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Taxes and money are a volatile combination in current litigious times. If a mistake is made on client tax returns and a business loses money, tax professionals will be at a high risk of getting sued. Tax preparation is a highly regulated industry that runs on strict deadlines. Failure to adhere to key regulatory codes or missing a filing date can create an exposure resulting in litigation or disciplinary/regulatory proceedings. Fortunately, one can avoid such risks by safeguarding themselves as individuals and their business with professional liability insurance.
Preparing taxes is perilous, regardless of expertise in tax preparation or accounting. Common everyday risks include missing allowable deductions, failure to document individuals claimed, or accidental errors or omissions related to client information. Many different circumstances could lead a tax professional to miss a tax-saving opportunity buried within current tax laws or regulations. Whatever the mistake or act of negligence, financially harming a client almost always has consequences.
If mistakes result in underpayment of taxes, clients will become liable for interest and penalties. Past and present clients are capable of filing a claim against preparers to recover such losses.
Professional liability insurance mitigates the risks of preparing tax returns and maintaining company records and books. Also known as errors and omissions or malpractice insurance, professional liability insurance covers the expenses of defending oneself against accusations of professional negligence. Coverage provides for the cost to hire an attorney and pay any legal defense fees as well as settlements or financial judgments ruled against the insured. Even the most seasoned tax professionals can make mistakes. A client can bring forth a lawsuit for any reason, especially if they perceive that wrongdoing or negligence has taken place.
Purchasing a professional liability policy is a means of risk transfer. When an insured professional pays their premium, they have decided to outsource their professional risks by entering an agreement with their insurance company which provides:
Notably, the aforementioned costs resulting from client accusations and legal expense can add up fairly quickly. Obtaining professional liability coverage is a simple way to gain peace of mind. Certain services fall outside of a tax preparer’s professional liability insurance policy and remain uncovered. Common exclusions include:
Additionally covered areas of practice include but are not limited to:
It is important to purchase a professional liability coverage specifically tailored to your professional needs and with your interests in mind. Coverage provides peace of mind in a few ways:
Given the importance of protecting a business against client lawsuits, it’s crucial to pick an insurer with industry expertise. Here are some things 360 Coverage Pros can guarantee outside of a great price:
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Tax Preparer professional liability insurance safeguards against financial damages arising from an alleged mistake that you make while rendering professional tax preparing services. In layman’s terms, it helps protect you when you make a mistake or forget to do something important that ends up hurting a client.
If you make a mistake or are accused of negligence when rendering professional tax preparation services, it can trigger a client lawsuit that can cost thousands of dollars to defend. If you are found liable, and a judgment is levied against you in a court of law, you may also be responsible for settlement costs. Having an professional liability insurance policy in place provides you with expert legal counsel in the event of a claim and helps protect your current and future earnings. It also safeguards your business and personal assets against the high costs associated with client litigation and court settlements.
Professional liability insurance policies are all different from carrier to carrier, so it’s important to carefully read your policy to understand coverages, exclusions, limits, deductibles and other key policy considerations. Tax Preparer Professional Liability Insurance policies from 360 Coverage Pros are specifically designed to protect Tax Preparers, Bookkeepers, Accountants, CPAs, Enrolled Agents, Annual Filing Season Program Participants and PTIN Holders in multiple areas of practice including, but not limited to:
In addition to our professional liability coverage, we offer the following at no additional charge: