PROFESSIONS AND OCCUPATIONS
A. ACCOUNTING
Actions against Public Accountants or Public Accounting Firms
735 ILCS 5/13-214.2: Public accounting—Limitation
Actions based upon tort, contract, or otherwise against any public accountant or firm for an act or omission in the performance of professional services must be commenced within 2 years from the time the person bringing the action knew or should reasonably have known of such act or omission.
In no event may an action be brought more than 5 years after the date on which the act or omission occurred. However, if an income tax assessment is made or a criminal prosecution brought, an action may be brought against the public accountant who prepared the tax return within 2 years from the date of assessment or conclusion of the prosecution. If the person entitled to bring the action is under the age of 18 or under a legal disability, the period of limitation does not begin to run until the disability is removed.
This includes fraud actions. Polsky v. BDO Seidman, 293 Ill. App. 3d 414, 688 N.E.2d 264, 227 Ill. Dec. 883 (2d Dist. 1997).
Exception to statute of repose for income tax assessment does not extend to advice with regards to the requirement to collect and transmit sales tax. Inphoto Surveillance, Inc. v. Crowe, Chizek & Co., LLP, 338 Ill. App. 3d 929, 788 N.E.2d 216, 272 Ill. Dec. 912 (1st Dist. 2003).
Statute of limitations in accountant malpractice case involving increased tax liability begins to run when taxpayer receives statutory notice of deficiency per Internal Revenue Code section 6212, or at time when taxpayer agrees with IRS' proposed deficiency assessments. Federated Industries, Inc. v. Reisin, 402 Ill. App. 3d 23, 927 N.E.2d 1253, 340 Ill. Dec. 242 (1st Dist. 2010). Accord, Khan v. Deutsche Bank AG, 2012 IL 112219 (holding that receipt of a notice of deficiency puts the taxpayer on notice he has suffered an injury and that it was wrongfully caused, thereby causing the commencement of the limitations period under the discovery rule) (overruling the decision of the Fourth District). See also Lane v. Deutsche Bank, 2015 IL App (1st) 142968.
Where taxes were overpaid, the statute begins to run when the plaintiff becomes aware that the earlier tax returns were problematic. SK Partners, I LP v. Metro Consultants, Inc., 408 Ill. App. 3d 127, 944 N.E.2d 414, 348 Ill. Dec. 461 (1st Dist. 2011).
Where the tax return was not timely filed, and both sides knew the due date, the statute began to run on the...
