Interesting Offshore Account Malpractice Opinion Denying Summary Judgment (4/1/17; 4/6/17)

In Miksic v. Boeckerman Grafstrom Mayer, LLC, 2017 U.S. Dist. LEXIS 46906 (D MN 2017), here, court opens with an short summary of the case:

The Internal Revenue Service ("IRS") assessed substantial taxes, monetary penalties, and interest against Plaintiff Boris Miksic for his failure to file U.S. tax forms during tax years 2005 to 2010, and not disclosing his interests in and income from foreign trusts, businesses, and bank accounts. Miksic filed this accounting malpractice action alleging those errors were due to negligent tax preparation by Defendants Boeckermann Graftstrom Mayer LLC, formerly known as Johnson, West & Co. P.L.C., Boeckermann Graftstrom Mayer, P.A., and Johnson West & Co. P.L.C. (collectively "Defendants"). Miksic also contends that as a result of Defendants' negligence, he changed accountants and retained legal counsel to respond to the IRS audit and to bring this action.

In the opinion, the court (i) denies the accounting firm's motion for summary judgment in major part, (ii) denies the accounting firm's attempt to exclude or limit the plaintiff's expert witness, and (iii) granted the accounting firm's summary judgment on the Form 5471 penalties that had been abated by the IRS.

I deal with only some of the issues discussed in the opinion and with certain other matters.  I sometimes refer to the accounting firm as the accounting firm or the defendant.  I sometimes refer to the plaintiff as the plaintiff or the taxpayer.  For background, I offer also the following (without exhibits):

• The plaintiff's (taxpayer's) complaint, here.
• The defendant's (accounting firm's) answer, here.
• The defendant's memo in support of motion for summary judgment, here.
• The plaintiff's (taxpayer's) response, here.
• The defendant's (accounting firm's) reply, here.
• The docket entries in the case as of 3/31/17, here.

I offer the following brief background probably known to most readers but not covered in the opinion:  In 2009, the IRS began its most recent offshore account initiative with the UBS deferred prosecution agreement and then the first round of OVDP for U.S. persons having previously unreported offshore accounts.  The U.S. and offshore press reports of this initiative in 2009 and later years were significant, which is probably an understatement.  Those practicing in this are will recall that UBS U.S. customers received letters in 2009 regarding their accounts, notifying them the account information may be turned over to the IRS or DOJ and notifying them of the IRS OVDP.  Some of the UBS account holders' information had already been supplied to DOJ and thus were ineligible for OVDP.