty much nipped in the bud.

It's really amazing what some people will attempt to do!

Five years ago, I was in a check cashing store dealing with anykind of "crazy" guys

I thought we need an occupational license to do business. And , then, you need to live in certain areas to get that license. Maybe I will start an entreprise in that way.

Two years ago, I got e-filin authorization from the IRS. I think we need that. And, What kind of license from the city- Occupational?

Many cities requires Business License to do any kind of Business in the city. Also you may be asked to file for "zonig change" for your residence from residential to commercial (it is required in Fremont, CA, where I am). You should check with your city office for what things you might need. Thanks.Inagpurwala 10:39, 8 May 2006 (CDT)

Insurance is based on the preparers in your firm and gross revenue - but don't go without it!!!

Hawaii only requires you to get a General Excise Tax license (business license) which is a one time fee of $20. Then you pay the state 4.00% of your gross income. Each City in CA is different. But, most require a business license and gross income reports to the City plus a tax on your income. Then you have to have a state license too.

For Dstain43...I have an office in home but I go to my clients or the documents are emailed or scanned to me. If they come to the house it is only to drop off paperwork so no rezoning necessary. When I am done with the return I priority mail the packet to the client and when they send prep payment and signed 8879 I efile the return.

John Huddleston http://huddlestontax.com

I thought I heard somewhere that you have protection from ordinary negligence but not gross negligence gross negligence that you have commited when it comes to limited liability entities for the practice of law, accounting, etc. But I am far from certain.

Anyway, in many states like CA professionals can't form a LLC to practice their profession in. They can form an LLP which is similar to an LLC or a professional corp.

John Huddleston http://huddlestontax.com

If you are the party that is thinking of suing, find a good, respected civil atty, and take advice from them. Expect to have to pay for an expert witness at some point, but the lawyer may front this for you if it's a good enough case. Now, if the accountant was involved in the fraud, that's a different ball of wax. The atty. will worry about coverage issues. Finally, if you are the accountant in question, call your carrier.

Another question I have is where was the 99% owner when the tax returns were reviewed and signed? Were returns filed without this person's authorization?

I'm curious about the 99% owner too, unless... it was the wife, and she just let hubby sign the return? Contributory negligence? Perhaps, who knows at this point.

They state that "even if you made a change in your practice, you need to consider continued coverage to ensure your practice in the past.

HELP!!!

DJ DJ 08:08, 12 February 2009 (CST)

I also have coverage through Norman Spencer, so I know what you are talking about. I would give them a call. Perhaps you can agree to alter your prior years' coverage down to the new lower limits. If you can't, them you will have to make a decision. If you want to change coverage, you will probably have to pay for prior years' coverage.

Good Luck, Leslie

I call it "sleep at night" insurance.

DJ DJ 12:30, 13 February 2009 (CST)