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Accountants, be nice to your staff...

August 25, 2009

...or they could cause you more headaches than you can imagine. Headaches like this:

A prominent Bay Area accounting firm might have some serious explaining to do, according to a $5 million suit filed by a former employee.

The suit charges San Francisco's Shea Labagh Dobberstein of "violating their legal duties" in connection with tax returns the firm had prepared on behalf of two of its corporate clients. One of them allegedly had engaged in "intentional tax fraud," the other in a "substantial understatement of (its) tax liability," according to court papers.

Both were known, or became known, to the firm's principals, who signed off on the returns anyway, the suit states. For blowing the whistle, tax accountant Gary Winston says he was fired, or, in legal parlance, subject to "wrongful termination in violation of public policy."

It's not clear from the article whether the 'whistleblowing" involved the IRS whistleblower program, which can reward snitches up to 30% of taxes collected as a result of the information provided to the IRS.

If the plaintiff collected an IRS reward, the lawsuit seems a stretch. Potential whistleblowers have to weigh a tradeoff: it's asking a lot of your employer to keep you on the job after you've sold your partners and clients to the IRS, and it's not likely another firm will be eager to take you on. If you can collect 30% of a $10 million underpayment, though, you just might be willing to give up that public accounting career.