A hotel chain based out of Northern Kentucky was the recipient of a $99 million judgment concerning alleged fraud by a tax preparing company. It is alleged that the chain was misled by its tax preparer, Grant Thornton, LLP, concerning products that the company sold. It was argued in court that these instruments were not legal and could not stand up to scrutiny by the Internal Revenue Service.

Because a number of products were purchased from Grant Thornton, the owners of Columbia Sussex were forced to settle out tax liabilities with the IRS for $18.4 million in taxes, fees and fines. The Columbia Sussex is run by a family in Crestview Hills, and the family owns a large number of hotels and casinos across the country. The family operates as many as 41 hotels throughout the United States.

According to attorneys for the family, a number of accounting firms sold tax strategies in the 1990s that included letters claiming the strategies were legal. Unfortunately, these assumptions turned out not to be correct.

There are many tax preparers presenting a number of strategies that may not be in the best interest of their business clients. Those preparing taxes may not have a legal background or an attorney license that will allow for them to dispense legal advice. Realistically, tax planning should be handled by experienced tax attorneys who understand the laws and can provide legal counsel and representation. Attorneys can also negotiate with IRS officials in the event that there is a dispute or disagreement.

Though the above business was able to recoup losses that came about because of alleged negligence on the part of the tax preparers, it's generally best to have tax documents prepared appropriately to begin with so that no further litigation is required.

Source: Kentucky.com, "Hotel, casino family wins $99 million judgment," Brett Barrouquere, Nov. 19, 2013