Lawsuits involving audits of public companies have gotten the lion's share of the media's attention in recent months. But state tax returns and other services provided to wealthy individuals still present a multitude of pitfalls for accounting firms of all sizes. Two recent cases show how these pitfalls can and do turn into nightmarish negligence lawsuits, no matter how popular and well-regarded the clients.

Michael Eisner, chairman and chief executive officer of Walt Disney Company, and his wife recently filed a lawsuit against their accounting firm for failure to give correct advice on preparing and filing California state income tax returns. The lawsuit claims Mr. and Mrs. Eisner had to cover $3 million in unpaid state taxes and interest. The returns were prepared by Executive Monetary Management (EMM), a wholly-owned subsidiary of New York-based Neuberger Berman Inc.

According to an article published by the Associated Press, EMM acknowledged there were errors in the calculation of the taxes due to contributions of appreciated stock to private foundations. EMM told the state Franchise Tax Board the errors occurred because the firm was unaware that California law did not conform with a 1996 extension of a federal rule on the subject.

Separately, pop singer Elton John tried again to reopen a lawsuit against his former accountants, PricewaterhouseCoopers (PwC).

Mr. John claimed that his manager, not he, should pay the costs of tours amounting to $10.5 million, and he said PwC was negligent because it failed to advise him that he was paying the touring costs. A British Court of Appeal refused to allow him to reopen the case. The British courts have described the case as a "melancholy truth" that involved a man with "an uncommonly generous disposition" and great intelligence, who had "little or no interest in business matters."

-Rosemary Schlank