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Mandatory Tax Penalty Insurance, Michael Abramowicz
Mandatory Tax Penalty Insurance, Michael Abramowicz
Indiana Law Journal
In a mandatory tax penalty insurance regime, taxpayers would be required to find insurers to certify portions of their tax returns. A certifying insurer would be subject to a governmental auditing regime insurers of randomly selected filings would pay an amount equal to the inverse of the selection probability multiplied by the underpayment, or they would receive money from the government in the case of overpayment. The insurers function as private auditors with no incentive to underestimate their customers' tax liability. Such a regime will consume real resources, ultimately paid by taxpayers, and thus should not be imposed universally. But …
Accountants' Accountability To Nonclients In Texas., Jessica P. Gomez
Accountants' Accountability To Nonclients In Texas., Jessica P. Gomez
St. Mary's Law Journal
This Comment proposes that accountants be held liable to any foreseeable user of their work product to ensure the deterrence of negligence on their part. Currently, the three main common law theories concerning whether nonclients can sue accountants for negligence are: (1) the privity rule; (2) the Restatement (Second) of Torts § 552; and (3) the foreseeability standard. Many states follow the Restatement approach entitled “Information Negligently Supplied for the Guidance of Others.” Texas imposes liability on accountants but fails to extend protections to third parties who rely upon the accuracy of financial statements. Further, Texas liability does not expose …