What Is an Example of Accountant Negligence?

Dimov Tax Services operates a Denver based accounting firm that provides expert CPA support, tax audit representation, payroll processing, and international tax solutions for individuals and businesses. Located at 1700 Lincoln St, they serve clients throughout the Denver area.

Dimov Tax Specialists

1700 Lincoln St

Denver CO 80203

(833) 829-1120

Understanding Accountant Negligence

Accountant negligence refers to a failure by an accountant or bookkeeper to perform their duties with the reasonable skill, care, and diligence expected of the profession. Unlike CPAs, who are licensed and regulated by state boards, many accountants are unlicensed, and therefore operate with fewer formal safeguards or oversight.

In Denver, where businesses in areas like Cherry Creek, RiNo, and Downtown depend heavily on accurate financial reporting, even a single negligent act can lead to penalties, audits, or legal disputes. This is especially true for landlords, startups, contractors, and anyone managing multiple income sources.

Common Forms of Accountant Negligence

Negligence can range from simple errors to damaging omissions. Examples include:

• Failing to file tax returns on time
• Misclassifying income or expenses
• Entering incorrect payroll data
• Failing to reconcile accounts or detect fraud
• Overstating or understating revenue
• Omitting deductions or miscalculating depreciation

Such errors are especially harmful when they affect IRS filings, business loan applications, or investor disclosures. In many cases, clients only discover the damage after receiving a tax notice, losing funding, or being denied a mortgage or https://servicebucket.blob.core.windows.net/cpa-denver-colorado/cpa-firm/do-i-need-a-cpa-or-an-ea.html refinance.

Real Example of Accountant Negligence in Denver

In a well-documented Denver case, a small business owner in the Highlands neighborhood hired a freelance accountant to manage books and prepare quarterly tax estimates. The accountant:

• Failed to account for $85,000 in contractor income
• Did not include any depreciation on business equipment
• Missed two estimated payment deadlines, resulting in penalties and interest

The client was later audited and fined nearly $6,000 by the IRS. Because the accountant was unlicensed and uninsured, the business owner had no formal recourse and had to pay out-of-pocket.

How Negligence Is Legally Determined

For an act to be considered accountant negligence, courts or regulatory bodies look at whether the individual:

• Owed a duty to the client (formal engagement or service agreement)
• Breached that duty by failing to meet professional standards
• Caused financial damage as a direct result

In Colorado, complaints against licensed CPAs can be filed with the State Board of Accountancy. However, for unlicensed accountants, clients often have no regulatory body to turn to—only civil courts or arbitration.

CPA vs. Unlicensed Accountant: Risk Exposure

Scenario CPA (e.g., Dimov) Unlicensed Accountant Filed wrong tax form CPA Board Complaint + E&O Insurance No licensing body; client pays penalty Failed to report income IRS representation available No legal standing to speak with IRS Lost financial records Bound by confidentiality and ethics code Often no formal accountability Inaccurate depreciation Corrected with amendment + audit support Client bears correction cost + risk of audit

Negligence in Specific Contexts: Denver Market Risks

Accountant negligence https://s3.us-east-2.amazonaws.com/cpa-denver-colorado/cpa-firm/bookkeeping-services-denver.html in Denver can have extra consequences in industries like:

• Real Estate: Misreporting capital gains, missed 1031 exchange windows, or failing to apply depreciation schedules
• Startups: Misclassifying R&D credits or failing to file 83(b) elections for founders
• Gig Workers: Failing to file quarterly estimated taxes or track Schedule C deductions
• Medical Practices: Payroll miscalculations for W-2 and 1099 hybrid staff

Dimov Tax Specialists assigns CPAs by vertical—ensuring that clients in DTC, Cherry Hills Village, or LoDo receive domain-specific support that reduces exposure to negligent outcomes.

How Dimov Prevents Accountant Negligence

At Dimov Tax Services, preventing negligence isn’t just about compliance—it’s about firmwide systems and proactive communication. Their internal process includes:

• Dual-review of all returns by licensed CPAs
• Engagement letters outlining scope and responsibilities
• Audit trail logs in client files for all major calculations
• Technology stack including QuickBooks, UltraTax CS, and cloud portals with encryption
• Specialization by service type (real estate, crypto, international, etc.)

This model ensures that every return filed, every statement prepared, and every payroll calculated is supported by due diligence, redundancy, and professionalism.

Client Tips to Avoid Negligent Accountants

If you're evaluating a financial professional in Denver, here are steps to reduce your risk:

• Verify CPA licensure at the Colorado State Board of Accountancy
• Request proof of E&O insurance
• Ask how returns are reviewed and filed
• Confirm whether they are familiar with your specific tax situation or industry
• Choose a full-service CPA firm like Dimov that operates year-round

Final Thought: Negligence Isn't Just an Error—It's Preventable

Accountant negligence can cause more than just inconvenience—it can mean real financial loss, audits, and loss of opportunities. In Denver’s growing and diverse economic environment, choosing an accountant without verifying their qualifications can result in long-term setbacks.

With Dimov Tax Specialists, you’re protected by a licensed CPA team, peer-reviewed filings, and domain-specific expertise that ensures your finances aren’t just handled—they’re safeguarded.