Getting served with legal documents can seem like one of the worst things that can happen to a business owner. As it’s one of those situations that is always a possibility but not something top of mind, you may not be properly protected with the right insurance coverage.
As defined by findlaw.com, “A subpoena… is a request for the production of documents, or a request to appear in court or other legal proceeding. It is court-ordered command that essentially requires you to do something, such as testify or present information that may help support the facts that are at issue in a pending case. The term ‘subpoena’ literally means ‘under penalty.’ A person who receives a subpoena but does not comply with its terms may be subject to civil or criminal penalties, such as fines, jail time or both.”
First things first, don’t ignore it
Being served legal documents is an incredibly stressful event. Human nature oftentimes leads us to ignore or procrastinate dealing with unpleasant matters; however, that will only worsen the situation, as a subpoena is part of the legal process and failure to respond could lead you to be in contempt of court.
Next, figure out what is being requested
Ask yourself, who is being asked to appear, what is being requested, when is the court date and where is the trial being held? Usually, subpoenas are written in a very detailed and specific way and will request certain documents or items. Make sure you understand exactly what the subpoena requirements are and that you don’t miss any important dates.
Finally, know the background
It’s important to know who is requesting the information and why. This step will help you prepare so you can anticipate giving a testimony.
If you are served with a subpoena, it’s best to enlist the help of an attorney who can help interpret the technical nature of the document itself, advise you on the information you need to gather or answer any additional questions you may have.
Preparation is key
“Prepare for the worst, hope for the best,” truly applies to protecting your business. It’s always easier, more efficient and more cost effective to plan for legal challenges when your company is doing well and not in any foreseeable danger. When you properly manage your risk ahead of time, there could be a silver lining if any legal troubles arise: Professional liability insurance mitigates the risks of preparing tax returns and maintaining company records and books. Also known as errors and omissions (E&O) or malpractice insurance, professional liability insurance covers the expenses of defending oneself against accusations of professional negligence. Coverage includes legal costs associated with hiring an attorney, court fees and resulting financial penalties. Even the most seasoned tax professionals can make mistakes. A client can sue you 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 pays their premium, they have decided to outsource their professional risks by entering an agreement with their insurance company which provides:
- A claims representative and a defense attorney
- Costs for expert witness(es) to strengthen a legal defense.
- Coverage for arbitration, mediation or other forms of alternative dispute resolution.
- Payment for court administrative expenses.
- Coverage for disciplinary or regulatory proceedings.
- Assistance in the event in the insured received subpoenas for documents or testimony.
- Expense benefits for costs incurred resulting from trial or arbitration attendance.
- Employee-theft coverage.
Read more about how insurance claims can ruin a tax preparation business.
The Importance of Tax Preparers Professional Liability Insurance
As a tax preparer, it’s essential to protect your business and personal finances against client litigation— both justified and contrived. The solution is to buy professional liability insurance designed to cover your specific job duties and issued by an insurance company you trust. As a 360 Coverage Pros policyholder, you’ll have 24/7 access to a legal-advice hotline with coverage underwritten by an “A”-rated carrier. Tax Preparer Professional Liability Insurance:
- Reduces financial doubt.
- Provides convenient access to a proven defense attorney.
- Reduces stress.
- Fills coverage gaps that general liability or other business insurance fails to address.
Check out the tax preparer professional liability insurance coverage available at 360 Coverage Pros, with premiums starting at $23.33 per month with instant proof of coverage.
