Coverage Question Series – Part 43
Post on February 22nd, 2019
This is a continuing series in which we address policy coverage questions that we routinely discuss with you and your colleagues. The answers provided are based on the basic policy form, currently LPLP-1s (effective for all policies new or renewed as of May 1, 2018). Refer to your specific policy and any endorsements attached thereto that may change coverage or the answers provided here.
I prepared my client’s tax return, am I covered?
Most likely yes! As part of your practice, you prepare tax returns for clients annually. When the client receives a large tax bill, they point to your preparation of their 1040EZ as the cause of the problem.
You are able to prepare and file income tax returns specifically using your attorney license and as part of your legal practice. See Treasury Dept. Circular No. 230, §10.8(a). By preparing and filing the returns, you are providing services to others in a lawyer-client capacity. That meets the definition of “Professional Services” in the policy form. However, if you are providing services that require a CPA license, rather than your attorney license, then those services and claims arising from those services would not be covered by the policy per the definition of “Professional Services.” See LPLP-1s, II. DEFINITIONS, (i), pg. 4.
As you should expect, these Q&A scenarios are based on simple hypotheticals. Coverage determinations for an actual claim are ultimately based on the unique facts, applicable law, and the Terms, Conditions, Limitations, Exclusions, and Endorsements of your policy.
Carl Marsh, Esq.