The Forgetful CPA
This blog has been too serious as of late, so I am going to start talking about some fun tax cases. This brings me to the case of Paul A. Bilzerian v. Commissioner. This is another one of my favorite cases.
Poor Paul failed to report about $4 million dollars on his tax return. Paul blamed the error on a mistake made by his CPA. In all fairness to the CPA this mistake could have been an error and it could have resulted from the work of another accounting firm. But in honorable fashion the CPA tried to blame the error on his client, poor Paul. This was a very serious case. It involved substantial additions to tax, penalties, and interest. The client, poor Paul, could have easily gone to jail and he may very well have. So you might be asking what makes this case a fun tax case?
What makes this a fun case is not the taxpayer, the tax or even the law. Rather the CPA is what makes this a fun case. Put yourself in the CPA’s shoes. He is trying to argue that he was not at fault, so the CPA testified that he “missed about $4 million in income.” That was probably the only forthright statement that the CPA made, as the court summed up the rest of the CPA’s testimony as “vague, evasive, and contradictory.” Those are strong words. I cite some of the CPA’s testimony here so that you can judge for yourself:
- Question: All right. And is it true that you denied liability — any liability for malpractice in that case [referring to a malpractice case poor Paul filed against the CPA]?
- Answer: I really don't remember what I said or didn't say. I would assume that that's true, but I don't know for sure. I don't remember the case now at all.
- Question: This would've been about eight years ago.
- Answer: Yes.
- Question: Did you get sued often?
- Answer: No, I have never been sued before.
- Question: And your testimony then is: you got sued and don't remember anything.
- Answer: What I'm saying is that I turned it over to the attorney who is representing me and the insurance company, and he did whatever he needed to do, and I was involved to a very small degree.
- Question: What was the result of the lawsuit?
- Answer: It was, I think, withdrawn, I believe. I think it was withdrawn.
- Question: And you didn't have to pay any money, did you, as a result of this lawsuit to Paul Bilzerian.
- Answer: No, not to him.
- Question: To anybody?
- Answer: Oh, I paid legal fees, and if it would've been my insurance company would've paid. I wouldn't have paid him anyhow [note the CPA’s concern for his client].
- Question: Do you remember any depositions in connection with that lawsuit?
- Answer: I don't, but I won't say that there wasn't, but the thing is is that, as I said, that whole thing is just been — I have forgot it all. It was not important for me to remember, and I haven't gone back and reviewed any papers.
- Question: Do you remember accepting liability or denying liability in that lawsuit?
- Answer: I am assuming that if I went to the attorney I probably denied liability.
- Question: Okay. Didn't we speak about a week ago or so?
- Answer: Yes.
- Question: And in that conversation you told me that you deny liability?
- Answer: I don't remember if I said that to you. I probably said that to you, though. But you are asking me questions that I really, in my memory since, I don't know. I can only tell you what I think [for the non-attorneys, the only way that the attorney could ask this last question is if it has a basis in reality, meaning that the CPA had in fact denied liability one week prior].
Wow! Would you hire that CPA (or have you)? The CPA’s mistakes could result in the taxpayer going to jail; facing penalties, interest, and additions to tax; and the loss of a hard-earned business reputation, the business itself, and even taxpayer’s family and friends. Yet, based on the CPA's testimony, the CPA seems to be indifferent to his client's situation. In fact, he seems to be completely at peace with his client's situation.
This just goes to show that we don't need religion, spirituality, medication, or even meditation or yoga to find inner peace. The secret to finding inner peace is simply to forget everything...
 
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